Document:

EXHIBIT 10.2

 

 

 

TEXAS
GENCO LLC

 

AND

 

TEXAS
GENCO FINANCING CORP.

 

AND
EACH OF THE GUARANTORS PARTY HERETO

 

 

6.875%
SENIOR NOTES DUE 2014

 

 

 

INDENTURE

 

Dated
as of December 14, 2004

 

 

 

WELLS
FARGO BANK, NATIONAL ASSOCIATION

 

Trustee

 

 

 

 

 

CROSS-REFERENCE
TABLE*

 

	
  Trust Indenture

  Act Section

  	
   

  	
  Indenture
  Section

  
	
  310(a)(1)

  	
   

  	
  7.10

  
	
        (a)(2)

  	
   

  	
  7.10

  
	
        (a)(3)

  	
   

  	
  N.A.

  
	
        (a)(4)

  	
   

  	
  N.A.

  
	
        (a)(5)

  	
   

  	
  7.10

  
	
        (b)

  	
   

  	
  7.10

  
	
        (c)

  	
   

  	
  N.A.

  
	
  311(a)

  	
   

  	
  7.11

  
	
        (b)

  	
   

  	
  7.11

  
	
        (c)

  	
   

  	
  N.A.

  
	
  312(a)

  	
   

  	
  2.05

  
	
        (b)

  	
   

  	
  12.03

  
	
        (c)

  	
   

  	
  12.03

  
	
  313(a)

  	
   

  	
  7.06

  
	
        (b)(1)

  	
   

  	
  N.A

  
	
        (b)(2)

  	
   

  	
  7.06; 7.07

  
	
        (c)

  	
   

  	
  7.06; 12.02

  
	
        (d)

  	
   

  	
  7.06

  
	
  314(a)

  	
   

  	
  4.03;12.02; 12.05

  
	
        (b)

  	
   

  	
  N.A

  
	
        (c)(1)

  	
   

  	
  12.04

  
	
        (c)(2)

  	
   

  	
  12.04

  
	
        (c)(3)

  	
   

  	
  N.A.

  
	
        (d)

  	
   

  	
  N.A

  
	
        (e)

  	
   

  	
  12.05

  
	
        (f)

  	
   

  	
  N.A.

  
	
  315(a)

  	
   

  	
  7.01

  
	
        (b)

  	
   

  	
  7.05; 12.02

  
	
        (c)

  	
   

  	
  7.01

  
	
        (d)

  	
   

  	
  7.01

  
	
        (e)

  	
   

  	
  6.11

  
	
  316(a)
  (last sentence)

  	
   

  	
  2.09

  
	
        (a)(1)(A)

  	
   

  	
  6.05

  
	
        (a)(1)(B)

  	
   

  	
  6.04

  
	
        (a)(2)

  	
   

  	
  N.A.

  
	
        (b)

  	
   

  	
  6.07

  
	
        (c)

  	
   

  	
  2.12

  
	
  317(a)(1)

  	
   

  	
  6.08

  
	
        (a)(2)

  	
   

  	
  6.09

  
	
        (b)

  	
   

  	
  2.04

  
	
  318(a)

  	
   

  	
  12.01

  
	
        (b)

  	
   

  	
  N.A.

  
	
        (c)

  	
   

  	
  12.01

  

 

N.A.
means not applicable.

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

 

 

TABLE OF CONTENTS

 

 

	
  ARTICLE
  1

  DEFINITIONS AND INCORPORATION

  BY REFERENCE

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
  Definitions.

  	
   

  
	
  Section 1.02

  	
  Other Definitions.

  	
   

  
	
  Section
  1.03

  	
  Incorporation
  by Reference of Trust Indenture Act.

  	
   

  
	
  Section 1.04

  	
  Rules of Construction.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  THE NOTES

  
	
   

  	
   

  	
   

  
	
  Section 2.01

  	
  Form and Dating.

  	
   

  
	
  Section 2.02

  	
  Execution
  and Authentication.

  	
   

  
	
  Section 2.03

  	
  Registrar and
  Paying Agent.

  	
   

  
	
  Section
  2.04

  	
  Paying
  Agent to Hold Money in Trust.

  	
   

  
	
  Section 2.05

  	
  Holder Lists.

  	
   

  
	
  Section 2.06

  	
  Transfer and
  Exchange.

  	
   

  
	
  Section 2.07

  	
  Replacement Notes.

  	
   

  
	
  Section 2.08

  	
  Outstanding Notes.

  	
   

  
	
  Section 2.09

  	
  Treasury Notes.

  	
   

  
	
  Section 2.10

  	
  Temporary Notes.

  	
   

  
	
  Section 2.11

  	
  Cancellation.

  	
   

  
	
  Section 2.12

  	
  Defaulted Interest.

  	
   

  
	
  Section 2.13

  	
  Computation of
  Interest.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  REDEMPTION AND PREPAYMENT

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
  Notices to Trustee.

  	
   

  
	
  Section
  3.02

  	
  Selection
  of Notes to Be Redeemed or Purchased.

  	
   

  
	
  Section 3.03

  	
  Notice of
  Redemption.

  	
   

  
	
  Section
  3.04

  	
  Effect of
  Notice of Redemption.

  	
   

  
	
  Section
  3.05

  	
  Deposit
  of Redemption or Purchase Price.

  	
   

  
	
  Section
  3.06

  	
  Notes
  Redeemed or Purchased in Part.

  	
   

  
	
  Section 3.07

  	
  Optional Redemption.

  	
   

  
	
  Section 3.08

  	
  Mandatory
  Redemption.

  	
   

  
	
  Section
  3.09

  	
  Offer
  to Purchase by Application of Excess Proceeds.

  	
   

  
	
  Section
  3.10

  	
  Special
  Mandatory Redemption.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  COVENANTS

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Payment of Notes.

  	
   

  
	
  Section
  4.02

  	
  Maintenance
  of Office or Agency.

  	
   

  
	
  Section 4.03

  	
  Reports.

  	
   

  
	
  Section 4.04

  	
  Compliance
  Certificate.

  	
   

  
	
  Section 4.05

  	
  Taxes.

  	
   

  
	
  Section
  4.06

  	
  Stay,
  Extension and Usury Laws.

  	
   

  
	
  Section 4.07

  	
  Restricted Payments.

  	
   

  
	
  Section
  4.08

  	
  Dividend
  and Other Payment Restrictions Affecting Restricted Subsidiaries.

  	
   

  

 

i

 

	
  Section
  4.09

  	
  Incurrence
  of Indebtedness and Issuance of Disqualified Stock.

  	
   

  
	
  Section 4.10

  	
  Asset Sales.

  	
   

  
	
  Section
  4.11

  	
  Transactions
  with Affiliates.

  	
   

  
	
  Section 4.12

  	
  Liens.

  	
   

  
	
  Section 4.13

  	
  Corporate Existence.

  	
   

  
	
  Section
  4.14

  	
  Offer
  to Repurchase Upon Change of Control.

  	
   

  
	
  Section 4.15

  	
  Additional
  Guarantees.

  	
   

  
	
  Section 4.16

  	
  Release of
  Guarantees.

  	
   

  
	
  Section
  4.17

  	
  Restrictions
  on Activities of Financing Corp.

  	
   

  
	
  Section 4.18

  	
  Suspension of
  Covenants.

  	
   

  
	
  Section
  4.19

  	
  Limitation
  on Ability of the Issuers to Release Funds from Escrow.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  SUCCESSORS

  
	
   

  	
   

  	
   

  
	
  Section
  5.01

  	
  Merger,
  Consolidation, or Sale of Assets.

  	
   

  
	
  Section
  5.02

  	
  Successor
  Corporation Substituted.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  DEFAULTS AND REMEDIES

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
  Events of Default.

  	
   

  
	
  Section 6.02

  	
  Acceleration.

  	
   

  
	
  Section 6.03

  	
  Other Remedies.

  	
   

  
	
  Section 6.04

  	
  Waiver of Past
  Defaults.

  	
   

  
	
  Section 6.05

  	
  Control by Majority.

  	
   

  
	
  Section 6.06

  	
  Limitation on Suits.

  	
   

  
	
  Section
  6.07

  	
  Rights
  of Holders of Notes to Receive Payment.

  	
   

  
	
  Section 6.08

  	
  Collection
  Suit by Trustee.

  	
   

  
	
  Section
  6.09

  	
  Trustee
  May File Proofs of Claim.

  	
   

  
	
  Section 6.10

  	
  Priorities.

  	
   

  
	
  Section 6.11

  	
  Undertaking for
  Costs.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  TRUSTEE

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
  Duties of Trustee.

  	
   

  
	
  Section 7.02

  	
  Rights of Trustee.

  	
   

  
	
  Section 7.03

  	
  Individual
  Rights of Trustee.

  	
   

  
	
  Section 7.04

  	
  Trustee’s
  Disclaimer.

  	
   

  
	
  Section 7.05

  	
  Notice of Defaults.

  	
   

  
	
  Section
  7.06

  	
  Reports
  by Trustee to Holders of the Notes.

  	
   

  
	
  Section 7.07

  	
  Compensation
  and Indemnity.

  	
   

  
	
  Section 7.08

  	
  Replacement of
  Trustee.

  	
   

  
	
  Section
  7.09

  	
  Successor
  Trustee by Merger, etc.

  	
   

  
	
  Section
  7.10

  	
  Eligibility;
  Disqualification.

  	
   

  
	
  Section
  7.11

  	
  Preferential
  Collection of Claims Against the Issuers.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8

  LEGAL DEFEASANCE AND COVENANT DEFEASANCE

  
	
   

  	
   

  	
   

  
	
  Section
  8.01

  	
  Option
  to Effect Legal Defeasance or Covenant Defeasance.

  	
   

  
	
  Section
  8.02

  	
  Legal
  Defeasance and Discharge.

  	
   

  
	
  Section 8.03

  	
  Covenant Defeasance.

  	
   

  
	
  Section
  8.04

  	
  Conditions
  to Legal or Covenant Defeasance.

  	
   

  

 

ii

 

	
  Section
  8.05

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

  	
   

  
	
  Section 8.06

  	
  Repayment to the
  Issuers.

  	
   

  
	
  Section 8.07

  	
  Reinstatement.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  AMENDMENT, SUPPLEMENT AND WAIVER

  
	
   

  	
   

  	
   

  
	
  Section
  9.01

  	
  Without
  Consent of Holders of Notes.

  	
   

  
	
  Section
  9.02

  	
  With
  Consent of Holders of Notes.

  	
   

  
	
  Section
  9.03

  	
  Compliance
  with Trust Indenture Act.

  	
   

  
	
  Section
  9.04

  	
  Revocation
  and Effect of Consents.

  	
   

  
	
  Section
  9.05

  	
  Notation
  on or Exchange of Notes.

  	
   

  
	
  Section
  9.06

  	
  Trustee
  to Sign Amendments, etc.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  GUARANTEES

  
	
   

  	
   

  	
   

  
	
  Section 10.01.

  	
  Guarantee.

  	
   

  
	
  Section
  10.02.

  	
  Limitation
  on Guarantor Liability.

  	
   

  
	
  Section
  10.03.

  	
  Execution
  and Delivery of Guarantee.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  SATISFACTION AND DISCHARGE

  
	
   

  	
   

  	
   

  
	
  Section 11.01

  	
  Satisfaction
  and Discharge.

  	
   

  
	
  Section 11.02

  	
  Application
  of Trust Money.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  Section
  12.01

  	
  Trust
  Indenture Act Controls.

  	
   

  
	
  Section 12.02

  	
  Notices.

  	
   

  
	
  Section
  12.03

  	
  Communication
  by Holders of Notes with Other Holders of Notes.

  	
   

  
	
  Section
  12.04

  	
  Certificate
  and Opinion as to Conditions Precedent.

  	
   

  
	
  Section
  12.05

  	
  Statements
  Required in Certificate or Opinion.

  	
   

  
	
  Section
  12.06

  	
  Rules by
  Trustee and Agents.

  	
   

  
	
  Section
  12.07

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

  	
   

  
	
  Section 12.08

  	
  Governing Law.

  	
   

  
	
  Section
  12.09

  	
  No
  Adverse Interpretation of Other Agreements.

  	
   

  
	
  Section 12.10

  	
  Successors.

  	
   

  
	
  Section 12.11

  	
  Severability.

  	
   

  
	
  Section 12.12

  	
  Counterpart
  Originals.

  	
   

  
	
  Section
  12.13

  	
  Table
  of Contents, Headings, etc.

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  
	
   

  	
   

  	
   

  
	
  Exhibit
  A1

  	
  FORM
  OF NOTE

  	
   

  
	
  Exhibit
  A2

  	
  FORM OF
  REGULATION S TEMPORARY GLOBAL NOTE

  	
   

  
	
  Exhibit
  B

  	
  FORM OF
  CERTIFICATE OF TRANSFER

  	
   

  
	
  Exhibit
  C

  	
  FORM OF
  CERTIFICATE OF EXCHANGE

  	
   

  
	
  Exhibit
  D

  	
  FORM OF
  CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

  	
   

  
	
  Exhibit
  E

  	
  FORM OF
  NOTATION OF GUARANTEE

  	
   

  
	
  Exhibit F

  	
  FORM OF SUPPLEMENTAL
  INDENTURE

  	
   

  
				

 

iii

 

INDENTURE
dated as of December 14, 2004 among Texas Genco LLC, a Delaware limited
liability company (“Texas Genco LLC”),
Texas Genco Financing Corp., a Delaware corporation (“Financing Corp.” and, together with Texas
Genco LLC, the “Issuers”), the
Guarantors (as defined) and Wells Fargo Bank, National Association, as trustee.

 

The
Issuers, the Guarantors and the Trustee agree as follows for the benefit of
each other and for the equal and ratable benefit of the Holders (as defined) of
the 6.875% Senior Notes due 2014 (the “Notes”):

 

ARTICLE
1

DEFINITIONS AND INCORPORATION

BY REFERENCE

 

Section 1.01                                Definitions.

 

“144A Global Note” means a Global Note substantially in the
form of Exhibit A1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of, and registered in the name
of, the Depositary or its nominee that will be issued in a denomination equal
to the outstanding principal amount of the Notes sold in reliance on Rule 144A.

 

“Acquired Indebtedness” means, with respect to any specified Person,

 

(1) Indebtedness of any other Person existing at the
time such other Person is merged with or into or became a Restricted Subsidiary
of such specified Person, including, without limitation, Indebtedness incurred
in connection with, or in contemplation of, such other Person merging with or
into or becoming a Restricted Subsidiary of such specified Person; and 

 

(2) Indebtedness secured by a Lien encumbering any
asset acquired by such specified Person.

 

“Additional Interest” means all Special Interest (as defined in
the Registration Rights Agreement), then owing pursuant to the Registration
Rights Agreement.

 

“Additional Notes” means additional Notes (other than the
Initial Notes) issued under this Indenture in accordance with Sections 2.02 and
4.09 hereof, as part of the same series as the Initial Notes.

 

“Affiliate” of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person. For purposes of this definition, “control” (including,
with correlative meanings, the terms “controlling,” “controlled by” and “under
common control with”), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.

 

“Agent” means any Registrar, co-registrar, Paying Agent or additional paying
agent.

 

“Applicable Laws” shall mean, as to any
Person, any ordinance, law, treaty, rule or regulation or determination by an
arbitrator or a court or other Governmental Authority, including ERCOT, in each
case, applicable to or binding on such Person or any of its property or assets
or to which such Person or any of its property is subject. 

 

1

 

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

 

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

 

(2) the excess of: 

 

(a) the present value at such redemption date of (i)
the redemption price of the Note at December 15, 2009 (such redemption
price being set forth in the table appearing in Section 3.07 hereof), plus (ii) all required interest payments
due on the Note through December 15, 2009 (excluding accrued but unpaid
interest to the Redemption Date), computed using a discount rate equal to the
Treasury Rate as of such Redemption Date plus
50 basis points; over 

 

(b) the principal amount of
the Note, if greater.

 

“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, Euroclear and Clearstream that apply to such
transfer or exchange.

 

“Asset Sale” means 

 

(1) the sale, conveyance,
transfer or other disposition, whether in a single transaction or a series of
related transactions, of property or assets (including by way of a sale and
leaseback) of Texas Genco LLC or any Restricted Subsidiary (each referred to in
this definition as a “disposition”); and 

 

(2) the issuance or sale of
Equity Interests of any Restricted Subsidiary, 

 

whether in a single transaction or a series of related transactions, in each
case, other than: 

 

(a) a disposition of cash or Cash Equivalents or
Investment Grade Securities or obsolete or worn out equipment, vehicles or
other similar assets in the ordinary course of business or inventory or goods
held for sale in the ordinary course of business; 

 

(b) the disposition of all or substantially all of
the assets of Texas Genco LLC in a manner permitted pursuant to the provisions
of Section 5.01 hereof or any disposition that constitutes a Change of Control
pursuant to this Indenture; 

 

(c) the making of any
Restricted Payment or Permitted Investment that is permitted to be made, and is
made, under Section 4.07 hereof; 

 

(d) any disposition of assets or issuance or sale of
Equity Interests of any Restricted Subsidiary in any transaction or series of
transactions with an aggregate Fair Market Value of less than $25.0 million; 

 

(e) any disposition of property or assets or
issuance of securities by a Restricted Subsidiary to Texas Genco LLC or by
Texas Genco LLC or a Restricted Subsidiary to a Restricted Subsidiary; 

 

2

 

(f) to the extent allowable
under Section 1031 of the Internal Revenue Code of 1986, any exchange of like
property (excluding any boot thereon) for use in a Similar Business; 

 

(g) the lease, assignment
or sub-lease of any real or personal property in the ordinary course of
business; 

 

(h) any sale of Equity Interests in, or Indebtedness
or other securities of, an Unrestricted Subsidiary (with the exception of
Investments in Unrestricted Subsidiaries acquired pursuant to clause (j) of the
definition of Permitted Investments); 

 

(i) foreclosures on assets;

 

(j) sales of accounts
receivable, or participations therein; 

 

(k) any financing transaction with respect to
property built or acquired by Texas Genco LLC or any Restricted Subsidiary
after the Issue Date, including, without limitation, sale leasebacks and asset
securitizations permitted by this Indenture; 

 

(l) sales of Excluded
Assets up to the amounts provided under the definition of “Excluded Asset
Proceeds;” 

 

(m) any sale, transfer or disposition of power,
capacity, fuel or other related assets or products of services, including
assets related to trading activities, in each case in the ordinary course of
business; 

 

(n) any sale, transfer or
disposition of emission credits in the ordinary course of business; 

 

(o) any Casualty Event; and

 

(p) the unwinding of any
Hedging Obligation.

 

“Bankruptcy Law” means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.

 

“Baseload Plants” means the assets comprising (1) the
Limestone Electric Generating Station, STP, W.A. Parish Electric Generating
Station, Units 5, 6, 7 and 8 and (2) any other assets comprising an electric
generating unit or facility existing on the Issue Date or acquired, constructed
or redesignated after the Issue Date and that is certificated to be a baseload
plant in an Officer’s Certificate. 

 

“Beneficial Owner” has the meaning assigned
to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that
in calculating the beneficial ownership of any particular “person” (as that
term is used in Section 13(d)(3) of the Exchange Act), such “person” will be
deemed to have beneficial ownership of all securities that such “person” has
the right to acquire by conversion or exercise of other securities, whether
such right is currently exercisable or is exercisable only after the passage of
time.  The terms “Beneficially Owns” and
“Beneficially Owned” have a corresponding meaning.

 

3

 

“Board of Directors” means:

 

(1) with respect to Texas
Genco LLC, the board of managers or any committee thereof duly authorized to
act on behalf of such board; 

 

(2) with respect to a
corporation, the board of directors of the corporation or any committee thereof
duly authorized to act on behalf of such board;

 

(3) with respect to a
partnership, the Board of Directors of the general partner of the partnership; 

 

(4) with respect to a
limited liability company, the managing member or members or any controlling
committee of managing members thereof; and

 

(5) with respect to any
other Person, the board or committee of such Person serving a similar function.

 

“Broker-Dealer” has the meaning set forth in the
Registration Rights Agreement.

 

“Business Day” means any day other than a Legal Holiday.

 

“Capital Stock” means 

 

(1) in the case of a
corporation, corporate stock, 

 

(2) in the case of an association or business
entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, 

 

(3) in the case of a
partnership or limited liability company, partnership or membership interests
(whether general or limited), and 

 

(4) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person. 

 

“Capitalized Lease Obligation” means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized and reflected as a liability
on a balance sheet (excluding the footnotes thereto) in accordance with GAAP. 

 

“Cash Equivalents” means 

 

(1) United States dollars, 

 

(2) pounds sterling, 

 

(3) (a) euro, or any
national currency of any participating member state in the European Union or, 

 

(b) in the case of any
Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held
by them time to time in the ordinary course of business; 

 

(4) securities issued or
directly and fully and unconditionally guaranteed or insured by the United
States government or any agency or instrumentality thereof the securities of 

 

4

 

which are unconditionally guaranteed as a full faith and credit obligation
of such government with maturities of 24 months or less from the date of
acquisition, 

 

(5) certificates of deposit, time deposits and
eurodollar time deposits with maturities of one year or less from the date of
acquisition, bankers’ acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any commercial bank having capital
and surplus in excess of $500.0 million, 

 

(6) repurchase obligations
for underlying securities of the types described in clauses (4) and (5) entered
into with any financial institution meeting the qualifications specified in
clause (4) above, 

 

(7) commercial paper rated at least P-1 by Moody’s
or at least A-1 by S&P and in each case maturing within 12 months after the
date of creation thereof, 

 

(8) investment funds
investing 95% of their assets in securities of the types described in clauses
(1) through (5) above, 

 

(9) readily marketable direct obligations issued by
any state of the United States of America or any political subdivision thereof
having one of the two highest rating categories obtainable from either Moody’s
or S&P with maturities of 24 months or less from the date of acquisition
and 

 

(10) Indebtedness or preferred stock issued by Persons
with a rating of “A” or higher from S&P or “A2” or higher from Moody’s with
maturities of 12 months or less from the date of acquisition. 

 

Notwithstanding
the foregoing, Cash Equivalents shall include amounts denominated in currencies
other than those set forth in clauses (1) through (3) above and United States
dollars, provided that such amounts are converted into any currency listed in
clauses (1) through (3) and United States dollars as promptly as practicable
and in any event within ten Business Days following the receipt of such
amounts.

 

“Casualty Event” means any taking under power of eminent
domain or similar proceeding and any insured loss; provided that any such
taking or insured loss that results in Net Proceeds of less than $25.0 million shall
not be deemed a Casualty Event. 

 

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

 

(1) the sale, lease or transfer, in one or a series
of related transactions, of all or substantially all of the assets of Texas
Genco LLC and its Subsidiaries, taken as a whole, to any Person other than a
Permitted Holder; or 

 

(2) Texas Genco LLC becomes aware of (by way of a
report or any other filing pursuant to Section 13(d) of the Exchange Act,
proxy, vote, written notice or otherwise) the acquisition by any Person or
group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act, or any successor provision), including any group acting for the
purpose of acquiring, holding or disposing of securities (within the meaning of
Rule 13d-5(b)(1) under the Exchange Act), other than the Permitted Holders, in
a single transaction or in a related series of transactions, by way of merger,
consolidation or other business combination or purchase of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act, or any 

 

5

 

successor provision) of 50% or more of the total voting power of the
Voting Stock of Texas Genco LLC or any of its direct or indirect parent
corporations. 

 

“Clearstream” means Clearstream Banking, S.A.

 

“Consolidated Depreciation and Amortization Expense” means with respect to any Person for any
period, the total amount of depreciation and amortization expense, including
the amortization of deferred financing fees and nuclear fuel costs (not to be
reduced by any non-cash amortization relating to above-market fuel contracts
and off-market power contracts) of such Person and its Restricted Subsidiaries
for such period on a consolidated basis and otherwise determined in accordance
with GAAP. 

 

“Consolidated Interest Expense” means, with respect to any Person for any
period, the sum, without duplication, of: 

 

(a) consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, to the extent such expense was
deducted in computing Consolidated Net Income (including amortization of
original issue discount resulting from the issuance of Indebtedness at less
than par, noncash interest payments (but excluding any noncash interest expense
attributable to the movement in the mark-to-market valuation of Hedging
Obligations or other derivative instruments pursuant to Financial Accounting
Standards Board Statement No. 133—”Accounting for Derivative Instruments and
Hedging Activities”), the interest component of Capitalized Lease Obligations
and Synthetic Lease Obligations and net payments, if any, pursuant to interest
rate Hedging Obligations with respect to Indebtedness, and excluding
amortization of deferred financing fees, debt issuance costs, commissions, fees
and expenses and any expensing of bridge or other financing fees, commitments,
administration and transaction fees and charges), and

 

(b) consolidated
capitalized interest of such Person and its Restricted Subsidiaries for such
period, whether paid or accrued less

 

(c) interest income for
such period. 

 

“Consolidated Net Income” means, with respect to any Person for any
period, the aggregate of the Net Income, of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, and otherwise determined
in accordance with GAAP; provided, however,
that 

 

(1) any net after-tax
extraordinary, non-recurring or unusual gains or losses (less all fees and expenses relating
thereto) or expenses (including, without limitation, relating to severance,
relocation, one-time compensation charges and the Transactions) shall be
excluded, 

 

(2) the Net Income for such period shall not include
the cumulative effect of a change in accounting principles during such period,
whether effected through a cumulative effect adjustment or a retroactive
application in each case in accordance with GAAP, 

 

(3) any net after-tax
income (loss) from disposed or discontinued operations and any net after-tax
gains or losses on disposal of disposed or discontinued operations shall be
excluded, 

 

(4) any net after-tax gains or losses (less all fees and expenses relating
thereto) attributable to asset dispositions other than in the ordinary course
of business, as determined in good faith by the Board of Directors of Texas
Genco LLC, shall be excluded, 

 

6

 

(5) the Net Income for such period of any Person
that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is
accounted for by the equity method of accounting, shall be excluded; provided,
that Consolidated Net Income of Texas Genco LLC shall be increased by the
amount of dividends or distributions or other payments that are actually paid
in cash (or to the extent converted into cash) to the referent Person or a
Restricted Subsidiary thereof in respect of such period, 

 

(6) solely for the purpose of determining the amount
available for Restricted Payments under clause (iii)(A) of Section 4.07(a)
hereof, the Net Income for such period of any Restricted Subsidiary (other than
any Guarantor) shall be excluded if the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of its Net Income is not at
the date of determination wholly permitted without any prior governmental approval
(which has not been obtained) or, directly or indirectly, by the operation of
the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule, or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, unless such restriction with respect to the
payment of dividends or in similar distributions has been legally waived;
provided, that Consolidated Net Income of Texas Genco LLC will be increased by
the amount of dividends or other distributions or other payments actually paid
in cash (or to the extent converted into cash) to Texas Genco LLC or a
Restricted Subsidiary thereof in respect of such period, to the extent not
already included therein, 

 

(7) any increase in amortization or depreciation or
other noncash charges resulting from the application of purchase accounting in
relation to the Transactions or any acquisition that is consummated after the
Issue Date, net of taxes, shall be excluded, 

 

(8) any net after-tax
income (loss) from the early extinguishment of Indebtedness or Hedging
Obligations or other derivative instruments shall be excluded, 

 

(9) any impairment charge
or asset write-off pursuant to Financial Accounting Standards Board Statement
No. 142 and No. 144 and the amortization of intangibles arising pursuant to No.
141 shall be excluded, 

 

(10) any noncash compensation expense recorded from
grants of stock appreciation or similar rights, stock options, restricted stock
or other rights to officers, directors or employees shall be excluded, and 

 

(11) Notwithstanding the foregoing, Consolidated Net
Income shall include any benefit from any above market fuel contracts and shall
exclude any benefit from any off market power contracts, each as recorded on
the balance sheet at the time of the Transactions. 

 

Notwithstanding
the foregoing, for the purpose of Section 4.07 hereof only (other than clause
(iii)(D) of Section 4.07(a) hereof), there shall be excluded from Consolidated
Net Income any income arising from any sale or other disposition of Restricted
Investments made by Texas Genco LLC and the Restricted Subsidiaries, any
repurchases and redemptions of Restricted Investments from Texas Genco LLC and
the Restricted Subsidiaries, any repayments of loans and advances which
constitute Restricted Investments by Texas Genco LLC or any Restricted
Subsidiary, any sale of the stock of an Unrestricted Subsidiary or any
distribution or dividend from an Unrestricted Subsidiary, in each case only to
the extent such amounts increase the amount of Restricted Payments permitted
under clause (iii)(D) of Section 4.07(a) hereof. 

 

7

 

“Contingent Obligations” means, with respect to any Person, any
obligation of such Person guaranteeing any leases, dividends or other
obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether
directly or indirectly, including, without limitation, any obligation of such
Person, whether or not contingent, 

 

(1) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, 

 

(2) to advance or supply
funds 

 

(A) for the purchase or
payment of any such primary obligation or 

 

(B) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, or 

 

(3) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation against loss in respect thereof.

 

“Corporate Trust Office of the Trustee” will be at the address of the Trustee
specified in Section 12.02 hereof or such other address as to which the Trustee
may give notice to the Issuers.

 

“Credit Agreement” means the Senior Facilities Credit
Agreement, dated as of December 14, 2004, among Texas Genco LLC,
Goldman Sachs Credit Partners L.P., Morgan Stanley Senior Funding, Inc.,
Deutsche Bank AG Cayman Islands Branch and Citicorp North America, Inc., with
respect to an aggregate of $2,450.0 million of senior secured facilities, as
amended, restated, modified, renewed, refunded, replaced (whether upon or after
termination or otherwise) or refinanced (including by means of sales of debt
securities to institutional investors) in whole or in part from time to time. 

 

“Credit Agreement Agent” means, at any time, the Person serving at
such time as the “Agent” or “Administrative Agent” under the Credit Agreement
or any other representative then most recently designated in accordance with
the applicable provisions of the Credit Agreement, together with its successors
in such capacity. 

 

“Credit Facilities” means, with respect to Texas Genco LLC, one
or more debt facilities, including, without limitation, the Credit Agreement,
any letter of credit facility for Hedging Obligations or commercial paper
facilities with banks or other institutional lenders or investors or indentures
providing for revolving credit loans, term loans, receivables financing,
including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against receivables, letters of
credit or other long-term indebtedness, including any guarantees, collateral
documents, instruments and agreements executed in connection therewith, and any
amendments, supplements, modifications, extensions, renewals, restatements or
refundings thereof and any indentures or credit facilities or commercial paper
facilities with banks or other institutional lenders or investors that replace,
refund or refinance any part of the loans, notes, other credit facilities or
commitments thereunder, including any such replacement, refunding or
refinancing facility or indenture that increases the amount borrowable
thereunder or alters the maturity thereof. 

 

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

 

8

 

“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 2.06 hereof, substantially
in the form of Exhibit A1 hereto except that such Note shall not bear the
Global Note Legend and shall not have the “Schedule of Exchanges of Interests
in the Global Note” attached thereto.

 

“Depositary” means, with respect to the Notes issuable or issued in whole or in
part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.

 

“Designated Noncash Consideration” means the fair market value of noncash
consideration received by Texas Genco LLC or a Restricted Subsidiary in
connection with an Asset Sale that is so designated as Designated Noncash Consideration
pursuant to an Officer’s Certificate, setting forth the basis of such
valuation, executed by a vice president and the principal financial officer of
Texas Genco LLC, less the amount
of cash or Cash Equivalents received in connection with a subsequent sale of
such Designated Noncash Consideration. 

 

“Designated Preferred Stock” means preferred stock of Texas Genco LLC or
any parent corporation thereof (in each case other than Disqualified Stock)
that is issued for cash (other than to a Restricted Subsidiary) and is so
designated as Designated Preferred Stock, pursuant to an Officer’s Certificate
executed by an executive vice president and the principal financial officer of
Texas Genco LLC or the applicable parent corporation thereof, as the case may be,
on the issuance date thereof, the cash proceeds of which are excluded from the
calculation set forth in clause (iii) of Section 4.07(a) hereof. 

 

“Disqualified Stock” means, with respect to any Person, any
Capital Stock of such Person which, by its terms, or by the terms of any
security into which it is convertible or for which it is putable or
exchangeable, or upon the happening of any event, matures or is mandatorily
redeemable, other than as a result of a change of control or asset sale,
pursuant to a sinking fund obligation or otherwise, or is redeemable at the
option of the holder thereof, other than as a result of a change of control or
asset sale, in whole or in part, in each case prior to the date 91 days after
the earlier of the maturity date of the Notes or the date the Notes are no
longer outstanding; provided, however,
that if such Capital Stock is issued to any plan for the benefit of employees
of Texas Genco LLC or its Subsidiaries or by any such plan to such employees,
such Capital Stock shall not constitute Disqualified Stock solely because it
may be required to be repurchased by Texas Genco LLC or its Subsidiaries in
order to satisfy applicable statutory or regulatory obligations. 

 

“Domestic Subsidiary” means, with respect to any Person, any
Restricted Subsidiary of such Person other than (i) a Foreign Subsidiary or
(ii) a Domestic Subsidiary of a Foreign Subsidiary, but in each case including
any Subsidiary that guarantees or otherwise provides direct credit support for
any indebtedness of Texas Genco LLC. 

 

“EBITDA” means, with respect to any Person for any period, the Consolidated Net
Income of such Person for such period plus,
without duplication, 

 

(a)                   provision for taxes based on income or
profits, plus franchise or
similar taxes, of such Person for such period deducted in computing
Consolidated Net Income, plus 

 

9

 

(b)                  Consolidated Interest Expense of such Person
for such period to the extent the same was deducted in calculating such Consolidated
Net Income, plus 

 

(c)                   Consolidated Depreciation and Amortization
Expense of such Person for such period to the extent such depreciation and
amortization were deducted in computing Consolidated Net Income, plus 

 

(d)                  any expenses or charges related to any Equity
Offering, Permitted Investment, acquisition, disposition, recapitalization or
Indebtedness permitted to be incurred by this Indenture including a refinancing
thereof (whether or not successful), including such fees, expenses or charges related
to the offering of the Notes and the Credit Agreement, and deducted in
computing Consolidated Net Income, plus

 

(e)                   the amount of any restructuring charge
deducted in such period in computing Consolidated Net Income, including any
one-time costs incurred in connection with acquisitions after the Issue Date, plus 

 

(f)                     the amount of cost savings in respect of cost
reduction efforts, calculated on a pro forma basis as though such cost savings
had been achieved on the first day of any such period, pursuant to specified
actions taken during such period minus the amount of actual benefits realized
for such period from such actions (provided that (1) such actions are commenced
within 36 months of the Issue Date, (2) the amount of cost savings added pursuant
to this clause (f) shall not exceed $60.0 million during such period, (3) no
amount shall be added pursuant to this clause (f) to the extent such amount is
included in clause (e) above with respect to such period and (4) any such cost
savings shall be certified to the Trustee in writing in reasonable detail by a
responsible financial or accounting officer of Texas Genco LLC and, if they
exceed $15.0 million, by the Board of Directors of Texas Genco LLC), plus 

 

(g)                  without duplication, any writeoffs, writedowns or
other non-cash charges reducing Consolidated Net Income for such period,
excluding any such charge that represents an accrual or reserve for a cash
expenditure for a future period, plus

 

(h)                  the amount of any minority interest expense
deducted in calculating Consolidated Net Income (less the amount of any cash dividends paid to the holders of
such minority interests), plus 

 

(i)                      any non-cash gain or loss attributable to
Mark-to-Market Adjustments in connection with Hedging Obligations, plus 

 

(j)                      the amount of management, monitoring, consulting
and advisory fees and related expenses paid to the Sponsors (including any
amortization thereof), plus 

 

(k)                   up to $100.0 million per fiscal year of
expenses or charges incurred as a result of any planned or unplanned outage of
any unit at STP by reason of any action by any regulatory body or other
Governmental Authority or to comply with any Applicable Law, plus 

 

(l)                      up to $30.0 million per fiscal year of
expenses or charges incurred as a result of any planned outage of a Baseload
Plant for purposes of upgrading or expanding such Baseload Plant, plus 

 

10

 

(m)                expenses related to the implementation of enterprise resource planning systems,
less, without duplication, 

 

(n)                  non-cash items increasing Consolidated Net Income of
such Person for such period, excluding any items which represent the reversal
of any accrual of, or cash reserve for, anticipated cash charges in any prior
period. 

 

Notwithstanding
the foregoing, EBITDA shall include any benefit from any above market fuel
contracts and shall exclude any benefit from any off market power contracts,
each as recorded on the balance sheet at the time of the Transactions. 

 

“Environmental CapEx Debt” shall mean Indebtedness of Texas Genco LLC
or its Restricted Subsidiaries incurred for the purpose of financing
Environmental Capital Expenditures. 

 

“Environmental Capital Expenditures” shall mean capital expenditures deemed
necessary by Texas Genco LLC or its Restricted Subsidiaries to comply with
Environmental Laws. 

 

“Environmental Law” shall mean any applicable Federal, state,
foreign or local statute, law, rule, regulation, ordinance, code and rule of
common law now or hereafter in effect and in each case as amended, and any
binding judicial or administrative interpretation thereof, including any
binding judicial or administrative order, consent decree or judgment, relating
to the environment, human health or safety or Hazardous Materials. 

 

“Equity Interests” means Capital Stock and all warrants,
options or other rights to acquire Capital Stock, but excluding any debt
security that is convertible into, or exchangeable
for, Capital Stock. 

 

“Equity Offering” means any public or private sale of common
stock or preferred stock of Texas Genco LLC or any of its direct or indirect
parent corporations (excluding Disqualified Stock), other than 

 

(a)                   public offerings with respect to Texas Genco
LLC’s or any direct or indirect parent corporation’s common stock registered on
Form S-8 and 

 

(b)                  any such public or private sale that constitutes
an Excluded Contribution. 

 

“ERCOT” means the Electric Reliability Council of Texas. 

 

“Escrow Agent” means JPMorgan Chase Bank, N.A., as escrow
agent for the escrow agreement. 

 

“Estimation Period” shall mean each tax period ending on a
quarterly estimated tax payment date for federal income tax purposes for a
corporation that is taxed on a calendar year basis.

 

“Euroclear” means Euroclear Bank, S.A./N.V., as operator
of the Euroclear system.

 

“Exchange Act” means the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the SEC promulgated thereunder.

 

“Exchange Notes” means the Notes issued in the Exchange Offer
pursuant to Section 2.06(f) hereof.

 

“Exchange Offer” has the meaning set forth in the
Registration Rights Agreement.

 

11

 

“Exchange Offer Registration Statement” has the meaning set forth in the
Registration Rights Agreement.

 

“Excluded Assets” means 

 

(1) the 90 mile natural gas
and fuel oil pipeline and related storage facilities; 

 

(2) 50 acres of the Energy Development Complex in
Houston, Texas; 

 

(3) the North Dayton Gas
Storage Facility in Liberty County, Texas, and any expansion or extension of
such facility; 

 

(4) four mothballed units
of the P.H. Robinson facility near San Leon, Texas; 

 

(5) two mothballed units at
the Webster facility in Houston, Texas; 

 

(6) one unit at the
Deepwater facility in Harris County, Texas; 

 

(7) one inoperable unit at
the T.H. Wharton facility in Houston, Texas; 

 

(8) the Mills Creek
properties near Sealy, Texas; 

 

(9) the Malakoff properties
near Malakoff, Texas; 

 

(10) the Trinity Mine
properties near Malakoff, Texas; 

 

(11) the Allen’s Creek
properties near Wallis, Texas; and 

 

(12) up to 250,000 barrels
of excess fuel oil on hand. 

 

“Excluded Asset Proceeds” means (a) an aggregate amount of up to
$100.0 million in proceeds received in connection with one or more dispositions
of Excluded Assets if the dispositions of such Excluded Assets occur within 18
months from the Issue Date (or if a binding commitment is entered into for such
a sale within 18 months from the Issue Date, then within 30 months from the
Issue Date) and (b) an additional aggregate amount of up to $100.0 million (in
excess of the amounts received under clause (a) above) of the proceeds received
in connection with one or more dispositions of Excluded Assets to the extent
that any lender under the Credit Agreement refuses an offer of prepayment under
the terms of such Credit Agreement if such proceeds are received within 18
months from the Issue Date (or if a binding commitment is entered into for such
a sale within 18 months from the Issue Date, then within 30 months from the
Issue Date); provided, that the
Net Income associated with such disposition shall have been excluded from the
calculations in clause (iii) of Section 4.07(a) hereof. 

 

“Excluded Contribution” means net cash proceeds, marketable
securities or Qualified Proceeds received by Texas Genco LLC from  

 

(a) contributions to its
common equity capital, and  

 

(b) the sale (other than to a Subsidiary of Texas
Genco LLC or to any management equity plan or stock option plan or any other
management or employee benefit plan or agreement of Texas Genco LLC) of Capital
Stock (other than Disqualified Stock and Designated Preferred Stock) of Texas
Genco LLC,  

 

12

 

in
each case designated as Excluded Contributions pursuant to an officers’
certificate executed by an executive vice president and the principal financial
officer of Texas Genco LLC on the date such capital contributions are made or
the date such Equity Interests are sold, as the case may be, which are excluded
from the calculation set forth in clause (iii) of Section 4.07(a) hereof.

 

“Existing Indebtedness” means Indebtedness of Texas Genco LLC or the
Restricted Subsidiaries in existence on the Issue Date and Initial Acquisition
Date, plus interest accruing
thereon.

 

“Fair Market Value” means the value that would be paid by a
willing buyer to an unaffiliated willing seller in a transaction not involving
distress or necessity of either party, determined in good faith by the Board of
Directors of Texas Genco LLC (unless otherwise provided in this Indenture).

 

“Fixed Charge Coverage Ratio” means, with respect to any Person for any
period, the ratio of EBITDA of such Person for such period to the Fixed Charges
of such Person for such period. In the event that Texas Genco LLC or any
Restricted Subsidiary incurs, assumes, guarantees or redeems any Indebtedness
or issues or redeems Disqualified Stock or preferred stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee or redemption of Indebtedness, or such issuance or redemption
of Disqualified Stock or preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter period (the “reference period “).  

 

For
purposes of making the computation referred to above, Investments,
acquisitions, dispositions, mergers, consolidations and disposed operations
(including the Nuclear Acquisition and the ROFR) (as determined in accordance
with GAAP) that have been made by Texas Genco LLC or any Restricted Subsidiary
during the four-quarter reference period or subsequent to such reference period
and on or prior to or simultaneously with the Calculation Date shall be
calculated on a pro forma basis assuming that all such Investments,
acquisitions, dispositions, mergers, consolidations and disposed operations (including
the Nuclear Acquisition and the ROFR) had occurred on the first day of the
reference period; provided that
the pro forma change in EBITDA projected by Texas Genco LLC in good faith as a
result of reasonably identifiable and factually supportable cost savings and
costs (excluding one-time transition, transaction and restructuring costs), as
the case may be, expected to be realized during the consecutive four-quarter
period commencing after such acquisition or transaction (the “Savings Period”)
shall be included in such calculation for any reference period that includes
any of the Savings Period; provided, further,
that any such pro forma change to such EBITDA shall be without duplication for
cost savings and costs (excluding one-time transition, transaction and
restructuring costs) actually realized and already included in such EBITDA. If
since the beginning of such period any Person (that subsequently became a
Restricted Subsidiary or was merged with or into Texas Genco LLC or any
Restricted Subsidiary since the beginning of such period) shall have made any
Investment, acquisition, disposition, merger, consolidation or disposed
operation (including the Nuclear Acquisition and the ROFR) that would have
required adjustment pursuant to this definition, then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect thereto for such period as if
such Investment, acquisition, disposition, merger, consolidation or disposed
operation (including the Nuclear Acquisition and the ROFR) had occurred at the
beginning of the applicable four-quarter period.  

 

For
purposes of this definition, whenever pro forma effect is to be given to a
transaction, the pro forma calculations shall be made in good faith by a
responsible financial or accounting officer of Texas Genco LLC. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest on such Indebtedness shall be calculated as if the rate in
effect on the Calculation Date had been the applicable rate for the entire
period (taking into account any Hedging Obligations applicable to such 

 

13

 

Indebtedness). Interest on a Capitalized Lease Obligation
shall be deemed to accrue at an interest rate reasonably determined by a
responsible financial or accounting officer of Texas Genco LLC to be the rate
of interest implicit in such Capitalized Lease Obligation in accordance with
GAAP. For purposes of making the computation referred to above, interest on any
Indebtedness under a revolving credit facility computed on a pro forma basis
shall be computed based upon the average daily balance of such Indebtedness
during the applicable period. Interest on Indebtedness that may optionally be
determined at an interest rate based upon a factor of a prime or similar rate,
a eurocurrency interbank offered rate, or other rate, shall be deemed to have
been based upon the rate actually chosen, or, if none, then based upon such
optional rate chosen as Texas Genco LLC may designate.  

 

“Fixed Charges” means, with respect to any Person for any
period, the sum of  

 

(a) Consolidated Interest Expense of such Person for
such period,  

 

(b) all cash dividend payments (excluding items
eliminated in consolidation) on any series of preferred stock (including any
Designated Preferred Stock) or any Refunding Capital Stock of such Person,
and  

 

(c) all cash dividend
payments (excluding items eliminated in consolidation) on any series of
Disqualified Stock.  

 

“Foreign Subsidiary” means, with respect to any Person, any
Restricted Subsidiary of such Person that is not organized or existing under
the laws of the United States, any state thereof, the District of Columbia, or
any territory thereof.  

 

“GAAP” means generally accepted accounting principles in the United States
which are in effect on the Issue Date.

 

“Global Note Legend” means the legend set forth in Section 2.06(g)(2) hereof, which is required to be placed on all Global
Notes issued under this Indenture.

 

“Global Notes” means, individually and collectively, each
of the Restricted Global Notes and the Unrestricted Global Notes deposited with
or on behalf of and registered in the name of the Depository or its nominee,
substantially in the form of Exhibit A1 hereto and that bears the Global Note
Legend and that has the “Schedule of Exchanges of Interests in the Global Note”
attached thereto, issued in accordance with Section 2.01, 2.06(b)(3),
2.06(b)(4), 2.06(d)(2) or 2.06(f) hereof.

 

“Goldman Sachs Hedge Agreement” means the Master Power Purchase and Sale
Agreement dated as of July 21, 2004, between an affiliate of Goldman, Sachs
& Co. and Texas Genco, LP.  

 

“Governmental Authority” shall mean any nation or government, any
state, province, territory or other political subdivision thereof, and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including ERCOT.  

 

“Government Securities” means securities that are  

 

(a) direct obligations of
the United States of America for the timely payment of which its full faith and
credit is pledged, or  

 

14

 

(b) obligations of a Person controlled or supervised
by and acting as an agency or instrumentality of the United States of America
the timely payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America,  

 

which,
in either case, are not callable or redeemable at the option of the issuers
thereof, and shall also include a depository receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act), as custodian with respect to
any such Government Securities or a specific payment of principal of or
interest on any such Government Securities held by such custodian for the account
of the holder of such depository receipt; provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the Government Securities or
the specific payment of principal of or interest on the Government Securities
evidenced by such depository receipt.  

 

“guarantee” means a guarantee (other than by endorsement
of negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness or other obligations.  

 

“Guarantee” means the guarantee by any Guarantor of the Issuers’ Indenture
Obligations.  

 

“Guarantor” means each of:

 

(1) GCP Funding Company, LLC, a Delaware
limited liability company, New Genco GP, LLC, a Delaware limited liability
company, New Genco LP, LLC, a Delaware limited liability company, HPC Merger
Sub, Inc., a Texas corporation, New Genco II, LP, a Texas limited partnership,
Texas Genco Operating Services LLC, a Delaware limited liability company, and
New Genco Services, LP, a Texas limited partnership; and

 

(2)
any other Subsidiary of Texas Genco LLC that executes
a Guarantee in accordance with the provisions of thiss Indenture.

 

“Hazardous Materials” shall mean (a) any petroleum or petroleum
products, radioactive materials, friable asbestos, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid containing
regulated levels of polychlorinated biphenyls and radon gas; (b) any chemicals,
materials or substances defined as or included in the definition of “hazardous
substances,” “hazardous waste,” “hazardous materials,” “extremely hazardous
waste,” “restricted hazardous waste,” “toxic substances,” “toxic pollutants,”
“contaminants,” or “pollutants” or words of similar import, under any
applicable Environmental Law; and (c) any other chemical, material or
substance, which is prohibited, limited or regulated by any Environmental
Law.  

 

“Hedging Credit Support Facility” shall mean any letter of credit facility or
similar credit support facility entered into by Texas Genco LLC or any Restricted
Subsidiary for the issuance of letters of credit or other support instruments
to support the obligations of Texas Genco LLC or any Restricted Subsidiary
under Hedging Obligations and any amendments, supplements, modifications,
extensions, renewals, restatements, refinancings or refundings thereof.  

 

“Hedging Obligations” means, with respect to any Person, the
obligations of such Person under  

 

(a) currency exchange, interest rate or commodity
swap agreements, currency exchange, interest rate or commodity cap agreements
and currency exchange, interest rate or commodity collar agreements and  

 

15

 

(b) other agreements or arrangements designed to
protect such Person against fluctuations in currency exchange, interest rates,
commodity prices or commodity transportation or transmission pricing or
availability, including but not limited to the Goldman Sachs Hedge Agreement,
any netting arrangements, power purchase and sale agreements, fuel purchase and
sale agreements, swaps, options and other agreements to hedge against
fluctuations in power or gas prices.  

 

“Holder” means a holder of the Notes.

 

“IAI Global Note” means a Global Note substantially in the
form of Exhibit A1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee that will be issued in a denomination equal to
the outstanding principal amount of the Notes sold to Institutional Accredited
Investors.

 

“Indebtedness” means, with respect to any Person,  

 

(a) any indebtedness
(including principal and premium) of such Person, whether or not
contingent  

 

(1) in respect of borrowed
money,  

 

(2) evidenced by bonds, notes, debentures or similar
instruments or letters of credit to the extent not collateralized with cash and
Cash Equivalents or bankers’ acceptances (or, without double counting,
reimbursement agreements in respect thereof), 

 

(3) representing the
balance deferred and unpaid of the purchase price of any property (including
Capitalized Lease Obligations and Synthetic Lease Obligations), except any such
balance that constitutes a trade payable or similar obligation to a trade
creditor, in each case accrued in the ordinary course of business, or  

 

(4) representing any
Hedging Obligations,  

 

if
and to the extent that any of the foregoing Indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet (excluding the footnotes thereto) of such Person prepared in accordance
with GAAP,  

 

(b) to the extent not
otherwise included, any obligation by such Person to be liable for, or to pay,
as obligor, guarantor or otherwise, on the Indebtedness of another Person,
other than by endorsement of negotiable instruments for collection in the
ordinary course of business, and  

 

(c) to the extent not
otherwise included, Indebtedness of another Person secured by a Lien on any
asset owned by such Person, whether or not such Indebtedness is assumed by such
Person;  

 

provided, however,
that Contingent Obligations incurred in the ordinary course of business shall
be deemed not to constitute Indebtedness and obligations under or in respect of
Receivables Facilities shall not be deemed to constitute Indebtedness. 

 

16

 

“Independent Financial Advisor” means an accounting, appraisal, investment
banking firm or consultant to Persons engaged in Similar Businesses of
nationally recognized standing that is, in the good faith judgment of Texas
Genco LLC, qualified to perform the task for which it has been engaged.

 

“Indenture” means this Indenture, as amended or supplemented from time to time.

 

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

 

“Initial Acquisition” means the acquisition of the non-nuclear
assets of Texas Genco Holdings, Inc. pursuant to the Transaction
Agreement.  

 

“Initial Acquisition Date” means the date that the Initial Acquisition
is consummated.  

 

“Initial Acquisition Option Plan” means the option plan to be entered into by
Texas Genco LLC or any of its direct or indirect parent or other entities
within twelve months of the Issue Date.  

 

“Initial Notes” means the first $1,125,000,000 aggregate
principal amount of Notes issued under this Indenture on the date hereof.

 

“Initial Purchasers” means Goldman, Sachs & Co, Morgan
Stanley & Co. Incorporated, Deutsche Bank Securities Inc. and Citigroup
Global Markets Inc.

 

“insolvency or liquidation
proceeding”
means:  

 

(1) any case commenced by or against Texas Genco LLC
or any other Pledgor under Title 11, U.S. Code or any similar federal or state
law for the relief of debtors, any other proceeding for the reorganization,
recapitalization or adjustment or marshalling of the assets or liabilities of
Texas Genco LLC or any other Pledgor, any receivership or assignment for the
benefit of creditors relating to Texas Genco LLC or any other Pledgor or any
similar case or proceeding relative to Texas Genco LLC or any other Pledgor or
its creditors, as such, in each case whether or not voluntary;  

 

(2) any liquidation, dissolution, marshalling of
assets or liabilities or other winding up of or relating to Texas Genco LLC or
any other Pledgor, in each case whether or not voluntary and whether or not
involving bankruptcy or insolvency; or  

 

(3) any other proceeding of any type or nature in
which substantially all claims of creditors of Texas Genco LLC or any other
Pledgor are determined and any payment or distribution is or may be made on
account of such claims.

 

“Institutional Accredited Investor” means an institution that is an “accredited
investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act, who are not also QIBs.

 

“Investment Grade Rating” means a rating equal to or higher than Baa3
(or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, or an
equivalent rating by any other Rating Agency. 

 

“Investment Grade Securities” means: 

 

(1) securities issued or directly and fully
guaranteed or insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents),  

 

17

 

(2) debt securities or debt instruments with a
rating of BBB- or higher by S&P or Baa3 or higher by Moody’s or the
equivalent of such rating by such rating organization, or, if no rating of
S&P or Moody’s then exists, the equivalent of such rating by any other
nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among Texas Genco LLC
and its Subsidiaries,  

 

(3) investments in any fund that invests exclusively
in investments of the type described in clauses (1) and (2) which fund may also
hold immaterial amounts of cash pending investment and/or distribution,
and  

 

(4) corresponding
instruments in countries other than the United States customarily utilized for
high quality investments.  

 

“Investments” means, with respect to any Person, all investments
by such Person in other Persons (including Affiliates) in the form of loans
(including guarantees), advances or capital contributions (excluding accounts
receivable, trade credit, advances to customers, commission, travel and similar
advances to officers and employees, in each case made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities issued by any other Person and investments
that are required by GAAP to be classified on the balance sheet (excluding the
footnotes) of Texas Genco LLC in the same manner as the other investments
included in this definition to the extent such transactions involve the
transfer of cash or other property. For purposes of the definition of
“Unrestricted Subsidiary” and Section 4.07 hereof,

 

(1) “Investments” shall include the portion
(proportionate to Texas Genco LLC’s equity interest in such Subsidiary) of the
fair market value of the net assets of a Subsidiary of Texas Genco LLC at the
time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, Texas Genco LLC
shall be deemed to continue to have a permanent “Investment” in an Unrestricted
Subsidiary in an amount (if positive) equal to 

 

(x) Texas Genco LLC’s “Investment” in such
Subsidiary at the time of such redesignation less  

 

(y) the portion
(proportionate to Texas Genco LLC’s equity interest in such Subsidiary) of the
fair market value of the net assets of such Subsidiary at the time of such
redesignation; and  

 

(2) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer, in each case as determined in good
faith by Texas Genco LLC.  

 

“Issue Date” means December 14, 2004.

 

“Legal Holiday” means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed.  If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue on such payment for
the intervening period.

 

“Letter of Transmittal” means the letter of transmittal to be
prepared by the Issuers and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.

 

18

 

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction;
provided that in no event shall
an operating lease be deemed to constitute a Lien.  

 

“Mark-to-Market Adjustments” means: 

 

(1) any non-cash loss
attributable to the mark-to-market movement in the valuation of Hedging
Obligations (to the extent the cash impact resulting from such loss has not
been realized) or other derivative instruments pursuant to Financial Accounting
Standards Board Statement No. 133, “Accounting for Derivative Instruments and
Hedging Activities,” plus  

 

(x) any loss relating to
amounts paid in cash prior to the stated settlement date of any Hedging
Obligation that has been reflected in Consolidated Net Income in the current
period, plus  

 

(y) any gain relating to Hedging Obligations
associated with transactions recorded in the current period that has been
reflected in Consolidated Net Income in prior periods and excluded from EBITDA
pursuant to clauses (2)(x) and (2)(y) below, less,  

 

(2) any non-cash gain attributable to the
mark-to-market movement in the valuation of Hedging Obligations (to the extent
the cash impact resulting from such gain has not been realized) or other
derivative instruments pursuant to Financial Accounting Standards Board
Statement No. 133, “Accounting for Derivative Instruments and Hedging
Activities,” less  

 

(x) any gain relating to
amounts received in cash prior to the stated settlement date of any Hedging
Obligation that has been reflected in Consolidated Net Income in the current
period, less  

 

(y) any loss relating to Hedging Obligations
associated with transactions recorded in the current period that has been
reflected in Consolidated Net Income in prior periods and excluded from EBITDA
pursuant to clauses (1)(x) and (1)(y) above. 

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating
agency business.  

 

“Necessary CapEx Debt” shall mean Indebtedness of Texas Genco LLC
or its Restricted Subsidiaries incurred for the purpose of financing Necessary
Capital Expenditures.  

 

“Necessary Capital Expenditures” shall mean capital expenditures that are
required by Applicable Law (other than Environmental Laws) or undertaken for
health and safety reasons. The term “Necessary Capital Expenditures” does not
include any capital expenditure undertaken primarily to increase the efficiency
of, expand or re-power any power generation facility.  

 

“Net Income” means, with respect to any Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect
of preferred stock dividends.  

 

“Net Proceeds” means the aggregate cash proceeds received
by Texas Genco LLC or any Restricted Subsidiary in respect of any Asset Sale or
Casualty Event, including, without limitation, any 

 

19

 

cash
received upon the sale or other disposition of any Designated Noncash
Consideration received in any Asset Sale or Casualty Event, net of the direct
costs relating to such Asset Sale or Casualty Event and the sale or disposition
of such Designated Noncash Consideration, including, without limitation, legal,
accounting and investment banking fees, and brokerage and sales commissions,
any relocation expenses incurred as a result thereof, taxes paid or payable as
a result thereof (after taking into account any available tax credits or deductions
and any tax sharing arrangements), amounts required to be applied to the
repayment of principal, premium, if any, and interest on Indebtedness required
(other than in clause (1) of Section 4.10(b) hereof to be paid as a result of
such transaction and any deduction of appropriate amounts to be provided by
Texas Genco LLC as a reserve in accordance with GAAP against any liabilities
associated with the asset disposed of in such transaction and retained by Texas
Genco LLC after such sale or other disposition thereof, including, without
limitation, pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with such transaction. 

 

 “Non-U.S.
Person” means a Person
who is not a U.S. Person.

 

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

 

“Nuclear Acquisition” means the consummation of the acquisition of
Texas Genco Holdings, Inc. by Texas Genco LLC or any of its Restricted
Subsidiaries of an indirect undivided ownership interest in STP as described in
the Offering Circular.

 

“Obligations” means any principal (including reimbursement
obligations with respect to letters of credit whether or not drawn), interest
(including, to the extent legally permitted, all interest accrued thereon after
the commencement of any insolvency or liquidation proceeding at the rate,
including any applicable post-default rate, specified in the applicable
agreement), premium (if any), guarantees of payment, fees, indemnifications,
reimbursements, expenses, damages and other liabilities payable under the
documentation governing any Indebtedness; provided
that Obligations with respect to the Notes shall not include fees or
indemnifications in favor of the Trustee, the Escrow Agent and other third
parties other than the Holders of the Notes. 

 

“Offering Circular” means the offering
circular, dated December 8, 2004, with respect to the Notes and the Guarantees.

 

“Officer” means the Chairman of the Board, the Chief Executive Officer, any
Executive Vice President, Senior Vice President or Vice President, the
Treasurer, Chief Legal Officer, the Secretary, any principal executive officer
or any principal accounting officer of Texas Genco LLC.  

 

“Officer’s Certificate” means a certificate signed on behalf of
Texas Genco LLC by an Officer of Texas Genco LLC that meets the requirements of
Section 12.05 hereof.

 

“Opinion of Counsel” means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof.  The counsel may be an
employee of or counsel to Texas Genco LLC, any Subsidiary of Texas Genco LLC or
the Trustee.

 

“Pari Passu Indebtedness” means with respect to any Person:  

 

20

 

(1) Indebtedness of such Person, whether outstanding
on the Issue Date or thereafter incurred; and 

 

(2) all other Obligations of such Person (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to such Person whether or not post-filing interest is
allowed in such proceeding) in respect of Indebtedness described in clause (1)
above  

 

unless,
in the case of clauses (1) and (2) above, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
provided that such Indebtedness or other Obligations are subordinate in right
of payment to the Notes or the Guarantee of such Person, as the case may be; provided, however,
that Pari Passu Indebtedness shall not include: 

 

(1) any obligation of such
Person to Texas Genco LLC or any of its Subsidiaries;  

 

(2) any liability for
Federal, state, local or other taxes owed or owing by such Person;  

 

(3) any accounts payable or
other liability to trade creditors arising in the ordinary course of business;
or  

 

(4) any Indebtedness or
other Obligation of such Person which is subordinate or junior in any respect
to any other Indebtedness or other Obligation of such Person.

 

“Participant” means, with respect to the Depositary,
Euroclear or Clearstream, a Person who has an account with the Depositary,
Euroclear or Clearstream, respectively (and, with respect to DTC, shall include
Euroclear and Clearstream).

 

“Permitted Asset Swap” means the concurrent purchase and sale or
exchange of Related Business Assets or a combination of Related Business Assets
and cash or Cash Equivalents between Texas Genco LLC or any of its Restricted
Subsidiaries and another Person that is not Texas Genco LLC or any of its
Restricted Subsidiaries; provided
that any cash or Cash Equivalents received must be applied in accordance with
Section 4.10 hereof.  

 

“Permitted Holders” means (i) each of the Sponsors and (ii)
members of management who receive equity interests in Texas Genco LLC or any of
its direct or indirect parent entities pursuant to the Initial Acquisition
Option Plan, not to exceed 10% in the aggregate of such equity interests. Any
Person or group whose acquisition of beneficial ownership constitutes a Change
of Control in respect of which a Change of Control Offer is made in accordance
with the requirements of this Indenture will thereafter, together with its
Affiliates, constitute an additional Permitted Holder.  

 

“Permitted Investments” means: 

 

(a) any Investment in Texas
Genco LLC or any Restricted Subsidiary;  

 

(b) any Investment in cash
and Cash Equivalents or Investment Grade Securities;  

 

(c) any Investment by Texas
Genco LLC or any Restricted Subsidiary of Texas Genco LLC in a Person that is
engaged in a Similar Business if as a result of such Investment  

 

(1) such Person becomes a
Restricted Subsidiary or  

 

21

 

(2) such Person, in one transaction or a series of
related transactions, is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
Texas Genco LLC or a Restricted Subsidiary; 

 

(d) any Investment in securities or other assets not
constituting cash or Cash Equivalents and received in connection with an Asset
Sale made pursuant to the provisions of Section 4.10 hereof or any other
disposition of assets not constituting an Asset Sale;  

 

(e) any Investment existing
on the Issue Date or Initial Acquisition Date or made pursuant to legally binding
written commitments in existence on the Issue Date or Initial Acquisition
Date;  

 

(f) loans and advances to
officers, directors and employees not in excess of $10.0 million outstanding at
any one time, in the aggregate;  

 

(g) any Investment acquired
by Texas Genco LLC or any Restricted Subsidiary 

 

(1) in exchange for any other Investment or accounts
receivable held by Texas Genco LLC or any such Restricted Subsidiary in
connection with or as a result of a bankruptcy, workout, reorganization or recapitalization
of Texas Genco LLC of such other Investment or accounts receivable or  

 

(2) as a result of a
foreclosure by Texas Genco LLC or any Restricted Subsidiary with respect to any
secured Investment or other transfer of title with respect to any secured
Investment in default;  

 

(h) Hedging Obligations permitted under clause (10)
of Section 4.09(b) hereof;  

 

(i) loans and advances to officers, directors and
employees for business-related travel expenses, moving expenses and other
similar expenses, in each case incurred in the ordinary course of
business;  

 

(j) Investments the payment for which consists of
Equity Interests of Texas Genco LLC, or any of its direct or indirect parent
corporations (exclusive of Disqualified Stock); provided, however, that such Equity Interests will not
increase the amount available for Restricted Payments under Section 4.07
hereof;  

 

(k) guarantees of
Indebtedness permitted under Section 4.09 hereof;  

 

(l) any transaction to the extent it constitutes an
investment that is permitted and made in accordance with the provisions of
Section 4.11(b) hereof (except transaction described in clause (2), (6), (7)
and (11) of Section 4.11(b) hereof);

 

(m) Investments consisting of purchases and
acquisitions of inventory, supplies, material or equipment or the licensing or
contribution of intellectual property pursuant to joint marketing arrangements
with other Persons;  

 

(n) any Investment in STP
not to exceed a 50% undivided ownership interest in STP;  

 

(o) any Investments in or repurchases
of the Notes;  

 

22

 

(p) additional Investments having an aggregate fair
market value, taken together with all other Investments made pursuant to this
clause (p) that are at that time outstanding (without giving effect to the sale
of an Unrestricted Subsidiary to the extent the proceeds of such sale do not
consist of cash and/or marketable securities), not to exceed the greater of (x)
$250.0 million and (y) 5.0% of Total Assets at the time of such Investment
(with the fair market value of each Investment being measured at the time made
and without giving effect to subsequent changes in value); and  

 

(q) Investments relating to any special purpose
wholly owned subsidiary of Texas Genco LLC organized in connection with a
Receivables Facility that, in the good faith determination of the Board of
Directors of Texas Genco LLC, are necessary or advisable to effect such
Receivables Facility.  

 

“Permitted Liens” means, with respect to any Person:  

 

(1) Liens on assets of Texas Genco LLC or any of its
Restricted Subsidiaries securing Indebtedness and other Obligations under
Credit Facilities, including any letter of credit facility for Hedging
Obligations, that was permitted by the terms of this Indenture to be incurred
and/or securing Hedging Obligations in addition to the Hedging Support Credit
Facility related thereto;  

 

(2) pledges or deposits by such Person under
workmen’s compensation laws, unemployment insurance laws or similar
legislation, or deposits to secure bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which such Person is a party, or deposits
to secure public or statutory obligations of such Person or deposits of cash or
U.S. government bonds to secure surety or appeal bonds to which such Person is
a party, or deposits as security for contested taxes or import duties or for
the payment of rent, in each case incurred in the ordinary course of
business;  

 

(3) Liens imposed by law, such as carriers’,
warehousemen’s and mechanics’ Liens and other similar Liens, in each case for
sums not yet due or being contested in good faith by appropriate proceedings or
other Liens arising out of judgments or awards against such Person with respect
to which such Person shall then be proceeding with an appeal or other
proceedings for review;  

 

(4) Liens for taxes, assessments or other
governmental charges or claims not yet due or payable or subject to penalties
for nonpayment or which are being contested in good faith by appropriate
proceedings;  

 

(5) Liens in favor of issuers of performance and
surety bonds or bid bonds or with respect to other regulatory requirements or
letters of credit issued pursuant to the request of and for the account of such
Person in the ordinary course of its business; 

 

(6) minor survey exceptions, minor encumbrances,
easements or reservations of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real properties or
Liens incidental to the conduct of the business of such Person or to the
ownership of its properties, in each case, which were not incurred in
connection with Indebtedness and which do not interfere in any material adverse
respect with the business of Texas Genco LLC and its Subsidiaries, taken as a
whole;  

 

23

 

(7) Liens existing on the Issue Date and on the
Initial Acquisition Date (including, but not limited to, any escrow
arrangements with respect to the Notes); 

 

(8) Liens on property or shares of stock of a Person
at the time such Person becomes a Subsidiary; provided,
however, such Liens are not created or incurred in connection with,
or in contemplation of, such other Person becoming such a subsidiary; provided, further, however, that such
Liens may not extend to any other property owned by Texas Genco LLC or any
Restricted Subsidiary;  

 

(9) Liens on property at the time Texas Genco LLC or
a Restricted Subsidiary acquired the property, including any acquisition by
means of a merger or consolidation with or into Texas Genco LLC or any
Restricted Subsidiary; provided, however,
that such Liens are not created or incurred in connection with, or in
contemplation of, such acquisition; provided,
further, however, that the Liens may not extend to any other
property owned by Texas Genco LLC or any Restricted Subsidiary;  

 

(10) Liens securing Indebtedness or other
obligations of a Restricted Subsidiary owing to Texas Genco LLC or another
Restricted Subsidiary permitted to be incurred in accordance with Section 4.09
hereof;

 

(11) Liens securing interest rate or currency
Hedging Obligations;  

 

(12) Liens on specific items of inventory of other
goods and proceeds of any Person securing such Person’s obligations in respect
of bankers’ acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;  

 

(13) leases and subleases
granted to others which do not materially interfere with the conduct of the
business of Texas Genco LLC or any of the Restricted Subsidiaries;  

 

(14) Liens arising from financing statement filings
under the Uniform Commercial Code or similar state laws regarding operating leases
entered into by Texas Genco LLC and its Restricted Subsidiaries in the ordinary
course of business;  

 

(15) Liens in favor of Texas Genco LLC or any
Guarantor;  

 

(16) Liens on equipment of Texas Genco LLC or any
Restricted Subsidiary granted in the ordinary course of business to Texas Genco
LLC’s client at which such equipment is located;  

 

(17) Liens securing Hedging Obligations of Texas
Genco LLC and its Restricted Subsidiaries, including, without limitation, the
Goldman Sachs Hedge Agreement;  

 

(18) Liens on accounts receivable and related assets
incurred in connection with a Receivables Facility;  

 

(19) Liens to secure any refinancing, refunding,
extension, renewal or replacement (or successive refinancing, refunding,
extensions, renewals or replacements) as a whole, or in part, of any
Indebtedness secured by any Lien referred to in the foregoing clauses (7), (8),
(9), (10), (11), (15), (21), (22), (23) and (24); provided however, that (x) such new Lien shall be limited to
all or part of the same property that secured the original Lien (plus
improvements on 

 

24

 

such property), and (y) the Indebtedness secured by such Lien at such
time is not increased to any amount greater than the sum of (A) the outstanding
principal amount or, if greater, committed amount of the Indebtedness described
under clauses (7), (8), (9), (10), (11), (15), (21), (22), (23) and (24) at the
time the original Lien became a Permitted Lien under this Indenture, and (B) an
amount necessary to pay any fees and expenses, including premiums, related to
such refinancing, refunding, extension, renewal or replacement;  

 

(20) Liens on cash and Cash Equivalents (i)
deposited by Texas Genco LLC or any of its Subsidiaries in margin accounts with
or on behalf of futures contract brokers or paid over to other counterparties
or (ii) pledged or deposited as collateral to a contract counterparty or issuer
of surety bonds by Texas Genco LLC or any of its Subsidiaries, in the case of
clause (i) or (ii), to secure obligations with respect to (a) contracts for
commercial and trading activities in the ordinary course of business and
contracts (including without limitation, physical delivery, option (whether
cash or financial), exchange, swap and futures contracts) for the purchase,
transmission, transportation, distribution, sale, lease or hedge of any
fuel-related or power-related commodity or service or (b) Hedging
Obligations;  

 

(21) Liens securing Indebtedness (including Capital
Lease Obligations and Synthetic Lease Obligations) permitted to be incurred
pursuant to clause (4) of the definition of Permitted Debt;  

 

(22) Liens securing Indebtedness permitted to be
incurred pursuant to clause (23) of the definition of Permitted Debt;  

 

(23) Liens to secure Indebtedness incurred to
finance Necessary Capital Expenditures that encumber only the assets purchased,
installed or otherwise acquired with the proceeds of such Indebtedness;  

 

(24) Liens to secure Environmental CapEx Debt that
encumber only the assets purchased, installed or otherwise acquired with the
proceeds of such Environmental CapEx Debt; 

 

(25) Liens on Excluded Assets;  

 

(26) Customary non-assignment Liens entered into in
the ordinary course of business;  

 

(27) Liens on any cash collateral account securing
the reimbursement obligations of Texas Genco Holdings Inc. under any letters of
credits issued in connection with the ROFR; 

 

(28) any liens on STP other
than any interest Texas Genco LLC or its Restricted Subsidiaries has in STP;  

 

(29) Liens relating to the escrow agreement in
effect on the Issue Date and future escrow arrangements securing Indebtedness
incurred in accordance with this Indenture; 

 

(30) other Liens securing
obligations incurred in the ordinary course of business which obligations do
not exceed $25.0 million at any one time outstanding;  

 

(31) Liens under Hedging Credit Support Facilities
in an aggregate amount not to exceed (1) the product of (A) the amount of Notes
repaid (other than with borrowed cash) and the amount of Indebtedness under the
Credit Facilities repaid (other than with borrowed cash) 

 

25

 

times (B) 50%, plus 30%
of any consideration paid or costs incurred, as the case may be, in connection
with the acquisition, expansion, upgrading or construction after the Issue Date
of any assets (excluding the assets acquired in connection with the Nuclear
Acquisition and the ROFR) of Texas Genco LLC and its Restricted Subsidiaries
constituting Baseload Plants at the time of the granting of such Lien; and  

 

(32) Additional Liens; provided, that at the time of incurrence and after giving
pro forma effect thereto, the Secured Leverage Ratio would be no greater than
2.25 to 1.0.  

 

“Permitted Quarterly Tax Distributions” means quarterly distributions of Tax Amounts
determined on the basis of the estimated taxable income of Texas Genco LLC (in
each case, including any such taxable income attributable to Texas Genco LLC’s
ownership of interest in any other pass-through entity for Federal income tax
purposes), for the related Estimation Period, as in a statement filed with the
trustee; provided, however, that,
for an Estimation Period that includes a True-up Determination Date, (1) if a
True-Up Amount is due to the members, the Permitted Quarterly Tax Distribution
payable by Texas Genco LLC for such Estimation Period shall be increased by
such True-up Amount, and (2) if a True-up Amount is due to Texas Genco LLC, the
Permitted Quarterly Tax Distribution payable by Texas Genco LLC for such
Estimation Period shall be reduced by such True-up Amount and the excess, if
any, of such True-up Amount over such Permitted Quarterly Tax Distribution
shall be applied to reduce the immediately following Permitted Quarterly Tax
Distribution(s) until such True-up Amount is entirely offset. The amount of
Permitted Quarterly Tax Distribution relating to an Estimation Period including
a True-up Determination Date shall be determined by a Tax Amounts CPA, and the
amount of Permitted Quarterly Tax Distribution relating to all other Estimation
Periods shall be determined by Texas Genco LLC. 

 

“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint
stock company, trust, unincorporated organization, government or any agency or
political subdivision thereof or any other entity.  

 

“preferred stock” means any Equity Interest with preferential
rights of payment of dividends or upon liquidation, dissolution, or winding up.

 

“Private Placement Legend” means the legend set forth in Section 2.06(g)(1) hereof to be placed on all Notes issued under this
Indenture except where otherwise permitted by the provisions of this Indenture.

 

“Public Company Merger” means the consummation of the merger of Texas
Genco Holdings, Inc. with a wholly owned subsidiary of CenterPoint Energy, Inc.
pursuant to the Transaction Agreement.

 

“QIB” means a “qualified institutional buyer” as defined in Rule 144A.

 

“Qualified Proceeds” means assets that are used or useful in, or
Capital Stock of any Person engaged in, a Similar Business; provided that the fair market value of any
such assets or Capital Stock shall be determined by the Board of Directors in
good faith.  

 

“Quarterly Payment Period” shall mean the period commencing on the
tenth day and ending on and including the twentieth day of each month in which
Federal estimated tax payments are due for a corporation taxed on a calendar
year basis (provided that payments in respect of estimated state income taxes
due in January may instead, at the option of Texas Genco LLC, be paid during
the last five days of the immediately preceding December).  

 

26

 

“Rating Agencies” mean Moody’s and S&P or, if Moody’s or
S&P or both shall not make a rating on the Notes publicly available, a
nationally recognized statistical rating agency or agencies, as the case may
be, selected by Texas Genco LLC which shall be substituted for Moody’s or
S&P or both, as the case may be.  

 

“Receivables Facility” means one or more receivables financing
facilities, as amended from time to time, the Indebtedness of which is
non-recourse (except for standard representations, warranties, covenants and
indemnities made in connection with such facilities) to the Issuer and the
Restricted Subsidiaries pursuant to which Texas Genco LLC and/or any of its
Restricted Subsidiaries sells its accounts receivable to a Person that is not a
Restricted Subsidiary.  

 

“Receivables Fees” means distributions or payments made directly
or by means of discounts with respect to any participation interest issued or
sold in connection with, and other fees paid to a Person that is not a
Restricted Subsidiary in connection with, any Receivables Facility.

 

“Registration Rights Agreement” means the Registration Rights Agreement,
dated as of December 14, 2004, among the Issuers, the Guarantors and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time and, with respect to any Additional
Notes, one or more registration rights agreements among the Issuers, the
Guarantors and the other parties thereto, as such agreement(s) may be amended,
modified or supplemented from time to time, relating to rights given by the Issuers
to the purchasers of Additional Notes to register such Additional Notes under
the Securities Act.

 

“Regulation S” means Regulation S promulgated under the
Securities Act.

 

“Regulation S Global Note” means a Regulation S Temporary Global Note
or Regulation S Permanent Global Note, as appropriate.

 

“Regulation S Permanent Global Note” means a permanent Global Note in the form of
Exhibit A1 hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of and registered in the name of the
Depositary or its nominee, issued in a denomination equal to the outstanding
principal amount of the Regulation S Temporary Global Note upon expiration of
the Restricted Period.

 

“Regulation S Temporary Global Note” means a temporary Global Note in the form of
Exhibit A2 hereto deposited with or on behalf of and registered in the name of
the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Notes initially sold in reliance on Rule 903
of Regulation S.

 

“Related Business Assets” means assets (other than cash or Cash
Equivalents) used or useful in a Similar Business; provided that any assets received by Texas Genco LLC or a
Restricted Subsidiary in exchange for assets transferred by Texas Genco LLC or
a Restricted Subsidiary shall not be deemed to be Related Business Assets if
they consist of securities of a Person, unless upon receipt of the securities
of such Person, such Person would become a Restricted Subsidiary.

 

“Responsible Officer,” when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.

 

27

 

“Restoration Certification” means an Officer’s Certificate provided to
the Trustee prior to the end of 365 days from the date that a Casualty Event
has occurred certifying (a) that Texas Genco LLC or the relevant Restricted
Subsidiary intends to use the proceeds received in connection with such
Casualty Event to repair, restore or replace the property or assets in respect
of such Casualty Event, (b) the approximate costs of completion of such repair,
restoration or replacement and (c) that such repair, restoration or replacement
is expected to be completed within 24 months from the date that the proceeds of
such Casualty Event are received.

 

“Restricted Definitive Note” means a Definitive Note bearing the Private
Placement Legend.

 

“Restricted Global Note” means a Global Note bearing the Private
Placement Legend.

 

“Restricted Investment” means an Investment other than a Permitted
Investment.

 

“Restricted Period” means the 40-day distribution compliance
period as defined in Regulation S. 

 

“Restricted Subsidiary” means, at any time, any direct or indirect
Subsidiary of Texas Genco LLC that is not then an Unrestricted Subsidiary; provided, however, that upon the
occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary,
such Subsidiary shall be included in the definition of “Restricted
Subsidiary.”  

 

“ROFR” means the purchase of an additional 13.2% interest in STP pursuant to
the Amended and Restated South Texas Project Participation Agreement between
City of San Antonio, Central Power and Light Company, Houston Lighting &
Power Company, City of Austin, dated November 17, 1997.

 

“Rule 144” means Rule 144 promulgated under the Securities Act.

 

“Rule 144A” means Rule 144A promulgated under the Securities Act.

 

“Rule 903” means Rule 903 promulgated under the Securities Act.

 

“Rule 904” means Rule 904 promulgated under the Securities Act.

 

“S&P” means Standard and Poor’s Ratings Group.

 

“SEC” means the Securities and Exchange Commission.

 

“Secured Debt” means Indebtedness of Texas Genco LLC and
its Restricted Subsidiaries that is secured by a Lien.  

 

“Secured Leverage Ratio” means, on any date, the ratio of:  

 

(1) the aggregate principal
amount of Secured Debt outstanding for borrowed Indebtedness on such date,
to:  

 

(2) the aggregate amount of
Texas Genco LLC’s EBITDA for the most recent four-quarter period for which
financial information is available.  

 

In
addition, for purposes of calculating the Secured Leverage Ratio:  

 

(1) Investments, acquisitions, dispositions,
mergers, consolidations and disposed operations (as determined in accordance
with GAAP) that have been made by Texas Genco 

 

28

 

LLC or any Restricted Subsidiary during the four-quarter reference
period or subsequent to such reference period and on or prior to or
simultaneously with the date on which the event for which the calculation of
the Secured Leverage Ratio is made (the “Leverage Calculation Date”) shall be
calculated on a pro forma basis assuming that all such Investments,
acquisitions, dispositions, mergers, consolidations and disposed operations
(including the Nuclear Acquisition and the ROFR) had occurred on the first day
of the reference period; provided
that the pro forma change in EBITDA projected by Texas Genco LLC in good faith
as a result of reasonably identifiable and factually supportable cost savings
and costs (excluding one-time transition, transaction and restructuring costs),
as the case may be, expected to be realized during the Savings Period shall be
included in such calculation for any reference period that includes any of the
Savings Period; provided, further, that any such pro forma change to
such EBITDA shall be without duplication for cost savings and costs (excluding
one-time transition, transaction and restructuring costs) actually realized and
already included in such EBITDA. If since the beginning of such period any
Person (that subsequently became a Restricted Subsidiary or was merged with or
into Texas Genco LLC or any Restricted Subsidiary since the beginning of such
period) shall have made any Investment, acquisition, disposition, merger,
consolidation or disposed operation (including the Nuclear Acquisition and the
ROFR) that would have required adjustment pursuant to this definition, then the
Secured Leverage Ratio shall be calculated giving pro forma effect thereto for
such period as if such Investment, acquisition, disposition, merger,
consolidation or disposed operation (including the Nuclear Acquisition and the
ROFR) had occurred at the beginning of the applicable four-quarter period;  

 

(2) for purposes of this
definition, whenever pro forma effect is to be given to a transaction, the pro
forma calculations shall be made in good faith by a responsible financial or accounting
officer of Texas Genco LLC . If any Indebtedness bears a floating rate of
interest and is being given pro forma effect, the interest on such Indebtedness
shall be calculated as if the rate in effect on the Leverage Calculation Date
had been the applicable rate for the entire period (taking into account any
Hedging Obligations applicable to such Indebtedness). Interest on a Capitalized
Lease Obligation or Synthetic Lease Obligation shall be deemed to accrue at an
interest rate reasonably determined by a responsible financial or accounting
officer of Texas Genco LLC to be the rate of interest implicit in such
Capitalized Lease Obligation or Synthetic Lease Obligation in accordance with
GAAP. For purposes of making the computation referred to above, interest on any
Indebtedness under a revolving credit facility computed on a pro forma basis
shall be computed based upon the average daily balance of such Indebtedness
during the applicable period. Interest on Indebtedness that may optionally be
determined at an interest rate based upon a factor of a prime or similar rate,
a 

 

(3) any Person that is a Restricted Subsidiary on
the Leverage Calculation Date will be deemed to have been a Restricted
Subsidiary at all times during such four-quarter period; and  

 

(4) any Person that is not
a Restricted Subsidiary on the Leverage Calculation Date will be deemed not to
have been a Restricted Subsidiary at any time during such four-quarter period.

 

“Securities Act” means the Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated thereunder.

 

29

 

“Shelf Registration Statement” means the Shelf Registration Statement as
defined in the Registration Rights Agreement.

 

“Significant Subsidiary” means any Restricted 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 hereof.

 

“Similar Business” means the ownership, construction, leasing,
operation and maintenance of the facilities currently owned by Texas Genco LLC and
any other power generation plants, including nuclear power generation plants,
together with any related assets or facilities, the acquisition or ownership of
fuel and fuel reserves, and the sale and marketing primarily of wholesale power
and activities as may be reasonably incidental thereto.  

 

“Sponsors” means Blackstone Capital Partners, Hellman & Friedman LLC,
Kohlberg Kravis Roberts & Co. L.P. and Texas Pacific Group and each of
their respective Affiliates.

 

“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 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.

 

“STP” means the South Texas Project Electric Generating Station.  

 

“STP Acquisition” means the pending acquisition of all of the
common equity of Texas Genco Holdings, Inc., which at the time of acquisition
will own no assets other than not more than a 44% interest in the STP.  

 

“Subordinated Indebtedness” means 

 

(a) with respect to Texas Genco LLC , any
Indebtedness of Texas Genco LLC which is by its terms subordinated in right of
payment to the Notes, and  

 

(b) with respect to any Guarantor, any Indebtedness
of such Guarantor which is by its terms subordinated in right of payment to the
guarantee of such Guarantor.  

 

“Subsidiary” means, with respect to any Person, 

 

(1) any corporation, association, or other business
entity (other than a partnership, joint venture, limited liability company or
similar entity) of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
of determination owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of that Person or a combination thereof
and  

 

(2) any partnership, joint venture, limited
liability company or similar entity of which 

 

(x) more than 50% of the capital accounts,
distribution rights, total equity and voting interests or general or limited
partnership interests, as applicable, are owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries 

 

30

 

of
that Person or a combination thereof whether in the form of membership,
general, special or limited partnership or otherwise, and  

 

(y) such Person or any Restricted Subsidiary of such
Person is a controlling general partner or otherwise controls such entity.  

 

“Synthetic Lease” shall mean, with respect to any Person, (a)
a so-called synthetic, off-balance sheet or tax retention lease or (b) an
agreement for the use or possession of any property (whether real, personal or
mixed) creating obligations which do not appear on the balance sheet of such
Person, but upon the bankruptcy or insolvency of such Person and which
obligations would be characterized as Indebtedness of such Person (without
regard to accounting treatment).  

 

“Tax Amount” means, with respect to an Estimation Period or a taxable year, as the
case may be, an amount equal to the product of (a) the United States federal
taxable income of Texas Genco LLC (determined by including all separately
stated items of income and deduction) for such Estimation Period or a taxable
year, as the case may be, reduced (but not below zero) by (to the extent not
previously taken into account) any United States federal taxable loss
(determined by including all separately stated items of income and deduction)
of Texas Genco LLC for any prior period; and (b) 45%.  

 

“Tax Amounts CPA” means a nationally recognized certified
public accounting firm.

 

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

 

“Total Assets” means the total amount of all assets of
Texas Genco LLC and the Restricted Subsidiaries, determined on a consolidated
basis in accordance with GAAP as shown on the most recent balance sheet of
Texas Genco LLC.  

 

“Transactions” means the Initial Acquisition, the Nuclear
Acquisition and the ROFR, and the financing and related matters thereof as
disclosed in the Offering Circular.  

 

“Transaction Agreement” means the Transaction Agreement, dated as of
July 21, 2004, by and among CenterPoint Energy, Inc., Utility Holding, LLC, NN
Houston Sub, Inc., Texas Genco Holdings, Inc, HPC Merger Sub, Inc. and Texas
Genco LLC.  

 

“Treasury Rate” means, as of any redemption date, 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 December 15,
2009; provided, however, that if the period from the
redemption date to December 15, 2009, 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. 

 

“True-up Amount” means, in respect of a particular taxable
year, an amount determined by the Tax Amounts CPA equal to the difference
between (1) the aggregate Permitted Quarterly Tax Distributions actually
distributed in respect of such taxable year, without taking into account any
adjustment to such Permitted Quarterly Tax Distributions made with respect to
any other taxable year (including any adjustment to take into account a True-up
Amount for the immediately preceding taxable year) and (2) the Tax Amount in
respect of such taxable year as determined by reference to Texas Genco LLC’s
IRS Form 1065 filed for such year; provided,
however, that if there is an audit or other adjustment with respect
to a return filed by Texas Genco LLC (including a filing of an amended return),
upon a final 

 

31

 

determination
or resolution of such audit or other adjustment, the Tax Amounts CPA shall
redetermine the True-up Amount for the relevant taxable year. The amount equal
to the excess, if any, of the amount described in clause (1) above over the
amount described in clause (2) above shall be referred to as the “True-up Amount
due to Texas Genco LLC” and the excess, if any, of the amount described in
clause (2) over the amount described in clause (1) shall be referred to as the
“True-up Amount due to the members.”  

 

“True-up Determination Date” means the date on which the Tax Amounts CPA
delivers a statement to the trustee indicating the True-up Amount; provided, however,
that the True-up Determination Date shall not be later than 30 days after the
occurrence of an event requiring the determination of the True-up Amount (including,
the filing of the federal and state tax returns or the final determination or
resolution of an audit or other adjustment, as the case may be).

 

“Trustee” means Wells Fargo Bank, National Association, as trustee, until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.

 

“Unrestricted Definitive Note” means a Definitive Note that does not bear
and is not required to bear the Private Placement Legend.

 

“Unrestricted Global Note” means a Global Note that does not bear and
is not required to bear the Private Placement Legend.

 

“Unrestricted Subsidiary” means 

 

(1) any Subsidiary of Texas Genco LLC which at the
time of determination is an Unrestricted Subsidiary (as designated by the Board
of Directors of Texas Genco LLC, as provided below) and  

 

(2) any Subsidiary of an Unrestricted
Subsidiary.  

 

The
Board of Directors of Texas Genco LLC may designate any Subsidiary of Texas
Genco LLC (including any existing Subsidiary and any newly acquired or newly
formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or
any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns
or holds any Lien on, any property of, Texas Genco LLC or any Subsidiary of
Texas Genco LLC (other than any Subsidiary of the Subsidiary to be so
designated), provided that  

 

(a) any Unrestricted Subsidiary must be an entity of
which shares of the capital stock or other equity interests (including
partnership interests) entitled to cast at least a majority of the votes that
may be cast by all shares or equity interests having ordinary voting power for
the election of directors or other governing body are owned, directly or
indirectly, by Texas Genco LLC,  

 

(b) such designation complies with Section 4.07
hereof and

 

(c) each of  

 

(1) the Subsidiary to be so designated and  

 

(2) its Subsidiaries has not at the time of
designation, and does not thereafter, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable 

 

32

 

with
respect to any Indebtedness pursuant to which the lender has recourse to any of
the assets of Texas Genco LLC or any Restricted Subsidiary.  

 

The
Board of Directors of Texas Genco LLC may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided
that, immediately after giving effect to such designation no Default or Event
of Default shall have occurred and be continuing and either  

 

(1) Texas Genco LLC could incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test
described in the first sentence under Section 4.09 hereof or

 

(2) the Fixed Charge Coverage Ratio for Texas Genco
LLC and its Restricted Subsidiaries would be greater than such ratio for Texas
Genco LLC and its Restricted Subsidiaries immediately prior to such
designation, 

 

in each case on a pro forma basis taking into
account such designation.  

 

Any
such designation by the Board of Directors of Texas Genco LLC shall be notified
by Texas Genco LLC to the Trustee by promptly filing with the Trustee a copy of
the board resolution giving effect to such designation and an Officer’s
Certificate certifying that such designation complied with the foregoing provisions.

 

“U.S. Person” means a U.S. Person as defined in Rule
902(k) promulgated under the Securities Act.

 

“Voting Stock” of any Person as of any date means the
Capital Stock of such Person that is at the time entitled to vote in the
election of the Board of Directors of such Person.

 

“Weighted Average Life to Maturity” means, when applied to any Indebtedness,
Disqualified Stock or preferred stock, as the case may be, at any date, the
quotient obtained by dividing  

 

(1) the sum of the products of the number of years
from the date of determination to the date of each successive scheduled
principal payment of such Indebtedness or redemption or similar payment with
respect to such Disqualified Stock or preferred stock multiplied by the amount
of such payment, by  

 

(2) the sum of all such payments.  

 

“Wholly-Owned Subsidiary” of any Person means a Subsidiary of such
Person, 100% of the outstanding Capital Stock or other ownership interests of
which (other than directors’ qualifying shares) shall at the time be owned by
such Person or by one or more Wholly-Owned Subsidiaries of such Person.

 

Section 1.02                                Other Definitions.

 

	
   

  	
   

  	
  Defined
  in

  	
   

  
	
  Term

  	
   

  	
  Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Acceptable Commitment”

  	
   

  	
  4.10

  	
   

  
	
  “Affiliate Transaction”

  	
   

  	
  4.11

  	
   

  
	
  “Asset Sale Offer”

  	
   

  	
  3.09

  	
   

  
	
  “Authentication Order”

  	
   

  	
  2.02

  	
   

  
	
  “Change of Control Offer”

  	
   

  	
  4.15

  	
   

  

 

33

 

	
   

  	
   

  	
  Defined
  in

  	
   

  
	
  Term

  	
   

  	
  Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Change of Control Payment”

  	
   

  	
  4.15

  	
   

  
	
  “Change of Control Payment Date”

  	
   

  	
  4.15

  	
   

  
	
  “Covenant Defeasance”

  	
   

  	
  8.03

  	
   

  
	
  “Covenant Suspension Event”

  	
   

  	
  4.18

  	
   

  
	
  “DTC”

  	
   

  	
  2.03

  	
   

  
	
  “Event of Default”

  	
   

  	
  6.01

  	
   

  
	
  “Excess Proceeds”

  	
   

  	
  4.10

  	
   

  
	
  “incur”

  	
   

  	
  4.09

  	
   

  
	
  “Legal Defeasance”

  	
   

  	
  8.02

  	
   

  
	
  “Offer Amount”

  	
   

  	
  3.09

  	
   

  
	
  “Offer Period”

  	
   

  	
  3.09

  	
   

  
	
  “Paying Agent”

  	
   

  	
  2.03

  	
   

  
	
  “Permitted Debt”

  	
   

  	
  4.09

  	
   

  
	
  “Payment Default”

  	
   

  	
  6.01

  	
   

  
	
  “Purchase Date”

  	
   

  	
  3.09

  	
   

  
	
  “Redemption Date”

  	
   

  	
  3.07

  	
   

  
	
  “Refinancing Indebtedness”

  	
   

  	
  4.09

  	
   

  
	
  “Registrar”

  	
   

  	
  2.03

  	
   

  
	
  “Restricted Payments”

  	
   

  	
  4.07

  	
   

  
	
  “Reversion Date”

  	
   

  	
  4.18

  	
   

  
	
  “STP Call”

  	
   

  	
  3.07

  	
   

  
	
  “Successor Company”

  	
   

  	
  5.01

  	
   

  
	
  “Successor Person”

  	
   

  	
  5.01

  	
   

  
	
  “Suspended Covenants”

  	
   

  	
  4.18

  	
   

  
	
  “Suspension Date”

  	
   

  	
  4.18

  	
   

  
	
  “Suspension Period”

  	
   

  	
  4.18

  	
   

  

 

Section 1.03                                Incorporation by Reference of Trust
Indenture Act.

 

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

 

The
following TIA terms used in this Indenture have the following meanings:

 

“indenture securities” means the Notes;

 

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

 

“indenture to be qualified” means this Indenture;

 

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

 

“obligor” on the Notes and the Guarantees means the Issuers and the Guarantors,
respectively, and any successor obligor upon the Notes and the Guarantees,
respectively.

 

All
other terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rule under the TIA have the
meanings so assigned to them.

 

34

 

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; and

 

(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 SEC from time to time.

 

ARTICLE 2

THE NOTES

 

Section 2.01                                Form and Dating.

 

(a)              General. 
The Notes and the Trustee’s certificate of authentication will be
substantially in the form of Exhibits A1 and A2 hereto.  The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage.  Each Note will be dated the date of its
authentication.  The Notes shall be in
denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

The
terms and provisions contained in the Notes will constitute, and are hereby
expressly made, a part of this Indenture and the Issuers, the Guarantors and
the Trustee, by their execution and delivery of this 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 this Indenture, the provisions of
this Indenture shall govern and be controlling.

 

(b)             Global Notes. 
Notes issued in global form will be substantially in the form of
Exhibits A1 or A2 hereto (including the Global Note Legend thereon and the
“Schedule of Exchanges of Interests in the Global Note” attached thereto).  Notes issued in definitive form will be
substantially in the form of Exhibit A1 hereto (but without the Global Note
Legend thereon and without the “Schedule of Exchanges of Interests in the
Global Note” attached thereto).  Each
Global Note will 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 endorsed thereon 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.  Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby will be made by the
Trustee or the Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof as required by Section 2.06 hereof.

 

35

 

(c)              Temporary Global Notes. 
Notes offered and sold in reliance on Regulation S will be issued
initially in the form of the Regulation S Temporary Global Note, which will be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, as custodian for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Clearstream, duly executed by the
Issuers and authenticated by the Trustee as hereinafter provided.  The Restricted Period will be terminated upon
the receipt by the Trustee of:

 

(1) a written
certificate from the Depositary, together with copies of certificates from
Euroclear and Clearstream certifying that they have received certification of
non-United States beneficial ownership of 100% of the aggregate principal
amount of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein during the
Restricted Period pursuant to another exemption from registration under the
Securities Act and who will take delivery of a beneficial ownership interest in
a 144A Global Note or an IAI Global Note bearing a Private Placement Legend,
all as contemplated by Section 2.06(b) hereof); and

 

(2) an Officer’s
Certificate from Texas Genco LLC.

 

Following
the termination of the Restricted Period, beneficial interests in the
Regulation S Temporary Global Note will be exchanged for beneficial interests
in the Regulation S Permanent Global Note pursuant to the Applicable
Procedures.  Simultaneously with the
authentication of the Regulation S Permanent Global Note, the Trustee will
cancel the Regulation S Temporary Global Note. 
The aggregate principal amount of the Regulation S Temporary Global Note
and the Regulation S Permanent Global Note may from time to time be increased
or decreased by adjustments made on the records of the Trustee and the
Depositary or its nominee, as the case may be, in connection with transfers of
interest as hereinafter provided.

 

(3) Euroclear and Clearstream Procedures Applicable.  The provisions of the “Operating Procedures
of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear”
and the “General Terms and Conditions of Clearstream Banking” and “Customer
Handbook” of Clearstream will be applicable to transfers of beneficial
interests in the Regulation S Temporary Global Note and the Regulation S
Permanent Global Note that are held by Participants through Euroclear or
Clearstream.

 

Section 2.02                                Execution and Authentication.

 

At
least one Officer must sign the Notes for each of the Issuers 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 Indenture.

 

The
Trustee will, upon receipt of a written order of the Issuers signed by one
Officer of each Issuer (an
“Authentication Order”),
authenticate Notes for original issue that may be validly issued under this
Indenture, including any Additional Notes and Exchange Notes.  The aggregate principal amount of Notes
outstanding at any time may not exceed the aggregate principal amount of Notes
authorized for issuance by the Issuers pursuant to one or more Authentication
Orders, except as provided in Section 2.07 

 

36

 

hereof.  It is understood that, notwithstanding any
other Section herein, no Opinion of Counsel is required in order for the
Trustee to authenticate the Notes issued on the date hereof.

 

The
Trustee may appoint an authenticating agent acceptable to the Issuers to authenticate
Notes.  An authenticating agent may
authenticate Notes whenever the Trustee may do so.  Each reference in this 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 or an Affiliate of the Issuers.

 

Section 2.03                                Registrar and Paying Agent.

 

The
Issuers will maintain an office or agency where Notes may be presented for
registration of transfer or for exchange (“Registrar”)
and an office or agency where Notes may be presented for payment (“Paying Agent”).  The Registrar will keep a register of the
Notes and of their transfer and exchange. 
The Issuers may appoint one or more co-registrars and one or more
additional paying agents.  The term
“Registrar” includes any co-registrar and the term “Paying Agent” includes any
additional paying agent.  The Issuers may
change any Paying Agent or Registrar without notice to any Holder.  The Issuers will notify the Trustee in
writing of the name and address of any Agent not a party to this
Indenture.  If the Issuers fail to
appoint or maintain another entity as Registrar or Paying Agent, the Trustee
shall act as such.  Texas Genco LLC or any
of its Subsidiaries may act as Paying Agent or Registrar.

 

The
Issuers initially appoint The Depository Trust Company (“DTC”) to act as Depositary with respect
to the Global Notes.

 

The
Issuers initially appoint the Trustee to act as the Registrar and Paying Agent
and to act as Custodian with respect to the Global Notes.

 

Section 2.04                                Paying Agent to Hold Money in Trust.

 

The
Issuers will require each Paying Agent other than the Trustee to agree in
writing that the Paying Agent will hold in trust for the benefit of Holders or
the Trustee all assets held by the Paying Agent for the payment of principal,
premium or Additional Interest, if any, or interest on the Notes, and will
notify the Trustee of any default by the Issuers in making any such
payment.  While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it
to the Trustee.  The Issuers at any time
may require a Paying Agent to pay all money held by it to the Trustee.  Upon payment over to the Trustee, the Paying
Agent (if other than Texas Genco LLC or a Subsidiary) will have no further liability
for the money.  If Texas Genco LLC or a
Subsidiary acts as Paying Agent, it will segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent.  Upon any bankruptcy or reorganization
proceedings relating to Texas Genco LLC, the Trustee will serve as Paying Agent
for the Notes.

 

Section 2.05                                Holder Lists.

 

The
Trustee will 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 TIA § 312(a). 
If the Trustee is not the Registrar, the Issuers will furnish to the
Trustee at least two 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 the Holders of Notes and the Issuers shall otherwise comply with
TIA § 312(a).

 

37

 

Section 2.06                                Transfer and Exchange.

 

(a)               Transfer and Exchange of Global
Notes.  A Global Note may not be transferred except
as a whole 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 will be exchanged by the Issuers for Definitive Notes if:

 

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

 

(2) the Issuers in
their 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; provided
that in no event shall the Regulation S Temporary Global Note be exchanged by
the Issuers for Definitive Notes prior to (A) the expiration of the Restricted
Period and (B) the receipt by the Registrar of any certificates required
pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act; or

 

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

 

Upon
the occurrence of either of the preceding events in (1) or (2) above,
Definitive Notes shall be issued in such names as the Depositary shall instruct
the Trustee.  Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof.  Every Note authenticated and
delivered in exchange for, or in lieu of, a Global Note or any portion thereof,
pursuant to this Section 2.06 or Sections 2.07 or 2.10 hereof, 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 2.06(a), however,
beneficial interests in a Global Note may be transferred and exchanged as
provided in Section 2.06(b), (c) or (f) hereof.

 

(b)              Transfer and Exchange of Beneficial
Interests in the Global Notes.  The transfer
and exchange of beneficial interests in the Global Notes will be effected
through the Depositary, in accordance with the provisions of this Indenture and
the Applicable Procedures.  Beneficial
interests in the Restricted Global Notes will be subject to restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act.  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 Restricted Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in the same Restricted Global Note
in accordance with the transfer restrictions set forth in the Private Placement
Legend; provided, however, that
prior to the expiration of the Restricted Period, transfers of beneficial
interests in the Regulation S Temporary Global
Note may not be made to a U.S. Person or for the account or benefit of a U.S.
Person (other than an Initial Purchaser). 
Beneficial interests in any Unrestricted Global Note may be transferred
to Persons who take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note.  No written
orders or instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.06(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 

 

38

 

Section 2.06(b)(1) above,
the transferor of such beneficial interest must deliver to the Registrar either:

 

(A)     both: 

 

(i)                                         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

 

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

 

(B)       both:

 

(i)                                         a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to cause to be issued a Definitive Note in
an amount equal to the beneficial interest to be transferred or exchanged; and

 

(ii)                                      instructions given by the Depositary to
the Registrar containing information regarding the Person in whose name such
Definitive Note shall be registered to effect the transfer or exchange referred
to in (1) above;

 

;
provided that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (A) the expiration
of the Restricted Period and (B) the receipt by the Registrar of any certificates
required pursuant to Rule 903 under the Securities Act.

 

Upon
consummation of an Exchange Offer by the Issuers in accordance with Section
2.06(f) hereof, the requirements of this Section 2.06(b)(2) shall be deemed to
have been satisfied upon receipt by the Registrar of the instructions contained
in the Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes. 
Upon satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this 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 2.06(h)
hereof.

 

(3) Transfer of Beneficial Interests to Another
Restricted Global Note.  A
beneficial interest in any Restricted Global Note may be transferred to a
Person who takes delivery thereof in the form of a beneficial interest in
another Restricted Global Note if the transfer complies with the requirements
of Section 2.06(b)(2) above and the Registrar receives the following:

 

(A)     if the transferee will take delivery in
the form of a beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;

 

(B)       if the transferee will take delivery in
the form of a beneficial interest in the Regulation S Temporary Global Note or
the Regulation S Permanent Global Note, then 

 

39

 

the transferor
must deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and

 

(C)       if the transferee will take delivery in
the form of a beneficial interest in the IAI Global Note, then the transferor
must deliver a certificate to the Registrar in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel required by
item (3) thereof, if applicable.

 

(4) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in an Unrestricted Global Note.  A beneficial interest in any Restricted
Global Note may be exchanged by any holder thereof for a beneficial interest in
an Unrestricted Global Note or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note if
the exchange or transfer complies with the requirements of Section 2.06(b)(2)
above and:

 

(A)     such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer, certifies
that it is not (i) a Broker-Dealer, (ii) a Person participating in the
distribution of the Exchange Notes or (iii) a Person who is an affiliate (as
defined in Rule 144) of the Issuers;

 

(B)       such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the Registration Rights
Agreement;

 

(C)       such transfer is effected by a
Broker-Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or

 

(D)      the Registrar receives the following:

 

(i)                                     if the holder of such beneficial interest
in a Restricted Global Note proposes to exchange such beneficial interest for a
beneficial interest in an Unrestricted Global Note, a certificate from such
holder in the form of Exhibit C hereto, including the certifications in item
(1)(a) thereof; or

 

(ii)                                  if the holder of such beneficial interest
in a Restricted Global Note proposes to transfer such beneficial interest to a
Person who shall take delivery thereof in the form of a beneficial interest in
an Unrestricted Global Note, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof;

 

and,
in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.

 

If
any such transfer is effected pursuant to subparagraph (B) or (D) above at a
time when an Unrestricted Global Note has not yet been issued, the Issuers
shall issue and, upon receipt of an Authentication Order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more 

 

40

 

Unrestricted
Global Notes in an aggregate principal amount equal to the aggregate principal
amount of beneficial interests transferred pursuant to subparagraph (B) or (D)
above.

 

Beneficial
interests in an Unrestricted Global Note cannot be exchanged for, or
transferred to Persons who take delivery thereof in the form of, a beneficial
interest in a Restricted Global Note.

 

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

 

(1)
Beneficial Interests in Restricted Global
Notes to Restricted Definitive Notes.  If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:

 

(A)     if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (2)(a) thereof;

 

(B)       if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1) thereof;

 

(C)       if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule
904, a certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;

 

(D)      if such beneficial interest is being transferred pursuant
to an exemption from the registration requirements of the Securities Act in
accordance with Rule 144, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(a) thereof;

 

(E)        if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set forth in
Exhibit B hereto, including the certifications, certificates and Opinion of
Counsel required by item (3)(d) thereof, if applicable;

 

(F)        if such beneficial interest is being transferred to
Texas Genco LLC or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b) thereof;
or

 

(G)       if such beneficial interest is being transferred
pursuant to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,

 

the
Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Issuers 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 in a Restricted Global Note
pursuant to this Section 2.06(c) shall be registered in such name or names and
in such authorized 

 

41

 

denomination
or denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from 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.  Any Definitive Note issued
in exchange for a beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c)(1) shall bear the Private Placement Legend and shall be
subject to all restrictions on transfer contained therein.

 

(2) Beneficial Interests in Regulation S Temporary Global
Note to Definitive Notes. 
Notwithstanding Sections 2.06(c)(1)(A) and (C) hereof, a beneficial
interest in the Regulation S Temporary Global Note may not be exchanged for a
Definitive Note or transferred to a Person who takes delivery thereof in the
form of a Definitive Note prior to (A) the expiration of the Restricted Period
and (B) the receipt by the Registrar of any certificates required pursuant to
Rule 903(b)(3)(ii)(B) under the Securities Act, except in the case of a
transfer pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 903 or Rule 904.

 

(3) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. 
A holder of a beneficial interest in a Restricted Global Note may
exchange such beneficial interest for an Unrestricted Definitive Note or may
transfer such beneficial interest to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Note only if:

 

(A)     such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies that it is
not (i) a Broker-Dealer, (ii) a Person participating in the distribution of the
Exchange Notes or (iii) a Person who is an affiliate (as defined in Rule 144)
of the Issuers;

 

(B)       such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the Registration Rights
Agreement;

 

(C)       such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or

 

(D)      the Registrar receives the following:

 

(i)                                     if the holder of such beneficial interest
in a Restricted Global Note proposes to exchange such beneficial interest for
an Unrestricted Definitive Note, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b) thereof; or

 

(ii)                                  if the holder of such beneficial interest
in a Restricted Global Note proposes to transfer such beneficial interest to a
Person who shall take delivery thereof in the form of an Unrestricted
Definitive Note, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;

 

and,
in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the 

 

42

 

Private
Placement Legend are no longer required in order to maintain compliance with
the Securities Act.

 

(4) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. 
If any holder of a beneficial interest in an Unrestricted 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 2.06(b)(2) hereof, the Trustee will cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly pursuant to
Section 2.06(h) hereof, and the Issuers will execute and the Trustee will
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 2.06(c)(4) will 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 Registrar
from or through the Depositary and the Participant or Indirect
Participant.  The Trustee will deliver
such Definitive Notes to the Persons in whose names such Notes are so
registered.  Any Definitive Note issued
in exchange for a beneficial interest pursuant to this Section 2.06(c)(4) will
not bear the Private Placement Legend.

 

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

 

(1) Restricted Definitive Notes to Beneficial Interests
in Restricted Global Notes. 
If any Holder of a Restricted Definitive Note proposes to exchange such
Note for a beneficial interest in a Restricted Global Note or to transfer such
Restricted Definitive Notes to a Person who takes delivery thereof in the form
of a beneficial interest in a Restricted Global Note, then, upon receipt by the
Registrar of the following documentation:

 

(A)     if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (2)(b) thereof;

 

(B)       if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item (1)
thereof;

 

(C)       if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (2) thereof;

 

(D)      if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

 

(E)        if such Restricted Definitive Note is being
transferred to an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the effect set
forth in Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable;

 

43

 

(F)        if such Restricted Definitive Note is being
transferred to Texas Genco LLC or any of its Subsidiaries, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or

 

(G)       if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,

 

the
Trustee will cancel the Restricted Definitive Note, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A) above,
the appropriate Restricted Global Note, in the case of clause (B) above, the
144A Global Note, in the case of clause (C) above, the Regulation S Global
Note, and in all other cases, the IAI Global Note.

 

(2) Restricted Definitive Notes to Beneficial Interests
in Unrestricted Global Notes. 
A Holder of a Restricted Definitive Note may exchange such Note for a
beneficial interest in an Unrestricted Global Note or transfer such Restricted
Definitive Note to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note only if:

 

(A)     such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of a
transfer, certifies that it is not (i) a Broker-Dealer, (ii) a Person
participating in the distribution of the Exchange Notes or (iii) a Person who
is an affiliate (as defined in Rule 144) of the Issuers;

 

(B)       such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights Agreement;

 

(C)       such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or

 

(D)      the Registrar receives the following:

 

(i)                                     if the Holder of such Definitive Notes
proposes to exchange such Notes for a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(c) thereof; or

 

(ii)                                  if the Holder of such Definitive Notes
proposes to transfer such Notes to a Person who shall take delivery thereof in
the form of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;

 

and,
in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.

 

44

 

Upon satisfaction of the conditions of any of the
subparagraphs in this Section 2.06(d)(2), the Trustee will cancel the
Definitive Notes and increase or cause to be increased the aggregate principal
amount of the Unrestricted Global Note.

 

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

 

If any such exchange or transfer from a Definitive
Note to a beneficial interest is effected pursuant to subparagraphs (2)(B),
(2)(D) or (3) above at a time when an Unrestricted Global Note has not yet been
issued, the Issuers will issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee will authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.

 

(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 2.06(e), the Registrar will 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 Registrar the Definitive Notes duly endorsed or accompanied
by a written instruction of transfer in form satisfactory to the 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 2.06(e).

 

(1) Restricted Definitive Notes to Restricted Definitive
Notes.  Any Restricted
Definitive Note may be transferred to and registered in the name of Persons who
take delivery thereof in the form of a Restricted Definitive Note if the
Registrar receives the following:

 

(A)     if the transfer will be made pursuant to Rule 144A,
then the transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;

 

(B)       if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the form of Exhibit
B hereto, including the certifications in item (2) thereof; and

 

(C)       if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel required by
item (3) thereof, if applicable.

 

(2) Restricted Definitive Notes to Unrestricted
Definitive Notes.  Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:

 

45

 

(A)     such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of a
transfer, certifies that it is not (i) a Broker-Dealer, (ii) a Person
participating in the distribution of the Exchange Notes or (iii) a Person who
is an affiliate (as defined in Rule 144) of the Issuers;

 

(B)       any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights Agreement;

 

(C)       any such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or

 

(D)      the Registrar receives the following:

 

(i)                                     if the Holder of such Restricted
Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (1)(d) thereof; or

 

(ii)                                  if the Holder of such Restricted
Definitive Notes proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive Note, a certificate
from such Holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof;

 

and,
in each such case set forth in this subparagraph (D), if the Registrar so
requests, an Opinion of Counsel in form reasonably acceptable to the Registrar
to the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and in
the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.

 

(3) Unrestricted Definitive Notes to Unrestricted
Definitive Notes.  A Holder of
Unrestricted Definitive Notes may transfer such Notes to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note.  Upon receipt of a request to register such a
transfer, the Registrar shall register the Unrestricted Definitive Notes
pursuant to the instructions from the Holder thereof.

 

(f)                 Exchange Offer. 
Upon the occurrence of the Exchange Offer in accordance with the
Registration Rights Agreement, the Issuers will issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee will
authenticate:

 

(1) one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of the beneficial interests in the Restricted Global Notes
accepted for exchange in the Exchange Offer by Persons that certify that (A)
they are not Broker-Dealers, (B) they are not participating in a distribution
of the Exchange Notes and (C) they are not affiliates (as defined in Rule 144)
of the Issuers; and 

 

(2) Unrestricted
Definitive Notes in an aggregate principal amount equal to the principal amount
of the Restricted Definitive Notes accepted for exchange in the Exchange Offer
by Persons that certify that (A) they are not Broker-Dealers, (B) they are not
participating in a distribution of the Exchange Notes and (C) they are not
affiliates (as defined in Rule 144) of the Issuers. 

 

46

 

Concurrently
with the issuance of such Notes, the Trustee will cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Issuers will execute and the Trustee will authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Unrestricted
Definitive Notes in the appropriate principal amount.

 

(g)              Legends. 
The following legends will appear on the face of all Global Notes and
Definitive Notes issued under this Indenture unless specifically stated
otherwise in the applicable provisions of this Indenture.

 

(1) Private Placement Legend.

 

(A)     Except as permitted by subparagraph (B) below, each
Global Note and each Definitive Note (and all Notes issued in exchange therefor
or substitution thereof) shall bear the legend in substantially the following
form:

 

“THE
NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR
(5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND OTHER JURISDICTIONS.”

 

(B)       Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(4), (c)(3), (c)(4),
(d)(2), (d)(3), (e)(2), (e)(3) or (f) of this Section 2.06 (and all Notes
issued in exchange therefor or substitution thereof) will not bear the Private
Placement Legend.

 

(2) Global Note Legend.  Each Global Note will bear a legend in
substantially the following form:

 

“THIS
GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE 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 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUERS.

 

47

 

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 ISSUERS OR THEIR 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.”

 

(3) Regulation S Temporary Global Note Legend.  The Regulation S Temporary Global Note will
bear a Legend in substantially the following form:

 

“THE
RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS
AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED
IN THE INDENTURE (AS DEFINED HEREIN). 
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S
TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.”

 

(h)              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 will be returned to or retained and canceled by the
Trustee in accordance with Section 2.11 hereof. 
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 an endorsement will be made on such Global Note
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 an endorsement will be made on such Global Note by
the Trustee or by the Depositary at the direction of the Trustee to reflect
such increase.

 

(i)                  General Provisions Relating to
Transfers and Exchanges.

 

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

 

(2) No service
charge will be made to a Holder of a beneficial interest in a Global Note or to
a Holder of a Definitive Note for any registration of transfer or exchange, but
the Issuers 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 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).

 

48

 

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

 

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

 

(5) Neither the
Registrar nor the Issuers will 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 Issuers 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 Issuers shall be affected by notice
to the contrary.

 

(7) The Trustee
will 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 Registrar pursuant to this Section 2.06 to effect a registration of
transfer or exchange may be submitted by facsimile.

 

Section 2.07                                Replacement Notes.

 

If
any mutilated Note is surrendered to the Trustee, the Registrar or the Issuers
and the Trustee receives evidence to its satisfaction of the ownership and
destruction, loss or theft of any Note, the Issuers will issue and the Trustee,
upon receipt of an Authentication Order, will authenticate a replacement Note
if the Trustee’s requirements are met. 
If required by the Trustee or the Issuers, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Trustee and
the Issuers to protect the Issuers, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced.  The Issuers may charge for its
expenses in replacing a Note.

 

Every
replacement Note is a contractual obligation of the Issuers and will be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.

 

49

 

Section 2.08                                Outstanding Notes.

 

The
Notes outstanding at any time are all the Notes authenticated by the Trustee
except for those canceled by it, those delivered to it for cancellation, those
reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section 2.08
as not outstanding.  Except as set forth in
Section 2.09 hereof, a Note does not cease to be outstanding because the
Issuers or an Affiliate of the Issuers holds the Note.

 

If
a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Note is
held by a protected purchaser.

 

If
the principal amount of any Note is considered paid under Section 4.01 hereof,
it ceases to be outstanding and interest on it ceases to accrue.

 

If
the Paying Agent (other than Texas Genco LLC or any of its Subsidiaries or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes will be deemed to be no longer outstanding and will cease to accrue
interest.

 

Section 2.09                                Treasury Notes.

 

In
determining whether the Holders of the required principal amount of Notes have
concurred in any direction, waiver or consent, Notes owned by the Issuers or
any Guarantor, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Issuers or
any Guarantor, will be considered as though not outstanding, except that for
the purposes of determining whether the Trustee will be protected in relying on
any such direction, waiver or consent, only Notes that the Trustee knows are so
owned will be so disregarded.

 

Section 2.10                                Temporary Notes.

 

Until
certificates representing Notes are ready for delivery, the Issuers may prepare
and the Trustee, upon receipt of an Authentication Order, will authenticate
temporary Notes.  Temporary Notes will be
substantially in the form of certificated Notes but may have variations that
the Issuers considers appropriate for temporary Notes and as may be reasonably acceptable
to the Trustee.  Without unreasonable
delay, the Issuers will prepare and the Trustee will authenticate definitive
Notes in exchange for temporary Notes.

 

Holders
of temporary Notes will be entitled to all of the benefits of this Indenture.

 

Section 2.11                                Cancellation.

 

The
Issuers at any time may deliver Notes to the Trustee for cancellation.  The Registrar and Paying Agent will forward
to the Trustee any Notes surrendered to them for registration of transfer,
exchange or payment.  The Trustee or, at
the direction of the Trustee, the Registrar or the Paying Agent (other than
Texas Genco LLC or any Subsidiary) and no one else will cancel all Notes
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and will destroy canceled Notes (subject to the record retention
requirement of the Exchange Act). 
Certification of the destruction of all canceled Notes will be delivered
to the Issuers.  The Issuers may not
issue new Notes to replace Notes that it has paid or that have been delivered
to the Trustee for cancellation.

 

50

 

Section 2.12                                Defaulted Interest.

 

If
the Issuers default in a payment of interest on the Notes, it will pay the
defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof.  The Issuers
will notify the Trustee in writing of the amount of defaulted interest proposed
to be paid on each Note and the date of the proposed payment.  The Issuers will fix or cause to be fixed
each such special record date and payment date; provided that no such special record date may be less than
10 days prior to the related payment date for such defaulted interest.  At least 15 days before the special record
date, the Issuers (or, upon the written request of the Issuers, the Trustee in
the name and at the expense of the Issuers) will mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid. 
The Issuers may make payment of any defaulted interest in any other
lawful manner not inconsistent with the requirements (if applicable) of any
securities exchange on which the Notes may be listed and, upon such notice as
may be required by such exchange, if, after written notice given by the Issuers
to the Trustee of the proposed payment pursuant to this sentence, such manner
of payment shall be deemed practicable by the Trustee.

 

Section 2.13                                Computation of Interest.

 

Interest
on the Notes shall be computed on the basis of a 360-day year of twelve 30-day
months and actual days elapsed.

 

ARTICLE
3

REDEMPTION AND PREPAYMENT

 

Section 3.01                                Notices to Trustee.

 

If
the Issuers elect to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it must furnish to the Trustee, at least 30
days but not more than 60 days before a redemption date, an Officer’s
Certificate setting forth:

 

(1) the clause of
this 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 at any time, selection of such
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
such Notes are listed, or if such Notes are not so listed, on a pro rata basis;
provided that no Notes of $2,000
or less shall be purchased or redeemed in part.

 

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

 

The
Trustee will promptly notify the Issuers in writing of the Notes selected for
redemption or purchase and, in the case of any Note selected for partial
redemption or purchase, the principal amount 

 

51

 

thereof
to be redeemed or purchased.  Notes and
portions of Notes selected will be in amounts of $2,000 or whole multiples of
$1,000 in excess thereof; except that if, but only if, all of the Notes of a
Holder are to be redeemed or purchased, the entire outstanding amount of Notes
held by such Holder, even if not a multiple of $1,000, shall be redeemed or
purchased.  Except as provided in the
preceding sentence, provisions of this Indenture that apply to Notes called for
redemption or purchase also apply to portions of Notes called for redemption or
purchase.

 

Section 3.03                                Notice of Redemption.

 

Subject
to the provisions of Section 3.09 hereof, at least 30 days but not more than 60
days before a redemption date, the Issuers will 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 Indenture pursuant to Articles 8 or 11 hereof.

 

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 Issuers default 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 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 Issuers’ request, the Trustee will give the notice of redemption in the
Issuers’ names and at their expense; provided,
however, that the Issuers have delivered to the Trustee, at least 35
days prior to the redemption date (unless a shorter notice shall be agreed to
by the Trustee), 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.  The 

 

52

 

notice,
if mailed in a manner herein provided in Section 3.03, shall be conclusively
presumed to have been given, whether or not the Holder receives such
notice.  In any case, failure to give
such notice by mail or any defect in the notice to the Holder of any Note
designated for redemption in whole or in part shall not affect the validity of
the proceedings for the redemption of any other Note.  A notice of redemption may not be
conditional.

 

Section 3.05                                Deposit of Redemption or Purchase
Price.

 

On
or before 10:00 a.m. New York time on the redemption or purchase date, the
Issuers will deposit with the Trustee or with the Paying Agent money sufficient
to pay the redemption or purchase price of and accrued interest and Additional
Interest, if any, on all Notes to be redeemed or purchased on that date.  The Trustee or the Paying Agent will promptly
return to the Issuers any money deposited with the Trustee or the Paying Agent by
the Issuers in excess of the amounts necessary to pay the redemption or
purchase price of, and accrued interest and Additional Interest, if any, on,
all Notes to be redeemed or purchased.

 

If
the Issuers comply 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 to the redemption or purchase date
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 Issuers 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 Trustee will
authenticate for the Holder at the expense of the Issuers a new Note equal in
principal amount to the unredeemed or unpurchased portion of the Note
surrendered in the name of the Holder thereon upon cancellation of the original
Note.  It is understood that,
notwithstanding any other Section herein, only an Authentication Order and not
an Opinion of Counsel or Officer’s Certificate is required for the Trustee to
authenticate such new Note.

 

Section 3.07                                Optional Redemption.

 

(a)               At any time prior to December 15, 2007, the Issuers
may, at their option, redeem up to 40% of the original aggregate principal
amount of Notes issued under this Indenture less any Notes redeemed pursuant to
the STP Call at a redemption price equal to 106.875 % of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon and
Additional Interest, if any, to the redemption date, subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date, with the net proceeds of one or more Equity
Offerings of the Issuers or any direct or indirect parent of the Issuers to the
extent such net proceeds are contributed to the Issuers; provided that: 

 

(1) at least 50%
of the sum of the original aggregate principal amount of Notes issued under
this Indenture after the Issue Date remains outstanding immediately after the
occurrence of such redemption; and 

 

53

 

(2) the redemption
occurs within 90 days of the date of closing of each such Equity Offering.

 

(b)              At any time prior to December 15, 2009, the Issuers
may also redeem all or a part of the Notes, upon not less than 30 nor more than
60 days’ prior notice mailed by first-class mail to each Holder’s registered
address, 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 and
Additional Interest, if any, to the date of redemption (the “Redemption Date”), subject to the rights
of Holders of Notes on the relevant record date to receive interest due on the
relevant interest payment date.

 

(c)               In addition, if at any time the Transaction Agreement
is terminated or the Issuers have abandoned the acquisition of Texas Genco
Holdings, Inc. (as determined by the Issuers in their sole discretion), the
Issuers may, at their option, redeem up to $200.0 million in aggregate
principal amount of Notes issued under this Indenture (the “STP Call”) at a redemption price equal to
101% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon and Additional
Interest, if any, to the redemption date, subject to the rights of Holders of
Notes on the relevant record date to receive interest due on the relevant
interest payment date; provided,
that the redemption will be completed on or prior to April 30, 2006 and so long
as the Nuclear Acquisition has not been or will not be consummated; provided  further
that at least 50% of the sum of the original aggregate principal amount of the
Notes issued under this Indenture remains outstanding immediately after the
occurrence of such redemption.

 

(d)              Except pursuant to the preceding paragraphs,
the Notes will not be redeemable at the Issuer’s option prior to December 15,
2009.

 

(e)               From and after December 15, 2009, the Issuers may
redeem the Notes, in whole or in part, upon not less than 30 nor more than 60
days’ prior notice by first class mail, postage prepaid, with a copy to the
Trustee, to each Holder of Notes to the address of such Holder appearing in the security register
at the redemption prices (expressed as percentages of principal amount) set
forth below, plus accrued and unpaid interest thereon and Additional Interest,
if any, to the applicable redemption date, subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date, if redeemed during the twelve-month period beginning on
December 15 of each of the years indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2009

  	
   

  	
  103.438

  	
  %

  
	
  2010

  	
   

  	
  102.292

  	
  %

  
	
  2011

  	
   

  	
  101.146

  	
  %

  
	
  2012 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

Unless
the Issuers default in the payment of the redemption price, interest will cease
to accrue on the Notes or portions thereof called for redemption on the
applicable redemption date.

 

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

 

Section 3.08                                Mandatory Redemption.

 

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

 

54

 

Section 3.09                                Offer to Purchase by Application of
Excess Proceeds.

 

In
the event that, pursuant to Section 4.10 hereof, the Issuers are required to
commence an offer to all Holders to purchase Notes (an “Asset Sale Offer”), they will follow the
procedures specified below.

 

The
Asset Sale Offer shall be made to all Holders and all holders of other
Indebtedness that is pari passu
with the Notes containing provisions similar to those set forth in this
Indenture with respect to offers to purchase or redeem with the proceeds of
sales of assets.  The Asset Sale Offer
will remain open for a period of at least 20 Business Days following its
commencement and not more than 40 Business Days, except to the extent that a
longer period is required by applicable law (the “Offer Period”).  No
later than seven Business Days after the termination of the Offer Period (the “Purchase Date”), the Issuers will apply
all Excess Proceeds (the “Offer Amount”)
to the purchase of Notes and such other pari
passu Indebtedness (on a pro rata
basis, if applicable) or, if less than the Offer Amount has been tendered, all
Notes and other Indebtedness tendered in response to the Asset Sale Offer.  Payment for any Notes so purchased will be
made in the same manner as interest payments are made.

 

If
the Purchase Date is on or after an interest record date and on or before the
related interest payment date, any accrued and unpaid interest and Additional
Interest, if any, up to but excluding the Purchase Date, will be paid to the
Person in whose name a Note is registered at the close of business on such
record date, and no additional interest will be payable to Holders who tender
Notes pursuant to the Asset Sale Offer.

 

Upon
the commencement of an Asset Sale Offer, the Issuers will send, by first class
mail, a notice to the Trustee and each of the Holders, with a copy to the
Trustee.  The notice will contain all
instructions and materials necessary to enable such Holders to tender Notes
pursuant to the Asset Sale Offer.  The
notice, which will govern the terms of the Asset Sale Offer, will state:

 

(1) that the Asset
Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof
and the length of time the Asset Sale Offer will remain open;

 

(2) the Offer
Amount, the purchase price and the Purchase Date;

 

(3) that any Note
not tendered or accepted for payment will continue to accrue interest;

 

(4) that, unless
the Issuers default in making such payment, any Note accepted for payment
pursuant to the Asset Sale Offer will cease to accrue interest after the
Purchase Date;

 

(5) that Holders
electing to have a Note purchased pursuant to an Asset Sale Offer may elect to
have Notes purchased in integral multiples of $1,000 only;

 

(6) that Holders
electing to have Notes purchased pursuant to any Asset Sale Offer will be
required to surrender the Note, with the form entitled “Option of Holder to
Elect Purchase” attached to the Notes completed, or transfer by book-entry
transfer, to the Issuers, a Depositary, if appointed by the Issuers, or a
Paying Agent at the address specified in the notice at least three days before
the Purchase Date;

 

(7) that Holders
will be entitled to withdraw their election if the Issuers, the Depositary or
the Paying Agent, as the case may be, receives, not later than the expiration
of the Offer Period, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Note the
Holder delivered for purchase and a statement that such Holder is withdrawing
his election to have such Note purchased;

 

55

 

(8) that, if the
aggregate principal amount of Notes and other pari
passu Indebtedness surrendered by holders thereof exceeds the Offer
Amount, the Issuers will select the Notes and other pari passu Indebtedness to be purchased on a pro rata basis based on the principal
amount of Notes and such other pari passu
Indebtedness surrendered (with such adjustments as may be deemed appropriate by
the Issuers so that only Notes in denominations of $2,000, or integral
multiples of $1,000 in excess thereof, will be purchased); and

 

(9) that Holders
whose Notes were purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered (or
transferred by book-entry transfer).

 

On
or before the Purchase Date, the Issuers will, to the extent lawful, accept for
payment, on a pro rata basis to
the extent necessary, all Notes or portions thereof properly tendered pursuant
to the Asset Sale Offer, and will 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 all Notes or portions thereof so
tendered.  The Issuers, the Depositary or
the Paying Agent, as the case may be, will promptly mail or deliver to each
tendering Holder an amount equal to the purchase price of the Notes tendered by
such Holder and accepted by the Issuers for purchase, and the Issuers will
promptly issue a new Note, and the Trustee, upon an Authentication Order, will
authenticate and mail or deliver (or cause to be transferred by book entry)
such new Note to such Holder (it being understood that, notwithstanding any
Sections in the Indenture to the contrary, no other Officer’s Certificate or
any Opinion of Counsel is required), in a principal amount equal to any
unpurchased portion of the Note surrendered, provided
that each such new Note shall be in a principal amount of $2,000 or an integral
multiple of $1,000 in excess thereof. 
Any Note not so accepted shall be promptly mailed or delivered by the
Issuers to the Holder thereof.  The
Issuers will publicly announce the results of the Asset Sale Offer on the
Purchase Date.

 

Other
than as specifically provided in this Section 3.09, 4.10 or 4.14 any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.

 

Section 3.10                                Special Mandatory Redemption.

 

In
the event that the Initial Acquisition is not consummated upon the earlier to
occur of (A) the end of the tenth calendar day following the Issue Date and (B)
the date of the termination of the Transaction Agreement, then the Issuers will
redeem all, but not less than all, of the Notes, at a redemption price in cash
equal to 100% of the issue price of the Notes plus accrued and unpaid interest
to, but excluding, the redemption date pursuant to the terms of the Escrow
Agreement.  Any redemption made pursuant
to this Section 3.10 shall be made pursuant to the procedures set forth in the
Escrow Agreement.

 

ARTICLE 4

COVENANTS

 

Section 4.01                                Payment of Notes.

 

The
Issuers will pay or cause to be paid the principal of, premium, if any, and
interest and Additional Interest, if any, on, the Notes on the dates and in the
manner provided in the Notes.  Principal,
premium, if any, and interest and Additional Interest, if any will be
considered paid on the date due if the Paying Agent, if other than Texas Genco
LLC or any of its Subsidiaries, holds as of 10:00 a.m. Eastern Time on the due
date money deposited by the Issuers in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest then due.  The Issuers will pay
all 

 

56

 

Additional
Interest, if any, in the same manner on the dates and in the amounts set forth
in the Registration Rights Agreement.

 

The
Issuers will pay interest on overdue principal (including post-petition
interest in any proceeding under any Bankruptcy Law) and on overdue
installments of interest and Additional Interest at the same rate per annum
borne by the Notes to the extent lawful.

 

Section 4.02                                Maintenance of Office or Agency. 

 

The
Issuers will 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, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Issuers in respect of the Notes and this Indenture may be served.  The Issuers will 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 Issuers
fail 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 address of the Trustee set forth in
Section 12.02 hereof.  

 

The
Issuers 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 Issuers of their
obligation to maintain an office or agency in the Borough of Manhattan, the
City of New York for such purposes.  The
Issuers will 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
Issuers hereby designate the Corporate Trust Office of the Trustee as one such
office or agency of the Issuers in accordance with Section 2.03 hereof.

 

Section 4.03                                Reports. 

 

(a)               Whether or not required by the SEC, so long as any
Notes are outstanding, Texas Genco LLC will furnish to the Holders of Notes,
within the time periods specified in the SEC’s rules and regulations:

 

(1) all quarterly
and annual financial information that would be required to be contained in a
filing with the SEC on Forms 10-Q and 10-K if Texas Genco LLC were required to
file such forms, including a “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and, with respect to the annual
information only, a report on the annual financial statements thereon by Texas
Genco LLC’s certified independent accountants; and

 

(2) all current
reports that would be required to be filed with the SEC on Form 8-K if Texas
Genco LLC were required to file such reports. 

 

In
addition, whether or not required by the SEC, Texas Genco LLC will file a copy
of all of the information and reports referred to in clauses (1) and (2) above
with the SEC for public availability within the time periods specified in the
SEC’s rules and regulations (unless the SEC will not accept such a filing) and
make such information available to securities analysts and prospective
investors upon request.

 

(b)              If at any time any direct or indirect parent of Texas
Genco LLC becomes a Guarantor (there being no obligation of such parent to do
so), holds no material assets other than cash, Cash Equivalents and the Capital
Stock of Texas Genco LLC (and performs the related incidental activities
associated with 

 

57

 

such ownership) and complies with the requirements of
Rule 3-10 of Regulation S-X promulgated by the SEC (or any successor
provision), the reports, information and other documents required to be filed
and furnished to the holders of the Notes pursuant to this Section 4.03 may, at
the option of Texas Genco LLC, be filed by and be those of such parent rather
than Texas Genco LLC.

 

(c)               Notwithstanding the foregoing, such requirements shall
be deemed satisfied prior to the commencement of the Exchange Offer or the
effectiveness of the Shelf Registration Statement by the filing with the SEC of
the Exchange Offer Registration Statement and/or Shelf Registration Statement,
and any amendments thereto, with such financial information that satisfies
Regulation S-X of the Securities Act.

 

Section 4.04                                Compliance Certificate. 

 

(a)               The Issuers and each Guarantor (to the extent that
such Guarantor is so required under the TIA) shall deliver to the Trustee,
within 90 days after the end of each fiscal year of Texas Genco LLC commencing
with the fiscal year ended December 31, 2005, an Officer’s Certificate stating
that a review of the activities of the Issuers and Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Issuers have kept, observed,
performed and fulfilled their obligations under this Indenture, and further
stating, as to the Officer signing such certificate, that to the best of his or
her knowledge the Issuers have kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and are not in default in the
performance or observance of any of the terms, provisions and conditions of
this 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 Issuers are taking or propose to take with respect
thereto).

 

(b)              So long as any of the Notes are outstanding, Texas
Genco LLC will deliver to the Trustee as soon as possible after any Officer has
actual knowledge of any Default or Event of Default, an Officer’s Certificate
specifying such Default or Event of Default and what action Texas Genco LLC is
taking or proposes to take with respect thereto.

 

Section 4.05                                Taxes. 

 

The
Issuers will pay, and will cause each of Texas Genco LLC’s 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 the Holders of the Notes.

 

Section 4.06                                Stay, Extension and Usury Laws. 

 

The
Issuers and each of the Guarantors covenant (to the extent that they may
lawfully do so) that they will 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 this Indenture; and the
Issuers and each of the Guarantors (to the extent that they may lawfully do so)
hereby expressly waive all benefit or advantage of any such law, and covenant
that they will not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law has been
enacted.

 

58

 

Section 4.07                                Restricted Payments. 

 

(a)               Texas Genco LLC will not, and will not permit any
Restricted Subsidiary to, directly or indirectly:

 

(1) declare or pay
any dividend or make any distribution on account of Texas Genco LLC’s or any
Restricted Subsidiary’s Equity Interests, including any dividend or
distribution payable in connection with any merger or consolidation other than
(A) dividends or distributions by Texas Genco LLC payable in Equity Interests
(other than Disqualified Stock) of Texas Genco LLC or in options, warrants or
other rights to purchase such Equity Interests or (B) dividends or
distributions by a Restricted Subsidiary so long as, in the case of any
dividend or distribution payable on or in respect of any class or series of
securities issued by a Subsidiary other than a Wholly-Owned Subsidiary, Texas
Genco LLC or a Restricted Subsidiary receives at least its pro rata share of such dividend or
distribution in accordance with its Equity Interests in such class or series of
securities;

 

(2) purchase,
redeem, defease or otherwise acquire or retire for value any Equity Interests
of Texas Genco LLC or any direct or indirect parent of Texas Genco LLC,
including in connection with any merger or consolidation;

 

(3) make any
principal payment on, or redeem, repurchase, defease or otherwise acquire or
retire for value in each case, prior to any scheduled repayment, sinking fund
payment or maturity, any Subordinated Indebtedness, other than (x) Indebtedness
permitted under clauses (7) and (8) of Section 4.09 hereof or (y) the purchase,
repurchase or other acquisition of Subordinated Indebtedness purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of purchase,
repurchase or acquisition; or

 

(4) make any
Restricted Investment (all such payments and other actions set forth in these
clauses (1) through (4) above being collectively referred to as “Restricted Payments”), 

 

unless,
at the time of such Restricted Payment:

 

(i)                                     no Default or Event of Default has occurred
and is continuing or would occur as a consequence of such Restricted Payment; 

 

(ii)                                  immediately after giving effect to such
transaction on a pro forma basis, Texas Genco LLC could incur $1.00 of
additional Indebtedness under the provisions of Section 4.09(a) hereof; and

 

(iii)                               such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Texas Genco LLC and its Restricted
Subsidiaries after the Issue Date (including Restricted Payments permitted by
Section 4.07(b)(1), (2) (with respect to the payment of dividends on Refunding
Capital Stock pursuant to clause (b) thereof only), (5), (6)(A), (6)(C) and
(8), but excluding all other Restricted Payments permitted by Section 4.07(b)
hereof), is less than the sum of:

 

(A)                              50% of the Consolidated Net Income of
Texas Genco LLC for the period (taken as one accounting period) from the
beginning of the first fiscal quarter commencing after the Issue Date to the
end of Texas Genco LLC’s most recently ended fiscal quarter for which internal
financial statements are available at the time of such 

 

59

 

Restricted Payment or, in
the case such Consolidated Net Income for such period is a deficit, minus 100%
of such deficit; plus 

 

(B)                                100% of the aggregate net cash proceeds
and the Fair Market Value of marketable securities or other property received
by Texas Genco LLC since immediately after the Issue Date (other than net cash
proceeds to the extent such net cash proceeds have been used to incur
Indebtedness, Disqualified Stock or preferred stock pursuant to clause (23) of
Section 4.09(b) hereof ) from the issue or sale of

 

(i)                                   Equity Interests of Texas Genco LLC,
including Retired Capital Stock (as defined below), but excluding cash proceeds
and the Fair Market Value of marketable securities or other property received
from the sale of:

 

(A) Equity Interests to members of management,
directors or consultants of Texas Genco LLC, any direct or indirect parent
corporation of Texas Genco LLC and Texas Genco LLC’s Subsidiaries after the
Issue Date to the extent such amounts have been applied to Restricted Payments
made in accordance with clause (4) of Section 4.07(b) hereof; and 

 

(B) Designated Preferred Stock; 

 

and
to the extent actually contributed to Texas Genco LLC, Equity Interests of
Texas Genco LLC’s direct or indirect parent corporations (excluding
contributions of the proceeds from the sale of Designated Preferred Stock of
such corporations) or 

 

(ii)                                debt securities of Texas Genco LLC that
have been converted into such Equity Interests of Texas Genco LLC; 

 

provided, however, that this
clause (2) will not include the proceeds from (a) Refunding Capital Stock (as
defined below), (b) Equity Interests or converted debt securities of Texas
Genco LLC sold to a Restricted Subsidiary or Texas Genco LLC, as the case may
be, (c) Disqualified Stock or debt securities that have been converted into
Disqualified Stock or (d) Excluded Contributions; plus

 

(C)                                100% of the aggregate amount of cash and
the Fair Market Value of marketable securities or other property contributed to
the capital of Texas Genco LLC following the Issue Date (other than net cash
proceeds to the extent such net cash proceeds have been used to incur
Indebtedness, Disqualified Stock or preferred stock pursuant to clause (23) of
Section 4.09(b) hereof) (other than by a Restricted Subsidiary and other than
by any Excluded Contributions); plus

 

(D)                               100% of the aggregate amount received in
cash and the Fair Market Value of marketable securities or other property
received by means of: 

 

(i)                                   the sale or other disposition (other than
to Texas Genco LLC or a Restricted Subsidiary) of Restricted Investments made
by Texas Genco LLC and its Restricted Subsidiaries and repurchases and
redemptions of such Restricted Investments from Texas Genco LLC and its
Restricted Subsidiaries and repayments of loans or advances which constitute
Restricted Investments by Texas Genco LLC and its Restricted Subsidiaries; or 

 

60

 

(ii)                                the sale (other than to Texas Genco LLC
or a Restricted Subsidiary) of the stock of an Unrestricted Subsidiary or a
distribution from an Unrestricted Subsidiary (other than in each case to the
extent the Investment in such Unrestricted Subsidiary was made by Texas Genco
LLC or a Restricted Subsidiary pursuant to clause (9) of Section 4.07(b) hereof
or to the extent such Investment constituted a Permitted Investment) or a
dividend from an Unrestricted Subsidiary; plus

 

(E)                                 in the case of the redesignation of an
Unrestricted Subsidiary as a Restricted Subsidiary, the Fair Market Value of
the Investment in such Unrestricted Subsidiary, as determined at the time of
the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary
(and if such Fair Market Value may exceed (a) $10.0 million, then Texas Genco
LLC will provide an Officer’s Certificate with respect to the Fair Market Value
of the Investment or (b) $20.0 million, Texas Genco LLC will provide a
resolution adopted by the majority of the Board of Directors with respect to
the Fair Market Value of the Investment), other than an Unrestricted Subsidiary
to the extent the Investment in such Unrestricted Subsidiary was made by Texas
Genco LLC or a Restricted Subsidiary pursuant to clause (9) of Section 4.07(b)
or to the extent such Investment constituted a Permitted Investment.

 

(b)              The foregoing provisions of Section 4.07(a) will not prohibit:

 

(1) the payment of
any dividend or distribution within 60 days after the date of declaration of
the dividend, if at the date of declaration such payment would have complied
with the provisions of this Indenture; 

 

(2) the
redemption, repurchase, retirement or other acquisition of any Equity Interests
(“Retired Capital Stock”) or
Subordinated Indebtedness of Texas Genco LLC, or any Equity Interests of any
direct or indirect parent corporation of Texas Genco LLC, in exchange for, or
out of the proceeds of the substantially concurrent sale (other than to a
Restricted Subsidiary) of, Equity Interests of Texas Genco LLC (in each case,
other than any Disqualified Stock) (“Refunding
Capital Stock”) and (b) if immediately prior to the retirement of
Retired Capital Stock, the declaration and payment of dividends thereon was
permitted under clause (6) of this Section 4.09(b), the declaration and payment
of dividends on the Refunding Capital Stock (other than Refunding Capital Stock
the proceeds of which were used to redeem, repurchase, retire or otherwise
acquire any Equity Interests of any direct or indirect parent company of Texas
Genco LLC) in an aggregate amount per year no greater than the aggregate amount
of dividends per annum that was declarable and payable on such Retired Capital
Stock immediately prior to such retirement; 

 

(3) the
defeasance, redemption, repurchase or other acquisition or retirement of
Subordinated Indebtedness of Texas Genco LLC made by exchange for, or out of
the proceeds of the substantially concurrent sale of, new Indebtedness of Texas
Genco LLC which is incurred in compliance with Section 4.09 hereof so long as:

 

(A)     the principal amount of such new Indebtedness does not
exceed the principal amount (or accreted value, if applicable) of the
Subordinated Indebtedness being so redeemed, repurchased, acquired or retired
for value, plus the amount of any reasonable premium required to be paid under
the terms of the instrument governing the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired and any reasonable fees and expenses
incurred in the issuance of such new Indebtedness;

 

61

 

(B)       such Indebtedness is subordinated to the Notes at
least to the same extent as such Subordinated Indebtedness so purchased,
exchanged, redeemed, repurchased, acquired or retired for value;

 

(C)       such Indebtedness has a final scheduled maturity date
equal to or later than the final scheduled maturity date of the Subordinated
Indebtedness being so redeemed, repurchased, acquired or retired; and 

 

(D)      such Indebtedness has a Weighted Average Life to
Maturity equal to or greater than the remaining Weighted Average Life to
Maturity of the Subordinated Indebtedness being so redeemed, repurchased,
acquired or retired;

 

(4) a Restricted
Payment to pay for the repurchase, retirement or other acquisition or
retirement for value of common Equity Interests of Texas Genco LLC or any of
its direct or indirect parent companies held by any future, present or former
employee, director, manager or consultant of Texas Genco LLC, any of its
Subsidiaries or any of its direct or indirect parent corporations pursuant to
any management equity plan or stock option plan or any other management or
employee benefit plan or agreement or the repurchase for value of any common
equity interest of Texas Genco LLC in the open market to satisfy stock options
issued by Texas Genco LLC that are outstanding; provided, however,
that the aggregate Restricted Payments made under this clause (4) do not exceed
in any calendar year $10.0 million (with unused amounts in any calendar year
being carried over to succeeding calendar years subject to a maximum (without
giving effect to the following proviso) of $20.0 million in any calendar year);
provided, further, that such amount in any calendar
year may be increased by an amount not to exceed:

 

(A)     the cash proceeds from the sale of Equity Interests of
Texas Genco LLC and, to the extent contributed to Texas Genco LLC, Equity
Interests of any of Texas Genco LLC’s direct or indirect parent corporations,
in each case to members of management, directors, managers or consultants of
Texas Genco LLC, any of its Subsidiaries or any of its direct or indirect
parent corporations that occurs after the Issue Date, to the extent the cash
proceeds from the sale of such Equity Interests have not otherwise been applied
to the payment of Restricted Payments by virtue of clause (iii) of Section
4.07(a) hereof; plus 

 

(B)       the cash proceeds of key man life insurance policies
received by Texas Genco LLC and its Restricted Subsidiaries after the Issue
Date; less 

 

(C)       the amount of any Restricted Payments previously made
pursuant to clauses (A) and (B) of this clause (4); 

 

and
provided, further, that cancellation of Indebtedness
owing to Texas Genco LLC from members of management of Texas Genco LLC, any of
its direct or indirect parent corporations or any Restricted Subsidiary in
connection with a repurchase of Equity Interests of Texas Genco LLC or any of its
direct or indirect parent corporations will not be deemed to constitute a
Restricted Payment for purposes of this Section 4.07 or any other provision of
this Indenture; 

 

(5) the
declaration and payment of dividends to holders of any class or series of Disqualified
Stock of Texas Genco LLC or any other Restricted Subsidiary issued in
accordance with Section 4.09 hereof to the extent such dividends are included
in the definition of Fixed Charges; 

 

62

 

(6)                           (A)       (A) the
declaration and payment of dividends to holders of any class or series of
Designated Preferred Stock (other than Disqualified Stock) issued by Texas
Genco LLC after the Issue Date; 

 

(B)       the declaration and payment of dividends to a direct
or indirect parent corporation of Texas Genco LLC, the proceeds of which will
be used to fund the payment of dividends to holders of any class or series of
Designated Preferred Stock (other than Disqualified Stock) of such parent
corporation issued after the Issue Date, provided
that the amount of dividends paid pursuant to this clause (B) shall not exceed
the aggregate amount of cash actually contributed to Texas Genco LLC from the
sale of such Designated Preferred Stock; or 

 

(C)       the declaration and payment of dividends on Refunding
Capital Stock in excess of the dividends declarable and payable thereon
pursuant to clause (2); 

 

provided, however, in the case of
each of (A), (B) and (C) of this clause (6), that for the most recently ended
four full fiscal quarters for which internal financial statements are available
immediately preceding the date of issuance of such Designated Preferred Stock
or the declaration of such dividends on Refunding Capital Stock, after giving
effect to such issuance or declaration on a pro forma basis, Texas Genco LLC
and the Restricted Subsidiaries would have had a Fixed Charge Coverage Ratio of
at least 2.00 to 1.00; 

 

(7) repurchases of
Equity Interests deemed to occur upon exercise of stock options or warrants if
such Equity Interests represent a portion of the exercise price of such options
or warrants; 

 

(8) the payment of
dividends on Texas Genco LLC’s common stock or equivalent (or the payment of
dividends to any direct or indirect parent of Texas Genco LLC of dividends in
that entity’s common stock or equivalent), following the first public offering
of Texas Genco LLC’s common stock or equivalent or the common stock or
equivalent of any of its direct or indirect parent companies after the Issue
Date, of up to 6% per annum of the net proceeds received by or contributed to
Texas Genco LLC in any public offering of common stock, other than public
offerings with respect to Texas Genco LLC’s common stock registered on Form S-8
and other than any public sale constituting an Excluded Contribution; 

 

(9) Investments
that are made with Excluded Contributions; 

 

(10) the
declaration and payment of dividends by Texas Genco LLC to, or the making of
loans to, its direct parent in amounts required for either of their respective
direct or indirect parent corporations to pay: 

 

(A)     franchise taxes and other fees, taxes and expenses
required to maintain their corporate existence; 

 

(B)       federal, state and local income taxes, to the extent
such income taxes are attributable to the income of Texas Genco LLC and the
Restricted Subsidiaries and, to the extent of the amount actually received from
its Unrestricted Subsidiaries, in amounts required to pay such taxes to the
extent attributable to the income of such Unrestricted Subsidiaries; provided, however,
that this clause (10)(B) shall not apply if clause (13) below applies; 

 

63

 

(C)       customary salary, bonus and other benefits payable to
officers and employees of any direct or indirect parent corporation of Texas
Genco LLC to the extent such salaries, bonuses and other benefits are
attributable to the ownership or operation of Texas Genco LLC and the
Restricted Subsidiaries; and 

 

(D)      general corporate overhead expenses of any direct or
indirect parent corporation of Texas Genco LLC to the extent such expenses are
attributable to the ownership or operation of Texas Genco LLC and the
Restricted Subsidiaries; 

 

(11) cash
dividends or other distributions on Texas Genco LLC’s or any Restricted
Subsidiary’s Capital Stock used to fund the Transactions and the fees and
expenses related thereto or owed to Affiliates, in each case to the extent
permitted by Section 4.11 hereof;  

 

(12) the
repurchase, redemption or other acquisition or retirement for value of any
Subordinated Indebtedness pursuant to the provisions similar to those described
under Section 4.14 hereof and Section 4.10 hereof; provided that all senior subordinated notes tendered by
holders of senior subordinated notes in connection with a Change of Control Offer
or Asset Sale Offer, as applicable, have been repurchased, redeemed or acquired
for value; 

 

(13) for so long
as Texas Genco LLC is a limited liability company that is treated as a
partnership for federal income tax purposes, Texas Genco LLC may make cash
distributions to its members, during each Quarterly Payment Period, in an
aggregate amount not to exceed the Permitted Quarterly Tax Distribution in
respect of the related Estimation Period, and if any portion of the Permitted
Quarterly Tax Distribution is not distributed during such Quarterly Payment
Period, the Permitted Quarterly Tax Distribution payable during the immediately
following four quarter period shall be increased by such undistributed portion;

 

(14) Investments
in Unrestricted Subsidiaries having an aggregate Fair Market Value, taken
together with all other Investments made pursuant to this clause (14) that are
at the time outstanding, without giving effect to the sale of an Unrestricted
Subsidiary to the extent the proceeds of such sale do not consist of cash
and/or marketable securities, not to exceed the greater of (x) $150.0 million
and (y) 3.0% of Total Assets, in each case, at the time of such Investment
(with the Fair Market Value of each Investment being measured at the time made
and without giving effect to subsequent changes in value); 

 

(15) distributions
or payments of Receivables Fees; 

 

(16) the
distribution of Excluded Asset Proceeds; 

 

(17) any
Restricted Payments from cash on the balance sheet of Texas Genco Holdings, Inc.
at the time of the Nuclear Acquisition in excess of $89.4 million, and in any
event not to exceed $75.0 million; and 

 

(18) other
Restricted Payments in an aggregate amount not to exceed $75.0 million; 

 

provided however, that at the
time of, and after giving effect to, any Restricted Payment permitted under
clauses (5), (6), (16) and (18), no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof. 

 

64

 

As
of the time of issuance of the Notes, all of Texas Genco LLC’s Subsidiaries
will be Restricted Subsidiaries. Texas Genco LLC will not permit any
Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to
the last sentence of the definition of “Unrestricted Subsidiary.” For purposes
of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all
outstanding Investments by Texas Genco LLC and its Restricted Subsidiaries
(except to the extent repaid) in the Subsidiary so designated will be deemed to
be Restricted Payments in an amount determined as set forth in the last
sentence of the definition of “Investment.” Such designation will be permitted
only if a Restricted Payment in such amount would be permitted at such time, whether
pursuant to Section 4.07(a) hereof or under clauses (9), (14) or (18), or
pursuant to the definition of “Permitted Investments,” and if such Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted
Subsidiaries will not be subject to any of the restrictive covenants set forth
in this Indenture.

 

Section 4.08                                Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries. 

 

(a)          Texas Genco LLC will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or consensual
restriction on the ability of any such Restricted Subsidiary to:

 

(1)
(A)  pay dividends or make any other
distributions to Texas Genco or any Restricted Subsidiary on its Capital Stock
or with respect to any other interest or participation in, or measured by, its
profits, or (B) pay any Indebtedness owed Texas Genco LLC or any Restricted
Subsidiary;

 

(2)  make loans or advances to Texas Genco LLC or
any Restricted Subsidiary; or

 

(3)
sell, lease or transfer any of its properties or assets to Texas Genco LLC or
any Restricted Subsidiary.

 

(b)         The restrictions in Section 4.08(a) hereof will not
apply to encumbrances or restrictions existing under or by reason of:

 

(1)
contractual encumbrances or restrictions in effect on the Issue Date and
Initial Acquisition Date, including, without limitation, pursuant to the Credit
Agreement and its related documentation and Hedging Obligations;

 

(2)
this Indenture, the Notes and the Guarantees;

 

(3)
purchase money obligations for property acquired in the ordinary course of
business and Capital Lease Obligations and Synthetic Lease Obligations that
impose restrictions of the nature discussed in clause (a)(3) above on the
property so acquired; 

 

(4)
applicable law or any applicable rule, regulation or order; 

 

(5)
any agreement or other instrument of a Person acquired by Texas Genco LLC or
any Restricted Subsidiary in existence at the time of such acquisition (but not
created in contemplation thereof), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired; 

 

(6)
contracts for the sale of assets, including, without limitation, customary
restrictions with respect to a Subsidiary pursuant to an agreement that has
been entered into

 

65

 

for
the sale or disposition of all or substantially all of the Capital Stock or
assets of such Subsidiary; 

 

(7)
secured Indebtedness otherwise permitted to be incurred pursuant to Section
4.09 hereof and Section 4.12 hereof that limit the right of the debtor to
dispose of the assets securing such Indebtedness; 

 

(8)
restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business; 

 

(9)
other Indebtedness, Disqualified Stock or preferred stock of Restricted
Subsidiaries permitted to be incurred subsequent to the Issue Date pursuant to
the provisions of Section 4.09 hereof; 

 

(10)
customary provisions in joint venture agreements, asset sale agreements,
sale-lease back agreements and other similar agreements; 

 

(11)
customary provisions contained in leases and other agreements entered into in
the ordinary course of business; 

 

(12)
any agreement for the sale or other disposition of a Restricted Subsidiary that
restricts distributions by that Restricted Subsidiary pending the sale or other
disposition; 

 

(13)
restrictions in connection with any Receivables Facility that, in the good
faith determination of the Board of Directors of Texas Genco LLC, are necessary
or advisable to effect such Receivables Facility; 

 

(14)
restrictions or conditions contained in any trading, netting, operating,
construction, service, supply, purchase, sale or similar agreement to which
Texas Genco LLC or any Restricted Subsidiary of Texas Genco LLC is a party
entered into in the ordinary course of business; provided, that such agreement prohibits the encumbrance of
solely the property or assets of Texas Genco LLC or such Restricted Subsidiary
that are the subject of such agreement, the payment rights arising thereunder
and/or the proceeds thereof and does not extend to any other asset or property
of Texas Genco LLC or such Restricted Subsidiary or the assets or property of
any other Restricted Subsidiary; and 

 

(15)
any encumbrances or restrictions of the type referred to in Section 4.08(a)
hereof imposed by any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings of the
contracts, instruments or obligations referred to in clauses (1) through (14)
of this Section 4.08(b); provided,
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are, in the good faith
judgment of the Texas Genco LLC’s Board of Directors, not materially more
restrictive with respect to such encumbrance and other restrictions than those
prior to such amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing.

 

Section 4.09                                Incurrence of Indebtedness
and Issuance of Disqualified Stock. 

 

(a)          Texas Genco LLC will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, (collectively, “incur”
and collectively, an “incurrence”)
with respect to any

 

66

 

Indebtedness
(including Acquired Indebtedness) and Texas Genco LLC will not issue any shares
of Disqualified Stock and will not permit any Restricted Subsidiary to issue
any shares of Disqualified Stock or preferred stock; provided, however, that Texas Genco LLC may incur
Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified
Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired
Indebtedness), issue shares of Disqualified Stock and issue shares of preferred
stock, if the Fixed Charge Coverage Ratio for Texas Genco LLC’s most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional Indebtedness
is incurred or such Disqualified Stock or preferred stock is issued would have
been at least 2.00 to 1.00, determined on a pro
forma basis (including a pro
forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock or
preferred stock had been issued, as the case may be, and the application of
proceeds therefrom had occurred at the beginning of such four-quarter period; provided, that the amount of Indebtedness
(other than Acquired Indebtedness), Disqualified Stock and preferred stock that
may be incurred pursuant to the foregoing by Restricted Subsidiaries that are
not Guarantors shall not exceed $100.0 million at any one time outstanding.

 

(b)         The provisions of Section 4.09(a) hereof will not
apply to any of the following items (collectively, “Permitted Debt”):

 

(1)
the incurrence of Indebtedness under Credit Facilities by Texas Genco LLC or
any of the Restricted Subsidiaries and the issuance and creation of letters of
credit and bankers’ acceptances thereunder (with letters of credit and bankers’
acceptances being deemed to have a principal amount equal to the face amount
thereof), up to an aggregate principal amount of (i) $2,175 million outstanding
at any one time prior to the consummation of the STP Acquisition and (ii)
$2,695 million outstanding at any one time subsequent to the consummation of
the STP Acquisition; 

 

(2)
the incurrence by the Issuers and any Guarantor of Indebtedness represented by
the Notes (including any Guarantee) and the Exchange Notes and related Exchange
Guarantees to be issued pursuant to the Registration Rights Agreement (other
than any Additional Notes); 

 

(3)
Existing Indebtedness (other than Indebtedness described in clauses (1) and
(2)); 

 

(4)
Indebtedness (including Capitalized Lease Obligations and Synthetic Lease
Obligations), Disqualified Stock and preferred stock incurred by Texas Genco
LLC or any of the Restricted Subsidiaries, to finance the development, construction,
purchase, lease, repairs, additions or improvement of property (real or
personal), equipment or other fixed or capital assets that is used or useful in
a Similar Business, whether through the direct purchase of assets or the
Capital Stock of any Person owning such assets, in an aggregate principal
amount which, when aggregated with the principal amount of all other
Indebtedness, Disqualified Stock and preferred stock then outstanding and
incurred pursuant to this clause (4) and including all Refinancing Indebtedness
incurred to refund, refinance or replace any other Indebtedness, Disqualified
Stock and preferred stock incurred pursuant to this clause (4), does not exceed
the greater of (x) $225.0 million and (y) 5.0% of Total Assets; 

 

(5)
Indebtedness incurred by Texas Genco LLC or any Restricted Subsidiary
constituting reimbursement obligations with respect to letters of credit issued
in the ordinary course of business, including without limitation letters of
credit in respect of workers’ compensation claims, or other Indebtedness with
respect to reimbursement type obligations

 

67

 

regarding
workers’ compensation claims; provided,
however, that upon the drawing of such letters of credit or the
incurrence of such Indebtedness, such obligations are reimbursed within 30 days
following such drawing or incurrence; 

 

(6)
Indebtedness arising from agreements of Texas Genco LLC or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or a Subsidiary, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or a Subsidiary for the purpose of financing such acquisition;
provided, however, that:

 

(A) such
Indebtedness is not reflected on the balance sheet of Texas Genco LLC or any
Restricted Subsidiary (contingent obligations referred to in a footnote to
financial statements and not otherwise reflected on the balance sheet will not
be deemed to be reflected on such balance sheet for purposes of this clause
(6)(A)); and 

 

(B) the maximum
assumable liability in respect of all such Indebtedness shall at no time exceed
the gross proceeds including noncash proceeds (the Fair Market Value of such
noncash proceeds being measured at the time received and without giving effect
to any subsequent changes in value) actually received by Texas Genco LLC and
the Restricted Subsidiary in connection with such disposition; 

 

(7)
Indebtedness of Texas Genco LLC to a Restricted Subsidiary; provided that any such Indebtedness owing
to a non-Guarantor is subordinated in right of payment to the Notes; provided, further, that that any subsequent
issuance or transfer of any Capital Stock or any other event which results in
any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
other subsequent transfer of any such Indebtedness (except to Texas Genco LLC
or another Restricted Subsidiary) shall be deemed, in each case to be an
incurrence of such Indebtedness; 

 

(8)
Indebtedness of a Restricted Subsidiary to Texas Genco LLC or another
Restricted Subsidiary; provided that:

 

(A) any such
Indebtedness is made pursuant to an intercompany note; and 

 

(B) if a Guarantor
incurs such Indebtedness to a Restricted Subsidiary that is not an Issuer or a
Guarantor such Indebtedness is subordinated in right of payment to the
Guarantee of such Guarantor; provided,
further, that any subsequent transfer of any such Indebtedness
(except to any Issuer or another Restricted Subsidiary) shall be deemed, in
each case, to be an incurrence of such Indebtedness; 

 

(9)
shares of preferred stock of a Restricted Subsidiary issued to Texas Genco LLC
or another Restricted Subsidiary; provided that
any subsequent issuance or transfer of any Capital Stock or any other event
which results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any other subsequent transfer of any such shares of preferred
stock (except to Texas Genco LLC or another Restricted Subsidiary) shall be
deemed in each case to be an issuance of such shares of preferred stock; 

 

(10)
Indebtedness incurred in respect of Hedging Obligations; 

 

68

 

(11)
obligations in respect of performance, bid, appeal and surety bonds and
completion guarantees and similar obligations provided by Texas Genco LLC or
any Restricted Subsidiary in the ordinary course of business; 

 

(12)
Indebtedness of any Guarantor in respect of such Guarantor’s Guarantee; 

 

(13)
any guarantee by the Issuers or a Restricted Subsidiary of Indebtedness or
other obligations of any Restricted Subsidiary or the Issuers so long as the
incurrence of such Indebtedness incurred by such Restricted Subsidiary or the
Issuers is permitted under the terms of this Indenture; 

 

(14)
the incurrence by the Issuers or any Restricted Subsidiary of Indebtedness,
Disqualified Stock or preferred stock which serves to extend, refund, refinance,
renew, replace or defease any Indebtedness, Disqualified Stock or preferred
stock incurred as permitted under Section 4.09(a) hereof and clauses (2) and
(3) of this Section 4.09(b), this clause (14) and clause (15) of this Section
4.09(b) or any Indebtedness, Disqualified Stock or preferred stock issued to so
refund or refinance such Indebtedness, Disqualified Stock or preferred stock
including additional Indebtedness, Disqualified Stock or preferred stock
incurred to pay premiums and fees in connection therewith (the “Refinancing Indebtedness”) prior to its
respective maturity; provided, however, that
such Refinancing Indebtedness:

 

(A) has a Weighted
Average Life to Maturity at the time such Refinancing Indebtedness is incurred
which is not less than the remaining Weighted Average Life to Maturity of the
Indebtedness, Disqualified Stock or preferred stock being refunded or
refinanced;

 

(B) to the extent
such Refinancing Indebtedness refinances (i) Indebtedness subordinated or pari passu to the Notes or any Guarantee
of the Notes, such Refinancing Indebtedness is subordinated or pari passu to the Notes or such Guarantee
at least to the same extent as the Indebtedness being refinanced or refunded or
(ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must
be Disqualified Stock or preferred stock, respectively; and 

 

(C) shall not
include:

 

(i)                                     Indebtedness, Disqualified Stock or
preferred stock of a Subsidiary that refinances Indebtedness, Disqualified
Stock or preferred stock of Texas Genco LLC;

 

(ii)                                  Indebtedness, Disqualified Stock or
preferred stock of a Subsidiary that is not a Guarantor that refinances
Indebtedness, Disqualified Stock or preferred stock of a Guarantor; or 

 

(iii)                               Indebtedness, Disqualified Stock or preferred stock of
Texas Genco LLC or a Restricted Subsidiary that refinances Indebtedness,
Disqualified Stock or preferred stock of an Unrestricted Subsidiary; 

 

and
provided, further that subclause
(A) of this clause (14) will not apply to any refunding or refinancing of any
secured Indebtedness; 

 

69

 

(15)
Indebtedness, Disqualified Stock or preferred stock of Persons that are
acquired by Texas Genco LLC or any Restricted Subsidiary or merged into Texas
Genco LLC or a Restricted Subsidiary in accordance with the terms of this
Indenture; provided that such
Indebtedness, Disqualified Stock or preferred stock is not incurred in
contemplation of such acquisition or merger; and provided further that after giving effect to such
acquisition or merger, either: 

 

(A) Texas Genco
LLC would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a)
hereof; or 

 

(B) the Fixed
Charge Coverage Ratio is greater than immediately prior to such acquisition or
merger; 

 

(16)
Indebtedness arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument drawn against insufficient funds in the
ordinary course of business, provided that
such Indebtedness is extinguished within two Business Days of its incurrence; 

 

(17)
Indebtedness of Texas Genco LLC or any Restricted Subsidiary supported by a
letter of credit issued pursuant to the Credit Facilities, in a principal
amount not in excess of the stated amount of such letter of credit; 

 

(18)
Indebtedness of Texas Genco LLC or any Restricted Subsidiary consisting of (i)
the financing of insurance premiums or (ii) take-or-pay obligations contained
in supply arrangements, in each case, in the ordinary course of business; 

 

(19)
Environmental CapEx Debt; provided,
that prior to the incurrence of any Environmental CapEx Debt, Texas Genco LLC
shall deliver to the Trustee an Officer’s Certificate designating such
Indebtedness as Environmental CapEx Debt; 

 

(20)
Indebtedness incurred to finance Necessary Capital Expenditures; provided, that prior to the incurrence of
any Indebtedness to finance Necessary Capital Expenditures, Texas Genco LLC
shall deliver to the Trustee an Officer’s Certificate designating such
Indebtedness as Necessary CapEx Debt; 

 

(21)
Indebtedness under Hedging Credit Support Facilities in an aggregate amount not
to exceed the amount permitted to be secured by Liens described in clause (31)
of the definition of “Permitted Liens;” 

 

(22)
unsecured Indebtedness in respect of obligations of Texas Genco LLC or any
Restricted Subsidiary to pay the deferred purchase price of goods or services
or progress payments in connection with such goods and services; provided, that such obligations are
incurred in connection with open accounts extended by suppliers on customary
trade terms (which require that all such payments be made within 60 days of the
incurrence of the related Indebtedness) in the ordinary course of business and
not in connection with the borrowing of money; and

 

(23)
Indebtedness, Disqualified Stock and preferred stock of Texas Genco LLC or any
Restricted Subsidiary not otherwise permitted hereunder in an aggregate
principal amount or liquidation preference, which when aggregated with the
principal amount and

 

70

 

liquidation
preference of all other Indebtedness, Disqualified Stock and preferred stock
then outstanding and incurred pursuant to this clause (23), does not at any one
time outstanding exceed the sum of:

 

(A) $450.0
million; 

 

(B) 100% of the
net cash proceeds received by Texas Genco LLC since immediately after the Issue
Date from the issue or sale of Equity Interests of Texas Genco LLC or cash
contributed to the capital of Texas Genco LLC (in each case other than (A)
proceeds of Disqualified Stock or sales of Equity Interests to Texas Genco LLC
or any of its Subsidiaries and (B) Equity Interests in connection with the
Nuclear Acquisition) as determined in accordance with clauses (iii)(B) and
(iii)(C) of Section 4.07(a) hereof  to
the extent such net cash proceeds or cash are not applied pursuant to such
clauses to make Restricted Payments or to make other investments, payments or
exchanges pursuant to Section 4.07(b) hereof or to make Permitted Investments
(other than Permitted Investments specified in clauses (a) and (c) of the
definition thereof); and 

 

(C) 40% of the
consideration paid and construction costs of the assets (other than fuel and
consumable inventory purchased in the ordinary course of business) acquired,
constructed, upgraded or expanded by Texas Genco LLC and its Restricted
Subsidiaries after the Issue Date (excluding the assets acquired in connection
with the Nuclear Acquisition and ROFR), less
40% of the consideration paid and construction costs of the assets
which increased the amount available under this clause (C) (other than fuel and
consumable inventory purchased in the ordinary course of business) sold or
otherwise disposed of by Texas Genco LLC and its Restricted Subsidiaries after
the Issue Date (excluding the assets acquired in connection with the Nuclear
Acquisition and ROFR) that were financed with Indebtedness incurred pursuant to
this clause (C) to the extent that such proceeds are not used to repay
Indebtedness pursuant to Section 4.10 hereof; provided,
further that such amounts available under this clause (C) shall be
increased or decreased giving pro forma effect to the asset to be acquired,
constructed, upgraded or expanded, or sold or otherwise disposed of.

 

Texas
Genco LLC will not incur, and will not permit any Guarantor to incur, any
Indebtedness (including Permitted Debt) that is contractually subordinated in
right of payment to any other Indebtedness of Texas Genco LLC or such Guarantor
unless such Indebtedness is also contractually subordinated in right of payment
to the Notes and the applicable Subsidiary Guarantee on substantially identical
terms; provided, however, that no
Indebtedness will be deemed to be contractually subordinated in right of
payment to any other Indebtedness of Texas Genco LLC solely by virtue of being
unsecured or by virtue of being secured on a first or junior Lien basis. 

 

For
purposes of determining compliance with this Section 4.09, in the event that an
item of Indebtedness, Disqualified Stock or Preferred Stock meets the criteria
of more than one of the categories of Permitted Indebtedness, Disqualified
Stock or Preferred Stock described in clauses (1) through (23) of this Section
4.09(b) or is entitled to be incurred pursuant to Section 4.09(a), Texas Genco
LLC will, in its sole discretion, classify or reclassify such item of
Indebtedness in any manner that complies with this Section 4.09(b) and such
item of Indebtedness, Disqualified Stock or Preferred Stock will be treated as
having been incurred pursuant to only one of such clauses or pursuant to
Section 4.09(a). Accrual of interest, the accretion of accreted value and the
payment of interest in the form of additional Indebtedness, Disqualified Stock
or Preferred Stock will not be deemed to be an incurrence of Indebtedness,
Disqualified Stock or Preferred Stock for purposes of this Section 4.09 hereof.

 

71

 

For
purposes of determining compliance with any U.S. dollar-denominated restriction
on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount
of Indebtedness denominated in a foreign currency shall be calculated based on
the relevant currency exchange rate in effect on the date such Indebtedness was
incurred, in the case of term debt, or first committed, in the case of
revolving credit debt; provided that
if such Indebtedness is incurred to refinance other Indebtedness denominated in
a foreign currency, and such refinancing would cause the applicable U.S. dollar
denominated restriction to be exceeded if calculated at the relevant currency
exchange rate in effect on the date of such refinancing, such U.S.
dollar-denominated restriction shall be deemed not to have been exceeded so
long as the principal amount of such refinancing Indebtedness does not exceed
the principal amount of such Indebtedness being refinanced. 

 

The
principal amount of any Indebtedness incurred to refinance other Indebtedness,
if incurred in a different currency from the Indebtedness being refinanced,
shall be calculated based on the currency exchange rate applicable to the
currencies in which such respective Indebtedness is denominated that is in
effect on the date of such refinancing.

 

Section
4.10                                Asset Sales. 

 

(a)          Texas Genco LLC will not, and will not permit any
Restricted Subsidiary to, cause, make or suffer to exist an Asset Sale, unless:

 

(1)
Texas Genco LLC or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the assets sold or otherwise disposed of; and

 

(2)
except in the case of a Permitted Asset Swap, at least 75% of the consideration
received in the Asset Sale by Texas Genco LLC or such Restricted Subsidiary, as
the case may be, is in the form of cash or Cash Equivalents; provided that the amount of:

 

(A) any
liabilities (as shown on Texas Genco LLC’s, or such Restricted Subsidiary’s,
most recent balance sheet or in the notes thereto) of Texas Genco LLC or any
Restricted Subsidiary, other than liabilities that are by their terms
subordinated to the Notes, that are assumed by the transferee of any such
assets (or a third party on behalf of the transferee) and for which Texas Genco
LLC or such Restricted Subsidiary has been validly released by all creditors in
writing;

 

(B) any
securities, notes or other obligations or assets received by Texas Genco LLC or
such Restricted Subsidiary from such transferee that are converted by Texas
Genco LLC or such Restricted Subsidiary into cash (to the extent of the cash
received) within 180 days following the closing of such Asset Sale; and

 

(C) any Designated
Noncash Consideration received by Texas Genco LLC or any Restricted Subsidiary
in such Asset Sale having an aggregate Fair Market Value, taken together with
all other Designated Noncash Consideration received pursuant to this clause (C)
that is at that time outstanding, not to exceed the greater of (x) $200.0
million and (y) 5.0% of Total Assets at the time of the receipt of such
Designated Noncash Consideration, with the Fair Market Value of each item of
Designated Noncash Consideration being measured at the time received and
without giving effect to subsequent changes in value;

 

72

 

shall be deemed to be
cash for purposes of this provision and for no other purpose.

 

(b)         Within 365 days after any of the Issuers’ or any
Restricted Subsidiary’s receipt of the Net Proceeds of any Asset Sale, Texas
Genco LLC or such Restricted Subsidiary may, at its option, reinvest, enter
into a binding commitment to reinvest within an additional 365 days (an “Acceptable Commitment”) (and reinvest
within 24 months from the date of receipt of Net Proceeds), or in the case of a
Casualty Event, either enter into an Acceptable Commitment or deliver to the
trustee a Restoration Certification with respect to plans to invest (and
reinvest within 24 months from the date of receipt of Net Proceeds) or may
apply the Net Proceeds from such Asset Sale: 

 

(1)                                  to permanently reduce 

 

(x) Obligations under the Credit Agreement (and, in
the case of revolving Obligations, to correspondingly reduce commitments with
respect thereto), the Notes, Guarantees of the Notes or any other Pari Passu
Indebtedness, and to correspondingly reduce commitments with respect thereto
(other than Obligations owed to the Issuer or a Restricted Subsidiary of the
Issuer); provided, that if Texas
Genco LLC shall so reduce Obligations under any Pari Passu Indebtedness (other
than Obligations under any Pari Passu Indebtedness secured by a Lien on the
assets of Texas Genco LLC or any Restricted Subsidiary), Texas Genco LLC shall
make an offer (in accordance with the procedures set forth below for an Asset
Sale Offer) to all Holders to purchase their Notes at 100% of the principal
amount thereof, plus the amount of accrued and unpaid interest, if any, on the pro rata principal amount of Notes; or 

 

(y) Indebtedness of a Restricted Subsidiary which is
not a Guarantor, other than Indebtedness owed to Texas Genco LLC or another
Restricted Subsidiary (but only to the extent such Net Proceeds from such Asset
Sale are from an Asset Sale of such Restricted Subsidiary which is not a
Guarantor); or 

 

(2)                                  to an investment in (a) any one or more
businesses, provided that such
investment in any business is in the form of the acquisition of Capital Stock
and results in Texas Genco LLC or any Restricted Subsidiary owning an amount of
the Capital Stock of such business such that it constitutes a Restricted Subsidiary,
(b) properties, (c) capital expenditures and (d) acquisitions of assets, that
in each of (a), (b), (c) and (d), are used or useful in a Similar Business
and/or replace the businesses, properties and assets that are the subject of
such Asset Sale. 

 

(c)          Notwithstanding Section 4.10(b) hereof, in the event
that regulatory approval is necessary for an asset or investment, or
construction, repair or restoration on any asset or investment has commenced,
then Texas Genco LLC or any Restricted Subsidiary shall have an additional 365
days to apply the Net Proceeds from such Asset Sale in accordance with Section
4.10(b) hereof. 

 

(d)         Any Acceptable Commitment that is later canceled or
terminated for any reason before such Net Proceeds are so applied shall be
treated as a permitted application of the Net Proceeds if Texas Genco LLC or
such Restricted Subsidiary enters into another Acceptable Commitment within the
later of (1) nine months of such cancellation or termination or (2) the
initial 365-day period. 

 

73

 

(e)          Any Net Proceeds from the Asset Sale or Casualty Event
that are not invested or applied as provided and within the time period set
forth in the first sentence of this Section 4.10(e) will be deemed to
constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds
exceeds $25.0 million, the Issuers shall make an offer to all Holders of the
Notes and, if required by the terms of any Pari Passu Indebtedness, to the
holders of such Pari Passu Indebtedness (other than with respect to Hedging
Obligations) (an “Asset Sale Offer”),
to purchase the maximum principal amount of Notes and such Pari Passu
Indebtedness that may be purchased out of the Excess Proceeds at an offer price
in cash in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest and Additional Interest, if any, to the date fixed
for the closing of such offer, in accordance with the procedures set forth in
this Indenture. The Issuers will commence an Asset Sale Offer with respect to
Excess Proceeds within ten business days after the date that Excess Proceeds
exceed $25.0 million by mailing the notice required pursuant to the terms of
this Indenture, with a copy to the Trustee. To the extent that the aggregate
amount of Notes and such Pari Passu Indebtedness tendered pursuant to an Asset
Sale Offer is less than the Excess Proceeds, Texas Genco LLC may use any
remaining Excess Proceeds for general corporate purposes, subject to other
covenants contained in this Indenture. If the aggregate principal amount of
Notes or the Pari Passu Indebtedness surrendered by such holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and
such Pari Passu Indebtedness to be purchased on a pro rata basis based on the
accreted value or principal amount of the Notes or such Pari Passu Indebtedness
tendered. Upon completion of any such Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero. 

 

(f)            Pending the final application of any Net Proceeds
pursuant to this Section 4.10, Texas Genco LLC or the applicable Restricted
Subsidiary may apply such Net Proceeds temporarily to reduce Indebtedness
outstanding under a revolving credit facility or otherwise invest such Net
Proceeds in any manner not prohibited by this Indenture. 

 

(g)         The Issuers will comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws or regulations are applicable in connection
with the repurchase of the Notes pursuant to an Asset Sale Offer. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of this Indenture, the Issuers will comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations described in this Indenture by virtue thereof. 

 

Section 4.11                                Transactions with
Affiliates. 

 

(a)          Texas Genco LLC will not, and will not permit any
Restricted Subsidiary to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate of Texas Genco LLC (each of the foregoing, an “Affiliate Transaction”) involving
aggregate payments or consideration in excess of $5.0 million, unless: 

 

(1)
such Affiliate Transaction is on terms that are not materially less favorable
to Texas Genco LLC or the relevant Restricted Subsidiary than those that would
have been obtained in a comparable transaction by Texas Genco LLC or such
Restricted Subsidiary with an unrelated Person; and

 

(2)
Texas Genco LLC delivers to the Trustee with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
payments or consideration in excess of $35.0 million, a resolution adopted by
the majority of the Board

 

74

 

of
Directors approving such Affiliate Transaction and set forth in an Officer’s
Certificate certifying that such Affiliate Transaction complies with clause (1)
of this Section 4.11(a).

 

(b)         The following items will not be deemed to be Affiliate
Transactions and, therefore, will not be subject to the provisions of Section
4.11(a)hereof:

 

(1)
Transactions between or among Texas Genco LLC and/or any of the Restricted
Subsidiaries; 

 

(2)
Restricted Payments permitted by Section 4.07 hereof and the definition of
“Permitted Investments;” 

 

(3)
the payment of management, consulting, monitoring and advisory fees and related
expenses to the Sponsors; 

 

(4)
the payment of customary fees paid to, and indemnities provided on behalf of,
officers, directors, managers, employees or consultants of Texas Genco LLC, any
of its direct or indirect parent corporations or any Restricted Subsidiary; 

 

(5)
payments by Texas Genco LLC or any Restricted Subsidiary to the Sponsors made
for any financial advisory, financing, underwriting or placement services or in
respect of other investment banking activities, including, without limitation,
in connection with acquisitions or divestitures which payments are approved by
a majority of the Board of Directors of Texas Genco LLC in good faith; 

 

(6)
transactions in which Texas Genco LLC or any Restricted Subsidiary, as the case
may be, delivers to the Trustee a letter from an Independent Financial Advisor
stating that such transaction is fair to Texas Genco LLC or such Restricted Subsidiary
from a financial point of view or meets the requirements of Section 4.11(a); 

 

(7)
payments or loans (or cancellation of loans) to employees or consultants of
Texas Genco LLC, any of its direct or indirect parent corporations or any
Restricted Subsidiary and employment agreements, stock option plans and other
compensatory arrangements which are, in each case, approved by a majority of
the Board of Directors of Texas Genco LLC in good faith; 

 

(8)
any agreement, instrument or arrangement as in effect as of the Initial
Acquisition Date, or any amendment thereto (so long as any such amendment is
not disadvantageous to the holders in any material respect as reasonably
determined by Texas Genco LLC); 

 

(9)
the existence of, or the performance by Texas Genco LLC or any of its
Restricted Subsidiaries of its obligations under the terms of, any stockholders
agreement or limited liability company agreement (including any registration
rights agreement or purchase agreement related thereto) to which it is a party
as of the Issue Date and any similar agreements which it may enter into
thereafter; provided, however, that
the existence of, or the performance by Texas Genco LLC or any Restricted
Subsidiary of obligations under any future amendment to any such existing
agreement or under any similar agreement entered into after the Issue Date
shall only be permitted by this clause (9) to the extent that the terms of any
such amendment or new agreement are not otherwise disadvantageous to the
Holders in any material respect; 

 

75

 

(10)
the Transactions and the payment of all fees and expenses related to the
Transactions, in each case as disclosed in the Offering Circular; 

 

(11)
transactions with customers, clients, suppliers, or purchasers or sellers of
goods or services, in each case in the ordinary course of business and
otherwise in compliance with the terms of this Indenture which are fair to
Texas Genco LLC and the Restricted Subsidiaries, in the reasonable determination
of the Board of Directors of Texas Genco LLC or the senior management thereof,
or are on terms at least as favorable as might reasonably have been obtained at
such time from an unaffiliated party; 

 

(12)
the issuance of Equity Interests (other than Disqualified Stock) of the Issuers
to any Permitted Holder or to any director, manager, officer, employee or
consultant; and 

 

(13)
sales of accounts receivable, or participations therein, in connection with any
Receivables Facility.

 

Section 4.12                                Liens.

 

Texas
Genco LLC will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien of
any kind on any asset or property now owned or hereafter acquired, except
Permitted Liens, unless (1) in the case of Liens securing Indebtedness that is
Subordinated Indebtedness, the Notes or such Guarantee of a Guarantor are
secured by a Lien on such property or assets that is senior in priority to such
Liens; and (2) in all other cases, the Notes or such Guarantee of a Guarantor
are equally and ratably secured; provided
that any Lien which is granted to secure the Notes under this Section 4.12
shall be discharged at the same time as the discharge of the Lien that gave
rise to the obligation to so secure the Notes.

 

Section
4.13                                Corporate Existence. 

 

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

 

(1)
its limited liability company 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
Texas Genco LLC or any such Subsidiary; and 

 

(2)
the rights (charter and statutory), licenses and franchises of Texas Genco LLC
and its Subsidiaries; provided, however,
that Texas Genco LLC 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 its Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of Texas Genco
LLC and its Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders of the Notes.

 

Section 4.14                                Offer to Repurchase Upon
Change of Control. 

 

(a)          If a Change of Control occurs, the Issuers will make
an offer (a “Change of Control Offer”)
to each Holder to purchase all or any part (equal to $2,000 or an integral multiple
of $1,000 in excess thereof) of that Holder’s Notes at a price in cash (a “Change of Control Payment”) equal to 101%
of the aggregate principal amount of Notes plus accrued and unpaid interest and
Additional Interest, if any, to

 

76

 

the date
of purchase, subject to the rights of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date. Within 30
days following any Change of Control, the Issuers will send notice of such
Change of Control Offer by first class mail, with a copy to the Trustee, to
each Holder of Notes to the address of such Holder appearing in the security
register with a copy to the Trustee, with the following information:

 

(1)
that a Change of Control Offer is being made pursuant to this Section 4.14 and
that all Notes properly tendered pursuant to such Change of Control Offer, will
be accepted for payment; 

 

(2)
the purchase price and the purchase date, which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”); 

 

(3)
that any Note not properly tendered will remain outstanding and continue to
accrue interest; 

 

(4)
that, unless the Issuers default 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 on the Change of Control Payment Date;

 

(5)
that Holders electing to have any Notes purchased pursuant to a Change of Control
Offer will 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 specified in the notice 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 tendered Notes and their
election to require the Issuers to purchase such Notes, provided that the paying agent receives, not
later than the close of business on the last day of the offer period, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder of the Notes, the principal amount of Notes tendered for purchase, and a
statement that such Holder is withdrawing his tendered Notes and his election
to have such 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 thereof.

 

While
the Notes are in global form and the Issuers make an offer to purchase all of
the Notes pursuant to the Change of Control Offer, a Holder may exercise its
option to elect for the purchase of the Notes through the facilities of DTC,
subject to its rules and regulations.

 

The
Issuers will 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 pursuant to a Change of Control Offer. 
To the extent that the provisions of any securities laws or regulations
conflict with the provisions of Section 3.09 or this Section 4.14 hereof, the
Issuers will comply with the applicable securities laws and regulations and
will not be deemed to have breached their obligations under Section 3.09 hereof
or this Section 4.14 by virtue of such compliance.

 

77

 

(b)         On the Change of Control Payment Date, the Issuers
will, to the extent permitted by law:

 

(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 for cancellation the Notes so
accepted together with an Officer’s Certificate stating that such Notes or
portions of Notes have been tendered to and purchased by the Issuers.

 

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

 

(c)          Notwithstanding anything to the contrary in this
Section 4.14, the Issuers will not be required to make a Change of Control
Offer following a Change of Control if 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 4.14 and Section 3.09 hereof made by the
Issuers and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.

 

A
Change of Control Offer may be made in advance of a Change of Control,
conditional upon such Change of Control, if a definitive agreement is in place
for the Change of Control at the time of making of the Change of Control
Offer.  

 

Section 4.15                                Additional Guarantees. 

 

Texas
Genco LLC will cause each Restricted Subsidiary that is a Domestic Subsidiary,
unless such Subsidiary is a Receivables Subsidiary or a Restricted Subsidiary
that cannot guarantee the Notes as a result of any statute or any order, rule
or regulation of any court or governmental or regulatory agency, body or
authority having jurisdiction over such Restricted Subsidiary or any of its
properties, that 

 

(1) guarantees any Indebtedness of Texas Genco LLC
or any of its Restricted Subsidiaries; or 

 

(2) Incurs any Indebtedness or issues any shares of
Disqualified Stock permitted to be Incurred or issued pursuant to clause (1)
Section 4.09(b) hereof 

 

to
execute and deliver to the Trustee, the form of which is attached as Exhibit E
hereto, a supplemental indenture pursuant to which such Subsidiary will
guarantee payment of the Notes or a Guarantee. Each Guarantee will be limited
to an amount not to exceed the maximum amount that can be guaranteed by that
Restricted Subsidiary without rendering the Guarantee, as it relates to such
Restricted Subsidiary, voidable under applicable law relating to fraudulent conveyance
or fraudulent transfer or similar laws affecting the rights of creditors
generally. Each Guarantee shall be released in accordance with Section 4.16
hereof.  The form of such Guarantee is
attached as Exhibit E hereto. 
Notwithstanding any other Section in this Indenture, if the merger of
HPC Merger Sub, Inc. with and into Texas Genco Holdings, Inc. after which Texas
Genco LLC will own Texas Genco Holdings, Inc.’s assets and liabilities relating
to

 

78

 

its
nuclear facilities is consummated pursuant to the terms of the Transaction
Agreement, and Texas Genco Holdings, Inc., Texas Genco GP, LLC, Texas Genco LP,
LLC and Texas Genco, LP are required to guarantee the Notes in accordance with
this Section 4.15, Texas Genco Holdings, Inc., Texas Genco GP, LLC, Texas Genco
LP, LLC and Texas Genco, LP will be Guarantors by signing a supplemental
indenture, and no Opinion of Counsel or Officer’s Certificate shall be
required.  

 

Section 4.16                                Release of Guarantees.

 

A
Guarantee of a Guarantor will be automatically released and no further action
is required for the release of such Guarantor’s Guarantee, upon: 

 

(1)          (A)  the sale, disposition or other transfer
(including through merger or consolidation) of the Capital Stock (including any
sale, disposition or other transfer following which the applicable Guarantor is
no longer a Restricted Subsidiary), or all or substantially all the assets, of
the applicable Guarantor if such sale, disposition or other transfer is made in
compliance with this Indenture;

 

(B) Texas Genco
LLC designating such Guarantor to be an Unrestricted Subsidiary in accordance
with Section 4.07 hereof and the definition of “Unrestricted Subsidiary;” and 

 

(C) in the case of
any Restricted Subsidiary which after the Issue Date is required to guarantee
the Notes pursuant to this Section 4.16 hereof, the release or discharge of the
guarantee by such Restricted Subsidiary of Indebtedness of Texas Genco LLC or
any Restricted Subsidiary of Texas Genco LLC or such Restricted Subsidiary or
the repayment of the Indebtedness or Disqualified Stock, in each case, which
resulted in the obligation to guarantee the Notes; and 

 

(2) in the case of clause (1)(A) above, such
Guarantor is released from its guarantees, if any, of, and all pledges and
security, if any, granted in connection with, the Credit Agreement and any
other Indebtedness of Texas Genco LLC or any Restricted Subsidiary of Texas
Genco LLC. 

 

A
Guarantee also will be automatically released if such Subsidiary is released
from its guarantees of the Credit Agreement and any other Indebtedness of Texas
Genco LLC or any Restricted Subsidiary of Texas Genco LLC, which results in the
obligation to guarantee the Notes.

 

Upon
Legal Defeasance in accordance with Article 8 hereof or satisfaction and
discharge of this Indenture in accordance with Article 11 hereof, each
Guarantor will be released and relieved of any obligations under its
Guarantee.  

 

Section 4.17                                Restrictions on Activities
of Financing Corp.

 

Financing
Corp. will not hold any material assets, become liable for any material
obligations or engage in any significant business activities; provided, that Financing Corp. may be a
co-obligor or guarantor with respect to Indebtedness if Texas Genco LLC is an
obligor on such Indebtedness and the net proceeds of such Indebtedness are
received by Texas Genco LLC, Financing Corp. or one or more Guarantors. At any
time after Texas Genco LLC is a corporation, Financing Corp. may consolidate or
merge with or into Texas Genco LLC or any Restricted Subsidiary.

 

79

 

Section 4.18                                Suspension of Covenants.

 

(a)          During any period of time that: (i) the Notes have
Investment Grade Ratings from both Rating Agencies and (ii) no Default or Event
of Default has occurred and is continuing under this Indenture (the occurrence
of the events described in the foregoing clauses (i) and (ii) being
collectively referred to as a “Covenant
Suspension Event”), Texas Genco LLC and the Restricted Subsidiaries
will not be subject to the following provisions of this Indenture:

 

(1)
Section 4.07;

 

(2)
Section 4.09;

 

(3)
Section 4.11;

 

(4)
Section 4.15;

 

(5)
Section 4.08; 

 

(6)
Section 4.10; and

 

(7)
Clause 4 of Section 5.01(a) (collectively, the “Suspended Covenants”).

 

(b)         Upon the occurrence of a Covenant Suspension Event,
the amount of Excess Proceeds from Net Proceeds shall be set at zero. In
addition, the Guarantees of the Guarantors will also be suspended as of such
date (the “Suspension Date”). In
the event that Texas Genco LLC and the Restricted Subsidiaries are not subject
to the Suspended Covenants for any period of time as a result of the foregoing,
and on any subsequent date (the “Reversion
Date”) one or both of the Rating Agencies withdraws its Investment
Grade Rating or downgrades the rating assigned to the notes below an Investment
Grade Rating or a Default or Event of Default occurs and is continuing, then
Texas Genco LLC and the Restricted Subsidiaries will thereafter again be
subject to the Suspended Covenants with respect to future events and the
Guarantees will be reinstated. The period of time between the Suspension Date
and the Reversion Date is referred to in this description as the “Suspension Period.” Notwithstanding that
the Suspended Covenants may be reinstated, no Default or Event of Default will
be deemed to have occurred as a result of a failure to comply with the
Suspended Covenants during the Suspension Period (or upon termination of the
Suspension Period or after that time based solely on events that occurred
during the Suspension Period).

 

(c)          On the Reversion Date, all Indebtedness incurred, or
Disqualified Stock issued, during the Suspension Period will be classified to
have been incurred or issued pursuant to Section 4.09(a) hereof or one of the
clauses set forth in Section 4.09(b) hereof (to the extent such Indebtedness or
Disqualified Stock would be permitted to be incurred or issued thereunder as of
the Reversion Date and after giving effect to Indebtedness incurred or issued
prior to the Suspension Period and outstanding on the Reversion Date). To the
extent such Indebtedness or Disqualified Stock would not be so permitted to be
incurred or issued pursuant to Section 4.09(a) or (b) hereof, such Indebtedness
or Disqualified Stock will be deemed to have been outstanding on the Issue
Date, so that it is classified as permitted under clause (c) of Section 4.09(b)
hereof.  Calculations made after the
Reversion Date of the amount available to be made as Restricted Payments under
Section 4.07 hereof will be made as though Section 4.07 hereof had been in
effect since the Issue Date and throughout the Suspension Period. Accordingly,
Restricted Payments made during the Suspension Period will reduce the amount
available to be made as Restricted Payments under Section 4.07(a) hereof.

 

(d)         The Issuers shall deliver promptly to the Trustee an
Officer’s Certificate notifying it of any such occurrence under this Section
4.18.

 

80

 

Section 4.19                                Limitation on Ability of
the Issuers to Release Funds from Escrow.

 

The
Issuers agree that (i) the terms of the Escrow Agreement shall exclusively
control the conditions under which and procedures pursuant to which Escrow
Property (as defined in the Escrow Agreement) can be released and (ii) it will
not attempt to have an Escrow Property released from escrow except in
accordance with the Escrow Agreement.

 

ARTICLE 5

SUCCESSORS

 

Section 5.01                                Merger, Consolidation, or
Sale of Assets.

 

(a)          Texas Genco LLC may not consolidate or merge with or
into (whether or not Texas Genco LLC is the surviving entity, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of the
properties or assets in one or more related transactions, to another Person,
unless:

 

(1)
either:

 

(A) Texas Genco
LLC is the surviving company; or 

 

(B) the Person
formed by or surviving any such consolidation or merger (if other than Texas
Genco LLC) or to which such sale, assignment, transfer, lease, conveyance or
other disposition has been made is an entity organized or existing under the
laws of the United States, any state thereof, the District of Columbia, or any
territory thereof (such Person, as the case may be, being herein called the “Successor Company”);

 

(2)
the Successor Company, if other than Texas Genco LLC, expressly assumes all the
obligations of Texas Genco LLC under this Indenture and the Notes pursuant to
supplemental indentures or other documents or instruments in form reasonably
satisfactory to the Trustee;

 

(3)  immediately after such transaction, no
Default or Event of Default exists; and

 

(4)
immediately after giving pro forma effect to such transaction, as if such
transaction had occurred at the beginning of the applicable four-quarter
period:  

 

(A) the Successor
Company would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a)
hereof; or

 

(B) the Fixed
Charge Coverage Ratio for the Successor Company and the Restricted Subsidiaries
would be greater than such ratio for Texas Genco LLC and the Restricted
Subsidiaries immediately prior to such transaction;  

 

(5) each Guarantor, unless it is the other party to
the transactions described above, in which case Section 5.01(b)(1)(B) shall
apply, shall have by supplemental indenture confirmed that its Guarantee shall
apply to such Person’s obligations under the Indenture and the Notes; and

 

81

 

(6)  Texas
Genco LLC shall have delivered to the Trustee an Officer’s Certificate and an
opinion of counsel, each stating that such consolidation, merger or transfer
and such supplemental indentures, if any, comply with the Indenture.

 

The
Successor Company will succeed to, and be substituted for, Texas Genco LLC
under the Indenture and the Notes. Notwithstanding the foregoing clauses (3)
and (4):

 

(x) any Restricted Subsidiary may consolidate with,
merge into or transfer all or part of its properties and assets to Texas Genco
LLC; and 

 

(y) Texas Genco LLC may merge with an Affiliate
incorporated solely for the purpose of reincorporating the guarantor or Texas
Genco LLC in another State of the United States so long as the amount of
Indebtedness of Texas Genco LLC and the Restricted Subsidiaries is not
increased thereby. 

 

(b)         Subject to certain limitations described in this
Indenture governing release of a Guarantee upon the sale, disposition or
transfer of a Guarantor, each Guarantor will not, and Texas Genco LLC will not
permit any Guarantor to, consolidate or merge with or into or wind up into
(whether or not such Guarantor is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, any Person,
unless:

 

(1)                                         (A) such Guarantor is the surviving entity or
the Person formed by or surviving any such consolidation or merger (if other
than such Guarantor) or to which such sale, assignment, transfer, lease, conveyance
or other disposition will have been made is an entity organized or existing
under the laws of the United States, any state thereof, the District of
Columbia, or any territory thereof (such Guarantor or such Person, as the case
may be, being herein called the “Successor
Person”); 

 

(B) the Successor Person, if other than such
Guarantor, expressly assumes all the obligations of such Guarantor under the
Indenture and such Guarantor’s Guarantee pursuant to supplemental indentures or
other documents or instruments in form reasonably satisfactory to the Trustee;

 

(C) immediately after such transaction no Default or
Event of Default exists; and

 

(D) Texas Genco LLC shall have delivered to the
Trustee an Officer’s Certificate and an opinion of counsel, each stating that
such consolidation, merger or transfer and such supplemental indentures, if
any, comply with the Indenture; or

 

(2) the transaction is made in compliance with
Section 4.10 hereof. 

 

(c)          Notwithstanding the foregoing, the mergers
contemplated by the Transaction Agreement will be permitted without compliance
with this Section 5.01 hereof. Subject to certain limitations described in this
Indenture, the Successor Person will succeed to, and be substituted for, such
Guarantor under this Indenture and such Guarantor’s Guarantee. Notwithstanding
the foregoing, any Guarantor may merge into or transfer all or part of its
properties and assets to another Guarantor or Texas Genco LLC. 

 

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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 properties
or assets of Texas Genco LLC in a transaction that is subject to, and that
complies with the provisions of, Section 5.01 hereof, the successor Person
formed by such consolidation or into or with which the Issuers are 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, assignment, transfer, lease,
conveyance or other disposition, the provisions of this Indenture referring to
“Texas Genco LLC” shall refer instead to the successor Person and not to Texas
Genco LLC), and may exercise every right and power of Texas Genco LLC under
this Indenture with the same effect as if such successor Person had been named
as Texas Genco LLC herein; provided, however,
that the Texas Genco LLC shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
Texas Genco LLC’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 in payment when due and payable, upon redemption, acceleration or
otherwise, of principal of, or premium, if any, on the Notes issued under this
Indenture;

 

(2)
default for 30 days or more in the payment when due of interest on or with
respect to the Notes issued under the Indenture;

 

(3)
failure by Texas Genco LLC or any Guarantor for 30 days after receipt of
written notice given by the Trustee or the Holders of at least 30% in principal
amount of the Notes then outstanding and issued under this Indenture to comply
with any of its other agreements in this Indenture or the Notes;

 

(4)
default under any mortgage, indenture or instrument under which there is issued
or by which there is secured or evidenced any Indebtedness (other than with
respect to Hedging Obligations) for money borrowed by Texas Genco LLC or any
Restricted Subsidiary or the payment of which is guaranteed by Texas Genco LLC
or any Restricted Subsidiary, other than Indebtedness owed to Texas Genco LLC
or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists
or is created after the issuance of the Notes, if both:

 

(A) such default
either (i) results from the failure to pay any such Indebtedness at its stated
final maturity (after giving effect to any applicable grace periods) or (ii)
relates to an obligation other than the obligation to pay principal of any such
Indebtedness at its stated final maturity and results in the holder or holders
of such Indebtedness causing such Indebtedness to become due prior to its
stated maturity; and 

 

(B) the principal
amount of such Indebtedness, together with the principal amount of any other
such Indebtedness in default for failure to pay principal at stated final
maturity (after giving effect to any applicable grace periods), or the maturity
of which has been so accelerated, aggregates $25.0 million or more at any one
time outstanding;

 

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(5)
a payment default by Texas Genco or its Restricted Subsidiaries under any
Hedging Obligation after the counterparty to such Hedging Obligation has
exercised its right to terminate the Hedging Obligation or a payment default by
Texas Genco or its Restricted Subsidiaries on the last payment date of a
Hedging Obligation, in each case if such payment default, together with any
such payment defaults under any other Hedging Obligations, aggregates $25.0
million or more at any one time outstanding;

 

(6)
failure by Texas Genco LLC or any Significant Subsidiary (or any group of
subsidiaries that together would constitute a Significant Subsidiary) to pay
final judgments aggregating in excess of $25.0 million, which final judgments
remain unpaid, undischarged and unstayed for a period of more than 60 days
after such judgment becomes final, and in the event such judgment is covered by
insurance, an enforcement proceeding has been commenced by any creditor upon
such judgment or decree which is not promptly stayed;

 

(7)
Texas Genco LLC or any of its Subsidiaries that is a Significant Subsidiary or
any group of Subsidiaries of Texas Genco LLC that, taken together, would
constitute a Significant Subsidiary 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;

 

(8)
a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:

 

(A) is for relief
against Texas Genco LLC or any of its Subsidiaries that is a Significant
Subsidiary or any group of Subsidiaries of Texas Genco LLC that, taken
together, would constitute a Significant Subsidiary in an involuntary case;

 

(B) appoints a
custodian of Texas Genco LLC or any of its Subsidiaries that is a Significant
Subsidiary or any group of Subsidiaries of Texas Genco LLC that, taken
together, would constitute a Significant Subsidiary or for all or substantially
all of the property of Texas Genco LLC or any of its Subsidiaries that is a Significant
Subsidiary or any group of Subsidiaries of Texas Genco LLC that, taken
together, would constitute a Significant Subsidiary; or

 

(C) orders the
liquidation of Texas Genco LLC or any of its Subsidiaries that is a Significant
Subsidiary or any group of Subsidiaries of Texas Genco LLC that, taken
together, would constitute a Significant Subsidiary;

 

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

 

(9)
the Guarantee of any Significant Subsidiary (or any group of subsidiaries that
together would constitute a Significant Subsidiary) shall for any reason cease
to be in full

 

84

 

force
and effect or be declared null and void or any responsible officer of any
Guarantor that is a Significant Subsidiary (or the responsible officers of any
group of subsidiaries that together would constitute a Significant Subsidiary),
as the case may be, denies that it has any further liability under its
Guarantee or gives notice to such effect, other than by reason of the
termination of the related Indenture or the release of any such Guarantee in
accordance with this Indenture.

 

In the event of any Event of
Default specified in clause (4) above, such Event of Default and all
consequences thereof (excluding any resulting payment default) shall be
annulled, waived and rescinded, automatically and without any action by the
Trustee or the Holders, if within 20 days after such Event of Default arose: 

 

(x)                                   the Indebtedness or guarantee that is the
basis for such Event of Default has been discharged; or

 

(y)                                 the holders thereof have rescinded or waived
the acceleration, notice or action (as the case may be) giving rise to such
Event of Default, or 

 

(z)                                   if the default that is the basis for such
Event of Default has been cured. 

 

Section
6.02                                Acceleration.

 

In the case of an Event
of Default specified in clause (7) or (8) of Section 6.01 hereof, with respect
to the Issuers, any Restricted Subsidiary of Texas Genco LLC that is a
Significant Subsidiary or any group of Subsidiaries of Texas Genco LLC that,
taken together, would constitute a Significant Subsidiary, all outstanding
Notes will become due and payable without further action or notice.  If any other Event of Default occurs and is
continuing, the Trustee or the Holders of at least 30% in principal amount of
the then outstanding Notes issued under this Indenture may declare the
principal, premium, if any, interest and any other monetary obligations on all
of the then outstanding Notes issued under this Indenture to be due and payable
immediately.  

 

Upon
the effectiveness such declaration, such principal and interest shall become
due and payable immediately.    

 

The
Holders of a majority in aggregate principal amount of the then outstanding
Notes by written notice to the Trustee may, on behalf of all of the 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 or Additional Interest, if
any, that has become due solely because of the acceleration) have been cured or
waived. 

 

Section
6.03                                Other Remedies.

 

If
an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal, premium and Additional
Interest, if any, and interest on the Notes or to enforce the performance of
any provision of the Notes or this Indenture.

 

The
Trustee may maintain a proceeding even if it does not possess any of the Notes
or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any
Holder of a Note in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. 
All remedies are cumulative to the extent permitted by law.

 

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Section 6.04                                Waiver of Past Defaults.

 

Holders
of not less than a majority in aggregate principal amount of the then
outstanding Notes by notice to the Trustee may on behalf of the Holders of all
of the Notes waive an 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 and Additional Interest, if any, or interest on, any
Notes held by a non-consenting Holder (including in connection with an offer to
purchase); provided, however,
that the 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 this Indenture; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.

 

Section
6.05                                Control by Majority.

 

Holders
of a majority in aggregate principal amount of the then outstanding Notes may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it.  However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture that the
Trustee determines may be unduly prejudicial to the rights of other Holders of
Notes or that may involve the Trustee in personal liability.

 

Section
6.06                                Limitation on Suits.

 

A
Holder may pursue a remedy with respect to this Indenture or the Notes only if:

 

(1)
such Holder gives to the Trustee written notice that an Event of Default is
continuing;

 

(2)
Holders of at least 25% in aggregate principal amount of the then outstanding
Notes make a written request to the Trustee to pursue the remedy;

 

(3)
such Holder or Holders offer and, if requested, provide to the Trustee security
or indemnity reasonably satisfactory to the Trustee against any loss, liability
or expense;

 

(4)
the Trustee does not comply with the request within 60 days after receipt of
the request and the offer of security or indemnity; and

 

(5)
during such 60-day period, Holders of a majority in aggregate principal amount
of the then outstanding Notes do not give the Trustee a direction inconsistent
with such request.

 

A
Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.

 

Section 6.07                                Rights of Holders of Notes
to Receive Payment.

 

Notwithstanding
any other provision of this Indenture, the right of any Holder of a Note to
receive payment of principal, premium and Additional Interest, if any, and
interest on the Note, on or after the respective due dates expressed in the
Note (including in connection with an offer to purchase), or to bring suit for
the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.  

 

86

 

Section 6.08                                Collection Suit by Trustee.

 

If
an Event of Default specified in Section 6.01(1) or (2) hereof occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and
as Trustee of an express trust against the Issuers for the whole amount of
principal of, premium and Additional Interest, 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 6.09                                Trustee May File Proofs of
Claim.

 

The
Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the
Issuers (or any other obligor upon the Notes), their creditors or their
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the Trustee
any amount due to it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof. 
To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. 
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.

 

Section 6.10                                Priorities.

 

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

 

First:                                           to the Trustee, its agents and attorneys for
amounts due under Section 7.07 hereof, 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 of Notes for amounts due and
unpaid on the Notes for principal, premium and Additional Interest, 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 and Additional
Interest, if any and interest, respectively; and

 

Third:                                       to the Issuers 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 of
Notes pursuant to this Section 6.10.

 

87

 

Section 6.11                                Undertaking for Costs.

 

In
any suit for the enforcement of any right or remedy under this Indenture or in
any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in
its discretion may assess reasonable costs, including reasonable attorneys’
fees, against any party litigant in the suit, having due regard to the merits
and good faith of the claims or defenses made by the party litigant.  This Section 6.11 does not apply to a suit by
the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a
suit by Holders of more than 10% in aggregate principal amount of the then
outstanding Notes.

 

ARTICLE 7

TRUSTEE

 

Section
7.01                                Duties of Trustee.

 

(a)          If an Event of Default has occurred and is continuing,
the Trustee will exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person’s own affairs.

 

(b)         Except during the continuance of an Event of Default:

 

(1)
the duties of the Trustee will be determined solely by the express provisions
of this Indenture and the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and

 

(2)
in the absence of bad faith on its part, the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture. 
However, the Trustee will examine the certificates and opinions to
determine whether or not they conform to the requirements of this Indenture.

 

(c)          The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

 

(1)
this paragraph does not limit the effect of paragraph (b) of this Section 7.01;

 

(2)
the Trustee will not be liable for any error of judgment made in good faith by
a Responsible Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and

 

(3)
the Trustee will not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to
Section 6.05 hereof.

 

(d)         Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to paragraphs (a), (b), and (c) of this Section 7.01.

 

(e)          No provision of this Indenture will require the
Trustee to expend or risk its own funds or incur any liability.  The Trustee will be under no obligation to
exercise any of its rights and powers under this Indenture at the request of
any Holders, unless such Holder has offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense.

 

88

 

(f)            The Trustee will not be liable for interest on any money
received by it except as the Trustee may agree in writing with the
Issuers.  Money held in trust by the
Trustee need not be segregated from other funds except to the extent required
by law.

 

Section
7.02                                Rights of Trustee.

 

(a)          The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person.  The Trustee need not investigate
any fact or matter stated in the document.

 

(b)         Before the Trustee acts or refrains from acting, it
may require an Officer’s Certificate or an Opinion of Counsel or both.  The Trustee will not be liable for any action
it takes or omits to take in good faith in reliance on such Officer’s
Certificate or Opinion of Counsel.  The
Trustee may consult with counsel and the written advice of such counsel or any
Opinion of Counsel will be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.

 

(c)          The Trustee may act through its attorneys and agents
and will not be responsible for the misconduct or negligence of any agent
appointed with due care.

 

(d)         The Trustee will not be liable for any action it takes
or omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.

 

(e)          Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Issuers will be
sufficient if signed by an Officer of each Issuer.

 

(f)            The Trustee will be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders have offered to the Trustee
reasonable indemnity or security against the losses, liabilities and expenses
that might be incurred by it in compliance with such request or direction.

 

Section 7.03                                Individual Rights of
Trustee.

 

The
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuers or any Affiliate of the
Issuers with the same rights it would have if it were not Trustee.  However, in the event that the Trustee
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the SEC for permission to continue as trustee (if this Indenture
has been qualified under the TIA) or resign. 
Any Agent may do the same with like rights and duties.  The Trustee is also subject to Sections 7.10
and 7.11 hereof.

 

Section
7.04                                Trustee’s Disclaimer.

 

The
Trustee will not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Issuers’ use of the proceeds from the Notes or any money
paid to the Issuers or upon the Issuers’ direction under any provision of this
Indenture, it will not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it will not be
responsible for any statement or recital herein or any statement in the Notes
or any other document in connection with the sale of the Notes or pursuant to
this Indenture other than its certificate of authentication.

 

89

 

Section
7.05                                Notice of Defaults.

 

If
a Default or Event of Default occurs and is continuing and if it is known to
the Trustee, the Trustee will mail to Holders of Notes a notice of the Default
or Event of Default within 90 days after it occurs.  Except in the case of a Default or Event of
Default in payment of principal of, premium or Additional Interest, if any, or
interest on, any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.  In addition, prior to the termination of the
Escrow Agreement, the Trustee shall provide written notice to the Escrow Agent
thereunder upon the occurrence of a Default or Event of Default, in each case
of which the Trustee has actual knowledge. 
Until the earlier of December 28, 2004 or such date as the Escrow
Agreement or Transaction Agreement is terminated, Texas Genco LLC shall provide
the Trustee with an Officer’s Certificate if an Officer shall have actual knowledge
of the occurrence of a Default or an Event of Default.

 

Section 7.06                                Reports by Trustee to
Holders of the Notes.

 

(a)          Within 60 days after each May 15 beginning with the
May 15 following the date of this Indenture, and for so long as Notes remain outstanding,
the Trustee will mail to the Holders of the Notes a brief report dated as of
such reporting date that complies with TIA § 313(a) (but if no event
described in TIA § 313(a) has occurred within the twelve months preceding
the reporting date, no report need be transmitted).  The Trustee also will comply with TIA
§ 313(b)(2).  The Trustee will also
transmit by mail all reports as required by TIA § 313(c).

 

(b)         A copy of each report at the time of its mailing to
the Holders of Notes will be mailed by the Trustee to the Issuers and filed by
the Trustee with the SEC and each stock exchange on which the Notes are listed
in accordance with TIA § 313(d). 
The Issuers will promptly notify the Trustee when the Notes are listed
on any stock exchange.

 

Section 7.07                                Compensation and Indemnity.

 

(a)          The Issuers will pay to the Trustee from time to time
reasonable compensation for its acceptance of this 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 Issuers will 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 Issuers and the Guarantors will 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 Indenture, including the costs and expenses of enforcing this
Indenture against the Issuers and the Guarantors (including this Section 7.07)
and defending itself against any claim (whether asserted by the Issuers, the
Guarantors, 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.  The Trustee will notify
the Issuers promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so notify the
Issuers will not relieve the Issuers or any of the Guarantors of their  obligations hereunder.  The Issuers or such Guarantor will defend the
claim and the Trustee will cooperate in the defense.  The Trustee may have separate counsel and the
Issuers will pay the reasonable fees and expenses of such counsel.  Neither the Issuers nor any Guarantor need
pay for any settlement made without its consent, which consent will not be
unreasonably withheld.

 

90

 

(c)          The obligations of the Issuers and the Guarantors
under this Section 7.07 will survive the satisfaction and discharge of this
Indenture.

 

(d)         To secure the Issuers’ and the Guarantors’ payment
obligations in this Section 7.07, 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 will survive the satisfaction and
discharge of this Indenture.

 

(e)          When the Trustee incurs expenses or renders services
after an Event of Default specified in Section 6.01(7) or (8) hereof occurs, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.

 

(f)            The Trustee will comply with the provisions of TIA
§ 313(b)(2) to the extent applicable.

 

Section 7.08                                Replacement of Trustee.

 

(a)          A resignation or removal of the Trustee and
appointment of a successor Trustee will become effective only upon the
successor Trustee’s acceptance of appointment as provided in this Section 7.08.

 

(b)         The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Issuers.  The Holders of a majority in aggregate
principal amount of the then outstanding Notes may remove the Trustee by so notifying
the Trustee and the Issuers in writing. 
The Issuers may remove the Trustee if:

 

(1)
the Trustee fails to comply with Section 7.10 hereof;

 

(2)
the Trustee is adjudged a bankrupt or an insolvent or an order for relief is
entered with respect to the Trustee under any Bankruptcy Law;

 

(3)
a custodian or public officer takes charge of the Trustee or its property; or

 

(4)
the Trustee becomes incapable of acting.

 

(c)          If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Issuers will promptly
appoint a successor Trustee.  Within one
year after the successor Trustee takes office, the Holders of a majority in
aggregate principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuers.

 

(d)         If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the retiring Trustee,
the Issuers, or the Holders of at least 10% in aggregate principal amount of
the then outstanding Notes may petition any court of competent jurisdiction for
the appointment of a successor Trustee.

 

(e)          If the Trustee, after written request by any Holder
who has been a Holder for at least six months, fails to comply with Section
7.10 hereof, such Holder may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.

 

(f)            A successor Trustee will deliver a written acceptance
of its appointment to the retiring Trustee and to the Issuers.  Thereupon, the resignation or removal of the
retiring Trustee will become effective, and the successor Trustee will have all
the rights, powers and duties of the Trustee under this

 

91

 

Indenture.  The successor Trustee will mail a notice of
its succession to Holders.  The retiring
Trustee will promptly transfer all property held by it as Trustee to the
successor Trustee; provided all
sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. 
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Issuers’ obligations under Section 7.07 hereof will continue for the
benefit of the retiring Trustee.

 

Section 7.09                                Successor Trustee by
Merger, etc.

 

If
the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act will be the successor Trustee.

 

Section 7.10                                Eligibility;
Disqualification.

 

There
will at all times be a Trustee hereunder that is a corporation organized and
doing business under the laws of the United States of America or of any state
thereof that is authorized under such laws to exercise corporate trustee power,
that is subject to supervision or examination by federal or state authorities
and that has a combined capital and surplus of at least $100.0 million as set
forth in its most recent published annual report of condition.

 

This
Indenture will always have a Trustee who satisfies the requirements of TIA
§ 310(a)(1), (2) and (5).  The
Trustee is subject to TIA § 310(b).

 

Section 7.11                                Preferential Collection of
Claims Against the Issuers.

 

The
Trustee is subject to TIA § 311(a), excluding any creditor relationship
listed in TIA § 311(b).  A Trustee
who has resigned or been removed shall be subject to TIA § 311(a) to the
extent indicated therein.

 

ARTICLE
8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

 

Section 8.01                                Option to Effect Legal
Defeasance or Covenant Defeasance.

 

The
Issuers may, at their option and at any time, elect to have either Section 8.02
or 8.03 hereof be applied to all outstanding Notes and Guarantees issued under
this Indenture upon compliance with the conditions set forth below in this
Article 8.

 

Section 8.02                                Legal Defeasance and
Discharge.

 

Upon
the Issuers’ exercise under Section 8.01 hereof of the option applicable to
this Section 8.02, the Issuers and each of the Guarantors will, 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 (including the Guarantees) on the date the conditions set forth below are
satisfied (hereinafter, “Legal Defeasance”).  For this purpose, Legal Defeasance means that
the Issuers and the Guarantors will be deemed to have paid and discharged the
entire Indebtedness represented by the outstanding Notes (including the
Guarantees), which will thereafter be deemed to be “outstanding” only for the
purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in clauses (1) and (2) below, and to have satisfied all their other
obligations under such Notes, the Guarantees and this Indenture (and the Trustee,
on demand of and at the expense of the Issuers, shall execute proper
instruments acknowledging

 

92

 

the same), except for the following
provisions which will survive until otherwise terminated or discharged
hereunder:

 

(1)
the rights of Holders of Notes issued under this Indenture to receive payments
in respect of the principal of, premium, if any, and interest on such Notes
when such payments are due solely out of the trust referred to in Section 8.04
hereof;

 

(2)
the Issuers’ obligations with respect to Notes issued under this Indenture
concerning issuing temporary notes, registration of such Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust;

 

(3)
the rights, powers, trusts, duties and immunities of the Trustee hereunder and
the Issuers’ and the Guarantors’ obligations in connection therewith; and

 

(4)
this Section 8.02.

 

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

 

Section
8.03                                Covenant Defeasance.

 

Upon
the Issuers’ exercise under Section 8.01 hereof of the option applicable to
this Section 8.03, the Issuers and each of the Guarantors will, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from each of their obligations under the covenants contained in Sections 4.03,
4.04, 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17
and 4.18 hereof and clauses (3) and (4) of Section 5.01(a) 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 and Guarantees, the Issuers and each of the Guarantors may
omit to comply with and will 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 this Indenture and such Notes and Guarantees will be
unaffected thereby.  In addition, upon
the Issuers’ 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) through 6.01(6) hereof will not
constitute Events of Default.

 

Section 8.04                                Conditions to Legal or
Covenant Defeasance.

 

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

 

(1)
the Issuers must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest due

 

93

 

on
the Notes issued under this Indenture on the stated maturity date or on the
redemption date, as the case may be, of such principal, premium, if any, or
interest on the Notes;

 

(2)
in the case of an election under Section 8.02 hereof, the Issuers shall have
delivered to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee confirming that, subject to customary assumptions and
exclusions:

 

(A) the Issuers
have received from, or there has been published by, the Internal Revenue
Service a ruling; or

 

(B) since the
issuance of the Notes, there has been a change in the applicable U.S. federal
income tax law,

 

in
either case to the effect that, and based thereon such Opinion of Counsel in
the United States shall confirm that, subject to customary assumptions and
exclusions, the Holders of the outstanding Notes will not recognize income,
gain or loss for U.S. federal income tax purposes as a result of such Legal
Defeasance and will be subject to U.S. 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 an election under Section 8.03 hereof, the Issuers shall have
delivered to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee confirming that, subject to customary assumptions and
exclusions, the Holders will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of such Covenant Defeasance and will be
subject to such 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;

 

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

 

(5)
such Legal Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under, the Credit Agreement or any other
material agreement or instrument (other than this Indenture) to which, Texas
Genco LLC or any Guarantor is a party or by which Texas Genco LLC or any
guarantor is bound;

 

(6)
the Issuers shall have delivered to the Trustee an Opinion of Counsel to the
effect that, as of the date of such opinion and subject to customary
assumptions and exclusions following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors’ rights generally under any applicable U.S.
federal or state law, and that the Trustee has a perfected security interest in
such trust funds for the ratable benefit of the Holders;

 

(7)
the Issuers shall have delivered to the Trustee an Officer’s Certificate
stating that the deposit was not made by the Issuers with the intent of
defeating, hindering, delaying or defrauding any creditors of the Issuers or
any Guarantor or others; and

 

(8)
the Issuers shall have delivered to the Trustee an Officer’s Certificate and an
Opinion of Counsel in the United States (which Opinion of Counsel may be
subject to customary assumptions and exclusions), each stating that all
conditions precedent provided

 

94

 

for
or  relating to the Legal Defeasance or
the Covenant Defeasance, as the case may be, 
have been complied with.

 

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 will be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to
the payment, either directly or through any Paying Agent (including either
Issuer acting as Paying Agent) as the Trustee may determine, to the Holders of
such Notes of all sums due and to become due thereon in respect of principal,
premium and Additional Interest, if any, and interest, but such money need not
be segregated from other funds except to the extent required by law.

 

The
Issuers will 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 of the Holders of the outstanding Notes.

 

Notwithstanding
anything herein to the contrary, the Trustee will deliver or pay to the Issuers
from time to time upon the request of the Issuers any money or non-callable
Government Securities held by it as provided in Section 11.01(2)(A) 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 satisfaction and discharge.

 

Section 8.06                                Repayment to the Issuers.

 

Any
money deposited with the Trustee or any Paying Agent, or then held by the
Issuers, in trust for the payment of the principal of, premium or Additional
Interest, if any, or interest on, any Note and remaining unclaimed for two
years after such principal, premium or Additional Interest, if any, or interest
has become due and payable shall be paid to the Issuers or (if then held by the
Issuers) will be discharged from such trust; and the Holder of such Note will
thereafter be permitted to look only to the Issuers for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Issuers 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 Issuers cause to be published once in a
newspaper of general circulation in the Borough of Manhattan, City of New York,
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 will be
repaid to the Issuers.

 

Section
8.07                                Reinstatement.

 

If
the Trustee or Paying Agent is unable to apply any U.S. 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 Issuers’ and the Guarantors’ obligations under this Indenture and the
Notes and the Guarantees 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 Issuers

 

95

 

make any payment of principal of, premium or
Additional Interest, if any, or interest on, any Note following the
reinstatement of its obligations, the Issuers will be subrogated to the rights
of the Holders of such Notes 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
of Notes.

 

Notwithstanding
Section 9.02 of this Indenture, the Issuers, any Guarantor (with respect to a
Guarantee or this Indenture to which it is a party) and the Trustee may amend
or supplement this Indenture or the Notes or the Guarantees without the consent
of any Holder of Note:

 

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

 

(2)
to provide for uncertificated Notes in addition to or in place of certificated
Notes;

 

(3)
to comply with Section 5.01 hereof;

 

(4)
to provide the assumption of the Issuers’ or any Guarantor’s obligations to the
Holders;

 

(5)
to make any change that would provide any additional rights or benefits to the
Holders or that does not adversely affect the legal rights under this Indenture
of any such Holder;

 

(6)
to add covenants for the benefit of the Holders or to surrender any right or
power conferred upon the Issuers;

 

(7)
to comply with requirements of the SEC in order to effect or maintain the
qualification of this Indenture under the TIA;

 

(8)
to evidence and provide for the acceptance and appointment under this Indenture
of a successor Trustee pursuant to the requirements thereof;

 

(9)
to provide for the issuance of Exchange Notes or private exchange notes, which
are identical to Exchange Notes except that they are not freely transferable; 

 

(10)
to add a Guarantor under this Indenture; or

 

(11)
to conform the text of this Indenture, Guarantees, or the Notes to any
provision of the “Description of Notes” section of the Offering Circular to the
extent that such provision in that “Description of Notes” was intended to be a
verbatim recitation of a provision of this Indenture, the Guarantees or the
Notes.  

 

Upon
the request of the Issuers accompanied by a resolution of their Boards of Directors
authorizing the execution of any such amended or supplemental indenture, and
upon receipt by the Trustee of the documents described in Section 7.02 hereof,
the Trustee will join with the Issuers and the Guarantors in the execution of
any amended or supplemental indenture authorized or permitted by the terms of
this Indenture and to make any further appropriate agreements and stipulations
that may be

 

96

 

therein contained, but the Trustee will not
be obligated to enter into such amended or supplemental indenture that affects
its own rights, duties or immunities under this Indenture or otherwise.  Notwithstanding the foregoing, an additional
Guarantor may be added pursuant to a supplemental indenture, and no Opinion of
Counsel or Officer’s Certificate shall be required.  

 

Section 9.02                                With Consent of Holders of
Notes.

 

Except
as provided below in this Section 9.02, the Issuers and the Trustee may amend
or supplement this Indenture (including, without limitation, Section 3.09, 4.10
and 4.15 hereof) and the Notes and the Guarantees with the consent of the
Holders of at least a majority in aggregate principal amount of the then
outstanding Notes (including, without limitation, Additional Notes, if any)
voting as a single class (including, without limitation, consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes), and, subject to Sections 6.04 and 6.07 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 Additional Interest, if any, or interest on, the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes or
the Guarantees may be waived with the consent of the Holders of at least a
majority in aggregate principal amount of the then outstanding Notes
(including, without limitation, Additional Notes, if any) voting as a single
class (including, without limitation, consents obtained in connection with a
tender offer or exchange offer for, or purchase of, the Notes). Section 2.08 hereof
shall determine which Notes are considered to be “outstanding” for purposes of
this Section 9.02.

 

Upon
the request of the Issuers accompanied by a resolution of their Boards of
Directors authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt
by the Trustee of the documents described in Section 7.02 hereof, the Trustee
will join with the Issuers and the Guarantors 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 this
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 be necessary for the consent of the Holders of Notes under this Section
9.02 to approve the particular form of any proposed amendment, supplement 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 Issuers will mail to the Holders of Notes affected thereby a notice briefly
describing the amendment, supplement or waiver. 
Any failure of the Issuers 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 Sections 6.04 and 6.07 hereof, the Holders of a majority in
aggregate principal amount of the Notes then outstanding voting as a single
class may waive compliance in a particular instance by the Issuers with any
provision of this Indenture or the Notes or the Guarantees.  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 issued under this Indenture held by a non-consenting
Holder):

 

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

 

(2)
reduce the principal of or change the fixed maturity of any Note or alter or
waive the provisions with respect to the redemption of the Notes (other than
the provisions of Section 4.14 hereof);

 

97

 

(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 premium,
if any, or interest on the Notes issued under this Indenture, except a
rescission of acceleration of the Notes by the Holders of at least a majority
in aggregate principal amount of the Notes and a waiver of the payment default
that resulted from such acceleration, or in respect of a covenant or provision
contained in this Indenture or any guarantee which cannot be amended or
modified without the consent of all Holders;

 

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

 

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

 

(7)
make any change in these amendment and waiver provisions; or

 

(8)
impair the right of any Holder to receive payment of principal of, or interest
on, such Holder’s Notes on or after the due dates therefore or to institute
suit for the enforcement of any payment on or with respect to such Holder’s
Notes.  

 

Section 9.03                                Compliance with Trust
Indenture Act.

 

Every
amendment or supplement to this Indenture or the Notes will be set forth in a
amended or supplemental indenture that complies with the TIA 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
amendment, supplement or waiver becomes effective.  An amendment, supplement or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.

 

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 Issuers in exchange for all Notes may issue and the Trustee shall,
upon receipt of an Authentication 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 will 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.  The Issuers may not sign an amended or
supplemental indenture until the Board of Directors

 

98

 

of each of the Issuers approves it.  In executing any amended or supplemental
indenture, the Trustee will be entitled to receive and (subject to Section 7.01
hereof) will be fully protected in relying upon, in addition to the documents
required by Section 12.04 hereof, an Officer’s Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.

 

ARTICLE 10

GUARANTEES

 

Section
10.01.                  Guarantee.

 

(a)          Subject to this Article 10, each of the Guarantors
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Issuers hereunder or thereunder,
that:

 

(1)  the principal of, premium and Additional
Interest, if any, and interest on, the Notes will be promptly paid in full when
due, whether at maturity, by acceleration, redemption or otherwise, and
interest on the overdue principal of and interest on the Notes, if any, if
lawful, and all other obligations of the Issuers to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and 

 

(2)
in case of any extension of time of payment or renewal of any Notes or any of
such other obligations, that same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise.

 

Failing
payment when due of any amount so guaranteed or any performance so guaranteed
for whatever reason, the Guarantors will be jointly and severally obligated to
pay the same immediately.  Each Guarantor
agrees that this is a guarantee of payment and not a guarantee of collection.

 

(b)         The Guarantors hereby agree that their obligations
hereunder are unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Issuers, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a
guarantor.  Each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Issuers, any right to require a proceeding
first against the Issuers, protest, notice and all demands whatsoever and
covenant that this Guarantee will not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.

 

(c)          If any Holder or the Trustee is required by any court
or otherwise to return to the Issuers, the Guarantors or any custodian,
trustee, liquidator or other similar official acting in relation to either the
Issuers or the Guarantors, any amount paid by either to the Trustee or such
Holder, this Guarantee, to the extent theretofore discharged, will be
reinstated in full force and effect.

 

(d)         Each Guarantor agrees that it will not be entitled to
any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.  Each Guarantor
further agrees that, as between the Guarantors, on the one hand, and the
Holders and the Trustee, on the other hand, (1) the maturity of the obligations
guaranteed hereby may be

 

99

 

accelerated
as provided in Article 6 hereof for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (2) in the
event of any declaration of acceleration of such obligations as provided in
Article 6 hereof, such obligations (whether or not due and payable) will
forthwith become due and payable by the Guarantors for the purpose of this
Guarantee.  The Guarantors will have the
right to seek contribution from any non-paying Guarantor so long as the
exercise of such right does not impair the rights of the Holders under the
Guarantee.

 

(e)          Any release of 
a Guarantee shall be governed by Section 4.16 hereof.  

 

Section 10.02.                  Limitation on Guarantor
Liability.

 

Each
Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it
is the intention of all such parties that the Guarantee of such Guarantor not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar federal or state law to the extent applicable to any
Guarantee.  To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of such Guarantor will be limited to the maximum amount
that will, after giving effect to such maximum amount and all other contingent
and fixed liabilities of such Guarantor that are relevant under such laws, and
after giving effect to any collections from, rights to receive contribution
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Article 10, result in the
obligations of such Guarantor under its Guarantee not constituting a fraudulent
transfer or conveyance.

 

Section 10.03.                  Execution and Delivery of
Guarantee.

 

To
evidence its Guarantee set forth in Section 10.01 hereof, each Guarantor hereby
agrees that a notation of such Guarantee substantially in the form attached as
Exhibit E hereto will be endorsed by an Officer of such Guarantor on each Note
authenticated and delivered by the Trustee and that this Indenture will be
executed on behalf of such Guarantor by one of its Officers.

 

Each
Guarantor hereby agrees that its Guarantee set forth in Section 10.01 hereof
will remain in full force and effect notwithstanding any failure to endorse on
each Note a notation of such Guarantee.

 

If
an Officer whose signature is on this Indenture or on the Guarantee no longer
holds that office at the time the Trustee authenticates the Note on which a
Guarantee is endorsed, the Guarantee will be valid nevertheless.

 

The
delivery of any Note by the Trustee, after the authentication thereof
hereunder, will constitute due delivery of the Guarantee set forth in this
Indenture on behalf of the Guarantors.

 

In
the event that the Issuers or any of its Restricted Subsidiaries creates or
acquires any Domestic Subsidiary after the date of this Indenture, if required
by Section 4.15 hereof, the Issuers will cause such Domestic Subsidiary to
comply with the provisions of Section 4.15 hereof and this Article 10, to the
extent applicable.

 

100

 

ARTICLE
11

SATISFACTION AND DISCHARGE

 

Section 11.01                          Satisfaction and Discharge.

 

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

 

(1)
all such Notes theretofore authenticated and delivered, except lost, stolen or
destroyed Notes which have been replaced or paid and Notes for whose payment
money has theretofore been deposited in trust, 
have been delivered to the Trustee for cancellation; or

 

(2)                            (A) 
all such Notes not theretofore delivered to such 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 Issuers or any Guarantor has irrevocably deposited or caused to be
deposited with such Trustee as trust funds in trust solely for the benefit of
the Holders, cash in U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient, without
consideration of any reinvestment of interest, to pay and discharge the entire
Indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation for principal, premium, if any, and accrued  interest to the date of maturity or
redemption:

 

(B) no Default or Event of Default (other than that
resulting from borrowing funds to be applied to make such deposit) with respect
to this Indenture or the Notes issued hereunder has occurred and is continuing
on the date of such deposit or will occur as a result of such deposit and such
deposit will not result in a breach or violation of, or constitute a default
under, any other instrument to which the Issuers are or any Guarantor is a
party or by which the Issuers are or any Guarantor is bound;

 

(C) the Issuers
have paid or caused to be paid all sums payable by them under this Indenture;
and

 

(D) the Issuers have delivered irrevocable
instructions to the Trustee under this Indenture to apply the deposited money
toward the payment of such Notes at maturity or the redemption date, as the
case may be.  

 

In
addition, the Issuers 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 Indenture, if money has been deposited
with the Trustee pursuant to subclause (A) of clause (2) of this Section 11.01,
the provisions of Sections 11.02 and 8.06 hereof will survive.  In addition, nothing in this Section 11.01
will be deemed to discharge those provisions of Section 7.07 hereof, that, by
their terms, survive the satisfaction and discharge of this Indenture.

 

101

 

Section 11.02                          Application of Trust Money.

 

Subject
to the provisions of Section 8.06 hereof, all money deposited with the Trustee
pursuant to Section 11.01 hereof shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including either Issuer acting as
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium and Additional Interest, 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 11.01 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
Issuers’ and any Guarantor’s obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 11.01 hereof; provided
that if the Issuers have made any payment of principal of, premium or
Additional Interest, if any, or interest on, any Notes because of the
reinstatement of its obligations, the Issuers shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money or
Government Securities held by the Trustee or Paying Agent.

 

Notwithstanding
anything in Article 8 to the contrary, the Trustee will deliver or pay to the
Issuers from time to time upon the request of the Issuers 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.  

 

ARTICLE 12

MISCELLANEOUS

 

Section 12.01                          Trust Indenture Act
Controls.

 

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

 

Section 12.02                          Notices.

 

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

 

If
to the Issuers and/or any Guarantor:

 

Texas
Genco LLC

Texas
Genco Financing Corp.

12301
Kurland Drive, 4th Floor

Houston,
Texas 77034

Attn:  Chief Legal Officer

Fax:
(713) 945-3526

 

102

 

With
a copy to:

 

Simpson
Thacher & Bartlett LLP

425
Lexington Avenue

New
York, New York 10017

Attention:  Rise Norman, Esq.

Fax:
(212) 455-2502

 

If
to the Trustee:

 

Wells
Fargo Bank, National Association

Corporate
Trust Services

213
Court Street, Suite 703

Middletown,
Connecticut  06547

Facsimile No.:  (860) 704-6219

Attention:  Joseph P. O’Donnell

 

If
to the Escrow Agent:

 

JPMorgan
Chase Bank, N.A.

4
New York Plaza, Floor 17

New
York, New York 10004

Facsimile No.:  (212) 623-6168

Attention:  Audrey Mohan

 

The
Issuers, any Guarantor or the Trustee, by notice to the others, 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 calendar days after being deposited in the mail, postage prepaid, if
mailed; when receipt acknowledged, if transmitted by facsimile; 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
Registrar.  Any notice or communication
will also be so mailed to any Person described in TIA § 313(c), to the
extent required by the TIA.  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.

 

Notices
given by publication (where permitted by this Indenture) will be deemed given
on the first day on which publication is made.

 

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

 

103

 

Section 12.03                          Communication by Holders of
Notes with Other Holders of Notes.

 

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

 

Section 12.04                          Certificate and Opinion as
to Conditions Precedent.

 

Upon
any request or application by the Issuers to the Trustee to take any action
under this Indenture, the Issuers shall furnish to the Trustee:

 

(1)
an Officer’s Certificate in form and substance reasonably satisfactory to the
Trustee (which must include the statements set forth in Section 12.05 hereof)
stating that, in the opinion of the signers, all conditions precedent and
covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and

 

(2)
an Opinion of Counsel in form and substance reasonably satisfactory to the
Trustee (which must include the statements set forth in Section 12.05 hereof)
stating that, in the opinion of such counsel, all such conditions precedent and
covenants have been satisfied.

 

Section 12.05                          Statements Required in
Certificate or Opinion.

 

Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA § 314(a)(4)) must comply with the provisions of TIA § 314(e) and
must include:

 

(1)
a statement that the Person making such certificate or opinion has read such
covenant or condition;

 

(2)
a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;

 

(3)
a statement that, in the opinion of such Person, he or she has made such
examination or investigation as is necessary to enable him or her to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and

 

(4)
a statement as to whether or not, in the opinion of such Person, such condition
or covenant has been satisfied.

 

Section 12.06                          Rules by Trustee and
Agents.

 

The
Trustee may make reasonable rules for action by or at a meeting of
Holders.  The Registrar or Paying Agent
may make reasonable rules and set reasonable requirements for its functions.

 

Section 12.07                          No Personal Liability of
Directors, Officers, Employees and Stockholders.

 

No
past, present or future director, manager, officer, employee, incorporator or
stockholder of Texas Genco LLC, Texas Genco Financing Corp., or any Guarantor
or any of their parent companies will have any liability for any obligations of
Texas Genco LLC, Texas Genco Financing Corp., or the Guarantors under the
Notes, the Guarantees and this 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

 

104

 

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
12.08                          Governing Law.

 

THE
INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS
INDENTURE, THE NOTES AND THE GUARANTEES.

 

Section 12.09                          No Adverse Interpretation
of Other Agreements.

 

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

 

Section 12.10                          Successors.

 

All
agreements of the Issuers in this Indenture and the Notes will bind their
successors.  All agreements of the
Trustee in this Indenture will bind its successors.  All agreements of each Guarantor in this
Indenture will bind its successors.

 

Section 12.11                          Severability.

 

In
case any provision in this 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 12.12                          Counterpart Originals.

 

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

 

Section 12.13                          Table of Contents,
Headings, etc.

 

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

 

[Signatures on following page]

 

105

 

SIGNATURES

 

	
  Dated as of
  December 14, 2004

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TEXAS GENCO LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Thad Miller

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Legal Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TEXAS GENCO FINANCING CORP.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Thad Miller

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President and Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NEW GENCO GP, LLC

  
	
   

  	
   

  	
  TEXAS GENCO OPERATING SERVICES LLC

  
	
   

  	
   

  	
   

  	
  (formerly known as GC Power Operating Services

  
	
   

  	
   

  	
   

  	
  LLC)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Thad Miller

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President and Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HPC MERGER SUB, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Thad Miller

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President and Assistant Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NEW GENCO II L.P.

  
	
   

  	
   

  	
  NEW GENCO SERVICES L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  NEW GENCO GP, LLC, as General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Thad Miller

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President and Secretary of the

  
	
   

  	
   

  	
   

  	
   

  	
  General Partner

  

 

 

	
   

  	
   

  	
  GCP FUNDING COMPANY, LLC

  
	
   

  	
   

  	
  NEW GENCO LP, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Jeffrey K. Simpson

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WELLS FARGO BANK, NATIONAL ASSOCIATION,

  
	
   

  	
   

  	
  as Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Joseph P. O’Donnell

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Assistant Vice President

  

 

 

[Face of Note]

 

CUSIP/CINS                        

 

6.875% Senior
Notes due 2014

 

	
  No.     

  	
   

  	
  $                        

  

 

TEXAS GENCO LLC

and

TEXAS
GENCO FINANCING CORP.

 

promises to pay to Cede & Co., or registered
assigns,

 

the principal sum of                                                                                                                                DOLLARS
on                         ,
2014.

 

Interest Payment Dates:  June 15 and December 15

 

Record Dates: 
June 1 and December 1

 

Dated:  December
14, 2004

 

A1-1

 

	
   

  	
   

  	
  TEXAS GENCO LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TEXAS GENCO FINANCING CORP.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  

 

 

This is one of the Notes referred to

in the within-mentioned Indenture:

 

	
  WELLS FARGO BANK, NATIONAL ASSOCIATION

  as Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  	
   

  

 

A1-2

 

[Back of Note]

6.875% Senior Notes due 2014

 

THE NOTE EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1)
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO AN
INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

 

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED
IN THE 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 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE
MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE
MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE ISSUERS.

 

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 ISSUERS OR THEIR
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.

 

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

 

A1-3

 

(1) INTEREST.  Texas Genco LLC, a Delaware limited liability
company (“Texas Genco LLC”), and Texas Genco
Financing Corp., a Delaware corporation (the “Financing.
Corp.” and, together with Texas Genco LLC, the “Issuers”),
promise to pay interest on the principal amount of this Note at 6.875% per annum
from December 14, 2004 until maturity and shall pay the Additional Interest, if
any, payable pursuant to Section 2(d) of the Registration Rights Agreement
referred to below.  The Issuers will pay
interest and Additional Interest,  if
any, 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 June 15, 2005. The Issuers will
pay interest on principal (including post-petition interest in any proceeding
under any Bankruptcy Law) and on overdue installments of interest and
Additional Interest, if any, (without regard to any applicable grace periods)
from time to time on demand at the same rate to the extent lawful.  Interest will be computed on the basis of a
360-day year of twelve 30-day months and actual days elapsed.

 

(2) METHOD OF PAYMENT.  The Issuers will pay interest on the Notes
(except defaulted interest) and Additional Interest, if any, to the Persons who
are registered Holders of Notes 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 2.12 of the Indenture with respect to defaulted
interest.  The Notes will be payable as
to principal, premium and Additional Interest, if any, and interest at the
office or agency of the Issuers maintained for such purpose within or without
the City and State of New York, or, at the option of the Issuers, payment of
interest and Additional Interest, if any, may be made by check mailed to the
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,
premium and Additional Interest, if any, on, all Global Notes and all other
Notes the Holders of which will have provided wire transfer instructions to the
Issuers or the Paying Agent.  Such
payment will 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 debt.

 

(3) PAYING AGENT AND REGISTRAR.  Initially, Wells Fargo Bank, National
Association, the Trustee under the Indenture, will act as Paying Agent and
Registrar.  The Issuers may change any
Paying Agent or Registrar without notice to any Holder.  Texas Genco LLC or any of its Subsidiaries
may act in any such capacity.

 

(4) INDENTURE.  The Issuers issued the Notes under an
Indenture dated as of December 14, 2004 (the “Indenture”)
among the Issuers, the Guarantors 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
TIA.  The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement
of such terms.  To the extent any
provision of this Note conflicts with the express provisions of the Indenture,
the provisions of the Indenture shall govern and be controlling.  The Notes are unsecured obligations of the
Issuers.  The Indenture does not limit
the aggregate principal amount of Notes that may be issued thereunder.

 

A1-4

 

(5) OPTIONAL REDEMPTION.

 

(a)                                  Except as set forth in subparagraph
(b), (c) and (d) of this Paragraph 5, the Issuers will not have the option to
redeem the Notes prior to December 15, 2009. 
From and after December 15, 2009, the Issuers may redeem the Notes, in
whole or in part, upon not less than 30 nor more than 60 days’ prior notice by
first class mail, postage prepaid, with a copy to the Trustee, to each Holder
of Notes to the address of such Holder appearing in the security register at
the redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest thereon and Additional Interest, if
any, to the applicable redemption date, subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date, if during the twelve-month period beginning on December
15 of the years indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2009

  	
   

  	
  103.438

  	
  %

  
	
  2010

  	
   

  	
  102.292

  	
  %

  
	
  2011

  	
   

  	
  101.146

  	
  %

  
	
  2012 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

(b)                                 Notwithstanding the provisions of
subparagraph (a) of this Paragraph 5, at any time prior to December 15,
2007,  the Issuers may, at their option,
redeem up to 40% of the original aggregate principal amount of Notes issued
under the Indenture less any Notes redeemed pursuant to the STP call at a
redemption price equal to  106.875% of
the aggregate principal amount thereof, plus accrued and unpaid interest
thereon and Additional Interest, if any, to the redemption date, subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date, with the net proceeds of one or more
Equity Offerings of the Issuers or any direct or indirect parent of the Issuers
to the extent such proceeds are contributed to the Issuers; provided that at least 50% of the sum of the original
aggregate principal amount of Notes issued under the Indenture after the Issue
Date remains outstanding immediately after the occurrence of each such
redemption; provided further that each such
redemption occurs within 90 days of the date of closing of each such Equity
Offering.

 

(c)                                  Notwithstanding the provisions of
subparagraph (a) of this Paragraph 5, at any time prior to December 15, 2009,
the Issuers may also redeem all or a part of the Notes, upon not less than 30
nor more than 60 days’ prior notice mailed by first class mail to each Holder’s
registered address, 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 and Additional Interest, if any, to the date of redemption (the “Redemption Date”), subject to the rights of Holders of
Notes on the relevant record date to receive interest due on the relevant
interest payment date.

 

(d)                                 Notwithstanding the provisions of
subparagraph (a) of this Paragraph 5, if at any time the Transaction Agreement
is terminated or we have abandoned the acquisition of Texas Genco Holdings,
Inc. (as determined by the Issuers in their sole discretion), the Issuers may,
at their option, redeem up to $200.0 million in aggregate principal amount of
Notes issued under the Indenture (the “STP Call”) at
a redemption price equal to 101% of the aggregate principal amount thereof,
plus accrued and unpaid interest thereon and Additional Interest, if any, to
the redemption date, subject to the rights of Holders of Notes on the relevant
record date to receive interest due on the relevant interest payment date; provided, that the redemption will be completed on or prior
to April 30, 2006 and so long as the Nuclear Acquisition has not been or will
not be consummated; provided further
that at least 50% of the sum of the original aggregate principal amount of the
Notes issued under the Indenture remains outstanding immediately after the
occurrence of such redemption.

 

A1-5

 

(6) MANDATORY REDEMPTION.

 

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

 

(7) REPURCHASE AT THE OPTION OF HOLDER.

 

(a) If there is a Change of Control,
the Issuers will be required to make an offer (a “Change of Control Offer”) to each Holder to purchase all or
any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof)
of each Holder’s Notes at a price in cash (the “Change of Control Payment”) equal to 101% of the aggregate
principal amount of Notes plus accrued and unpaid interest and Additional
Interest, if any, to the date of purchase, 
subject to the rights of Holders of record on the relevant record date
to receive interest due on the relevant interest payment date.  Within 30 days following any Change of
Control, the Issuers will send notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.

 

(b) If Texas Genco LLC or a Restricted
Subsidiary of Texas Genco LLC consummates any Asset Sales, within ten days of
each date on which the aggregate amount of Excess Proceeds exceeds $25.0
million, the Issuers will commence an offer to all Holders of Notes and, if
required by the terms of any Pari Passu Indebtedness,
to the holders of such Pari Passu Indebtedness
(other than with respect to Hedging Obligations) (an “Asset Sale Offer”) pursuant to Section
3.09 of the Indenture to purchase the maximum principal amount of Notes
(including any Additional Notes) and such other Pari Passu Indebtedness
that may be purchased out of the Excess Proceeds at an offer price in cash in
an amount equal to 100% of the principal amount thereof, plus accrued and
unpaid interest and Additional Interest, if any, to the date fixed for the
closing of such offer, in accordance with the procedures set forth in the
Indenture.  To the extent that the
aggregate amount of Notes (including any Additional Notes) and such Pari Passu Indebtedness tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, Texas Genco LLC may use any remaining
Excess Proceeds for general corporate purposes, unless prohibited by the
Indenture.  If the aggregate principal
amount of Notes or the Pari Passu Indebtedness
surrendered by such Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes and such Pari Passu Indebtedness
to be purchased on a pro rata
basis based on the accreted value or principal amount of the Notes or such Pari Passu Indebtedness tendered.  Holders of Notes that are the subject of an
offer to purchase will receive an Asset Sale Offer from Texas Genco LLC prior
to any related purchase date and may elect to have such Notes purchased by completing
the form entitled “Option of Holder to Elect
Purchase” attached to the Notes.

 

(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, 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 or discharge of the Indenture. 
Notes in denominations larger than $2,000 may be redeemed in part but
only in whole multiples of 1,000, unless all of the Notes held by a Holder are
to be redeemed.

 

(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
thereof.  The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Issuers may require a Holder to pay any

 

A1-6

 

taxes and fees
required by law or permitted by the Indenture. 
The Issuers 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 Issuers 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.  Subject to certain exceptions, the Indenture
or the Notes or the Guarantees may be amended or supplemented with the consent
of the Holders of at least a majority in aggregate principal amount of then
outstanding Notes including Additional Notes, if any, voting as a single class,
and any existing Default or Event of Default or compliance with any provision
of the Indenture or the Notes or the Guarantees may be waived with the consent
of the Holders of at least a majority in aggregate principal amount of the then
outstanding Notes including Additional Notes, if any, voting as a single
class.  Without the consent of any Holder
of a Note, the Indenture or the Notes or the Guarantees may be amended or
supplemented to cure any ambiguity, omission, mistake, defect or inconsistency,
to provide for uncertificated Notes in addition to or in place of certificated
Notes, to comply with Section 5.01 of the Indenture, to provide for the
assumption of the Issuers’ or any Guarantors’ obligations to the Holders, to
make any change that would provide any additional rights or benefits to the
Holders or that does not adversely affect the legal rights under the Indenture
of any such Holder, to add covenants for the benefit of the Holders or to
surrender any right or power conferred upon the Issuers, to comply with requirements
of the SEC in order to effect or maintain the qualification of the Indenture
under the TIA, to evidence and provide for the acceptance and appointment under
the Indenture of a successor Trustee pursuant to the requirements thereof, to
provide for the issuance of Exchange Notes or private exchange notes, which are
identical to Exchange Notes except that they are not freely transferable and to
add a Guarantor under the Indenture.

 

(12) DEFAULTS AND REMEDIES.  Events of Default include:  (i) default in payment when due and payable,
upon redemption, acceleration or otherwise, of principal of, or premium, if
any, on the Notes issued under the Indenture; (ii) default for 30 days or more
in the payment when due of interest on or with respect to the Notes issued
under the Indenture; (iii) failure by Texas Genco LLC or any Guarantor for 30
days after receipt of written notice given by the Trustee or the Holders of at
least 30% in principal amount of the Notes then outstanding and issued under
the Indenture to comply with any of its other agreements in the Indenture or
the Notes; (iv) default under certain other agreements relating to Indebtedness
of Texas Genco LLC which default is either a payment default or results in the
acceleration of such Indebtedness prior to its express maturity; (v) a payment
default by Texas Genco LLC or its Restricted Subsidiaries under any Hedging
Obligation after the counterparty to such Hedging Obligation has exercised its
right to terminate the Hedging Obligation or a payment default by Texas Genco
LLC or its Restricted Subsidiaries on the last payment date of a Hedging
Obligation, in each case if such payment default, together with any such
payment defaults under any other Hedging Obligations, aggregates $25.0 million
or more at any one time outstanding; 
(vi) failure to pay certain final judgments for the payment of money
that remain undischarged for a period of 60 days; (vii) certain events of
bankruptcy or insolvency described in the Indenture with respect to Texas Genco
LLC or any of its Subsidiaries that is a Significant Subsidiary (or any group
of Subsidiaries that together would constitute a Significant Subsidiary; or
(viii) except as permitted by the Indenture, any Guarantee is held in any
judicial proceeding to be unenforceable or invalid or ceases for any reason to
be in full force and effect or any Guarantor or any Person acting on its

 

A1-7

 

behalf denies or
disaffirms its obligations under such Guarantor’s Guarantee.  If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 30% in principal amount of
the then outstanding Notes issued under the Indenture may declare the
principal, premium, if any, interest and any other monetary obligations of all
the then outstanding Notes issued under the Indenture to be due and payable
immediately.  Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes will become due and payable
without further action or notice. 
Holders may not enforce the Indenture or the Notes except as provided in
the Indenture.  Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes issued under the Indenture may direct the Trustee in its exercise of any
trust or power.  The Trustee may withhold
from Holders notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal, premium or Additional
Interest, if any,  or interest if it
determines that withholding notice is in their interest.  The Trustee shall have no obligation to
accelerate the Notes if in the best judgment of the Trustee acceleration is not
in the best interest of the Holders of such Notes.  The Holders of a majority in aggregate
principal amount of the then outstanding Notes issued under the Indenture by
notice to the Trustee may, on behalf of the Holders of all of such Notes, waive
any existing Default or Event of Default and its consequences under the
Indenture except a continuing Default or Event of Default in the payment of
interest, premium or Additional Interest, if any, or the principal of any such
Note held by a non-consenting Holder. 
The Issuers are required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and Texas Genco LLC will deliver to
the Trustee as soon as possible after any Officer has actual knowledge of any
Default or Event of Default, an Officer’s Certificate specifying such Default
or Event of Default and what action Texas Genco LLC is taking or proposes to
take with respect thereto.

 

(13) TRUSTEE DEALINGS WITH THE ISSUERS.  The Trustee, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Issuers or their Affiliates, and may otherwise deal with the Issuers or their
Affiliates, as if it were not the Trustee.

 

(14) NO RECOURSE AGAINST OTHERS.  No past, present or future director, manager,
officer, employee, incorporator or stockholder of Texas Genco LLC, Texas Genco
Financing Corp., or any Guarantor or any of their parent companies will have
any liability for any obligations of Texas Genco LLC, Texas Genco Financing
Corp., or the Guarantors under the Notes, the Guarantees and 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 the 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) ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED
GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES.  In addition to the rights provided to Holders
of Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes will have all the rights set forth in the Registration Rights
Agreement dated as of December 14, 2004, among the Issuers, the Guarantors and
the other parties named on the signature pages thereof or, in the case of
Additional Notes, Holders of Restricted Global Notes and Restricted Definitive
Notes will have

 

A1-8

 

the rights set
forth in one or more registration rights agreements, if any, among the Issuers,
the Guarantors and the other parties thereto, relating to rights given by the
Issuers and the Guarantors to the purchasers of any Additional Notes
(collectively, the “Registration Rights
Agreement”).

 

(18) CUSIP NUMBERS.  Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Issuers have
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.

 

(19) GOVERNING LAW.  THE
INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THE
INDENTURE, THIS NOTE AND THE GUARANTEES.

 

The Issuers will furnish to any Holder upon written
request and without charge a copy of the Indenture and/or the Registration
Rights Agreement.  Requests may be made
to:

 

Texas Genco LLC

12301 Kurland Drive, 4th Floor

Houston, Texas 77034

Attention: Chief Legal
Officer

 

A1-9

 

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 Issuers.
  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).

  

 

A1-10

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by
the Issuers pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate
box below:

 

o Section 4.10                 o
Section 4.15

 

If you want to elect to have only part of the Note
purchased by the Issuers pursuant to Section 4.10 or Section 4.15 of the
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).

  

 

A1-11

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
*

 

The following exchanges of a part of this Global Note
for an interest in another Global Note or for a Definitive Note, or exchanges
of a part of another Global Note or Definitive Note for an interest in this
Global Note, have been made:

 

	
  Date
  of Exchange

  	
   

  	
  Amount of decrease in

  Principal Amount

  of

  this Global Note

  	
   

  	
  Amount of increase in

  Principal Amount

  of

  this Global Note

  	
   

  	
  Principal Amount

  of this Global Note

  following such

  decrease

  (or increase)

  	
   

  	
  Signature of authorized

  officer of Trustee or

  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*                 This Schedule should be included only if the Note is issued in global
form.

 

A1-12

 

[Face of
Regulation S Temporary Global Note]

 

CUSIP/CINS                        

 

6.875% Senior
Notes due 2014

 

	
  No.     

  	
   

  	
  $                        

  

 

TEXAS GENCO LLC

and

TEXAS GENCO FINANCING
CORP.

 

promises to pay to CEDE & CO. or registered
assigns,

 

the principal sum of                                                                                                                                DOLLARS
on                         ,
2014.

 

Interest Payment Dates: June 15 and December 15

 

Record Dates: 
June 1 and December 1

 

Dated:  December
14, 2004

 

A2-1

 

	
   

  	
   

  	
  TEXAS GENCO LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TEXAS GENCO FINANCING CORP.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  

 

This is one of the Notes referred to

in the within-mentioned Indenture:

 

	
  WELLS FARGO BANK, NATIONAL ASSOCIATION

  as Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  	
   

  

 

A2-2

 

[Back of Regulation S Temporary Global Note]

6.875% Senior Notes due 2014

 

THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY
GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).  NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS
OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT
OF INTEREST HEREON.

 

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED
IN THE 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 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE
MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE
MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE ISSUERS.

 

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 ISSUERS OR
THEIR 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.

 

THE NOTE EVIDENCED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), (4) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN

 

A2-3

 

ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER
JURISDICTIONS

 

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

 

(1) INTEREST.  Texas Genco LLC, a Delaware limited liability
company (“Texas Genco LLC”), and Texas Genco
Financing Corp., a Delaware corporation (the “Financing.
Corp.” and, together with Texas Genco LLC, the “Issuers”),
promise to pay interest on the principal amount of this Note at 6.875% per
annum from December 14, 2004 until maturity and shall pay the Additional
Interest, if any, payable pursuant to Section 2(d) of the Registration Rights
Agreement referred to below.  The Issuers
will pay interest and Additional Interest, 
if any, 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 June 15, 2005. The Issuers will
pay interest on principal (including post-petition interest in any proceeding
under any Bankruptcy Law) and on overdue installments of interest and
Additional Interest, if any, (without regard to any applicable grace periods)
from time to time on demand at the same rate to the extent lawful.  Interest will be computed on the basis of a
360-day year of twelve 30-day months and actual days elapsed.

 

Until this Regulation S Temporary Global Note is
exchanged for one or more Regulation S Permanent Global Notes, the Holder
hereof shall not be entitled to receive payments of interest hereon; until so
exchanged in full, this Regulation S Temporary Global Note shall in all other
respects be entitled to the same benefits as other Notes under the Indenture.

 

(2) METHOD OF PAYMENT.  The Issuers will pay interest on the Notes
(except defaulted interest) and Additional Interest, if any, to the Persons who
are registered Holders of Notes 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 2.12 of the Indenture with respect to defaulted
interest.  The Notes will be payable as
to principal, premium and Additional Interest, if any, and interest at the
office or agency of the Issuers maintained for such purpose within or without
the City and State of New York, or, at the option of the Issuers, payment of
interest and Additional Interest, if any, may be made by check mailed to the
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,
premium and Additional Interest, if any, on, all Global Notes and all other
Notes the Holders of which will have provided wire transfer instructions to the
Issuers or the Paying Agent.  Such
payment will 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 debt.

 

(3) PAYING AGENT AND REGISTRAR.  Initially, Wells Fargo Bank, National
Association, the Trustee under the Indenture, will act as Paying Agent and
Registrar.  The Issuers may change any
Paying Agent or Registrar without notice to any Holder.  Texas Genco LLC or any of its Subsidiaries
may act in any such capacity.

 

A2-4

 

(4) INDENTURE.  The Issuers issued the Notes under an
Indenture dated as of December 14, 2004 (the “Indenture”)
among the Issuers, the Guarantors 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
TIA.  The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement
of such terms.  To the extent any
provision of this Note conflicts with the express provisions of the Indenture,
the provisions of the Indenture shall govern and be controlling.  The Notes are unsecured obligations of the
Issuers.  The Indenture does not limit
the aggregate principal amount of Notes that may be issued thereunder.

 

(5) OPTIONAL REDEMPTION.

 

(a) Except as set forth in
subparagraph (b), (c) and (d) of this Paragraph 5, the Issuers will not have
the option to redeem the Notes prior to December 15, 2009.  From and after December 15, 2009, the Issuers
may redeem the Notes, in whole or in part, upon not less than 30 nor more than
60 days’ prior notice by first class mail, postage prepaid, with a copy to the
Trustee, to each Holder of Notes to the address of such Holder appearing in the
security register at the redemption prices (expressed as percentages of
principal amount) set forth below, plus accrued and unpaid interest thereon and
Additional Interest, if any, to the applicable redemption date, subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date, if during the twelve-month period
beginning on December 15 of the years indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2009

  	
   

  	
  103.438

  	
  %

  
	
  2010

  	
   

  	
  102.292

  	
  %

  
	
  2011

  	
   

  	
  101.146

  	
  %

  
	
  2012 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

(b) Notwithstanding the provisions of
subparagraph (a) of this Paragraph 5, at any time prior to December 15,
2007,  the Issuers may, at their option,
redeem up to 40% of the original aggregate principal amount of Notes issued
under the Indenture less any Notes redeemed pursuant to the STP call at a
redemption price equal to 106.875% of the aggregate principal amount thereof,
plus accrued and unpaid interest thereon and Additional Interest, if any, to
the redemption date, subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date, with
the net proceeds of one or more Equity Offerings of the Issuers or any direct
or indirect parent of the Issuers to the extent such proceeds are contributed
to the Issuers; provided that at least 50% of the
sum of the original aggregate principal amount of Notes issued under the
Indenture after the Issue Date remains outstanding immediately after the
occurrence of each such redemption; provided further
that each such redemption occurs within 90 days of the date of closing of each
such Equity Offering.

 

(c) Notwithstanding the provisions of
subparagraph (a) of this Paragraph 5, at any time prior to December 15, 2009,
the Issuers may also redeem all or a part of the Notes, upon not less than 30
nor more than 60 days’ prior notice mailed by first class mail to each Holder’s
registered address, 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 and Additional Interest, if any, to the date of redemption (the “Redemption Date”), subject to the rights of Holders of
Notes on the relevant record date to receive interest due on the relevant
interest payment date.

 

A2-5

 

(d) Notwithstanding the provisions of
subparagraph (a) of this Paragraph 5, if at any time the Transaction Agreement
is terminated or we have abandoned the acquisition of Texas Genco Holdings,
Inc. (as determined by the Issuers in their sole discretion), the Issuers may,
at their option, redeem up to $200.0 million in aggregate principal amount of
Notes issued under the Indenture (the “STP Call”) at
a redemption price equal to 101% of the aggregate principal amount thereof,
plus accrued and unpaid interest thereon and Additional Interest, if any, to
the redemption date, subject to the rights of Holders of Notes on the relevant
record date to receive interest due on the relevant interest payment date; provided, that the redemption will be completed on or prior
to April 30, 2006 and so long as the Nuclear Acquisition has not been or will
not be consummated; provided further
that at least 50% of the sum of the original aggregate principal amount of the
Notes issued under the Indenture remains outstanding immediately after the
occurrence of such redemption.

 

(6) MANDATORY REDEMPTION.

 

The Issuers are not be required to make mandatory
redemption or sinking fund payments with respect to the Notes.

 

(7) REPURCHASE AT THE OPTION OF HOLDER.

 

(a) If there is a Change of Control,
the Issuers will be required to make an offer (a “Change of Control Offer”) to each Holder to purchase all or
any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof)
of each Holder’s Notes at a price in cash (the “Change of Control Payment”) equal to 101% of the aggregate
principal amount of Notes plus accrued and unpaid interest and Additional
Interest, if any, to the date of purchase, 
subject to the rights of Holders of record on the relevant record date
to receive interest due on the relevant interest payment date.  Within 30 days following any Change of
Control, the Issuers will send notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.

 

(b) If Texas Genco LLC or a
Restricted Subsidiary of Texas Genco LLC consummates any Asset Sales, within
ten days of each date on which the aggregate amount of Excess Proceeds exceeds
$25.0 million, the Issuers will commence an offer to all Holders of Notes and,
if required by the terms of any Pari Passu Indebtedness,
to the holders of such Pari Passu Indebtedness
(other than with respect to Hedging Obligations) (an “Asset Sale Offer”) pursuant to Section
3.09 of the Indenture to purchase the maximum principal amount of Notes
(including any Additional Notes) and such other Pari Passu Indebtedness
that may be purchased out of the Excess Proceeds at an offer price in cash in
an amount equal to 100% of the principal amount thereof, plus accrued and
unpaid interest and Additional Interest, if any, to the date fixed for the
closing of such offer, in accordance with the procedures set forth in the
Indenture.  To the extent that the
aggregate amount of Notes (including any Additional Notes) and such Pari Passu Indebtedness tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, Texas Genco LLC may use any remaining
Excess Proceeds for general corporate purposes, unless prohibited by the
Indenture.  If the aggregate principal
amount of Notes or the Pari Passu Indebtedness
surrendered by such Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes and such Pari Passu Indebtedness
to be purchased on a pro rata
basis based on the accreted value or principal amount of the Notes or such Pari Passu Indebtedness tendered.  Holders of Notes that are the subject of an offer
to purchase will receive an Asset Sale Offer from Texas Genco LLC prior to any
related purchase date and may elect to have such Notes purchased by completing
the form entitled “Option of Holder to Elect
Purchase” attached to the Notes.

 

A2-6

 

(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, 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 or discharge of the Indenture. 
Notes in denominations larger than $2,000 may be redeemed in part but
only in whole multiples of 1,000, unless all of the Notes held by a Holder are
to be redeemed.

 

(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
thereof.  The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and the Issuers may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. 
The Issuers 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 Issuers 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.

 

This Regulation S Temporary Global Note is
exchangeable in whole or in part for one or more Global Notes only (i) on or
after the termination of the 40-day distribution compliance period (as defined
in Regulation S) and (ii) upon presentation of certificates (accompanied by an
Opinion of Counsel, if applicable) required by Article 2 of the Indenture.  Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.

 

(10) PERSONS DEEMED OWNERS.  The registered Holder of a Note may be
treated as its owner for all purposes.

 

(11) AMENDMENT, SUPPLEMENT AND WAIVER.  Subject to certain exceptions, the Indenture
or the Notes or the Guarantees may be amended or supplemented with the consent
of the Holders of at least a majority in aggregate principal amount of then
outstanding Notes including Additional Notes, if any, voting as a single class,
and any existing Default or Event of Default or compliance with any provision of
the Indenture or the Notes or the Guarantees may be waived with the consent of
the Holders of at least a majority in aggregate principal amount of the then
outstanding Notes including Additional Notes, if any, voting as a single class.  Without the consent of any Holder of a Note,
the Indenture or the Notes or the Guarantees may be amended or supplemented to
cure any ambiguity, omission, mistake, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
comply with Section 5.01 of the Indenture, to provide for the assumption of the
Issuers’ or any Guarantors’ obligations to the Holders, to make any change that
would provide any additional rights or benefits to the Holders or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
add covenants for the benefit of the Holders or to surrender any right or power
conferred upon the Issuers, to comply with requirements of the SEC in order to
effect or maintain the qualification of the Indenture under the TIA, to
evidence and provide for the acceptance and appointment under the Indenture of
a successor Trustee pursuant to the requirements thereof, to provide for the
issuance of Exchange Notes or private exchange notes, which are identical to
Exchange Notes except that they are not freely transferable and to add a
Guarantor under the Indenture.

 

A2-7

 

(12) DEFAULTS AND REMEDIES.  Events of Default include:  (i) default in payment when due and payable,
upon redemption, acceleration or otherwise, of principal of, or premium, if
any, on the Notes issued under the Indenture; (ii) default for 30 days or more
in the payment when due of interest on or with respect to the Notes issued under
the Indenture; (iii) failure by Texas Genco LLC or any Guarantor for 30 days
after receipt of written notice given by the Trustee or the Holders of at least
30% in principal amount of the Notes then outstanding and issued under the
Indenture to comply with any of its other agreements in the Indenture or the
Notes; (iv) default under certain other agreements relating to Indebtedness of
Texas Genco LLC which default is either a payment default or results in the
acceleration of such Indebtedness prior to its express maturity; (v) a payment
default by Texas Genco LLC or its Restricted Subsidiaries under any Hedging
Obligation after the counterparty to such Hedging Obligation has exercised its
right to terminate the Hedging Obligation or a payment default by Texas Genco
LLC or its Restricted Subsidiaries on the last payment date of a Hedging
Obligation, in each case if such payment default, together with any such
payment defaults under any other Hedging Obligations, aggregates $25.0 million
or more at any one time outstanding; 
(vi) failure to pay certain final judgments for the payment of money
that remain undischarged for a period of 60 days; (vii) certain events of
bankruptcy or insolvency described in the Indenture with respect to Texas Genco
LLC or any of its Subsidiaries that is a Significant Subsidiary (or any group
of Subsidiaries that together would constitute a Significant Subsidiary); or
(viii) except as permitted by the Indenture, any Guarantee is held in any
judicial proceeding to be unenforceable or invalid or ceases for any reason to
be in full force and effect or any Guarantor or any Person acting on its behalf
denies or disaffirms its obligations under such Guarantor’s Guarantee.  If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 30% in principal amount of
the then outstanding Notes issued under the Indenture may declare the
principal, premium, if any, interest and any other monetary obligations of all
the then outstanding Notes issued under the Indenture to be due and payable
immediately.  Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes will become due and payable
without further action or notice. 
Holders may not enforce the Indenture or the Notes except as provided in
the Indenture.  Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes issued under the Indenture may direct the Trustee in its exercise of any
trust or power.  The Trustee may withhold
from Holders notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal, premium or
Additional Interest, if any, or interest if it determines that withholding
notice is in their interest.  The Trustee
shall have no obligation to accelerate the Notes if in the best judgment of the
Trustee acceleration is not in the best interest of the Holders of such Notes.  The Holders of a majority in aggregate
principal amount of the then outstanding Notes issued under the Indenture by
notice to the Trustee may, on behalf of the Holders of all of such Notes, waive
any existing Default or Event of Default and its consequences under the
Indenture except a continuing Default or Event of Default in the payment of
interest, premium or Additional Interest, if any, or the principal of any such
Note held by a non-consenting Holder. 
The Issuers are required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and Texas Genco LLC will deliver to
the Trustee as soon as possible after any Officer has actual knowledge of any
Default or Event of Default, an Officer’s Certificate specifying such Default
or Event of Default and what action Texas Genco LLC is taking or proposes to
take with respect thereto.

 

(13) TRUSTEE DEALINGS WITH THE ISSUERS.  The Trustee, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Issuers or their Affiliates, and may otherwise deal with the Issuers or their
Affiliates, as if it were not the Trustee.

 

A2-8

 

(14) NO RECOURSE AGAINST OTHERS.  No past, present or future director, manager,
officer, employee, incorporator or stockholder of Texas Genco LLC, Texas Genco
Financing Corp., or any Guarantor or any of their parent companies will have
any liability for any obligations of Texas Genco LLC, Texas Genco Financing
Corp., or the Guarantors under the Notes, the Guarantees and 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 the 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) ADDITIONAL RIGHTS OF HOLDERS.  In addition to the rights provided to Holders
of Notes under the Indenture, Holders of this Regulation S Temporary Global
Note will have all the rights set forth in the Registration Rights Agreement
dated as of December 14, 2004, among the Issuers, the Guarantors and the other
parties named on the signature pages thereof or, in the case of Additional
Notes, Holders thereof will have the rights set forth in one or more registration
rights agreements, if any, among the Issuers, the Guarantors and the other
parties thereto, relating to rights given by the Issuers and the Guarantors to
the purchasers of any Additional Notes (collectively, the “Registration Rights Agreement”).

 

(18) CUSIP NUMBERS.  Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Issuers have
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.

 

(19) GOVERNING LAW.  THE INTERNAL LAW OF THE STATE OF NEW YORK
WILL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THIS NOTE AND THE
GUARANTEES.

 

The Issuers will furnish to any Holder upon written
request and without charge a copy of the Indenture and/or the Registration
Rights Agreement.  Requests may be made
to:

 

Texas Genco LLC

12301 Kurland Drive, 4th Floor

Houston, Texas 77034

Attention: Chief Legal Officer

 

A2-9

 

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 Issuers.
  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).

  

 

A2-10

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by
the Issuers pursuant to Section 4.10 or 4.15 of the Indenture, check the
appropriate box below:

 

o Section 4.10                 o
Section 4.15

 

If you want to elect to have only part of the Note
purchased by the Issuers pursuant to Section 4.10 or Section 4.15 of the
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).

  

 

A2-11

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE REGULATION S
TEMPORARY GLOBAL NOTE

 

The following exchanges of a part of this Regulation S
Temporary Global Note for an interest in another Global Note, or exchanges of a
part of another other Restricted Global Note for an interest in this Regulation
S Temporary Global Note, have been made:

 

	
  Date
  of Exchange

  	
   

  	
  Amount of decrease in

  Principal Amount

  of

  this Global Note

  	
   

  	
  Amount of increase in

  Principal Amount

  of

  this Global Note

  	
   

  	
  Principal Amount

  of this Global Note

  following such

  decrease

  (or increase)

  	
   

  	
  Signature of authorized

  officer of Trustee or

  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A2-12

 

EXHIBIT B

 

FORM OF CERTIFICATE OF
TRANSFER

 

Texas Genco LLC

12301
Kurland Drive, 4th Floor

Houston,
Texas 77034

 

Wells Fargo Bank,
National Association

Corporate Trust Services

213 Court Street, Suite
703

Middletown,
Connecticut  06547

 

Re:  6.875 % Senior Notes due 2014

 

Reference is hereby made to the Indenture, dated as of
December 14, 2004 (the “Indenture”),
among Texas Genco LLC, a Delaware limited liability company (“Texas Genco LLC”) and Texas Genco Financing Corp. (“Financing Corp.” and, together with Texas Genco LLC, the “Issuers”) and Wells Fargo Bank, National Association, as
trustee.  Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.

 

                                       ,
(the “Transferor”) owns and proposes to
transfer the Note[s] or interest in such Note[s] specified in Annex A hereto,
in the principal amount of $                         
in such Note[s] or interests (the “Transfer”),
to                                                
(the “Transferee”), as further specified in
Annex A hereto.  In connection with the
Transfer, the Transferor hereby certifies that:

 

[CHECK ALL THAT APPLY]

 

1.  o  Check if Transferee will
take delivery of a beneficial interest in the 144A Global Note or a Restricted
Definitive Note pursuant to Rule 144A.  The Transfer is being effected pursuant to
and in accordance with Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”), and, accordingly, the
Transferor hereby further certifies that the beneficial interest or Definitive
Note is being transferred to a Person that the Transferor reasonably believes
is purchasing the beneficial interest or Definitive Note for its own account,
or for one or more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a “qualified
institutional buyer” within the meaning of Rule 144A in a transaction meeting
the requirements of Rule 144A, and such Transfer is in compliance with any
applicable blue sky securities laws of any state of the United States.  Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Definitive Note will be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the 144A Global Note and/or the
Restricted Definitive Note and in the Indenture and the Securities Act.

 

2.  o   Check if Transferee will
take delivery of a beneficial interest in the Regulation S Temporary Global
Note, the Regulation S Permanent
Global Note or a Restricted Definitive Note pursuant to Regulation S.  The Transfer is being effected pursuant to
and in accordance with Rule 903 or Rule 904 under the Securities Act and,
accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a Person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the

 

B-1

 

requirements of Rule 903(b) or Rule 904(b) of
Regulation S under the Securities Act, (iii) the transaction is not part of a
plan or scheme to evade the registration requirements of the Securities Act and
(iv) if the proposed transfer is being made prior to the expiration of the
Restricted Period, the transfer is not being made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser).Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on Transfer enumerated in the Private Placement
Legend printed on the Regulation S Permanent Global Note, the Regulation S
Temporary Global Note  and/or the Restricted Definitive Note and in
the Indenture and the Securities Act.

 

3.  o  Check and complete if
Transferee will take delivery of a beneficial interest in the IAI Global Note
or a Restricted Definitive Note pursuant to any provision of the Securities Act
other than Rule 144A or Regulation S.  The Transfer is being effected in compliance
with the transfer restrictions applicable to beneficial interests in Restricted
Global Notes and Restricted Definitive Notes and pursuant to and in accordance
with the Securities Act and any applicable blue sky securities laws of any
state of the United States, and accordingly the Transferor hereby further
certifies that (check one):

 

(a)                                  o  such Transfer is being effected pursuant to
and in accordance with Rule 144 under the Securities Act;

 

or

 

(b)                                 o  such Transfer is being effected to the
Issuers or a subsidiary thereof;

 

or

 

(c)                                  o  such Transfer is being effected pursuant to
an effective registration statement under the Securities Act and in compliance
with the prospectus delivery requirements of the Securities Act;

 

or

 

(d)                                 o  such Transfer is being effected to an
Institutional Accredited Investor and pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A, Rule 144,
Rule 903 or Rule 904, and the Transferor hereby further certifies that it has
not engaged in any general solicitation within the meaning of Regulation D
under the Securities Act and the Transfer complies with the transfer
restrictions applicable to beneficial interests in a Restricted Global Note or
Restricted Definitive Notes and the requirements of the exemption claimed,
which certification is supported by (1) a certificate executed by the
Transferee in the form of Exhibit D to the Indenture and (2) if such Transfer
is in respect of a principal amount of Notes at the time of transfer of less
than $250,000, an Opinion of Counsel provided by the Transferor or the
Transferee (a copy of which the Transferor has attached to this certification),
to the effect that such Transfer is in compliance with the Securities Act.  Upon consummation of the proposed transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Definitive Note will be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the IAI Global Note and/or the
Restricted Definitive Notes and in the Indenture and the Securities Act.

 

4.  o  Check if Transferee will
take delivery of a beneficial interest in an Unrestricted Global Note or of an
Unrestricted Definitive Note.

 

B-2

 

(a)  o  Check if Transfer is
pursuant to Rule 144.  (i) The
Transfer is being effected pursuant to and in accordance with Rule 144 under
the Securities Act and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any state of
the United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. 
Upon consummation of the proposed Transfer in accordance with the terms
of the Indenture, the transferred beneficial interest or Definitive Note will
no longer be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.

 

(b)  o  Check if Transfer is
Pursuant to Regulation S.  (i)
The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities
laws of any state of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.

 

(c)  o  Check if Transfer is
Pursuant to Other Exemption. 
(i) The Transfer is being effected pursuant to and in compliance with an
exemption from the registration requirements of the Securities Act other than
Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
State of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. 
Upon consummation of the proposed Transfer in accordance with the terms
of the Indenture, the transferred beneficial interest or Definitive Note will
not be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes or Restricted
Definitive Notes and in the Indenture.

 

This certificate and the statements contained herein
are made for your benefit and the benefit of the Issuers.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  [Insert Name of Transferor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  	
   

  	
   

  
						

 

B-3

 

ANNEX A TO CERTIFICATE OF TRANSFER

 

1.                                       The
Transferor owns and proposes to transfer the following:

 

[CHECK ONE OF (a) OR (b)]

 

(a) 
o 
a beneficial interest in the:

 

(i)                               o  144A Global Note (CUSIP                  ),
or

 

(ii)                            o  Regulation S Global Note (CUSIP                  ),
or

 

(iii)                         o  IAI Global Note (CUSIP                  );
or

 

(b)  o  a Restricted Definitive Note.

 

2.                                       After
the Transfer the Transferee will hold:

 

[CHECK ONE]

 

(a)  o  a beneficial interest in the:

 

(i)          o  144A Global Note (CUSIP                  ),
or

 

(ii)         o  Regulation S Global Note (CUSIP                 ),
or

 

(iii)        o  IAI Global Note (CUSIP                 );
or

 

(iv)        o  Unrestricted Global Note (CUSIP                  );
or

 

(b)  o  a Restricted Definitive Note; or

 

(c)  o  an Unrestricted Definitive Note,

 

in accordance with the
terms of the Indenture.

 

B-4

 

EXHIBIT C

 

FORM OF CERTIFICATE OF EXCHANGE

 

Texas Genco LLC

12301
Kurland Drive, 4th Floor

Houston,
Texas  77034

 

Wells Fargo Bank, National Association

Corporate Trust Services

213 Court Street, Suite 703

Middletown, Connecticut  06547

 

Re:  6.875% Senior Notes due 2014

 

(CUSIP                )

 

Reference is hereby made to the Indenture, dated as of
December 14, 2004 (the “Indenture”),
among Texas Genco LLC, a Delaware limited liability company (“Texas Genco LLC”) and Texas Genco Financing Corp. (“Financing Corp.” and, together with Texas Genco LLC, the “Issuers”) and Wells Fargo Bank, National Association, as
trustee.  Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.

 

                                               ,
(the “Owner”) owns and proposes to exchange
the Note[s] or interest in such Note[s] specified herein, in the principal
amount of $                   
in such Note[s] or interests (the “Exchange”).  In connection with the Exchange, the Owner
hereby certifies that:

 

1.                                       Exchange of Restricted Definitive Notes or
Beneficial Interests in a Restricted Global Note for Unrestricted Definitive
Notes or Beneficial Interests in an Unrestricted Global Note

 

(a)  o  Check if
Exchange is from beneficial interest in a Restricted Global Note to beneficial
interest in an Unrestricted Global Note.  In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for a beneficial interest in an
Unrestricted Global Note in an equal principal amount, the Owner hereby
certifies (i) the beneficial interest is being acquired for the Owner’s own
account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to the Global Notes and pursuant to
and in accordance with the Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with
any applicable blue sky securities laws of any state of the United States.

 

(b)  o  Check if Exchange is from
beneficial interest in a Restricted Global Note to Unrestricted Definitive Note.  In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for an Unrestricted Definitive
Note, the Owner hereby certifies (i) the Definitive Note is being acquired for
the Owner’s own account without transfer, (ii) such Exchange has been effected
in compliance with the transfer restrictions applicable to the Restricted
Global Notes and pursuant to and in accordance with the Securities Act, (iii)
the restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the

 

C-1

 

Securities Act and (iv) the Definitive Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

 

(c)  o  Check if Exchange is from
Restricted Definitive Note to beneficial interest in an Unrestricted Global
Note.  In connection with the
Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in
an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner’s own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial interest is
being acquired in compliance with any applicable blue sky securities laws of
any state of the United States.

 

(d)  o  Check if Exchange is from
Restricted Definitive Note to Unrestricted Definitive Note.  In connection with the Owner’s Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner
hereby certifies (i) the Unrestricted Definitive Note is being acquired for the
Owner’s own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to Restricted Definitive
Notes and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Unrestricted Definitive Note is being acquired in compliance with
any applicable blue sky securities laws of any state of the United States.

 

2.                                       Exchange of Restricted Definitive Notes or
Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes
or Beneficial Interests in Restricted Global Notes

 

(a)  o  Check if Exchange is from
beneficial interest in a Restricted Global Note to Restricted Definitive Note.  In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for a Restricted Definitive
Note with an equal principal amount, the Owner hereby certifies that the
Restricted Definitive Note is being acquired for the Owner’s own account
without transfer.  Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
Restricted Definitive Note issued will continue to be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Definitive Note and in the Indenture and the Securities Act.

 

(b)  o  Check if Exchange is from
Restricted Definitive Note to beneficial interest in a Restricted Global Note.  In connection with the Exchange of the Owner’s
Restricted Definitive Note for a beneficial interest in the [CHECK ONE]  ̈ 144A
Global Note,  ̈ Regulation S Global Note, 
 ̈ IAI Global Note with an equal principal amount, the Owner hereby
certifies (i) the beneficial interest is being acquired for the Owner’s own
account without transfer and (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to the Restricted Global Notes and
pursuant to and in accordance with the Securities Act, and in compliance with
any applicable blue sky securities laws of any state of the United States.  Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the beneficial interest issued will
be subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the relevant Restricted Global Note and in the Indenture and
the Securities Act.

 

This certificate and the statements contained herein
are made for your benefit and the benefit of the Issuers.

 

C-2

 

	
   

  	
   

  	
   

  
	
   

  	
  [Insert Name of Transferor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
						

 

C-3

 

EXHIBIT D

 

FORM OF CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

 

Texas Genco LLC

12301
Kurland Drive, 4th Floor

Houston,
Texas 77034

 

Wells Fargo Bank, National Association

Corporate Trust Services

213 Court Street, Suite 703

Middletown, Connecticut  06547

 

Re:  6.875% Senior Notes due 2014

 

Reference is hereby made to the Indenture, dated as of
December 14, 2004 (the “Indenture”),
among Texas Genco LLC, a Delaware limited liability company (“Texas Genco LLC”) and Texas Genco Financing Corp. (“Financing Corp.” and, together with Texas Genco LLC, the “Issuers”) and Wells Fargo Bank, National Association, as
trustee.  Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.

 

In connection with our proposed purchase of
$                    
aggregate principal amount of:

 

(a)  o  a beneficial interest in a Global Note, or

 

(b)  o  a Definitive Note,

 

we confirm that:

 

1.                                       We
understand that any subsequent transfer of the Notes or any interest therein is
subject to certain restrictions and conditions set forth in the Indenture and
the undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes or any interest therein except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the “Securities Act”).

 

2.                                       We
understand that the offer and sale of the Notes have not been registered under
the Securities Act, and that the Notes and any interest therein may not be
offered or sold except as permitted in the following sentence.  We agree, on our own behalf and on behalf of
any accounts for which we are acting as hereinafter stated, that if we should
sell the Notes or any interest therein, we will do so only (A) to Texas Genco
LLC or any subsidiary thereof, (B) in accordance with Rule 144A under the
Securities Act to a “qualified institutional buyer” (as defined therein), (C)
to an institutional “accredited investor” (as defined below) that, prior to
such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to you and to the Issuers a signed letter substantially in the
form of this letter and, if such transfer is in respect of a principal amount
of Notes, at the time of transfer of less than $250,000, an Opinion of Counsel
in form reasonably acceptable to the Issuers to the effect that such transfer
is in compliance with the Securities Act, (D) outside the United States in
accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant
to the provisions of Rule 144(k) under the Securities Act or (F) pursuant to an
effective registration statement under the Securities Act, and we further agree
to provide to any Person purchasing the Definitive Note or beneficial interest
in a Global Note from us in a transaction meeting the

 

D-1

 

requirements of clauses (A) through (E) of this
paragraph a notice advising such purchaser that resales thereof are restricted
as stated herein.

 

D-2

 

3.                                       We
understand that, on any proposed resale of the Notes or beneficial interest
therein, we will be required to furnish to you and the Issuers such
certifications, legal opinions and other information as you and the Issuers may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions.  We further
understand that the Notes purchased by us will bear a legend to the foregoing
effect.

 

4.                                       We
are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act) and have such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of our investment in the Notes, and we and any accounts
for which we are acting are each able to bear the economic risk of our or its
investment.

 

5.                                       We
are acquiring the Notes or beneficial interest therein purchased by us for our
own account or for one or more accounts (each of which is an institutional “accredited
investor”) as to each of which we exercise sole investment discretion.

 

You and the Issuers are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.

 

	
   

  	
   

  	
   

  
	
   

  	
  [Insert Name of Accredited Investor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
					

 

D-3

 

EXHIBIT E

 

[FORM OF NOTATION OF GUARANTEE]

 

For value received, each Guarantor (which term
includes any successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and
subject to the provisions in the Indenture dated as of December 14, 2004 (the “Indenture”) among Texas Genco LLC, a Delaware limited
liability company (“Texas Genco LLC”),
Texas Genco Financing Corp., a Delaware corporation (“Financing
Corp.” and, together with Texas Genco LLC, the “Issuers”),
the Guarantors party thereto and Wells Fargo Bank, National Association, as
trustee (the “Trustee”), (a) the due and
punctual payment of the principal of, premium and Additional Interest, if any,
and interest on, the Notes, whether at maturity, by acceleration, redemption or
otherwise, the due and punctual payment of interest on overdue principal of and
interest on the Notes, if any, if lawful, and the due and punctual performance
of all other obligations of the Issuers to the Holders or the Trustee all in
accordance with the terms of the Indenture and (b) in case of any extension of
time of payment or renewal of any Notes or any of such other obligations, that
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.  The
obligations of the Guarantors to the Holders of Notes and to the Trustee
pursuant to this Guarantee and the Indenture are expressly set forth in Section
4.15, Section 4.16 and Article 10 of the Indenture and reference is hereby made
to the Indenture for the precise terms of this Guarantee.  Each Holder of a Note, by accepting the same,
(a) agrees to and shall be bound by such provisions (b) authorizes and directs
the Trustee, on behalf of such Holder, to take such action as may be necessary
or appropriate to effectuate the subordination as provided in the Indenture and
(c) appoints the Trustee attorney-in-fact of such Holder for such purpose.

 

Capitalized terms used but not defined herein have the
meanings given to them in the Indenture.

 

	
   

  	
  [NAME OF GUARANTOR(S)]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

E-1

 

[FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED
BY SUBSEQUENT GUARANTORS]

 

SUPPLEMENTAL INDENTURE (this “Supplemental
Indenture”), dated as of                              ,
200   , among                                      
(the “Guaranteeing Subsidiary”), Texas Genco
LLC, a Delaware limited liability company (“Texas Genco LLC”),
Texas Genco Financing Corp. (“Financing Corp.”
and, together with Texas Genco LLC, the “Issuers”), the
other Guarantors (as defined in the Indenture referred to herein) and Wells
Fargo Bank, National Association, as trustee under the Indenture referred to
below (the “Trustee”).

 

W I T N E S S E T H

 

WHEREAS, the Issuers have heretofore executed and
delivered to the Trustee an indenture (the “Indenture”),
dated as of December 14, 2004 providing for the issuance of 6.875% Senior Notes
due 2014 (the “Notes”);

 

WHEREAS, the Indenture provides that under certain
circumstances the Guaranteeing Subsidiary shall execute and deliver to the
Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary
shall unconditionally guarantee all of the Issuers’ Obligations under the Notes
and the Indenture on the terms and conditions set forth herein (the “Guarantee”); and

 

WHEREAS, pursuant to Section 9.01 of the Indenture,
the Trustee is authorized to execute and deliver this Supplemental Indenture.

 

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

 

1.                                       CAPITALIZED
TERMS.  Capitalized terms used herein
without definition shall have the meanings assigned to them in the Indenture.

 

2.                                       AGREEMENT
TO GUARANTEE.  The Guaranteeing
Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and
subject to the conditions set forth in the Guarantee and in the Indenture
including but not limited to Section 4.15, Section 4.16 and Article 10 thereof.

 

4.                                       NO
RECOURSE AGAINST OTHERS.  No past,
present or future director, officer, employee, incorporator, stockholder or
agent of the Guaranteeing Subsidiary, as such, shall have any liability for any
obligations of the Issuers or any Guaranteeing Subsidiary under the Notes, any
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation.  Each Holder of the Notes by accepting a Note
waives and releases all such liability. 
The waiver and release are part of the consideration for issuance of the
Notes.  Such waiver may not be effective
to waive liabilities under the federal securities laws and it is the view of
the SEC that such a waiver is against public policy.

 

5.                                       NEW
YORK LAW TO GOVERN.  THE INTERNAL LAWS OF
THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL
INDENTURE.

 

F-1

 

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

 

7.                                       EFFECT
OF HEADINGS.  The Section headings herein
are for convenience only and shall not affect the construction hereof.

 

8.                                       THE
TRUSTEE.  The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Supplemental Indenture or for or in respect of the recitals
contained herein, all of which recitals are made solely by the Guaranteeing
Subsidiary and the Issuers.

 

F-2

 

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

 

Dated:                     ,
20    

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [GUARANTEEING SUBSIDIARY]

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  TEXAS GENCO LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  TEXAS GENCO FINANCING CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  [EXISTING GUARANTORS]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK, NATIONAL ASSOCIATION,

  as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  
					

 

F-3EXHIBIT 10.3

 

 

 

 

CREDIT AGREEMENT

 

Dated as of December 14, 2004

 

among

 

TEXAS GENCO LLC,

as Borrower

 

The Several Lenders

from Time to Time Parties Hereto

 

GOLDMAN SACHS CREDIT PARTNERS L.P.,

as Administrative Agent, Joint Lead Arranger and Joint Bookrunner

 

MORGAN STANLEY SENIOR FUNDING INC.,

as Syndication Agent, Joint Lead Arranger and Joint Bookrunner

 

DEUTSCHE BANK AG, CAYMAN ISLANDS BRANCH,

as Co-Documentation Agent and Joint Bookrunner

 

CITICORP USA, INC.,

as Co-Documentation Agent and Joint Bookrunner

 

and

 

DEUTSCHE BANK SECURITIES INC.,

as Joint Lead
Arranger for the Special Letter of Credit Facility

 

 

 

 

TABLE OF CONTENTS

 

	
  SECTION 1.
  

  	
   

  	
  Definitions

  	
   

  
	
  1.1.

  	
   

  	
  Defined
  Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2. 

  	
   

  	
  Amount and Terms of Credit Facilities

  	
   

  
	
  2.1.

  	
   

  	
  Loans

  	
   

  
	
  2.2.

  	
   

  	
  Minimum
  Amount of Each Borrowing; Maximum Number of Borrowings

  	
   

  
	
  2.3.

  	
   

  	
  Notice of
  Borrowing

  	
   

  
	
  2.4.

  	
   

  	
  Disbursement
  of Funds

  	
   

  
	
  2.5.

  	
   

  	
  Repayment
  of Loans; Evidence of Debt

  	
   

  
	
  2.6.

  	
   

  	
  Conversions
  and Continuations

  	
   

  
	
  2.7.

  	
   

  	
  Pro Rata
  Borrowings

  	
   

  
	
  2.8.

  	
   

  	
  Interest

  	
   

  
	
  2.9.

  	
   

  	
  Interest Periods

  	
   

  
	
  2.10.

  	
   

  	
  Increased Costs, Illegality, etc.

  	
   

  
	
  2.11.

  	
   

  	
  Compensation

  	
   

  
	
  2.12.

  	
   

  	
  Change of Lending Office

  	
   

  
	
  2.13.

  	
   

  	
  Notice of Certain Costs

  	
   

  
	
  2.14.

  	
   

  	
  Incremental Facilities.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3. 

  	
   

  	
  Letters of Credit

  	
   

  
	
  3.1.

  	
   

  	
  Issuance of Letters of Credit

  	
   

  
	
  3.2.

  	
   

  	
  Letter of Credit Requests

  	
   

  
	
  3.3.

  	
   

  	
  Letter of Credit Participations

  	
   

  
	
  3.4.

  	
   

  	
  Agreement to Repay Letter of Credit Drawings

  	
   

  
	
  3.5.

  	
   

  	
  Increased Costs

  	
   

  
	
  3.6.

  	
   

  	
  Successor Letter of Credit Issuer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4. 

  	
   

  	
  Fees; Commitment Reductions and Terminations

  	
   

  
	
  4.1.

  	
   

  	
  Fees

  	
   

  
	
  4.2.

  	
   

  	
  Voluntary Reduction of Commitments

  	
   

  
	
  4.3.

  	
   

  	
  Mandatory Termination of Commitments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5. 

  	
   

  	
  Payments

  	
   

  
	
  5.1.

  	
   

  	
  Voluntary Prepayments

  	
   

  
	
  5.2.

  	
   

  	
  Mandatory Prepayments

  	
   

  
	
  5.3.

  	
   

  	
  Method and Place of Payment

  	
   

  
	
  5.4.

  	
   

  	
  Net Payments

  	
   

  
	
  5.5.

  	
   

  	
  Computations of Interest and Fees

  	
   

  
	
  5.6.

  	
   

  	
  Limit on Rate of Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6. 

  	
   

  	
  Conditions Precedent to Initial Credit Event

  	
   

  
	
  6.1.

  	
   

  	
  Credit Documents

  	
   

  
	
  6.2.

  	
   

  	
  Collateral

  	
   

  

 

i

 

	
  6.3.

  	
   

  	
  Legal Opinions

  	
   

  
	
  6.4.

  	
   

  	
  No Defaults; Representations and Warranties

  	
   

  
	
  6.5.

  	
   

  	
  Senior Unsecured Notes

  	
   

  
	
  6.6.

  	
   

  	
  Equity Investment

  	
   

  
	
  6.7.

  	
   

  	
  Structure and Terms of the Acquisition Transactions
  and Public Company Merger

  	
   

  
	
  6.8.

  	
   

  	
  Discharge of Existing Debt and Redemption of
  Preferred Stock

  	
   

  
	
  6.9.

  	
   

  	
  Closing Certificates

  	
   

  
	
  6.10.

  	
   

  	
  Corporate Proceedings

  	
   

  
	
  6.11.

  	
   

  	
  Corporate Documents

  	
   

  
	
  6.12.

  	
   

  	
  Fees and Expenses

  	
   

  
	
  6.13.

  	
   

  	
  Solvency Certificate

  	
   

  
	
  6.14.

  	
   

  	
  Financial Statements

  	
   

  
	
  6.15.

  	
   

  	
  Consents and Approvals

  	
   

  
	
  6.16.

  	
   

  	
  Environmental Matters

  	
   

  
	
  6.17.

  	
   

  	
  Patriot Act, etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7. 

  	
   

  	
  Conditions Precedent to Initial Transaction Closing Date

  	
   

  
	
  7.1.

  	
   

  	
  Previous Closing Date

  	
   

  
	
  7.2.

  	
   

  	
  Credit Documents

  	
   

  
	
  7.3.

  	
   

  	
  Collateral

  	
   

  
	
  7.4.

  	
   

  	
  Legal Opinions

  	
   

  
	
  7.5.

  	
   

  	
  No Defaults; Representations and Warranties

  	
   

  
	
  7.6.

  	
   

  	
  Senior Unsecured Notes

  	
   

  
	
  7.7.

  	
   

  	
  Equity Investment

  	
   

  
	
  7.8.

  	
   

  	
  Initial Transaction

  	
   

  
	
  7.9.

  	
   

  	
  Discharge of Existing Debt

  	
   

  
	
  7.10.

  	
   

  	
  Closing Certificates

  	
   

  
	
  7.11.

  	
   

  	
  Corporate Proceedings

  	
   

  
	
  7.12.

  	
   

  	
  Corporate Documents

  	
   

  
	
  7.13.

  	
   

  	
  Fees and Expenses

  	
   

  
	
  7.14.

  	
   

  	
  Consents and Approvals

  	
   

  
	
  7.15.

  	
   

  	
  Perfection Certificate

  	
   

  
	
  7.16.

  	
   

  	
  Insurance Certificates

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8. 

  	
   

  	
  Condition Precedent to Borrowing of Delayed Draw Term
  Loans

  	
   

  
	
  8.1.

  	
   

  	
  Previous Closing Dates

  	
   

  
	
  8.2.

  	
   

  	
  Credit Documents

  	
   

  
	
  8.3.

  	
   

  	
  Collateral

  	
   

  
	
  8.4.

  	
   

  	
  Legal Opinions

  	
   

  
	
  8.5.

  	
   

  	
  Equity Investment

  	
   

  
	
  8.6.

  	
   

  	
  Subsequent Transaction

  	
   

  
	
  8.7.

  	
   

  	
  Closing Certificates

  	
   

  
	
  8.8.

  	
   

  	
  Corporate Proceedings

  	
   

  
	
  8.9.

  	
   

  	
  Corporate Documents

  	
   

  
	
  8.10.

  	
   

  	
  Consents and Approvals

  	
   

  
	
  8.11.

  	
   

  	
  Fees and Expenses

  	
   

  

 

ii

 

	
  8.12.

  	
   

  	
  Call Transaction

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9. 

  	
   

  	
  Conditions Precedent to All Credit Events

  	
   

  
	
  9.1.

  	
   

  	
  No Default; Representations and Warranties

  	
   

  
	
  9.2.

  	
   

  	
  Notice of Borrowing; Letter of Credit Request

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10. 

  	
   

  	
  Representations, Warranties and Agreements

  	
   

  
	
  10.1.

  	
   

  	
  Corporate Status

  	
   

  
	
  10.2.

  	
   

  	
  Corporate Power and Authority

  	
   

  
	
  10.3.

  	
   

  	
  No Violation

  	
   

  
	
  10.4.

  	
   

  	
  Litigation

  	
   

  
	
  10.5.

  	
   

  	
  Margin Regulations

  	
   

  
	
  10.6.

  	
   

  	
  Governmental Approvals

  	
   

  
	
  10.7.

  	
   

  	
  Investment Company Act

  	
   

  
	
  10.8.

  	
   

  	
  True and Complete Disclosure

  	
   

  
	
  10.9.

  	
   

  	
  Financial Condition; Financial Statements

  	
   

  
	
  10.10.

  	
   

  	
  Tax Returns and Payments

  	
   

  
	
  10.11.

  	
   

  	
  Compliance with ERISA

  	
   

  
	
  10.12.

  	
   

  	
  Subsidiaries

  	
   

  
	
  10.13.

  	
   

  	
  Patents, etc.

  	
   

  
	
  10.14.

  	
   

  	
  Environmental Laws

  	
   

  
	
  10.15.

  	
   

  	
  Properties, Assets and Rights

  	
   

  
	
  10.16.

  	
   

  	
  Commodity Hedging Agreements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11. 

  	
   

  	
  Affirmative Covenants

  	
   

  
	
  11.1.

  	
   

  	
  Information Covenants

  	
   

  
	
  11.2.

  	
   

  	
  Books, Records and Inspections

  	
   

  
	
  11.3.

  	
   

  	
  Maintenance of Insurance

  	
   

  
	
  11.4.

  	
   

  	
  Payment of Taxes

  	
   

  
	
  11.5.

  	
   

  	
  Consolidated Corporate Franchises

  	
   

  
	
  11.6.

  	
   

  	
  Compliance with Statutes.

  	
   

  
	
  11.7.

  	
   

  	
  ERISA

  	
   

  
	
  11.8.

  	
   

  	
  Good Repair

  	
   

  
	
  11.9.

  	
   

  	
  Transactions with Affiliates

  	
   

  
	
  11.10.

  	
   

  	
  End of Fiscal Years; Fiscal Quarters

  	
   

  
	
  11.11.

  	
   

  	
  Additional Guarantors and Grantors

  	
   

  
	
  11.12.

  	
   

  	
  Pledges of Additional Stock and Evidence of Indebtedness

  	
   

  
	
  11.13.

  	
   

  	
  Use of Proceeds

  	
   

  
	
  11.14.

  	
   

  	
  Changes in Business

  	
   

  
	
  11.15.

  	
   

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12. 

  	
   

  	
  Negative Covenants

  	
   

  
	
  12.1.

  	
   

  	
  Limitation on Indebtedness

  	
   

  
	
  12.2.

  	
   

  	
  Limitation on Liens

  	
   

  
	
  12.3.

  	
   

  	
  Limitation on Fundamental Changes

  	
   

  
	
  12.4.

  	
   

  	
  Limitation on Sale of Assets

  	
   

  
	
  12.5.

  	
   

  	
  Limitation on Investments

  	
   

  

 

iii

 

	
  12.6.

  	
   

  	
  Limitation on Dividends

  	
   

  
	
  12.7.

  	
   

  	
  Limitations on Debt Payments and Amendments

  	
   

  
	
  12.8.

  	
   

  	
  Limitations on Sale Leasebacks

  	
   

  
	
  12.9.

  	
   

  	
  Consolidated Total Debt to Consolidated EBITDA Ratio

  	
   

  
	
  12.10.

  	
   

  	
  Consolidated EBITDA to Consolidated Interest Expense
  Ratio

  	
   

  
	
  12.11.

  	
   

  	
  Capital Expenditures

  	
   

  
	
  12.12.

  	
   

  	
  Special Letter of Credit Covenants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13. 

  	
   

  	
  Events of Default

  	
   

  
	
  13.1.

  	
   

  	
  Payments

  	
   

  
	
  13.2.

  	
   

  	
  Representations, etc.

  	
   

  
	
  13.3.

  	
   

  	
  Covenants

  	
   

  
	
  13.4.

  	
   

  	
  Default Under Other Agreements

  	
   

  
	
  13.5.

  	
   

  	
  Bankruptcy, etc.

  	
   

  
	
  13.6.

  	
   

  	
  ERISA

  	
   

  
	
  13.7.

  	
   

  	
  Guarantee

  	
   

  
	
  13.8.

  	
   

  	
  Security Documents

  	
   

  
	
  13.9.

  	
   

  	
  Subordination

  	
   

  
	
  13.10.

  	
   

  	
  Judgments

  	
   

  
	
  13.11.

  	
   

  	
  Change of Control

  	
   

  
	
  13.12.

  	
   

  	
  Defaults Under Commodity Hedging Agreements

  	
   

  
	
  13.13.

  	
   

  	
  Termination of Special Letter of Credit Commitments

  	
   

  
	
  13.14.

  	
   

  	
  Borrower’s Right to Cure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14. 

  	
   

  	
  The Administrative Agent

  	
   

  
	
  14.1.

  	
   

  	
  Appointment

  	
   

  
	
  14.2.

  	
   

  	
  Delegation of Duties

  	
   

  
	
  14.3.

  	
   

  	
  Exculpatory Provisions

  	
   

  
	
  14.4.

  	
   

  	
  Reliance by Administrative Agent

  	
   

  
	
  14.5.

  	
   

  	
  Notice of Default

  	
   

  
	
  14.6.

  	
   

  	
  Non-Reliance on Administrative Agent and Other Lenders

  	
   

  
	
  14.7.

  	
   

  	
  Indemnification

  	
   

  
	
  14.8.

  	
   

  	
  Administrative Agent in its Individual Capacity

  	
   

  
	
  14.9.

  	
   

  	
  Successor Agent

  	
   

  
	
  14.10.

  	
   

  	
  Withholding Tax

  	
   

  
	
  14.11.

  	
   

  	
  Collateral Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 15. 

  	
   

  	
  Miscellaneous

  	
   

  
	
  15.1.

  	
   

  	
  Amendments and Waivers

  	
   

  
	
  15.2.

  	
   

  	
  Notices

  	
   

  
	
  15.3.

  	
   

  	
  No Waiver; Cumulative Remedies

  	
   

  
	
  15.4.

  	
   

  	
  Survival of Representations and Warranties

  	
   

  
	
  15.5.

  	
   

  	
  Payment of Expenses and Taxes; Indemnification

  	
   

  
	
  15.6.

  	
   

  	
  Successors and Assigns; Participations and Assignments

  	
   

  
	
  15.7.

  	
   

  	
  Replacements of Lenders under Certain Circumstances

  	
   

  
	
  15.8.

  	
   

  	
  Adjustments; Set-off

  	
   

  
	
  15.9.

  	
   

  	
  Counterparts

  	
   

  

 

iv

 

	
  15.10.

  	
   

  	
  Severability

  	
   

  
	
  15.11.

  	
   

  	
  Integration

  	
   

  
	
  15.12.

  	
   

  	
  GOVERNING LAW

  	
   

  
	
  15.13.

  	
   

  	
  Submission to Jurisdiction; Waivers

  	
   

  
	
  15.14.

  	
   

  	
  Acknowledgments

  	
   

  
	
  15.15.

  	
   

  	
  WAIVERS OF JURY TRIAL

  	
   

  
	
  15.16.

  	
   

  	
  Confidentiality

  	
   

  
	
  15.17.

  	
   

  	
  USA PATRIOT Act

  	
   

  

 

v

 

	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1.1(a)

  	
   

  	
  Mortgaged Properties

  
	
  Schedule 1.1(b)

  	
   

  	
  Commitments and Addresses of Lenders

  
	
  Schedule 1.1(c)

  	
   

  	
  Scheduled Assets

  
	
  Schedule 2.5(c)

  	
   

  	
  Delayed Draw Repayment Dates and Amounts
  (to be prepared pursuant to Section 2.5(b)

  
	
  Schedule 7.3(d)

  	
   

  	
  Insured Mortgaged Properties

  
	
  Schedule 10.12

  	
   

  	
  Subsidiaries

  
	
  Schedule 12.1

  	
   

  	
  Indebtedness

  
	
  Schedule 12.2

  	
   

  	
  Liens

  
	
  Schedule 12.5

  	
   

  	
  Investments

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Form of Assignment and Acceptance

  
	
  Exhibit B

  	
   

  	
  Form of Guarantee

  
	
  Exhibit C

  	
   

  	
  Form of Deed of Trust

  
	
  Exhibit D

  	
   

  	
  Form of Perfection Certificate

  
	
  Exhibit E-1

  	
   

  	
  Form of Security Agreement

  
	
  Exhibit E-2

  	
   

  	
  Form of Pledge Agreement

  
	
  Exhibit E-3

  	
   

  	
  Form of Collateral Trust Agreement

  
	
  Exhibit E-4

  	
   

  	
  Form of Escrow Agreement

  
	
  Exhibit F

  	
   

  	
  Form of Letter of Credit Request

  
	
  Exhibit G-1

  	
   

  	
  Form of Legal Opinions (Credit
  Agreement Closing Date)

  
	
  Exhibit G-2

  	
   

  	
  Form of Legal Opinions (Initial
  Transaction Closing Date)

  
	
  Exhibit H

  	
   

  	
  Form of Closing Certificate

  
	
  Exhibit I-1

  	
   

  	
  Form of Promissory Note (Initial Term
  Loans)

  
	
  Exhibit I-2

  	
   

  	
  Form of Promissory Note (Delayed Draw
  Term Loans)

  
	
  Exhibit I-3

  	
   

  	
  Form of Promissory Note (New Term
  Loans)

  
	
  Exhibit I-4

  	
   

  	
  Form of Promissory Note (Revolving
  Credit and Swingline Loans)

  
	
  Exhibit J

  	
   

  	
  Form of Joinder Agreement

  

 

vi

 

CREDIT
AGREEMENT, dated as of December 14, 2004, among TEXAS GENCO LLC, a
Delaware limited liability company (the “Borrower”), the lending
institutions from time to time parties hereto (each a “Lender” and,
collectively, the “Lenders”), GOLDMAN SACHS CREDIT PARTNERS L.P., as
Administrative Agent, Joint Lead Arranger and Joint Bookrunner, MORGAN STANLEY SENIOR
FUNDING INC., as Syndication Agent, Joint Lead Arranger and Joint Bookrunner,
DEUTSCHE BANK AG, CAYMAN ISLANDS BRANCH, as Co-Documentation Agent and Joint
Bookrunner, CITICORP USA, INC., as Co-Documentation Agent and Joint Bookrunner,
and DEUTSCHE BANK SECURITIES INC., as Joint Lead Arranger for the Special
Letter of Credit Facility (such term and each other capitalized term used but
not defined in this introductory statement having the meaning provided in Section 1).

 

RECITALS:

 

WHEREAS, prior to the date hereof, Texas Genco
Holdings, Inc. (“Genco Holdings”), a Delaware corporation wholly
owned by CenterPoint Energy, Inc. (“CenterPoint”), divided its Nuclear Assets and its Non-Nuclear Assets;

 

WHEREAS, on the Credit Agreement Closing Date, NN
Houston Sub, Inc. (“NN Houston Sub”), a Texas corporation
indirectly wholly owned by CenterPoint, will merge with and into Genco Holdings
(the “Public Company Merger”) and, as a result of the Public Company
Merger, the shareholders of Genco Holdings, other than CenterPoint, will
receive consideration in exchange for their shares of Capital Stock of Genco
Holdings;

 

WHEREAS, on or about the day following the Public
Company Merger, the Borrower will acquire all of the Non-Nuclear Assets of
Genco Holdings (other than cash on the balance sheet of Genco Holdings)
pursuant to (i) a merger of New Genco II L.P. (“Newco 1”), a Texas limited partnership indirectly
wholly owned by the Borrower, with and into Texas Genco II, LP (“Genco II LP”), a Texas limited partnership wholly owned
by Genco Holdings, and (ii) a
merger of New Genco Services L.P. (“Newco 2”), a Texas limited partnership indirectly wholly owned by the
Borrower, with and into Texas Genco Services, LP (“Genco Services”), a Texas limited partnership wholly owned
by Genco Holdings, in each case in accordance with the terms of the Transaction
Agreement (the transactions described in clauses (i) and (ii), together,
the “Initial Transaction”);

 

WHEREAS, following
the consummation of the Initial Transaction, the Borrower intends to acquire
all of the Capital Stock of Genco Holdings (which, at the date of such
acquisition, will own only the Nuclear Assets and cash on its balance sheet)
pursuant to a merger of HPC Merger Sub, Inc. (“HPC Merger Sub”), a
Texas corporation wholly owned by the Borrower, with and into Genco Holdings, in accordance with the terms of the
Transaction Agreement (the “Subsequent Transaction” and, together with
the Initial Transaction, the “Acquisition Transactions”);

 

WHEREAS,
in connection with the Acquisition Transactions, (i) the Borrower will
issue not less than $1,125,000,000 in aggregate principal amount of its senior unsecured
notes (the “Senior Unsecured Notes”) pursuant to a Rule 144A
offering (the “Notes Offering”) and (ii) the Sponsors and the
Management Investors will contribute an amount in cash and

 

 

common equity to
the Borrower that is equal to or greater than $898,100,000 (the “Equity
Investment”);

 

WHEREAS, in connection with the foregoing, the
Borrower has requested that the Lenders extend credit to the Borrower in
the form of (i) $1,150,000,000 in aggregate principal amount of term loans
to be borrowed on the Credit Agreement Closing Date (the “Initial Term Loan
Facility”), (ii) $475,000,000 in aggregate principal amount of term
loans to be borrowed on the earlier of the Subsequent Transaction Closing Date and
the Call Transaction Closing Date (the “Delayed Draw Term Loan Facility”),
provided that no more than $200,000,000 of the Delayed Draw Term Loan Facility
may be used to fund the Call Transaction, (iii) up to $325,000,000 in
aggregate principal amount of Revolving Credit Commitments (the “Revolving
Credit Facility”), (iv) up to $200,000,000 in aggregate Stated Amount
of letters of credit (the “Base Letter of Credit Facility”) and (v) up
to $344,352,000 in aggregate Stated Amount of letters of credit (the “Special
Letter of Credit Facility”).  The
proceeds of the Initial Term Loan Facility will be used to fund the Initial
Transaction and related Transaction Expenses. 
The proceeds of the Delayed Draw Term Loan Facility will be used to fund
the Subsequent Transaction and related Transaction Expenses or the Call
Transaction and related expenses (but not both).  Revolving Credit Loans available under the
Revolving Credit Facility will be used for working capital requirements and
general corporate purposes of the Borrower and the Restricted Subsidiaries,
including the financing of a portion of the Subsequent Transaction.  The Borrower will use the letters of credit
issued under the Revolving Credit Facility for general corporate purposes,
including supporting the obligations of the Borrower and the Restricted Subsidiaries
under Commodity Hedging Agreements.  The
letters of credit issued under the Base Letter of Credit Facility will be used
to support the obligations of the Borrower and the Restricted Subsidiaries
under Eligible Commodity Hedging Agreements. 
The letters of credit issued under the Special Letter of Credit Facility
will be used to support the obligations of the Borrower and the Restricted
Subsidiaries under the GS Commodity Hedging Agreement, the MS Commodity Hedging
Agreement and other Special Commodity Hedging Agreements;

 

WHEREAS,
the Borrower has agreed to secure all of its Obligations under this Agreement
by granting to the Collateral Trustee, for the
benefit of Secured Parties, a first priority lien on its assets, including a
pledge of all of the Capital Stock of each of its Domestic Subsidiaries
and 65% of the Capital Stock of each of its “first tier” Foreign Subsidiaries;
and

 

WHEREAS,
the Guarantors have agreed to guarantee the Obligations under this Agreement
and to secure their respective guarantees by granting to the Collateral
Trustee, for the benefit of Secured Parties, a first priority lien on their
respective assets, including a pledge of
all of the Capital Stock of each of their Domestic Subsidiaries and 65%
of the Capital Stock of each of their “first tier” Foreign Subsidiaries.

 

AGREEMENT:

 

NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:

 

2

 

SECTION 1.  
Definitions

 

1.1.                              Defined
Terms.  (a)  As used herein, the
following terms shall have the meanings specified in this Section 1.1
unless the context otherwise requires (it being understood that defined terms
in this Agreement shall include in the singular number the plural and in the
plural the singular):

 

“ABR”
shall mean, for any day, a rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect
on such day and (b) the Federal Funds Effective Rate in effect on such day
plus 1⁄2 of 1%.  Any change in the ABR due
to a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective as of the opening of business on the effective day of such change in
the Prime Rate or the Federal Funds Effective Rate, respectively.

 

“ABR Loan”
shall mean each Loan bearing interest at the rate provided in Section 2.8
and, in any event, shall include all Swingline Loans.

 

“Acceptable
Reinvestment Commitment” shall mean a binding commitment of the Borrower or
any Restricted Subsidiary entered into at any time prior to the end of the
Reinvestment Period to reinvest proceeds of an Asset Sale Prepayment Event,
Permitted Sale Leaseback or Recovery Prepayment Event; provided that such
reinvestment is made within 365 days after the date on which such commitment is
entered into by the Borrower or such Restricted Subsidiary.

 

“Acquired
EBITDA” shall mean, with respect to any Acquired Entity or Business, any
Converted Restricted Subsidiary, any Sold Entity or Business or any Converted
Unrestricted Subsidiary (any of the foregoing, a “Pro Forma Entity”) for
any period, the amount for such period of Consolidated EBITDA of such Pro Forma
Entity (determined using such definitions as if references to the Borrower and
its Subsidiaries therein were to such Pro Forma Entity and its Subsidiaries),
all as determined on a consolidated basis for such Pro Forma Entity in
accordance with GAAP.

 

“Acquired
Entity or Business” shall have the meaning provided in the definition of
the term “Consolidated EBITDA”.

 

“Acquisition
Transactions” shall have the meaning provided in the recitals to this
Agreement.

 

“Adjusted
Total Base Letter of Credit Commitment” shall mean, at any time, the Total
Base Letter of Credit Commitment less the aggregate Base Letter of Credit
Commitments of all Defaulting Lenders.

 

“Adjusted
Total Delayed Draw Term Loan Commitment” shall mean, at any time, the Total
Delayed Draw Term Loan Commitment less the aggregate Delayed Draw Term Loan
Commitments of all Defaulting Lenders.

 

“Adjusted
Total New Term Loan Commitment” shall mean, at any time with respect to New
Term Loans of any Series, the Total New Term Loan Commitment for such Series less
the aggregate New Term Loan Commitments for such Series of all Defaulting
Lenders.

 

3

 

“Adjusted
Total Revolving Credit Commitment” shall mean, at any time, the Total
Revolving Credit Commitment less the aggregate Revolving Credit Commitments of
all Defaulting Lenders.

 

“Adjusted
Total Special Letter of Credit Commitment” shall mean, at any time, the
Total Special Letter of Credit Commitment less the aggregate Special Letter of
Credit Commitments of all Defaulting Lenders.

 

“Administrative
Agent” shall mean GSCP, together with its affiliates, as the administrative
agent for the Lenders under this Agreement and the other Credit Documents.

 

“Administrative
Agent’s Office” shall mean the office of the Administrative Agent located
at 30 Hudson Street, Jersey City, New Jersey 07302, or such other office as the
Administrative Agent may hereafter designate in writing as such to the other
parties hereto.

 

“Affiliate”
shall mean, with respect to any Person, any other Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with
such Person.  A Person shall be deemed to
control a corporation if such Person possesses, directly or indirectly, the
power (a) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such corporation or (b) to direct
or cause the direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract or otherwise.

 

“Agents”
shall mean the Joint Lead Arrangers, the Administrative Agent, the Syndication
Agent and the Co-Documentation Agents.

 

“Agreement”
shall mean this Credit Agreement, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof and of
the other Credit Documents.

 

“Applicable
ABR Margin” shall mean, at any date, (a) with respect to Initial Term
Loans, Delayed Draw Term Loans and Special Letters of Credit, (i) if the Initial
Term Loans and Delayed Draw Term Loans are rated at least Ba1 by Moody’s on
such date, 0.75% per annum or (ii) otherwise, 1.00% per annum, and (b) with
respect to Revolving Credit Loans, Swingline Loans, Revolving Letters of Credit
and Base Letters of Credit, (i) during the period from the Credit
Agreement Closing Date to but excluding the Initial Financial Statement
Delivery Date, 1.25% per annum, and (ii) thereafter, the applicable
percentage per annum set forth below based upon the Status in effect on such
date.

 

	
  Status

  	
   

  	
  Applicable ABR Margin for

  Revolving Credit Loans,

  Swingline Loans, Revolving

  Letters of Credit and Base

  Letters of Credit

  	
   

  
	
  Level I
  Status

  	
   

  	
  1.00

  	
  %

  
	
  Level II
  Status

  	
   

  	
  0.75

  	
  %

  

 

4

 

“Applicable
Eurodollar Margin” shall mean, at any date, (a) with respect to
Initial Term Loans, Delayed Draw Term Loans and Special Letters of Credit, (i) if
the Initial Term Loans and Delayed Draw Term Loans are rated at least Ba1 by
Moody’s on such date, 1.75% per annum or (ii) otherwise, 2.00% per annum, and
(b) with respect to Revolving Credit Loans, Swingline Loans, Revolving
Letters of Credit and Base Letters of Credit, (i) during the period from
the Credit Agreement Closing Date to but excluding the Initial Financial
Statement Delivery Date, 2.25% per annum, and (ii) thereafter, the
applicable percentage per annum set forth below based upon the Status in effect
on such date.

 

	
  Status

  	
   

  	
  Applicable Eurodollar Margin

  for Revolving Credit Loans,

  Revolving Letters of Credit

  and Base Letters of Credit

  	
   

  
	
  Level I
  Status

  	
   

  	
  2.00

  	
  %

  
	
  Level II
  Status

  	
   

  	
  1.75

  	
  %

  

 

“Applicable Laws” shall mean, as to
any Person, any law, rule, regulation, ordinance or treaty, or any
determination, ruling or other directive by or from a court, arbitrator or
other Governmental Authority, including ERCOT, in each case applicable to or
binding on such Person or any of its property or assets or to which such Person
or any of its property or assets is subject.

 

“Applicable Margin” shall mean the
Applicable ABR Margin or the Applicable Eurodollar Margin, as applicable .

 

“Approved Fund” shall have the meaning
provided in Section 15.6(b).

 

“Asset Sale Prepayment Event” shall
mean any sale, transfer or other disposition of any business unit, asset or
property of the Borrower or any Restricted Subsidiary (including any sale,
transfer or other disposition of any Capital Stock of any Subsidiary of the
Borrower owned by the Borrower or any Restricted Subsidiary); provided that the
term “Asset Sale Prepayment Event” shall not include (a) any Recovery
Event or (b) any sale, transfer or other disposition permitted under
clauses (a), (b), (g) and (h) of Section 12.4.

 

“Assignment
and Acceptance” shall mean an assignment and acceptance substantially in
the form of Exhibit A.

 

“Authorized
Officer” shall mean the Chairman of the Board, the President, the Chief Financial Officer, the Treasurer or any other
senior officer of the Borrower designated as such in writing to the
Administrative Agent by the Borrower.

 

“Available
Amount” shall mean, on any date (the “Reference Date”), an amount
equal at such time to (a) the sum of, without duplication:

 

5

 

(i)                                     (x)
for the purposes of Sections 12.5(j), 12.5(m), 12.5(o) and 12.11(b), $250,000,000
in aggregate, and (y) for the purposes of clause (ii) of the proviso to Section 12.7(a) and
clause (i) of the proviso to Section 12.7(b), $125,000,000 in
aggregate;

 

(ii)                                  an
amount equal to (x) the cumulative amount of Excess Cash Flow for all
fiscal years completed after the Credit Agreement Closing Date and prior to the
Reference Date minus (y) the portion of such Excess Cash Flow that has
been after the Credit Agreement Closing Date and on or prior to the Reference
Date (or will be) applied to the prepayment of Loans in accordance with Section 5.2(a)(iii) (calculated
after giving pro forma effect to any investment actually made pursuant to Section 12.5(j),
12.5(m) or 12.5(o), any prepayment, reduction or repurchase actually made
pursuant to clause (ii) of the proviso to Section 12.7(a) or
clause (i) of the proviso to Section 12.7(b), or any Capital
Expenditure actually made pursuant to Section 12.11(b));

 

(iii)                               the
amount of any capital contributions or other equity issuances (other than the
Equity Investment) made or received by the Borrower during the period from and including
the Business Day immediately following the Credit Agreement Closing Date
through and including the Reference Date;

 

(iv)                              the
aggregate amount of all cash dividends and other cash distributions received by
the Borrower or any Guarantor from any Minority Investments or Unrestricted
Subsidiaries after the Credit Agreement Closing Date and on or prior to the
Reference Date (other than the portion of any such dividends and other
distributions that is used by the Borrower or any Guarantor to pay taxes or to
pay Tax Distributions);

 

(v)                                 the
aggregate amount of all cash repayments of principal received by the Borrower
or any Guarantor from any Minority Investments or Unrestricted Subsidiaries
after the Credit Agreement Closing Date and on or prior to the Reference Date
in respect of loans made by the Borrower or any Guarantor to such Minority
Investments or Unrestricted Subsidiaries; and

 

(vi)                              the
aggregate amount of all net cash proceeds received by the Borrower or any
Guarantor in connection with the sale, transfer or other disposition of its
ownership interest in any Minority Investment or Unrestricted Subsidiary after
the Credit Agreement Closing Date and on or prior to the Reference Date,

 

minus
(b) the sum of:

 

(i)                                     the
aggregate amount of any investments (including loans) made by the Borrower or
any Restricted Subsidiary pursuant to Section 12.5(j), 12.5(m) or 12.5(o)
after the Credit Agreement Closing Date and on or prior to the Reference Date;

 

(ii)                                  the
aggregate amount of prepayments, repurchases and redemptions made by the
Borrower or any Restricted Subsidiary pursuant to clause (ii) of the
proviso to Section 12.7(a) and clause (i) of the proviso to Section 12.7(b) after
the Credit Agreement Closing Date and on or prior to the Reference Date; and

 

6

 

(iii)                               the aggregate amount of Capital Expenditures made by the
Borrower or any Restricted Subsidiary pursuant to Section 12.11(b) after
the Credit Agreement Closing Date and on or prior to the Reference Date.

 

“Available
Capacity” shall mean the net generation capacity of any Baseload Asset less
scheduled maintenance outages.

 

“Bankruptcy
Code” shall have the meaning provided in Section 13.5.

 

“Base
Letter of Credit” shall have the meaning provided in Section 3.1(b).

 

“Base
Letter of Credit Commitment” shall mean, (a) with respect to each
Lender that is a Lender on the date hereof, the amount set forth opposite such
Lender’s name on Schedule 1.1(b) as such Lender’s “Base Letter of
Credit Commitment” and (b) in the case of any Lender that becomes a Lender
after the date hereof, the amount specified as such Lender’s “Base Letter of
Credit Commitment” in the Assignment and Acceptance pursuant to which such
Lender assumed a portion of the Total Base Letter of Credit Commitment, in each
case as the same may be changed from time to time pursuant to terms
hereof.  The aggregate amount of the Base
Letter of Credit Commitments as of the date hereof is $200,000,000.

 

“Base
Letter of Credit Commitment Percentage” shall mean at any time, for each
Lender, the percentage obtained by dividing (a) such Lender’s Base Letter
of Credit Commitment by (b) the aggregate amount of the Base Letter of
Credit Commitments, provided that at any time when the Total Base Letter of
Credit Commitment shall have been terminated pursuant to Section 13, each
Lender’s Base Letter of Credit Commitment Percentage shall be its Base Letter
of Credit Commitment Percentage as in effect immediately prior to such
termination.

 

“Base
Letter of Credit Exposure” shall mean, with respect to any Lender, at any
time, the sum of (a) the amount of any Unpaid Drawings in respect of which
such Lender has made (or is required to have made) payments to the Letter of
Credit Issuer pursuant to Section 3.4(c) at such time and (b) such
Lender’s Base Letter of Credit Commitment Percentage of the Base Letters of
Credit Outstanding at such time (excluding the portion thereof consisting of
Unpaid Drawings in respect of which the Lenders have made (or are required to
have made) payments to the Letter of Credit Issuer pursuant to Section 3.4(c)).

 

“Base
Letter of Credit Facility” shall have the meaning provided in the recitals
to this Agreement.

 

“Base
Letter of Credit Fee” shall have the meaning provided in Section 4.1(d).

 

“Base Letter
of Credit Maturity Date” shall mean the date that is five years after the Credit
Agreement Closing Date, or, if such date is not a Business Day, the next
preceding Business Day.

 

“Base
Letter of Credit Participant” shall have the meaning provided in Section 3.3(b).

 

7

 

“Base
Letter of Credit Participation” shall have the meaning provided in Section 3.3(b).

 

“Base
Letters of Credit Outstanding” shall mean, at any time, the sum of, without
duplication, (a) the aggregate Stated Amount of all outstanding Base
Letters of Credit and (b) the aggregate amount of all Unpaid Drawings in
respect of all Base Letters of Credit.

 

“Baseload Assets”
shall mean (a) any Initial Baseload Assets and (b) any other assets
comprising an electric generating facility or unit acquired, constructed or
redesignated as such, in each such case after the Initial Transaction Closing
Date that is certified by an Authorized Officer of the Borrower to be a
baseload asset.

 

“Board”
shall mean the Board of Governors of the Federal Reserve System of the United
States (or any successor).

 

“Borrower”
shall have the meaning provided in the preamble to this Agreement.

 

“Borrowing”
shall mean and include (a) the incurrence of Swingline Loans from the
Swingline Lender on a given date, (b) the incurrence of one Type of
Initial Term Loan on the Credit Agreement Closing Date (or resulting from
conversions on a given date after the Credit Agreement Closing Date) having, in
the case of Eurodollar Term Loans, the same Interest Period (provided that ABR
Loans incurred pursuant to Section 2.10(b) shall be considered part
of any related Borrowing of Eurodollar Term Loans), (c) the incurrence of
one Type of Delayed Draw Term Loan on the Subsequent Transaction Closing Date
or the Call Transaction Closing Date, as applicable (or resulting from
conversions on a given date after the Subsequent Transaction Closing Date or
the Call Transaction Closing Date, as applicable), having, in the case of
Eurodollar Term Loans, the same Interest Period (provided that ABR Loans
incurred pursuant to Section 2.10(b) shall be considered part of any
related Borrowing of Eurodollar Term Loans), (d) the incurrence of one
Type of New Term Loan on the applicable Increased Amount Date (or resulting
from conversions on a given date after the applicable Increased Amount Date)
having, in the case of Eurodollar Term Loans, the same Interest Period
(provided that ABR Loans incurred pursuant to Section 2.10(b) shall
be considered part of any related Borrowing of Eurodollar Term Loans), and (e) the
incurrence of one Type of Revolving Credit Loan on a given date (or resulting
from conversions on a given date) having, in the case of Eurodollar Revolving
Credit Loans, the same Interest Period (provided that ABR Loans incurred
pursuant to Section 2.10(b) shall be considered part of any related
Borrowing of Eurodollar Revolving Credit Loans).

 

“Business
Day” shall mean any day excluding Saturday, Sunday and any day that shall
be in The City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close.

 

“Call
Transaction” shall mean the right of the Borrower to redeem up to
$200,000,000 in aggregate principal amount of the Senior Unsecured Notes
pursuant to Section 3.07(c) of the Senior Unsecured Note Indenture if
the Subsequent Transaction is not consummated.

 

8

 

“Call
Transaction Closing Date” shall mean the date on which the Borrower consummates
the Call Transaction.

 

“Capital
Expenditures” shall mean, for any period, the aggregate of all expenditures
(whether paid in cash or accrued as liabilities and including in all events all
amounts expended or capitalized under Capital Leases, but excluding any amount
representing capitalized interest) by the Borrower and the Restricted
Subsidiaries during such period that, in conformity with GAAP, are or are
required to be included as additions during such period to property, plant or
equipment reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries, provided that the term “Capital Expenditures” shall not include (a) expenditures
made in connection with the replacement, substitution, restoration or repair of
assets to the extent financed from insurance proceeds or compensation awards
paid on account of a Recovery Event, (b) the purchase price of equipment
that is purchased simultaneously with the trade-in of existing equipment to the
extent that the gross amount of such purchase price is reduced by the credit
granted by the seller of such equipment for the equipment being traded in at
such time, (c) the purchase of plant, property or equipment made within two
years of the sale of any asset to the extent purchased with the proceeds of
such sale, (d) expenditures that constitute any part of Consolidated Lease
Expense or (e) expenditures relating to the acquisition of nuclear fuel.

 

“Capital
Lease” shall mean, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is or is required to be accounted for as a capital lease on the
balance sheet of that Person.

 

“Capital
Stock” shall mean any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing.

 

“Capitalized
Lease Obligations” shall mean, as applied to any Person, all obligations
under Capital Leases of such Person or any of its Subsidiaries, in each case
taken at the amount thereof accounted for as liabilities in accordance with
GAAP.

 

“CenterPoint”
shall have the meaning provided in the recitals to this Agreement.

 

“Change of
Control” shall mean and be deemed to have occurred if (a) (i) the
Sponsors and the Management Investors shall at any time not own, in the
aggregate, directly or indirectly, beneficially and of record, at least 35% of
the outstanding Voting Stock of the Borrower (other than as the result of one
or more widely distributed offerings of common stock of the Borrower whether by
the Borrower, the Sponsors or the Management Investors) and/or (ii) any
person, entity or “group” (within the meaning of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended), other than the Sponsors,
shall at any time have acquired direct or indirect beneficial ownership of a
percentage of the outstanding Voting Stock of the Borrower that exceeds the
percentage of such Voting Stock then beneficially owned, in the aggregate, by
the Sponsors and the Management Group, unless, in the case of either
clause (i) or (ii) above, the Sponsors and the Management
Investors have, at such time, the right or the ability by voting power,
contract or otherwise to elect or designate for election at least majority of
the Board of Managers of the Borrower; and/or (b) at any time Continuing
Managers shall not

 

9

 

constitute at least majority of the Board
of Managers of the Borrower; and/or (c) a Change of Control (as defined in
the Senior Unsecured Note Indenture) shall have occurred.

 

“Class”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are Revolving Credit Loans, New
Revolving Credit Loans, Initial Term Loans, Delayed Draw Term Loans, New Term
Loans or Swingline Loans and, when used in reference to any Commitment, refers
to whether such Commitment is an Initial Term Loan Commitment, a Delayed Draw
Term Loan Commitment, a New Term Loan Commitment, a Revolving Credit
Commitment, a New Revolving Credit Commitment, a Swingline Commitment, a Base
Letter of Credit Commitment or a Special Letter of Credit Commitment.

 

“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time, and
the regulations promulgated and rulings issued thereunder.  Section references to the Code are to
the Code, as in effect at the date of this Agreement, and any subsequent
provisions of the Code, amendatory thereof, supplemental thereto or substituted
therefor.

 

“Co-Documentation
Agents” shall mean Citicorp USA, Inc. and Deutsche Bank AG, Cayman
Islands Branch, together with their affiliates, as the co-documentation agents
for the Lenders under this Agreement and the other Credit Documents.

 

“Collateral”
shall have the meaning provided in the Security Agreement, the Pledge Agreement
or any Deed of Trust, as applicable.

 

“Collateral
Trust Agreement” shall mean the Collateral Trust Agreement, dated as of the
Credit Agreement Closing Date, among the Borrower, the Guarantors, the
Collateral Trustee and the Secured Parties named therein, substantially in the
form of Exhibit E-3, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof and of the
other Credit Documents.

 

“Collateral
Trustee” shall mean Goldman Sachs Credit Partners L.P., as collateral
trustee for the Secured Parties under the Collateral Trust Agreement.

 

“Commitment”
shall mean, with respect to each Lender, such Lender’s Initial Term Loan
Commitment, Delayed Draw Term Loan Commitment, New Term Loan Commitment, Revolving
Credit Commitment, New Revolving Credit Commitment, Swingline Commitment, Base
Letter of Credit Commitment or Special Letter of Credit Commitment.

 

“Commodity
Hedging Agreement” shall mean the GS Commodity Hedging Agreement, the MS
Commodity Hedging Agreement or any other swap, cap, collar, floor, future, option,
spot, forward, power purchase and sale agreement, fuel purchase and sale
agreement, power transmission agreement, fuel transportation agreement, fuel
storage agreement, netting agreement or similar agreement entered into by the
Borrower or any Restricted Subsidiary in the ordinary course of business in
order to protect the Borrower or such Restricted Subsidiary against
fluctuations in the price or availability of any commodity.

 

“Confidential
Information” shall have the meaning provided in Section 15.16.

 

10

 

“Confidential
Information Memorandum” shall mean the Confidential Information Memorandum
of the Borrower dated November 2004, delivered to the Lenders in
connection with this Agreement.

 

“Consolidated
Earnings” shall mean, for any period, “income (loss) before the deduction
of income and franchise taxes” of the Borrower and the Restricted Subsidiaries,
excluding (a) extraordinary items for such period, determined in a manner
consistent with the manner in which such amount was determined in accordance
with the audited financial statements referred to in Section 11.1(a) and
(b) the cumulative effect of a change in accounting principles during such
period, whether effected through a cumulative effect adjustment or a
retroactive application, in each case in accordance with GAAP.

 

“Consolidated
EBITDA” shall mean, for any period:

 

(a) the sum, without duplication, of the amounts for such period
of (x) Consolidated Earnings and (y) to the extent already deducted in
arriving at Consolidated Earnings:

 

(i)                                     Consolidated
Interest Expense;

 

(ii)                                  depreciation expense;

 

(iii)                               amortization expense, including the amortization of deferred
financing fees and nuclear fuel costs (not to be reduced by any non-cash amortization
relating to above market fuel contracts and off market power contracts);

 

(iv)                              extraordinary
losses and unusual or non-recurring charges (including any writeoffs,
writedowns or other non-cash charges reducing Consolidated Earnings for such
period, but excluding any such charge that represents an accrual or reserve for
a cash expenditure for a future period);

 

(v)                                 any
non-cash loss attributable to the mark to market movement in the valuation of Hedging
Obligations (to the extent the cash impact resulting from such loss has not
been realized) or other derivative instruments pursuant to Financial Accounting
Standards Board Statement No. 133-”Accounting for Derivative Instruments
and Hedging Activities”;

 

(vi)                              any loss relating to amounts paid in cash prior to the
stated settlement date of any Hedging Obligation that has been reflected in
Consolidated Earnings in the current period;

 

(vii)                           any
gain relating to Hedging Obligations associated with transactions recorded in
the current period that has been reflected in Consolidated Earnings in prior
periods and excluded from Consolidated EBITDA pursuant to clauses (b)(iii) and
(b)(iv) below;

 

(viii)                        losses on asset sales;

 

11

 

(ix)                                restructuring charges, including any one-time costs incurred
in connection with acquisitions after the Initial Transaction Closing Date;

 

(x)                                   in the case of any period that includes a period ending on
or prior to December 31, 2005, Transaction Expenses;

 

(xi)                                any
expenses or charges incurred in connection with any issuance of debt or equity
securities, any refinancing transaction or any amendment or other modification
of any debt instrument (whether or not successful);

 

(xii)                             any fees and expenses related to Permitted Acquisitions;

 

(xiii)                          any deduction for minority interest expense;

 

(xiv)                         the amount of management, monitoring, consulting and
advisory fees and related expenses paid to the Sponsors (including any
amortization thereof);

 

(xv)                            up to
$100,000,000 per fiscal year of the Borrower of expenses or charges incurred as
a result of any planned or unplanned outage of any unit at the South Texas
Project by reason of any action by any regulatory body or other Governmental
Authority or to comply with any Applicable Law;

 

(xvi)                         any
impairment charge or asset write-off pursuant to Financial Accounting Standards
Board Statement No. 142-”Goodwill and Other Intangible Assets” or Financial
Accounting Standards Board Statement No. 144-”Accounting for the
Impairment or Disposal of Long-Lived Assets” and the amortization of
intangibles arising pursuant to Financial Accounting Standards Board Statement No. 141-”Business
Combinations”;

 

(xvii)                      the amount
of cost savings in respect of cost reduction efforts, calculated on a pro forma
basis as though such cost savings had been achieved on the first day of such
period, pursuant to specified actions taken during such period minus the amount
of actual benefits realized for such period from such actions (provided that (1) such
actions are commenced within 36 months after the Credit Agreement Closing Date,
(2) the amount of cost savings added pursuant to this clause (xvii) shall
not exceed $60,000,000 during such period, (3) no amount shall be added
pursuant to this clause (xvii) to the extent such amount is included in clause (ix) above
with respect to such period and (4) any such cost savings shall be
certified to the Administrative Agent in writing in reasonable detail by the
chief financial officer of the Borrower and, if such cost savings exceed $15,000,000,
by the Board of Managers of the Borrower);

 

(xviii)                   any losses from the early extinguishment of Indebtedness or
Hedging Agreements or other derivative instruments (other than Commodity
Hedging Agreements);

 

(xix)                           up to $30,000,000 per fiscal year of the Borrower of
expenses or charges incurred as a result of any planned outage of any unit of a
Baseload Asset for purposes of upgrading or expanding such unit;

 

12

 

(xx)                              expenses related to the implementation of enterprise
resource planning systems; and

 

(xxi)                           any
non-cash compensation expense recorded from grants of stock appreciation or
similar rights, stock options, restricted stock or other rights to officers,
directors or employees;

 

less (b) the sum of the amounts
for such period of:

 

(i)                                     extraordinary gains and non-recurring gains;

 

(ii)                                  non-cash
gains (excluding any such non-cash gain to the extent it represents the
reversal of an accrual or reserve for potential cash item in any prior period,
excluding non-cash gains relating to above market fuel contracts and including
non-cash gains relating to off market power contracts) increasing Consolidated
Earnings for such period, other than the accrual of revenues in the ordinary
course of business;

 

(iii)                               any
non-cash gain attributable to the mark to market movement in the valuation of Hedging
Obligations (to the extent the cash impact resulting from such gain has not
been realized) or other derivative instruments pursuant to Financial Accounting
Standards Board Statement No. 133-”Accounting for Derivative Instruments
and Hedging Activities”;

 

(iv)                              any gain relating to amounts received in cash prior to the
stated settlement date of any Hedging Obligation that has been reflected in
Consolidated Earnings in the current period;

 

(v)                                 any loss relating to Hedging Obligations associated with
transactions recorded in the current period that has been reflected in
Consolidated Earnings in prior periods and excluded from Consolidated EBITDA
pursuant to clauses (a)(v) and (a)(vi) above;

 

(vi)                              any gains from the early extinguishment of Indebtedness or
Hedging Agreements or other derivative instruments (other than Commodity
Hedging Agreements); and

 

(vii)                           gains on asset sales;

 

all as
determined on a consolidated basis for the Borrower and the Restricted
Subsidiaries in accordance with GAAP; provided that (A) except as provided
in clause (C) below, there shall be excluded from Consolidated
Earnings for any period the income from continuing operations before income and
franchise taxes and extraordinary items of all Unrestricted Subsidiaries for
such period to the extent otherwise included in Consolidated Earnings, except
to the extent actually received in cash by the Borrower or the Restricted
Subsidiaries during such period through dividends or other distributions, (B) there
shall be excluded in determining Consolidated EBITDA non-operating currency transaction gains and losses and (C) (x) there
shall be included in determining Consolidated EBITDA for any period (1) the
Acquired EBITDA of any Person, property, business or asset (other than an
Unrestricted Subsidiary) acquired to the extent not

 

13

 

subsequently
sold, transferred or otherwise disposed of (but not including the Acquired EBITDA
of any related Person, property, business or assets to the extent not so
acquired) by the Borrower or any Restricted Subsidiary during such period (each
such Person, property, business or asset acquired, including pursuant to the Initial
Transaction, the Subsequent Transaction and the ROFR, and not subsequently so
disposed of, an “Acquired Entity or Business”), and the Acquired EBITDA
of any Unrestricted Subsidiary that is converted into a Restricted Subsidiary
during such period (each, a “Converted Restricted Subsidiary”), in each
case based on the actual Acquired EBITDA of such Acquired Entity or Business or
Converted Restricted Subsidiary for such period (including the portion thereof
occurring prior to such acquisition or conversion) and (2) for the purposes
of the definition of the term “Permitted Acquisition” and Sections 12.3, 12.9
and 12.10, an adjustment in respect of each Acquired Entity or Business equal
to the amount of the Pro Forma Adjustment with respect to such Acquired Entity
or Business for such period (including the portion thereof occurring prior to
such acquisition or conversion) as specified in the Pro Forma Adjustment
Certificate delivered to the Lenders and the Administrative Agent and
(y) for purposes of determining the Consolidated Total Debt to
Consolidated EBITDA Ratio only, there shall be excluded in determining
Consolidated EBITDA for any period the Acquired EBITDA of any Person, property,
business or asset (other than an Unrestricted Subsidiary) sold, transferred or
otherwise disposed of by the Borrower or any Restricted Subsidiary during such
period (each such Person, property, business or asset so sold, transferred or
otherwise disposed of, a “Sold Entity or Business”), and the Acquired
EBITDA of any Restricted Subsidiary that is converted into an Unrestricted
Subsidiary during such period (each, a “Converted Unrestricted Subsidiary”),
in each case based on the actual Acquired EBITDA of such Sold Entity or
Business or Converted Unrestricted Subsidiary for such period (including the
portion thereof occurring prior to such sale, transfer, disposition or
conversion).  Notwithstanding anything to
the contrary contained herein, Consolidated EBITDA shall include any benefit
from any above market fuel contracts and shall exclude any benefit from any off
market power contracts, each as recorded on the balance sheet of the Borrower
and the Restricted Subsidiaries at the time of the Acquisition Transactions.

 

“Consolidated
EBITDA to Consolidated Interest Expense Ratio” shall mean, as of any date
of determination, the ratio of (a) Consolidated EBITDA for the relevant
Test Period to (b) Consolidated Interest Expense for such Test Period.

 

“Consolidated
Interest Expense” shall mean, for any period, the cash interest expense
(including that attributable to Capital Leases and Synthetic Leases in
accordance with GAAP), net of cash interest income, of the Borrower and the
Restricted Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of the Borrower and the Restricted Subsidiaries, including all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers’ acceptance financing and net costs under Interest Rate
Hedging Agreements, but excluding, however, amortization of deferred financing
costs and any other amounts of non-cash interest, all as calculated on a
consolidated basis in accordance with GAAP, and excluding, for the avoidance of
doubt, any interest in respect of items excluded from Indebtedness in the
proviso to the definition thereof, any non-cash interest expense attributable
to the movement in the mark to market valuation of Hedging Obligations or other
derivative instruments pursuant to Financial Accounting Standards Board
Statement No. 133 and any one-time cash costs associated with breakage
costs in respect of Interest Rate Hedging Agreements; provided that (a) except
as provided in clause (b) below, there shall be excluded

 

14

 

from
Consolidated Interest Expense for any period the cash interest expense (or
income) of all Unrestricted Subsidiaries for such period to the extent
otherwise included in Consolidated Interest Expense and (b) for purposes
of the definition of the term “Permitted Acquisition” and Sections 12.3, 12.9
and 12.10, there shall be included in determining Consolidated Interest Expense
for any period the cash interest expense (or income) of any Acquired Entity or
Business acquired during such period and of any Converted Restricted Subsidiary
converted during such period, in each case based on the cash interest expense
(or income) relating to any debt incurred or assumed as part of an acquisition
of an Acquired Entity or Business or as part of the conversion of a Converted
Restricted Subsidiary for such period (including the portion thereof occurring
prior to such acquisition or conversion) assuming any Indebtedness incurred or
repaid in connection with any such acquisition or conversion had been incurred
or repaid on the first day of such period. 
Notwithstanding anything to the contrary contained herein, for purposes
of determining Consolidated Interest Expense for any period ending prior to the
first anniversary of the Credit Agreement Closing Date, Consolidated Interest
Expense shall be an amount equal to actual Consolidated Interest Expense from
the Credit Agreement Closing Date through the date of determination multiplied
by a fraction the numerator of which is 365 and the denominator of which is the
number of days from the Credit Agreement Closing Date through the date of
determination.

 

“Consolidated
Lease Expense” shall mean, for any period, all rental expenses of the
Borrower and the Restricted Subsidiaries during such period under operating
leases for real or personal property (including in connection with Permitted
Sale Leasebacks), excluding real estate taxes, insurance costs and common area
maintenance charges and net of sublease income, other than (a) obligations
under vehicle leases entered into in the ordinary course of business, (b) all
such rental expenses associated with assets acquired pursuant to a Permitted
Acquisition to the extent that such rental expenses relate to operating leases
in effect at the time of (and immediately prior to) such acquisition and (c) Capitalized
Lease Obligations and Synthetic Lease Obligations, all as determined on a
consolidated basis in accordance with GAAP, provided that there shall be
excluded from Consolidated Lease Expense for any period the rental expenses of
all Unrestricted Subsidiaries for such period to the extent otherwise included
in Consolidated Lease Expense.

 

“Consolidated
Net Income” shall mean, for any period, the consolidated net income (or
loss) after the deduction of income taxes of the Borrower and the Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP;
provided that Consolidated Net Income shall include any benefit from any above
market fuel contracts and shall exclude any benefit from any off market power
contracts, each as recorded on the balance sheet of the Borrower and the
Restricted Subsidiaries at the time of the Acquisition Transactions.

 

“Consolidated
Total Assets” shall mean, as of any date of determination, the total amount
of all assets of the Borrower and the Restricted Subsidiaries, determined on a consolidated
basis in accordance with GAAP as of such date.

 

“Consolidated
Total Debt” shall mean, as of any date of determination, (a) the sum
of (i) all indebtedness of the Borrower and the Restricted Subsidiaries
for borrowed money outstanding on such date and (ii) all Capitalized Lease
Obligations and Synthetic Lease Obligations of the Borrower and the Restricted
Subsidiaries outstanding on such date, all

 

15

 

calculated on
a consolidated basis in accordance with GAAP minus (b) the aggregate
amount of cash, to the extent exceeding $50,000,000, included in the cash
accounts listed on the consolidated balance sheet of the Borrower and the
Restricted Subsidiaries as at such date to the extent the use thereof for
application to payment of Indebtedness is not prohibited by law or any contract
to which the Borrower or any of the Restricted Subsidiaries is a party.

 

“Consolidated
Total Debt to Consolidated EBITDA Ratio” shall mean, as of any date of
determination, the ratio of (a) Consolidated Total Debt as of the last day
of the relevant Test Period to (b) Consolidated EBITDA for such Test
Period.

 

“Consolidated
Working Capital” shall mean, at any date, the excess of (a) the sum of
all amounts (other than cash, cash equivalents and bank overdrafts) that would,
in conformity with GAAP, be set forth opposite the caption “total current
assets” (or any like caption) on a consolidated balance sheet of the Borrower
and the Restricted Subsidiaries at such date over (b) the sum of all
amounts that would, in conformity with GAAP, be set forth opposite the caption “total
current liabilities” (or any like caption) on a consolidated balance sheet of
the Borrower and the Restricted Subsidiaries on such date, but excluding (i) the
current portion of any Funded Debt, (ii) without duplication of clause (i) above,
all Indebtedness consisting of Loans and Letter of Credit Exposure to the
extent otherwise included therein and (iii) the current portion of
deferred income taxes.

 

“Continuing
Manager” shall mean, at any date, an individual (a) who is a member of
the Board of Managers of the Borrower on the Credit Agreement Closing Date, (b) who,
as at such date, has been a member of such Board of Managers for at least the
12 preceding months, (c) who has been nominated to be a member of such
Board of Managers, directly or indirectly, by one or more Sponsors or Persons
nominated by one or more Sponsors or (d) who has been nominated to be a
member of such Board of Managers by a majority of the other Continuing Managers
then in office.

 

“Control
Account” shall mean an account maintained under the sole dominion and
control of, and on terms and conditions reasonably satisfactory to, the
Collateral Trustee.

 

“Converted
Restricted Subsidiary” shall have the meaning provided in the definition of
the term “Consolidated EBITDA”.

 

“Converted
Unrestricted Subsidiary” shall have the meaning provided in the definition
of the term “Consolidated EBITDA”.

 

“Credit
Agreement Closing Date” shall mean the date of the initial Credit Event
hereunder.

 

“Credit
Documents” shall mean this Agreement, the Escrow Agreement, the Security
Documents, each Letter of Credit and any promissory notes issued by the
Borrower hereunder.

 

“Credit
Event” shall mean and include the making (but not the conversion or
continuation) of a Loan, the issuance of a Letter of Credit and the Escrow Release.

 

16

 

“Credit
Facility” shall mean any of the Initial Term Loan Facility, the Delayed
Draw Term Loan Facility, any New Term Loan Facility, the Revolving Credit
Facility, the Base Letter of Credit Facility or the Special Letter of Credit
Facility, as applicable.

 

“Credit
Party” shall mean each of the Borrower, the Guarantors and each other
Subsidiary of the Borrower that is a party to a Credit Document.

 

“Cure
Amount” shall have the meaning provided in Section 13.14(a).

 

“Cure Right”
shall have the meaning provided in Section 13.14(a).

 

“Currency
Hedging Agreement” shall mean any swap, cap, collar, future, option or
similar agreement entered into by the Borrower or any Restricted Subsidiary in
the ordinary course of business and not for speculative purposes in order to
protect the Borrower or such Restricted Subsidiary against fluctuations in
currency exchange rates.

 

“Debt
Incurrence Prepayment Event” shall mean any issuance or incurrence by the
Borrower or any of the Restricted Subsidiaries of any Indebtedness (including
any issuance by the Borrower of Permitted Additional Notes), excluding any Indebtedness
permitted to be issued or incurred under Section 12.1 (other than clause
(i)(ii) thereof).

 

“Deed of
Trust” shall mean a Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Financing Statement or other security document entered into by
the owner of a Mortgaged Property and the Collateral Trustee for the benefit of
the Secured Parties in respect of that Mortgaged Property, substantially in the
form of Exhibit C or, in the case of any Mortgaged Property located
outside the United States of America, in such form as agreed between the
Borrower and the Collateral Trustee, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with the terms thereof
and of the other Credit Documents.

 

“Default”
shall mean any event, act or condition that with notice or lapse of time, or
both, would constitute an Event of Default.

 

“Defaulting
Lender” shall mean any Lender with respect to which a Lender Default is in
effect.

 

“Delayed
Draw Term Loan” shall have the meaning provided in Section 2.1(b).

 

“Delayed
Draw Term Loan Commitment” shall mean, (a) in the case of each Lender
that is a Lender on the date hereof, the amount set forth opposite such Lender’s
name on Schedule 1.1(b) as such Lender’s “Delayed Draw Term Loan
Commitment” and (b) in the case of any Lender that becomes a Lender after
the date hereof, the amount specified as such Lender’s “Delayed Draw Term Loan
Commitment” in the Assignment and Acceptance pursuant to which such Lender
assumed a portion of the Total Delayed Draw Term Loan Commitment, in each case
as the same may be changed from time to time pursuant to the terms hereof.  The aggregate amount of the Delayed Draw Term
Loan Commitments as of the date hereof is $475,000,000; provided that no more than
$200,000,000 of the Delayed Draw Term Loan Commitment may be used to fund the Call
Transaction.

 

17

 

“Delayed
Draw Term Loan Facility” shall have the meaning provided in the recitals to
this Agreement.

 

“Delayed
Draw Term Loan Maturity Date” shall mean the date that is seven years after
the Credit Agreement Closing Date, or, if such date is not a Business Day, the
next preceding Business Day.

 

“Delayed
Draw Term Loan Repayment Amount” shall have the meaning provided in Section 2.5(c).

 

“Delayed
Draw Term Loan Repayment Date” shall have the meaning provided in Section 2.5(c).

 

“Distributable
Scheduled Asset Proceeds” shall mean up to $100,000,000 of Net Cash Proceeds
received in connection with Scheduled Asset Events, which excess Net Cash Proceeds
are offered for prepayment pursuant to Section 5.2(a)(ii) and
refused by any Lender pursuant to Section 5.2(c).

 

“Dividends”
shall have the meaning provided in Section 12.6.

 

“Dollars”
and “$” shall mean dollars in lawful currency of the United States of
America.

 

“Domestic
Subsidiary” shall mean each Subsidiary of the Borrower that is organized
under the laws of the United States, any state or territory thereof, or
the District of Columbia.

 

“Drawing”
shall have the meaning provided in Section 3.4(b).

 

“Eligible Commodity Hedging Agreement” shall mean (a) the
GS Commodity Hedging Agreement and the MS Commodity Hedging Agreement and (b) any
other Commodity Hedging Agreement entered into by the Borrower or any Restricted
Subsidiary that has both of the following characteristics: (i) the purpose
of such Commodity Hedging Agreement is to protect the Borrower or such
Restricted Subsidiary against fluctuations in power and/or gas prices; and (ii) such
Commodity Hedging Agreement is structured such that the counterparty’s credit
exposure and actual or projected mark-to-market exposure to the Borrower or
such Restricted Subsidiary is positively correlated with power and/or gas
prices.

 

“Environmental
Capital Expenditures” shall mean Capital Expenditures deemed necessary by
the Borrower or any Restricted Subsidiary to comply with Environmental Laws.

 

“Environmental
Claims” shall mean any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports
prepared by the Borrower or any of its Subsidiaries (a) in the ordinary
course of such Person’s business or (b) as required in connection with a
financing transaction or an acquisition or disposition of real estate) or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereinafter, “Claims”),
including (i) any and all Claims by

 

18

 

governmental
or regulatory authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law and (ii) any
and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting
from Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.

 

“Environmental
Law” shall mean any applicable Federal, state, foreign or local statute,
law, rule, regulation, ordinance, code and rule of common law now or
hereafter in effect and in each case as amended, and any binding judicial or
administrative interpretation thereof, including any binding judicial or
administrative order, consent decree or judgment, relating to the environment,
human health or safety or Hazardous Materials.

 

“Equity
Commitment Letter” shall mean the Commitment Letter, dated July 21,
2004, among the Borrower and the Sponsors.

 

“Equity
Investment” shall have the meaning provided in the recitals to this
Agreement.

 

“ERCOT”
shall mean the Electric Reliability Council of Texas or any other entity
succeeding thereto.

 

“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time.  Section references to
ERISA are to ERISA as in effect at the date of this Agreement and any
subsequent provisions of ERISA amendatory thereof, supplemental thereto or
substituted therefor.

 

“ERISA
Affiliate” shall mean each person (as defined in Section 3(9) of
ERISA) that together with the Borrower or a Subsidiary thereof would be deemed
to be a “single employer” within the meaning of Section 414(b) or (c) of
the Code or, solely for purposes of Section 302 of ERISA and Section 412
of the Code, is treated as a single employer under Section 414 of the
Code.

 

“Escrow
Agent” shall mean JPMorgan Chase Bank, National Association, in such
capacity under the Escrow Agreement.

 

“Escrow
Agreement” shall mean the Escrow Agreement, dated as of the Closing Date,
among the Escrow Agent, the Borrower, the Administrative Agent and Wells Fargo
Bank, National Association, as trustee under the Senior Unsecured Note
Indenture, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof and of the other Credit
Documents.

 

“Escrow
Release” shall mean the release of the proceeds of the Initial Term Loans
from escrow to the Borrower in accordance with the Escrow Agreement to fund the
Initial Transaction and related Transaction Expenses.

 

“Escrow
Return Date” shall mean the earlier of (a) the date that is 10
Business Days after the Credit Agreement Closing Date and (b) the date of
termination of the Transaction

 

19

 

Agreement;
provided that the Escrow Return Date shall not occur if the Initial Transaction
Closing Date shall have occurred on or prior to the earlier of such dates.

 

“Estimation
Period” shall mean each tax period ending on a quarterly estimated tax
payment date for U.S. Federal income tax purposes for a corporation that is
taxed on a calendar year basis.

 

“Eurodollar
Delayed Draw Term Loan” shall mean any Delayed Draw Term Loan bearing
interest at a rate determined by reference to the Eurodollar Rate.

 

“Eurodollar
Initial Term Loan” shall mean any Initial Term Loan bearing interest at a
rate determined by reference to the Eurodollar Rate.

 

“Eurodollar
Loan” shall mean any Eurodollar Term Loan or Eurodollar Revolving Credit
Loan.

 

“Eurodollar
Rate” shall mean, in the case of any Eurodollar Loan, with respect to each
day during each Interest Period pertaining to such Eurodollar Loan, (a) the
rate of interest determined on the basis of the rate for deposits in Dollars
for a period equal to such Interest Period commencing on the first day of such
Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 a.m.
(London time) two Business Days prior to the beginning of such Interest Period
multiplied by (b) the Statutory Reserve Rate.  In the event that any such rate does not
appear on the applicable Page of the Telerate Service (or otherwise on
such service), the “Eurodollar Rate” for the purposes of this paragraph
shall be determined by reference to such other publicly available service for
displaying Eurodollar rates as may be agreed upon by the Administrative Agent
and the Borrower or, in the absence of such agreement, the “Eurodollar Rate”
for the purposes of this paragraph shall instead be the rate per annum notified
to the Administrative Agent by the Reference Lender as the rate at which the
Reference Lender is offered Dollar deposits at or about 11:00 a.m. (London
time) two Business Days prior to the beginning of such Interest Period in the
interbank Eurodollar market where the Eurodollar and foreign currency and
exchange operations in respect of its Eurodollar Loans are then being conducted
for delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its Eurodollar
Loan to be outstanding during such Interest Period.

 

“Eurodollar
Revolving Credit Loan” shall mean any Revolving Credit Loan bearing
interest at a rate determined by reference to the Eurodollar Rate.

 

“Eurodollar
Term Loan” shall mean any Eurodollar Initial Term Loan or Eurodollar
Delayed Draw Term Loan, as applicable.

 

“Event of
Default” shall have the meaning provided in Section 13.

 

“Excepted Distributable Scheduled Asset Proceeds”
shall mean up to $100,000,000 of net cash proceeds received in connection with
Scheduled Asset Events.

 

20

 

“Excess
Cash Flow” shall mean, for any period, an amount equal to the excess of (a) the
sum, without duplication, of:

 

(i)                                     Consolidated
Net Income for such period;

 

(ii)                                  an amount equal to the amount of all non-cash charges to the
extent deducted in arriving at such Consolidated Net Income;

 

(iii)                               decreases in Consolidated Working Capital for such period;

 

(iv)                              an
amount equal to the aggregate net non-cash loss on the sale, lease, transfer or
other disposition of assets by the Borrower and the Restricted Subsidiaries
during such period (other than sales in the ordinary course of business) to the
extent deducted in arriving at such Consolidated Net Income; and

 

(v)                                 any
termination payments or similar payments received by the Borrower or any
Restricted Subsidiary during such period in connection with the termination,
partial termination or other reduction of any Commodity Hedging Agreement;

 

over (b) the sum, without
duplication, of:

 

(i)                                     an amount equal to the amount of all non-cash credits
included in arriving at such Consolidated Net Income;

 

(ii)                                  the
aggregate amount actually paid by the Borrower and the Restricted Subsidiaries
in cash during such period on account of Capital Expenditures (excluding the
principal amount of Indebtedness incurred in connection with such Capital
Expenditures, whether incurred in such period or in a subsequent period);

 

(iii)                               the
aggregate amount of all prepayments of Revolving Credit Loans and Swingline
Loans made during such period to the extent accompanying reductions of the
Total Revolving Credit Commitment except to the extent financed with the
proceeds of other Indebtedness of the Borrower or the Restricted Subsidiaries;

 

(iv)                              the
aggregate amount of all principal payments of Indebtedness of the Borrower or
the Restricted Subsidiaries (including any Term Loans and the principal
component of payments in respect of Capitalized Lease Obligations but excluding
Revolving Credit Loans, Swingline Loans and voluntary prepayments of Term Loans
pursuant to Section 5.1) made during such period (other than in respect of
any revolving credit facility to the extent there is not an equivalent
permanent reduction in commitments thereunder) except to the extent financed
with the proceeds of other Indebtedness of the Borrower or the Restricted
Subsidiaries;

 

(v)                                 an
amount equal to the aggregate net non-cash gain on the sale, lease, transfer or
other disposition of assets by the Borrower and the Restricted Subsidiaries
during such period (other than sales in the ordinary course of business) to the
extent included in arriving at such Consolidated Net Income;

 

(vi)                              increases in Consolidated Working Capital for such period;

 

21

 

(vii)                           payments by the Borrower and the Restricted Subsidiaries
during such period in respect of long-term liabilities of the Borrower and the
Restricted Subsidiaries other than Indebtedness;

 

(viii)                        the amount of investments made during such period pursuant
to Section 12.5 to the extent that such investments were financed with
internally generated cash flow of the Borrower and the Restricted Subsidiaries;

 

(ix)                                the
amount of dividends or distributions paid during such period pursuant to clause
(b), (c) (to the extent financed with internally generated cash flow of
the Borrower and the Restricted Subsidiaries), (d), (f), (g) or (i) of
the proviso to Section 12.6 to the extent such dividends or distributions
were paid with the proceeds of any amount referred to in paragraph (a) of
this definition;

 

(x)                                   the aggregate amount of expenditures actually made by the
Borrower and the Restricted Subsidiaries in cash during such period (including
expenditures for the payment of financing fees) to the extent that such
expenditures are not expensed during such period;

 

(xi)                                the
aggregate amount of any premium, make-whole or penalty payments actually paid
in cash by the Borrower and the Restricted Subsidiaries during such period that
are required to be made in connection with any prepayment of Indebtedness and
that are accounted for as extraordinary items;

 

(xii)                             any
termination payments or similar payments made by the Borrower or any Restricted
Subsidiary during such period in connection with the termination, partial
termination or other reduction of any Commodity Hedging Agreement; and

 

(xiii)                          the aggregate amount of expenditures actually made by the
Borrower and the Restricted Subsidiaries relating to the acquisition of nuclear
fuel.

 

“Excess
Cash On Hand” shall have the meaning provided in Section 12.6(h).

 

“Federal
Funds Effective Rate” shall mean, for any day, the weighted average of the
per annum rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average
of the quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.

 

“Fees”
shall mean all amounts payable pursuant to, or referred to in, Section 4.1.

 

“Final Date”
shall mean (a) with respect to Revolving Credit Commitments and Revolving
Letters of Credit, the date on which the Revolving Credit Commitments shall
have terminated, no Revolving Credit Loans shall be outstanding and the
Revolving Letters of Credit Outstanding shall have been reduced to zero, (b) with
respect to Base Letter of Credit Commitments and Base Letters of Credit, the
date on which the Base Letter of Credit

 

22

 

Commitments
shall have terminated and the Base Letters of Credit Outstanding shall have
been reduced to zero, and (c) with respect to Special Letter of Credit
Commitments and Special Letters of Credit, the date on which the Special Letter
of Credit Commitments shall have terminated and the Special Letter of Credit
Outstandings shall have been reduced to zero.

 

“Financial
Performance Covenants” shall mean the covenants of the Borrower set forth
in Sections 12.9 and 12.10.

 

“First Lien”
shall mean a Lien that is pari passu with the Liens securing the Obligations;
provided that the holder of such Lien agrees to be bound by the Collateral
Trust Agreement with respect thereto.

 

“Foreign
Subsidiary” shall mean each Subsidiary of the Borrower that is not a
Domestic Subsidiary.

 

“Fronting
Fee” shall have the meaning provided in Section 4.1(b).

 

“Funded
Debt” shall mean all indebtedness of the Borrower and the Restricted
Subsidiaries for borrowed money that matures more than one year from the date
of its creation or matures within one year from such date that is renewable or
extendable, at the option of the Borrower or one of the Restricted
Subsidiaries, to a date more than one year from such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year from such date, including
all amounts of Funded Debt required to be paid or prepaid within one year from
the date of its creation and, in the case of the Borrower, Indebtedness in
respect of the Loans.

 

“GAAP”
shall mean generally accepted accounting principles in the United States of
America as in effect from time to time; provided, however, that if there occurs
after the date hereof any change in GAAP that affects in any respect the
calculation of any covenant contained in Section 12, the Lenders and the
Borrower shall negotiate in good faith amendments to the provisions of this
Agreement that relate to the calculation of such covenant with the intent of
having the respective positions of the Lenders and the Borrower after such
change in GAAP conform as nearly as possible to their respective positions as
of the date of this Agreement and, until any such amendments have been agreed
upon, the covenants in Section 12 shall be calculated as if no such change
in GAAP has occurred.

 

“Genco
Holdings” shall have the meaning provided in the recitals to this
Agreement.

 

“Genco
Services” shall have the meaning provided in the recitals to this
Agreement.

 

“Genco II
LP” shall have the meaning provided in the recitals to this Agreement.

 

“Governmental
Authority” shall mean any nation or government, any state, province,
territory or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including ERCOT.

 

23

 

“GS Commodity Hedging Agreement” shall mean the
Master Power Purchase and Sale Agreement and Cover Sheet dated as of July 21,
2004, the Confirmation thereunder dated as of July 21, 2004 and the
Confirmation thereunder dated as of November 30, 2004, each between the GS
Counterparty and Texas Genco II, LP (as successor by merger), as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof and thereof.

 

“GS Counterparty”
shall mean J. Aron & Company or any other subsidiary of The Goldman
Sachs Group, Inc. that succeeds to J. Aron & Company under the GS
Commodity Hedging Agreement.

 

“GS Letters
of Credit” shall mean the $300,000,000 and $18,000,000 Special Letter of
Credit issued in favor of the GS Counterparty on the Initial Transaction
Closing Date to support the obligations of Texas Genco II, LP under the GS
Commodity Hedging Agreement.

 

“GSCP”
shall mean Goldman Sachs Credit Partners L.P.

 

“Guarantee”
shall mean the Guarantee, made by each Guarantor in favor of the Administrative
Agent for the benefit of the Agents and the Lenders, substantially in the form
of Exhibit B, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof and of the
other Credit Documents.

 

“Guarantee
and Collateral Exception Amount” shall mean, at any time: (a) $250,000,000
minus (b) the sum of (i) the aggregate amount of Indebtedness
incurred or assumed prior to such time pursuant to Section 12.1(j) or (k)
that is outstanding at such time and that was used to acquire, or was assumed
in connection with the acquisition of, Capital Stock and/or assets in respect
of which guarantees, pledges and security have not been given pursuant to
Sections 11.11 and 11.12 and (ii) the lesser of (x) the
aggregate Increased Commitment Amount at such time and (y) $125,000,000.

 

“Guarantee
Obligations” shall mean, as to any Person, any obligation of such Person
guaranteeing or intended to guarantee any Indebtedness of any other Person (the
“primary obligor”) in any manner, whether directly or indirectly,
including any obligation of such Person, whether or not contingent, (a) to
purchase any such Indebtedness or any property constituting direct or indirect
security therefor (b) to advance or supply funds (i) for the purchase
or payment of any such Indebtedness or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
Indebtedness of the ability of the primary obligor to make payment of such
Indebtedness or (d) otherwise to assure or hold harmless the owner of such
Indebtedness against loss in respect thereof; provided, however, that the term “Guarantee
Obligations” shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. 
The amount of any Guarantee Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the Indebtedness in respect of
which such Guarantee Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in good
faith.

 

24

 

“Guarantors”
shall mean (a) each Domestic Subsidiary (other than an Unrestricted
Subsidiary or, if applicable, STP Nuclear Operating Company) on the Credit
Agreement Closing Date and (b) each Domestic Subsidiary (other than an
Unrestricted Subsidiary) that becomes a party to the Guarantee after the Credit
Agreement Closing Date pursuant to Section 11.11.

 

“Hazardous
Materials” shall mean (a) any petroleum or petroleum products,
radioactive materials, friable asbestos, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid containing
regulated levels of polychlorinated biphenyls, and radon gas; (b) any
chemicals, materials or substances defined as or included in the definition of “hazardous
substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous
waste”, “restricted hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”,
or “pollutants”, or words of similar import, under any applicable Environmental
Law; and (c) any other chemical, material or substance, which is
prohibited, limited or regulated by any Environmental Law.

 

“Hedge Outstanding Amount” shall mean, with
respect to obligations under a Commodity Hedging Agreement, the amount that
would be payable in the reasonable judgment of the counterparty under such
Commodity Hedging Agreement if such Commodity Hedging Agreement were terminated
as the result of an event of default with respect to the Borrower or any of its
Subsidiaries under such Commodity Hedging Agreement on the Business Day prior
to the date of such determination or, if such Commodity Hedging Agreement was
previously terminated, the termination amount which remains unpaid as of the Business
Day preceding such date.  For the
avoidance of doubt, any calculation of a Hedge Outstanding Amount in respect of
a Commodity Hedging Agreement involving the purchase of fuel or the sale of
power shall include, without limitation, consideration of the contractual value
of any fuel or power, as applicable, which has been delivered on or before the
date of the relevant calculation, but for which payment has not been made by
the buyer of such fuel or power.

 

“Hedging
Agreement” shall mean any Commodity Hedging Agreement, Currency Hedging
Agreement or Interest Rate Hedging Agreement, as applicable.

 

“Hedging
Credit Support Facility” shall mean any letter of credit facility or
similar credit support facility entered into by the Borrower or any Restricted
Subsidiary for the issuance of letters of credit or other support instruments
to support the obligations of the Borrower or any Restricted Subsidiary under
Commodity Hedging Agreements.

 

“Hedging
Obligations” shall mean, with respect to any Person, the obligations of
such Person under Hedging Agreements.

 

“Historical
Financial Statements” shall mean, as of the Credit Agreement Closing Date, (a) the
audited financial statements of the Borrower and its Subsidiaries for the
immediately preceding two fiscal years, and (b) to the extent reasonably available,
the unaudited quarterly financial statements of the Borrower and its
Subsidiaries for each fiscal quarter following the latest date for which
audited financial statements are available, in each case consisting of balance
sheets and the related consolidated statements of income, stockholders’ equity
and cash flows for such periods.

 

25

 

“HPC Merger
Sub” shall have the meaning provided in the recitals to this Agreement.

 

“Increased
Amount Date” shall have the meaning provided in Section 2.14(a).

 

“Increased
Commitment Amount” shall have the meaning given to that term in Section 15.1.

 

“Indebtedness”
of any Person shall mean (a) all indebtedness of such Person for borrowed
money, (b) the deferred purchase price of assets or services that in
accordance with GAAP would be included as liabilities in the balance sheet of
such Person, (c) the face amount of all letters of credit issued for the
account of such Person and, without duplication, all drafts drawn thereunder, (d) all
Indebtedness of a second Person secured by any Lien on any property owned by
such first Person, whether or not such Indebtedness has been assumed, (e) all
Capitalized Lease Obligations and Synthetic Lease Obligations of such Person, (f) all
obligations of such Person under interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts, commodity price protection agreements or other
commodity price hedging agreements and other similar agreements (including
Hedging Agreements) and (g) without duplication, all Guarantee Obligations
of such Person; provided that Indebtedness shall not include (i) trade
payables and accrued expenses, in each case payable directly or through a bank
clearing arrangement and arising in the ordinary course of business, (ii) prepaid
or deferred revenue arising in the ordinary course of business and (iii) purchase
price holdbacks arising in the ordinary course of business in respect of a
portion of the purchase price of an asset to satisfy warrants or other
unperformed obligations of the seller of such asset.

 

“Initial
Baseload Assets” shall mean the assets comprising the Limestone Project,
the South Texas Project and the Parish Project, each owned by the Borrower on
the Initial Transaction Closing Date.

 

“Initial
Financial Statement Delivery Date” shall mean the date on which Section 11.1
Financials are delivered to the Lenders under Section 11.1 for the first
full fiscal quarter commencing after the Credit Agreement Closing Date.

 

“Initial
Term Loan” shall have the meaning provided in Section 2.1(a).

 

“Initial
Term Loan Commitment” shall mean, (a) in the case of each Lender that
is a Lender on the date hereof, the amount set forth opposite such Lender’s
name on Schedule 1.1(b) as such Lender’s “Initial Term Loan
Commitment” and (b) in the case of any Lender that becomes a Lender after
the date hereof, the amount specified as such Lender’s “Initial Term Loan
Commitment” in the Assignment and Acceptance pursuant to which such Lender
assumed a portion of the Total Initial Term Loan Commitment, in each case as
the same may be changed from time to time pursuant to the terms hereof.  The aggregate amount of the Initial Term Loan
Commitments as of the date hereof is $1,150,000,000.

 

“Initial
Term Loan Facility” shall have the meaning provided in the recitals to this
Agreement.

 

26

 

“Initial
Term Loan Maturity Date” shall mean the earlier of (a) the Escrow
Return Date and (b) the date that is seven years after the Credit
Agreement Closing Date; provided that, in either case, if such date is not a
Business Day, the “Initial Term Loan Maturity Date” will be the next preceding
Business Day.

 

“Initial
Term Loan Repayment Amount” shall have the meaning provided in Section 2.5(b).

 

“Initial
Term Loan Repayment Date” shall have the meaning provided in Section 2.5(b).

 

“Initial
Transaction” shall have the meaning provided in the recitals to this
Agreement.

 

“Initial
Transaction Closing Date” shall mean the date on which the conditions
precedent set forth in Section 7 are satisfied and the Escrow Release
occurs.

 

“Initial
Transaction Closing Date Indebtedness” shall mean Indebtedness described on
Schedule 12.1 under the caption “Initial Transaction Closing Date”.

 

“Initial
Transaction Option Plan” shall mean the option plan to be entered into by
the Borrower or any of its direct or indirect parent entities within 12 months
after the Credit Agreement Closing Date.

 

“Interest
Period” shall mean, with respect to any Term Loan or Revolving Credit Loan,
the interest period applicable thereto, as determined pursuant to Section 2.9.

 

“Interest
Rate Hedging Agreement” shall mean any swap, cap, collar, future, option or
similar agreement entered into by the Borrower or any Restricted Subsidiary in
the ordinary course of business and not for speculative purposes in order to
protect the Borrower or such Restricted Subsidiary against fluctuations in
interest rates.

 

“Joinder
Agreement” shall mean an agreement substantially in the form of Exhibit J.

 

“Joint Lead
Arrangers” shall mean (a) Goldman, Sachs & Co. and Morgan
Stanley Senior Funding Inc., together with their affiliates, as arrangers of
the Initial Term Loan Commitments, Delayed Draw Term Loan Commitments,
Revolving Credit Commitments and Base Letter of Credit Commitments, and (b) Goldman,
Sachs & Co. and Deutsche Bank Securities Inc., together with their
affiliates, as arrangers of the Special Letter of Credit Commitments.

 

“Lender”
shall have the meaning provided in the preamble to this Agreement.

 

“Lender
Default” shall mean (a) the failure (which has not been cured) of a
Lender to make available its portion of any Borrowing or to fund its portion of
any unreimbursed payment under Section 3.4 or (b) a Lender having
notified the Administrative Agent and/or the Borrower that it does not intend
to comply with the obligations under Section 2.1, 3.3 or 3.4, in

 

27

 

the case of
either clause (a) or clause (b) above, as a result of the
appointment of a receiver or conservator with respect to such Lender at the
direction or request of any regulatory agency or authority.

 

“Letter of
Credit” shall mean a Revolving Letter of Credit, a Base Letter of Credit or
a Special Letter of Credit, as applicable.

 

“Letter of
Credit Commitment” shall mean the Revolving Letter of Credit Commitment, a
Base Letter of Credit Commitment or a Special Letter of Credit Commitment, as
applicable.

 

“Letter of
Credit Issuer” shall mean (a) in the context of the Revolving Letter
of Credit Facility and the Base Letter of Credit Facility, the Revolving/Base
Letter of Credit Issuer, and (b) in the context of the Special Letter of
Credit Facility, the Special Letter of Credit Issuer.  The Letter of Credit Issuer may, in its
discretion, arrange for one or more Letters of Credit to be issued by
Affiliates of the Letter of Credit Issuer, and in each such case the term “Letter
of Credit Issuer” shall include any such Affiliate with respect to Letters of
Credit issued by such Affiliate.  In the
event that there is more than one Letter of Credit Issuer at any time,
references herein and in the other Credit Documents to the Letter of Credit
Issuer shall be deemed to refer to the Letter of Credit Issuer in respect of
the applicable Letter of Credit or to all Letter of Credit Issuers, as the
context requires.

 

“Letters of
Credit Outstanding” shall mean Revolving Letters of Credit Outstanding,
Base Letters of Credit Outstanding or Special Letters of Credit Outstanding, as
applicable.

 

“Letter of
Credit Participant” shall mean a Revolving Letter of Credit Participant, a
Base Letter of Credit Participant or a Special Letter of Credit Participant, as
applicable.

 

“Letter of
Credit Participation” shall mean a Revolving Letter of Credit Participation,
a Base Letter of Credit Participation or a Special Letter of Credit
Participation, as applicable.

 

“Letter of
Credit Percentage” shall mean a Revolving Credit Percentage, a Base Letter
of Credit Percentage or a Special Letter of Credit Percentage, as applicable.

 

“Letter of
Credit Request” shall have the meaning provided in Section 3.2(a).

 

“Level I Status” shall mean, on any date, the Term Loan
Repayment Amount as of such date is at least (x) if the Subsequent Transaction
Closing Date has occurred, $400,000,000, or (y) if the Subsequent Transaction
Closing Date has not occurred, $320,000,000.

 

“Level II
Status” shall mean, on any date, the Term Loan Repayment Amount as of such
date is at least (x) if the Subsequent Transaction Closing Date has occurred, $750,000,000,
or (y) if the Subsequent Transaction Closing Date has not occurred, $600,000,000.

 

28

 

“Lien”
shall mean any mortgage, pledge, security interest, hypothecation, assignment,
lien (statutory or other) or similar encumbrance, and any easement,
right-of-way, license, restriction (including zoning restrictions), defect,
exception or irregularity in title or similar change or encumbrance (including
any agreement to give any of the foregoing, any conditional sale or other title
retention agreement or any lease in the nature thereof).

 

“Limestone
Project” shall mean the Limestone Electric Generating Station located in
Limestone, Leon and Freestone Counties in the State of Texas, consisting of two
coal-fired baseload generating units with an approximate net generating
capacity, as of the Initial Acquisition Closing Date, of 1,621 megawatts.

 

“Loan”
shall mean any Revolving Credit Loan, New Revolving Credit Loan, Swingline Loan,
Initial Term Loan, Delayed Draw Term Loan or New Term Loan made by any Lender
hereunder.

 

“Management
Group” shall mean, at any time, the Chairman of the Board, any President,
any Executive Vice President or Vice President, any Managing Director, any
Treasurer and any Secretary of the Borrower or any Restricted Subsidiary at
such time.

 

“Management
Investors” shall mean the management officers and employees of the Borrower
and the Restricted Subsidiaries who become investors in the Borrower or any of
its direct or indirect parent entities pursuant to the Initial Acquisition
Option Plan within 12 months after the Credit Agreement Closing Date, not to exceed
10% of the Capital Stock of the Borrower.

 

“Mandatory
Borrowing” shall have the meaning provided in Section 2.1(e)(ii).

 

“Mark-to-Market
Exposure” shall mean (a) with respect to any Business Day (other than
any Business Day that is within three Business Days prior to any date on which
Special Letter of Credit Fees are due) for which the GS Counterparty or the MS
Counterparty, as applicable, has provided the Special Letter of Credit Issuer
with written notice of the aggregate positive mark-to-market exposure of the GS
Counterparty or the MS Counterparty, as applicable, to the Borrower and the
Restricted Subsidiaries on such Business Day, the aggregate positive
mark-to-market exposure set forth in such notice, (b) with respect to any
Business Day that is within three Business Days prior to any date on which
Special Letter of Credit Fees are due or any day other than a Business Day, the
aggregate positive mark-to-market exposure described in the most recent notice
provided as described in clause (a), and (c) with respect to any day for
which no notice has been provided as described in clause (a) (including
for purposes of clause (b), the most recent day prior to the three Business Day
period referenced therein on which a notice should have been provided), the
aggregate Stated Amount of the applicable GS Letter of Credit or MS Letter of
Credit (provided that for purposes of this clause (c), until the MS Initial LOC
Reduction Date, the Stated Amount of the MS Letter of Credit shall be deemed to
be $26,352,000), as the case may be; provided that for purposes of calculating
the Mark-to-Market Exposure, any negative mark-to-market exposure of the GS
Counterparty or the MS Counterparty, as applicable, to the Borrower and the
Restricted Subsidiaries shall be deemed to be $0.

 

29

 

“Material
Adverse Change” shall mean any change in the business, assets, operations,
properties or financial condition of the Borrower and its Subsidiaries, taken
as a whole, that would materially adversely affect the ability of the Borrower
and the other Credit Parties, taken as a whole, to perform their obligations
under this Agreement or any of the other Credit Documents.

 

“Material
Adverse Effect” shall mean a circumstance or condition affecting the
business, assets, operations, properties or financial condition of the Borrower
and its Subsidiaries, taken as a whole, that would materially adversely affect (a) the
ability of the Borrower and the other Credit Parties, taken as a whole, to perform
their obligations under this Agreement or any of the other Credit Documents or (b) the
rights and remedies of the Administrative Agent and the Lenders under this
Agreement or any of the other Credit Documents.

 

“Material
Subsidiary” shall mean, at any date of determination, each Restricted
Subsidiary of the Borrower (a) whose total assets at the last day of the
Test Period ending on the last day of the most recent fiscal period for which Section 11.1
Financials have been delivered were equal to or greater than 5% of the Consolidated
Total Assets of the Borrower and the Restricted Subsidiaries at such date or (b) whose
gross revenues for such Test Period were equal to or greater than 5% of the
consolidated gross revenues of the Borrower and the Restricted Subsidiaries for
such period, in each case determined in accordance with GAAP.

 

“Maturity
Date” shall mean the Initial Term Loan Maturity Date, the Delayed Draw Term
Loan Maturity Date, any New Term Loan Maturity Date, the Revolving Credit
Maturity Date, the Swingline Maturity Date, the Base Letter of Credit Maturity
Date or the Special Letter of Credit Maturity Date, as applicable.

 

“Minimum
Borrowing Amount” shall mean (a) with respect to a Borrowing of Term
Loans or Revolving Credit Loans, $1,000,000, and (b) with respect to a
Borrowing of Swingline Loans, $100,000.

 

“Minority
Investment” shall mean any Person (other than a Subsidiary) in which the
Borrower or any Restricted Subsidiary owns Capital Stock.

 

“Moody’s”
shall mean Moody’s Investors Service, Inc. or any successor by merger or
consolidation to its business.

 

“Mortgaged
Property” shall mean, initially, each parcel of real estate and the improvements thereto owned by a Credit Party and identified on Schedule 1.1(a),
and includes each other parcel of real property and improvements thereto
with respect to which a Deed of Trust is granted pursuant to Section 11.15.

 

“MS Commodity Hedging Agreement” shall mean the
Master Power Purchase and Sale Agreement and Cover Sheet dated as of December 1,
2004 and the Confirmation thereunder dated as of December 2, 2004, each
between the MS Counterparty and Texas Genco II, LP (as successor by merger), as
the same may be amended, supplemented or otherwise modified from time to time
in accordance with the terms hereof and thereof.

 

30

 

“MS
Counterparty” shall mean Morgan Stanley Capital Group Inc. or any other
subsidiary of Morgan Stanley & Co. Incorporated that succeeds to Morgan
Stanley Capital Group Inc. under the MS Commodity Hedging Agreement.

 

“MS Letter
of Credit” shall mean the $26,352,000 Special Letter of Credit issued in
favor of the MS Counterparty on the Initial Transaction Closing Date to support
the obligations of Texas Genco II, LP under the MS Commodity Hedging Agreement.

 

“MS Initial
LOC Reduction Date” shall mean the first date after July 15, 2008 on
which the Special Letter of Credit Issuer receives a copy (certified by an
Authorized Officer of the Borrower) of the first request to reduce the Stated
Amount of the MS Letter of Credit.

 

“Necessary
Capital Expenditures” shall mean Capital Expenditures that are required by
Applicable Law (other than Environmental Laws) or undertaken for health and
safety reasons.  The term “Necessary
Capital Expenditures” shall not include any Capital Expenditures undertaken
primarily to increase the efficiency of, expand or re-power any power
generation facility.

 

“Net Cash
Proceeds” shall mean, with respect to any Prepayment Event, (a) the
gross cash proceeds (including payments from time to time in respect of
installment obligations, if applicable) received by or on behalf of the
Borrower or any of the Restricted Subsidiaries in respect of such Prepayment
Event, less (b) the sum of:

 

(i)                                     in
the case of any Prepayment Event, the amount, if any, of all taxes and Tax
Distributions paid or estimated to be payable by the Borrower or any of the
Restricted Subsidiaries in connection with such Prepayment Event,

 

(ii)                                  in
the case of any Prepayment Event, the amount of any reasonable reserve
established in accordance with GAAP against any liabilities (other than any
taxes or Tax Distributions deducted pursuant to clause (i) above) (x)
associated with the assets that are the subject of such Prepayment Event and
(y) retained by the Borrower or any of the Restricted Subsidiaries, provided
that the amount of any subsequent reduction of such reserve (other than in
connection with a payment in respect of any such liability) shall be deemed to
be Net Cash Proceeds of such Prepayment Event occurring on the date of such
reduction,

 

(iii)                               in
the case of any Prepayment Event, the amount of any Indebtedness secured by a
Lien on the assets that are the subject of such Prepayment Event to the extent
that the instrument creating or evidencing such Indebtedness requires that such
Indebtedness be repaid upon consummation of such Prepayment Event and such
Indebtedness is actually so repaid,

 

(iv)                              in
the case of any Asset Sale Prepayment Event (other than a transaction permitted
by Section 12.4(e)) or Permitted Sale Leaseback, the amount of any proceeds of
such Asset Sale Prepayment Event or Permitted Sale Leaseback that the Borrower
or the applicable Restricted Subsidiary has reinvested (or intends to
reinvest), or has entered into an Acceptable Reinvestment Commitment to
reinvest, within the Reinvestment Period, in the business of the Borrower or
any of the Restricted Subsidiaries (subject to Section 11.14), provided that:

 

31

 

(A)                              the Borrower or the applicable Restricted Subsidiary shall comply
with Sections 11.11, 11.12 and 11.15 with respect to such reinvestment;

 

(B)                                if such Asset Sale Prepayment Event or Permitted Sale
Leaseback is in respect of any Baseload Asset and the amount of such proceeds
exceeds $25,000,000, the Borrower or the applicable Restricted Subsidiary shall
deposit such proceeds in a Control Account pending reinvestment;

 

(C)                                if
such Asset Sale Prepayment Event (but not a Permitted Sale Leaseback) is in
respect of the Limestone Project, the Parish Project or any Baseload Asset in
which proceeds have previously been reinvested pursuant to this clause (C),
such proceeds shall be reinvested in other Baseload Assets;

 

(D)                               if
such Asset Sale Prepayment Event (but not a Permitted Sale Leaseback) is in
respect of the South Texas Project or any asset in which proceeds have
previously been reinvested pursuant to this clause (D), such proceeds shall be
reinvested in (x) other Baseload Assets or (y) other assets such that the
Consolidated Total Debt to Consolidated EBITDA Ratio as of the most recently
ended Test Period at the time such reinvestment is announced by the Borrower, calculated
on a pro forma basis after giving effect to such reinvestment, is equal to or
less than the Consolidated Total Debt to Consolidated EBITDA Ratio as of the
most recently ended Test Period at the time of such Asset Sale Prepayment Event;
provided that the pro forma change in Consolidated EBITDA projected by the
Borrower in good faith as a result of reasonably identifiable and factually
supportable cost savings and costs (excluding one-time transition, transaction
and restructuring costs), as the case may be, expected to be realized during
the consecutive four quarter period commencing after such reinvestment shall be
included in such calculation of the pro forma Consolidated Total Debt to
Consolidated EBITDA Ratio; provided, however, that any such pro forma change to
Consolidated EBITDA shall be without duplication for cost savings and costs
(excluding one-time transition, transaction and restructuring costs) actually
realized and already included in Consolidated EBITDA;

 

(E)                                 if such Permitted Sale Leaseback is in respect of Baseload
Assets, the property rented or leased back shall consist of such Baseload
Assets;

 

(F)                                 any
portion of such proceeds that has not been so reinvested or made subject to an
Acceptable Reinvestment Commitment within the Reinvestment Period shall
(x) be deemed to be Net Cash Proceeds of an Asset Sale Prepayment Event or
a Permitted Sale Leaseback occurring on the last day of the Reinvestment Period
and (y) be applied to the repayment of Term Loans in accordance with Section 5.2(a)(i) or 5.2(a)(ii), as applicable; and

 

(G)                                any
proceeds subject to an Acceptable Reinvestment Commitment that is later canceled
or terminated for any reason before such proceeds are applied in accordance
therewith shall be applied to the repayment of Term Loans in accordance with Section 5.2(a)(i) or 5.2(a)(ii), as applicable, unless the Borrower
or the applicable Restricted Subsidiary enters into another Acceptable
Reinvestment Commitment with

 

32

 

respect
to such proceeds prior to the later of (x) nine months after such cancellation
or termination or (y) the end of the Reinvestment Period,

 

(v)                                 in
the case of any Recovery Prepayment Event, the amount of any proceeds of such
Recovery Prepayment Event (x) that the Borrower or the applicable Restricted
Subsidiary has reinvested (or intends to reinvest), or has entered into an
Acceptable Reinvestment Commitment to reinvest, within the Reinvestment Period,
in the business of the Borrower or any of the Restricted Subsidiaries (subject
to Section 11.14), including for the repair, restoration or replacement of the
asset or assets subject to such Recovery Prepayment Event, or (y) for which the
Borrower or the applicable Restricted Subsidiary has provided a Restoration
Certification; provided that:

 

(A)                              the Borrower or the applicable Restricted Subsidiary shall comply
with Sections 11.11, 11.12 and 11.15 with respect to such reinvestment;

 

(B)                                if such Recovery Prepayment Event is in respect of any
Baseload Asset and the amount of such proceeds exceeds $25,000,000, the
Borrower or the applicable Restricted Subsidiary shall deposit such proceeds in
a Control Account pending reinvestment;

 

(C)                                if such Recovery Prepayment Event is in respect of the
Limestone Project, the Parish Project or any Baseload Asset in which proceeds have
previously been reinvested pursuant to this clause (C), such proceeds shall be
reinvested in other Baseload Assets;

 

(D)                               if
such Recovery Prepayment Event is in respect of the South Texas Project or any
asset in which proceeds have previously been reinvested pursuant to this clause
(D), such proceeds shall be reinvested in (x) other Baseload Assets or (y)
other assets such that the Consolidated Total Debt to Consolidated EBITDA Ratio
as of the most recently ended Test Period at the time such reinvestment is announced
by the Borrower, calculated on a pro forma basis after giving effect to such
reinvestment, is equal to or less than the Consolidated Total Debt to
Consolidated EBITDA Ratio as of the most recently ended Test Period at the time
of such Recovery Prepayment Event; provided that the pro forma change in
Consolidated EBITDA projected by the Borrower in good faith as a result of
reasonably identifiable and factually supportable cost savings and costs
(excluding one-time transition, transaction and restructuring costs), as the
case may be, expected to be realized during the consecutive four quarter period
commencing after such reinvestment shall be included in such calculation of the
pro forma Consolidated Total Debt to Consolidated EBITDA Ratio; provided,
however, that any such pro forma change to Consolidated EBITDA shall be without
duplication for cost savings and costs (excluding one-time transition,
transaction and restructuring costs) actually realized and already included in
Consolidated EBITDA;

 

(E)                                 any
portion of such proceeds that has not been so reinvested or made subject to an
Acceptable Reinvestment Commitment or Restoration Certification within the
Reinvestment Period shall (x) be deemed to be Net Cash Proceeds of a
Recovery Prepayment Event occurring on the last day of the Reinvestment Period
and (y) be

 

33

 

applied to the repayment of
Term Loans in accordance with Section 5.2(a)(i) or 5.2(a)(ii), as
applicable; and

 

(F)                                 any
proceeds subject to an Acceptable Reinvestment Commitment that is later
canceled or terminated for any reason before such proceeds are applied in
accordance therewith shall be applied to the repayment of Term Loans in
accordance with Section 5.2(a)(i) or 5.2(a)(ii), as applicable,
unless the Borrower or the applicable Restricted Subsidiary enters into another
Acceptable Reinvestment Commitment with respect to such proceeds prior to the
later of (x) nine months after such cancellation or termination or (y) the end
of the Reinvestment Period,

 

(vi)                              in the case of any Scheduled Asset Event (but not any other
Asset Sale Prepayment Event, Permitted Sale Leaseback or Recovery Prepayment
Event), the Excepted Distributable Scheduled Asset Proceeds received in
connection therewith, and

 

(vii)                           in the
case of any Prepayment Event, reasonable and customary fees, commissions,
expenses, issuance costs, discounts and other costs paid by the Borrower or any
of the Restricted Subsidiaries, as applicable, in connection with such
Prepayment Event (other than those payable to the Borrower or any Subsidiary of
the Borrower), in each case only to the extent not already deducted in arriving
at the amount referred to in clause (a) above.

 

“New Loan Commitments” shall have the meaning provided in Section 2.14(a).

 

“New Revolving Credit Commitments” shall have the meaning provided
in Section 2.14(a).

 

“New Revolving Credit Lender” shall have the meaning provided in
Section 2.14(b).

 

“New Revolving Credit Loans” shall have the meaning provided in Section 2.14(b).

 

“New Term
Loan Commitments” shall have the meaning provided in Section 2.14(a).

 

“New Term
Loan Facility” shall mean any credit facility constituting New Term Loan
Commitments and New Term Loans.

 

“New Term
Loan Lender” shall have the meaning provided in Section 2.14(c).

 

“New Term
Loans” shall have the meaning provided in Section 2.14(c).

 

“New Term
Loan Maturity Date” shall mean the date on which a New Term Loan matures.

 

“Newco 1”
shall have the meaning provided in the recitals to this Agreement.

 

“Newco 2”
shall have the meaning provided in the recitals to this Agreement.

 

34

 

“NN Houston
Sub” shall have the meaning provided in the recitals to this Agreement.

 

“Non-Defaulting
Lender” shall mean and include each Lender other than a Defaulting Lender.

 

“Non-Excluded
Taxes” shall have the meaning provided in Section 5.4(a).

 

“Non-Nuclear
Assets” shall mean all assets owned by Genco Holdings and its Subsidiaries
as of the Initial Transaction Closing Date other than the Nuclear Assets.

 

“Notes
Offering” shall have the meaning provided in the recitals to this
Agreement.

 

“Notice of
Borrowing” shall have the meaning provided in Section 2.3.

 

“Notice of
Conversion or Continuation” shall have the meaning provided in Section 2.6.

 

“Nuclear
Assets” shall mean Genco Holdings’ indirect undivided ownership interest in
the South Texas Project.

 

“Obligations”
shall mean the
collective reference to (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest at the applicable rate provided
in this Agreement (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (ii) each payment required to be made by the Borrower under
this Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral, and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding), of the Borrower or any other Credit Party to any of the Secured
Parties under this Agreement and the other Credit Documents, (b) the due
and punctual performance of all covenants, agreements, obligations and
liabilities of the Borrower under or pursuant to this Agreement and the other
Credit Documents, (c) the due and punctual payment and performance of all
the covenants, agreements, and liabilities of each other Credit Party under or
pursuant to this Agreement or the other Credit Documents, (d) the due and
punctual payment and performance of all obligations of each Credit Party under
each Interest Rate Hedging Agreement and each Currency Hedging Agreement that
(x) is in effect on the Credit Agreement Closing Date with a counterparty
that is an Agent, a Lender or an affiliate of an Agent or a Lender as of the
Credit Agreement Closing Date or (e) is entered into after the Credit
Agreement Closing Date with any counterparty that is an Agent, a Lender or an
affiliate of an Agent or a Lender at the time such Interest Rate Hedging
Agreement or Currency Hedging Agreement, as the case may be, is entered into
and (f) the due and punctual payment and performance of all obligations in
respect of overdrafts and related liabilities owed to the Administrative Agent
or its affiliates arising from or in connection with

 

35

 

treasury, depositary or cash management services or
in connection with any automated clearinghouse transfer of funds.

 

“Parish
Project” shall mean Units 5, 6, 7 and 8 of the W.A. Parish Electric
Generating Station, located in Fort Bend County in the State of Texas,
consisting of four coal-fired baseload generating units with an approximate net
generation capacity, as of the Initial Transaction Closing Date, of 2,501 megawatts.

 

“Participant”
shall have the meaning provided in Section 15.6(c)(i).

 

“PBGC”
shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002
of ERISA, or any successor thereto.

 

“Perfection
Certificate” shall mean a certificate of the Borrower in the form of Exhibit D
or any other form approved by the Administrative Agent.

 

“Permitted
Acquisition” shall mean (a) the Acquisition Transactions and the ROFR
and (b) any other acquisition, by merger or otherwise, by the Borrower or
any of the Restricted Subsidiaries of assets or Capital Stock, so long as, in
case of clause (b), (i) such acquisition and all transactions related
thereto shall be consummated in accordance with all Applicable Laws; (ii) such
acquisition shall result in the issuer of such Capital Stock becoming a
Restricted Subsidiary and, to the extent required by Section 11.11, a
Guarantor; (iii) such acquisition shall result in the Administrative
Agent, for the benefit of the applicable Lenders, being granted a security
interest in any Capital Stock or any assets so acquired to the extent required
by Sections 11.11, 11.12 and/or 11.15; (iv) after giving effect to such
acquisition, no Default or Event of Default shall have occurred and be
continuing; and (v) the Borrower shall be in compliance, on a pro forma
basis after giving effect to such acquisition (including any Indebtedness
assumed or permitted to exist or incurred pursuant to Sections 12.1(j) and
12.1(k), respectively, and any related Pro Forma Adjustment), with the
covenants set forth in Sections 12.9 and 12.10, as such covenants are
recomputed as at the last day of the most recently ended Test Period under such
Sections as if such acquisition had occurred on the first day of such Test
Period.

 

“Permitted
Additional Notes” shall mean senior or senior subordinated notes issued by
the Borrower; provided that (a) the terms of such notes do not provide for
any scheduled repayment, mandatory redemption, sinking fund obligation or other
payment prior to the Senior Unsecured Note Maturity Date, other than customary
offers to purchase upon a change of control, asset sale or casualty or
condemnation event and customary acceleration rights upon an event of default, (b) the
covenants, events of default, Subsidiary guarantees and other terms for such
notes (provided that such notes shall have interest rates and redemption
premiums determined by the Board of Managers of the Borrower to be market rates
and premiums at the time of issuance of such notes), taken as a whole, are not
more restrictive on the Borrower and its Subsidiaries, or less favorable to the
Lenders, than the terms of the Senior Unsecured Notes (as in effect on the
Credit Agreement Closing Date), (c) if such notes are senior subordinated
notes, the terms of such notes provide for customary subordination of such
notes to the Obligations and (d) no Subsidiary of the Borrower (other than
a Guarantor) is an obligor under such notes that is not an obligor under the Senior
Unsecured Notes.

 

36

 

“Permitted
Capital Expenditure Amount” shall have the meaning given to such term in Section 12.11.

 

“Permitted
Cure Security” shall mean an equity security of the Borrower having no
mandatory redemption, repurchase or similar requirements prior to 91 days after
the latest maturity date for any of the Loans, and upon which all dividends or
distributions (if any) shall be payable solely in additional shares of such
equity security.

 

“Permitted
Investments” shall mean (a) securities issued or unconditionally
guaranteed by the United States government or any agency or instrumentality
thereof, in each case having maturities of not more than 24 months from the
date of acquisition thereof; (b) securities issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof or any political subdivision of any such state
or any public instrumentality thereof having maturities of not more than 24
months from the date of acquisition thereof and, at the time of acquisition,
having an investment grade rating generally obtainable from either S&P or
Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such
obligations, then from another nationally recognized rating service); (c) commercial
paper issued by any Lender or any bank holding company owning any Lender; (d) commercial
paper maturing no more than 12 months after the date of creation thereof
and, at the time of acquisition, having a rating of at least A-2 or P-2 from
either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall
be rating such obligations, an equivalent rating from another nationally
recognized rating service); (e) domestic and Eurodollar certificates of
deposit or bankers’ acceptances maturing no more than two years after the date
of acquisition thereof issued by any Lender or any other bank having combined
capital and surplus of not less than $250,000,000 in the case of domestic banks
and $100,000,000 (or the dollar equivalent thereof) in the case of foreign
banks; (f) repurchase agreements with a term of not more than 30 days
for underlying securities of the type described in clauses (a), (b) and (e) above
entered into with any bank meeting the qualifications specified in clause (e) above
or securities dealers of recognized national standing; (g) marketable
short-term money market and similar securities having a rating of at least A-2
or P-2 from either S&P or Moody’s (or, if at any time neither S&P nor
Moody’s shall be rating such obligations, an equivalent rating from another
nationally recognized rating service); (h) shares of investment companies
that are registered under the Investment Company Act of 1940 and invest solely
in one or more of the types of securities described in clauses (a) through
(g) above; and (i) in the case of investments by any Restricted
Foreign Subsidiary or investments made in a country outside the United States
of America, other customarily utilized high-quality investments in the country
where such Restricted Foreign Subsidiary is located or in which such investment
is made.

 

“Permitted
Liens” shall mean (a) Liens for taxes, assessments or other
governmental charges or claims that are either (i) not yet due and payable
and not subject to penalties for nonpayment or (ii) being contested in
good faith by appropriate proceedings for which appropriate reserves have been
established in accordance with GAAP; (b) Liens in respect of property or
assets of the Borrower or any of its Subsidiaries imposed by law, such as
carriers’, warehousemen’s and mechanics’ Liens and other similar Liens, in each
case so long as such Liens arise in the ordinary course of business and do not
individually or in the aggregate have a Material Adverse Effect; (c) Liens
arising from judgments or decrees in circumstances not constituting an Event of
Default under Section 13.10; (d) Liens incurred or pledges or
deposits

 

37

 

made in
connection with workers’ compensation, unemployment insurance and other types
of social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations incurred in
the ordinary course of business; (e) ground leases or subleases in respect
of real property on which facilities owned or leased by the Borrower or any of
its Subsidiaries are located; (f) easements, rights-of-way, licenses,
restrictions (including zoning restrictions), minor defects, exceptions or
irregularities in title and other similar charges or encumbrances, in each case
not interfering in any material respect with the business of the Borrower and
its Subsidiaries, taken as a whole; (g) any interest or title of a lessor
or secured by a lessor’s interest under any lease permitted by this Agreement; (h) Liens
in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of goods; (i) Liens
on goods or inventory the purchase, shipment or storage price of which is
financed by a documentary letter of credit or bankers’ acceptance issued or
created for the account of the Borrower or any of its Subsidiaries, provided
that such Lien secures only the obligations of the Borrower or such
Subsidiaries in respect of such letter of credit to the extent permitted under Section 12.1;
(j) leases or subleases granted to others not interfering in any material
respect with the business of the Borrower and its Subsidiaries, taken as a
whole; (k) Liens created in the ordinary course of business in favor of
banks and other financial institutions over credit balances of any bank
accounts of the Borrower and the Restricted Subsidiaries held at such banks or
financial institutions, as the case may be, to facilitate the operation of cash
pooling and/or interest set-off arrangements in respect of such bank accounts
in the ordinary course of business; and (l) Liens arising from precautionary
Uniform Commercial Code financing statement or similar filings made in respect
of operating leases entered into by the Borrower or any of its Subsidiaries.

 

“Permitted
Quarterly Tax Distributions” shall mean quarterly distributions of Tax
Amounts determined on the basis of the estimated taxable income of the Borrower
(in each case, including any such taxable income attributable to the Borrower’s
ownership of interest in any other pass-through entity for Federal income tax
purposes) for the related Estimation Period, as set forth in a statement filed
with the Administrative Agent; provided, however, that at the time of such
distributions, the most recent audited financial statements of the Borrower
reflect that the Borrower was treated as a partnership for Federal income tax
purposes for the period covered by such financial statements; provided,
further, that, for an Estimation Period that includes a True-up Determination
Date, (i) for any True-Up Amount due to the members (as defined in the
definition of the term “True-up Amount”), the Permitted Quarterly Tax
Distribution payable by the Borrower for such Estimation Period shall be increased
by such True-up Amount, and (ii) for any True-up Amount due to the
Borrower (as defined in the definition of the term “True-up Amount”), the
Permitted Quarterly Tax Distribution payable by the Borrower for such
Estimation Period shall be reduced by such True-up Amount and the excess, if
any, of such True-up Amount over such Permitted Quarterly Tax Distribution
shall be applied to reduce the immediately following Permitted Quarterly Tax
Distribution(s) until such True-up Amount is entirely offset.  The amount of Permitted Quarterly Tax
Distributions relating to an Estimation Period including a True-up
Determination Date shall be determined by a Tax Amounts CPA, and the amount of
Permitted Quarterly Tax Distributions relating to all other Estimation Periods
shall be determined by the Borrower.

 

38

 

“Permitted
Sale Leaseback” shall mean any Sale Leaseback consummated by the Borrower
or any of the Restricted Subsidiaries after the Credit Agreement Closing Date,
provided that any such Sale Leaseback not between the Borrower and any
Guarantor or any Guarantor and another Guarantor is consummated for fair value
as determined at the time of consummation in good faith by the Borrower and, in
the case of any Sale Leaseback (or series of related Sales Leasebacks) the
aggregate proceeds of which exceed $50,000,000, the Board of Managers of the
Borrower (which such determination may take into account any retained interest
or other investment of the Borrower or such Restricted Subsidiary in connection
with, and any other material economic terms of, such Sale Leaseback).

 

“Person”
shall mean any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other
enterprise or any Governmental Authority.

 

“Plan”
shall mean any multiemployer or single-employer plan, as defined in Section 4001
of ERISA and subject to Title IV of ERISA, that is or was within any of the
preceding five plan years maintained or contributed to by (or to which there is
or was an obligation to contribute or to make payments to) the Borrower, a
Subsidiary or an ERISA Affiliate.

 

“Pledge
Agreement” shall mean the Pledge Agreement, entered into by the Borrower,
the other pledgors party thereto and the Collateral Trustee for the benefit of
the Secured Parties (as defined therein), substantially in the form of Exhibit E-2,
as the same may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof and of the other Credit Documents.

 

“Prepayment
Event” shall mean any Asset Sale Prepayment Event, Recovery Prepayment
Event, Debt Incurrence Prepayment Event or Permitted Sale Leaseback.

 

“Prime Rate”
shall mean the rate of interest per annum publicly announced from time to time by
the Administrative Agent as its reference rate in effect at its principal
office in New York City (the Prime Rate not being intended to be the lowest
rate of interest charged by GSCP in
connection with extensions of credit to debtors).

 

“Pro Forma
Adjustment” shall mean, for any Test Period that includes any of the six
consecutive fiscal quarters first ending following any Permitted Acquisition,
with respect to the Acquired EBITDA of the applicable Acquired Entity or
Business or the Consolidated EBITDA of the Borrower affected by such
acquisition, the pro forma increase or decrease in such Acquired EBITDA or such
Consolidated EBITDA, as the case may be, projected by the Borrower in good
faith as a result of reasonably identifiable and factually supportable cost
savings and costs (excluding one-time transition, transaction and restructuring
costs), as the case may be, expected to be realized during such period by
combining the operations of such Acquired Entity or Business with the
operations of the Borrower and its Subsidiaries; provided further that any such
pro forma increase or decrease to such Acquired EBITDA or such
Consolidated EBITDA, as the case may be, shall be without duplication for cost
savings and costs (excluding one-time transition, transaction and restructuring
costs) actually realized during such period and already included in such
Acquired EBITDA or such Consolidated EBITDA, as the case may be.

 

39

 

“Pro Forma
Adjustment Certificate” shall mean any certificate of an Authorized Officer
of the Borrower delivered pursuant to Section 11.1(h) or setting
forth the information described in clause (iv) to
Section 11.1(d).

 

“Project
Finance Subsidiary” shall mean any Unrestricted Subsidiary of the Borrower
that is formed or acquired after the Initial Transaction Closing Date for
purposes of financing the development, construction or acquisition by such
Subsidiary of an electric generation facility, electric transmission or
distribution facility or fuel supply or transportation facility and fixed or
capital assets, working capital or spare parts related thereto.

 

“Public
Company Merger” shall have the meaning provided in the recitals to this
Agreement.

 

“Quarterly
Payment Period” shall mean the period commencing on the tenth day and
ending on and including the twentieth day of each month in which Federal
estimated tax payments are due for a corporation taxed on a calendar year basis
(provided that payments in respect of estimated state income taxes due in January may
instead, at the option of the Borrower, be paid during the last five days of
the immediately preceding December).

 

“Real
Estate” shall have the meaning provided in Section 11.1(f).

 

“Recovery
Event” shall mean (a) any damage to, destruction of or other casualty
or loss involving any property or asset or (b) any seizure, condemnation,
confiscation or taking under the power of eminent domain of, or any requisition
of title or use of or relating to, or any similar event in respect of, any
property or asset.

 

“Recovery
Prepayment Event” shall mean the receipt of cash proceeds with respect to
any settlement or payment in connection with any Recovery Event in respect of
any property or asset of the Borrower or any Restricted Subsidiary; provided
that the term “Recovery Prepayment Event” shall not include any Asset Sale
Prepayment Event or any Permitted Sale Leaseback.

 

“Reference
Lender” shall mean GSCP.

 

“Refinanced
Senior Unsecured Notes” shall have the meaning provided in Section 12.1(i)(i).

 

“Register”
shall have the meaning provided in Section 15.6(b)(iv).

 

“Regulation
D” shall mean Regulation D of the Board as from time to time in effect and
any successor to all or a portion thereof establishing reserve requirements.

 

“Regulation
T” shall mean Regulation T of the Board as from time to time in effect and
any successor to all or a portion thereof establishing margin requirements.

 

“Regulation
U” shall mean Regulation U of the Board as from time to time in effect and
any successor to all or a portion thereof establishing margin requirements.

 

40

 

“Regulation
X” shall mean Regulation X of the Board as from time to time in effect and
any successor to all or a portion thereof establishing margin requirements.

 

“Reinvestment
Period” shall mean, with respect to any Asset Sale Prepayment Event,
Permitted Sale Leaseback or Recovery Prepayment Event, the day which is 365
days after such Asset Sale Prepayment Event, Permitted Sale Leaseback or
Recovery Prepayment Event; provided that in the event approval of any
Governmental Authority is required to be procured in connection with the
reinvestment of proceeds of such Asset Sale Prepayment Event, Permitted Sale
Leaseback or Recovery Prepayment Event, the Reinvestment Period with respect to
such reinvestment shall be extended for an additional period (not to exceed 180
days) as necessary to obtain such approval.

 

“Related
Parties” shall mean, with respect to any specified Person, such Person’s
Affiliates and the directors, officers, employees, agents, trustees, advisors
of such Person and any Person that possesses, directly or indirectly, the power
to direct or cause the direction of the management or policies of such Person,
whether through the ability to exercise voting power, by contract or otherwise.

 

“Repayment
Amount” shall mean any Initial Term Loan Repayment Amount or Delayed Draw
Term Loan Repayment Amount, as applicable.

 

“Repayment
Date” shall mean any Initial Term Loan Repayment Date or Delayed Draw Term
Loan Repayment Date, as applicable.

 

“Reportable
Event” shall mean an event described in Section 4043 of ERISA and the
regulations thereunder.

 

“Required
Base Letter of Credit Participants” shall mean, at any date, Non-Defaulting
Lenders having or holding a majority of (a) the Adjusted Total Base Letter
of Credit Commitment at such date or (b) if the Total Base Letter of
Credit Commitment has been terminated or for the purposes of acceleration
pursuant to Section 13, the aggregate amount of Base Letter of Credit Exposures
outstanding at such date.

 

“Required
Delayed Draw Term Loan Lenders” shall mean, at any date, Non-Defaulting
Lenders having or holding a majority of (a) until the Subsequent
Transaction Closing Date or the Call Transaction Closing Date, as applicable, the
Adjusted Total Delayed Draw Term Loan Commitment at such date and (b) thereafter,
the outstanding principal amount of the Delayed Draw Term Loans in the
aggregate at such date.

 

“Required
Initial Term Loan Lenders” shall mean, at any date, Non-Defaulting Lenders
having or holding a majority of (a) until the Credit Agreement Closing
Date, the Adjusted Total Initial Term Loan Commitment and (b) thereafter, the
outstanding principal amount of the Initial Term Loans in the aggregate at such
date.

 

“Required
Lenders” shall mean, at any date, Non-Defaulting Lenders having or holding
a majority of the sum of (a) (i) until the Credit Agreement Closing
Date, the Adjusted Total Initial Term Loan Commitment and (ii) thereafter,
the outstanding principal amount of the Initial Term Loans in the aggregate at
such date, (b) (i) until the Subsequent Transaction Closing

 

41

 

Date or the
Call Transaction Closing Date, as applicable, the Adjusted Total Delayed Draw
Term Loan Commitment at such date and (ii) thereafter, the outstanding
principal amount of the Delayed Draw Term Loans in the aggregate at such date, (c) (i) until
the Increased Amount Date for any Series, the Adjusted Total New Term Loan
Commitment for such Series and (ii) thereafter, the outstanding
principal amount of the New Term Loans of such Series in the aggregate at
such date, (d) (i) the Adjusted Total Revolving Credit Commitment at
such date or (ii) if the Total Revolving Credit Commitment has been terminated
or for the purposes of acceleration pursuant to Section 13, the
outstanding principal amount of the Revolving Credit Loans and Revolving Letter
of Credit Exposures in the aggregate at such date, (e) (i) the
Adjusted Total Base Letter of Credit Commitment at such date or (ii) if
the Total Base Letter of Credit Commitment has been terminated or for the
purposes of acceleration pursuant to Section 13, the aggregate amount of Base
Letter of Credit Exposures outstanding at such date, and (f) (i) the
Adjusted Total Special Letter of Credit Commitment at such date or (ii) if
the Total Special Letter of Credit Commitment has been terminated or for the
purposes of acceleration pursuant to Section 13, the aggregate amount of
Special Letter of Credit Exposures outstanding at such date.

 

“Required
New Term Loan Lenders” shall mean, at any date, Non-Defaulting Lenders
having or holding a majority of (a) until the Increased Amount Date for
any Series, the Adjusted Total New Term Loan Commitment for such Series and
(b) thereafter, the outstanding principal amount of the New Term Loans of
such Series in the aggregate at such date.

 

“Required
Revolving Credit Lenders” shall mean, at any date, Non-Defaulting Lenders
having or holding a majority of (a) the Adjusted Total Revolving Credit
Commitment at such date or (b) if the Total Revolving Credit Commitment
has been terminated or for the purposes of acceleration pursuant to Section 13,
the outstanding principal amount of the Revolving Credit Exposures in the
aggregate at such date.

 

“Required
Special Letter of Credit Participants” shall mean, at any date,
Non-Defaulting Lenders having or holding a majority of (a) the Adjusted
Total Special Letter of Credit Commitment at such date or (b) if the Total
Special Letter of Credit Commitment has been terminated or for the purposes of
acceleration pursuant to Section 13, the aggregate amount of Special
Letter of Credit Exposures outstanding at such date.

 

“Restoration
Certification” shall mean, with respect to any Recovery Prepayment Event, a
certification made by an Authorized Officer of the Borrower or a Restricted
Subsidiary, as applicable, to the Administrative Agent prior to the end of the
Reinvestment Period certifying (a) that the Borrower or such Restricted
Subsidiary intends to use the proceeds received in connection with such
Recovery Prepayment Event to repair, restore or replace the property or assets
in respect of which such Recovery Prepayment Event occurred, (b) the approximate
costs of completion of such repair, restoration or replacement and (c) that
such repair, restoration or replacement will be completed within 365 days after
the date on which such Recovery Prepayment Event occurred.

 

“Restricted
Domestic Subsidiary” shall mean each Restricted Subsidiary that is also a
Domestic Subsidiary.

 

42

 

“Restricted
Foreign Subsidiary” shall mean each Restricted Subsidiary that is also a
Foreign Subsidiary.

 

“Restricted
Subsidiary” shall mean any Subsidiary of the Borrower other than an
Unrestricted Subsidiary.

 

“Revolving/Base
Letter of Credit Issuer” shall mean any one or more Lenders reasonably
acceptable to the Borrower and the Administrative Agent, any of its Affiliates
or any successor pursuant to Section 3.6.

 

“Revolving
Credit Commitment” shall mean, (a) with respect to each Lender that is
a Lender on the date hereof, the amount set forth opposite such Lender’s name
on Schedule 1.1(b) as such Lender’s “Revolving Credit Commitment” and
(b) in the case of any Lender that becomes a Lender after the date hereof,
the amount specified as such Lender’s “Revolving Credit Commitment” in the
Assignment and Acceptance pursuant to which such Lender assumed a portion of
the Total Revolving Credit Commitment, in each case as the same may be changed
from time to time pursuant to terms hereof. 
The aggregate amount of the Revolving Credit Commitments as of the date
hereof is $325,000,000.

 

“Revolving
Credit Commitment Percentage” shall mean at any time, for each Lender, the
percentage obtained by dividing (a) such Lender’s Revolving Credit
Commitment by (b) the aggregate amount of the Revolving Credit
Commitments, provided that at any time when the Total Revolving Credit
Commitment shall have been terminated, each Lender’s Revolving Credit Commitment
Percentage shall be its Revolving Credit Commitment Percentage as in effect
immediately prior to such termination.

 

“Revolving
Credit Exposure” shall mean, with respect to any Lender at any time, the
sum of (a) the aggregate principal amount of the Revolving Credit Loans of
such Lender then outstanding and (b) such Lender’s Revolving Letter of
Credit Exposure at such time.

 

“Revolving
Credit Facility” shall have the meaning provided in the recitals to this
Agreement.

 

“Revolving
Credit Loan” shall have the meaning provided in Section 2.1(c).

 

“Revolving
Credit Maturity Date” shall mean the date that is five years after the Credit
Agreement Closing Date, or, if such date is not a Business Day, the next
preceding Business Day.

 

“Revolving
Letter of Credit” shall have the meaning provided in Section 3.1(a).

 

“Revolving
Letter of Credit Commitment” shall mean $325,000,000, as the same may be
reduced from time to time pursuant to Section 4.2.

 

“Revolving
Letter of Credit Exposure” shall mean, with respect to any Lender, at any
time, the sum of (a) the amount of any Unpaid Drawings in respect of which
such Lender has made (or is required to have made) Revolving Credit Loans
pursuant to Section 3.4(a) at such time and (b) such Lender’s
Revolving Credit Commitment Percentage of the Revolving

 

43

 

Letters of
Credit Outstanding at such time (excluding the portion thereof consisting of
Unpaid Drawings in respect of which the Lenders have made (or are required to
have made) Revolving Credit Loans pursuant to Section 3.4(a)).

 

“Revolving
Letter of Credit Fee” shall have the meaning provided in Section 4.1(c).

 

“Revolving
Letter of Credit Participant” shall have the meaning provided in Section 3.3(a).

 

“Revolving
Letter of Credit Participation” shall have the meaning provided in Section 3.3(a).

 

“Revolving
Letters of Credit Outstanding” shall mean, at any time, the sum of, without
duplication, (a) the aggregate Stated Amount of all outstanding Revolving
Letters of Credit and (b) the aggregate amount of all Unpaid Drawings in
respect of all Revolving Letters of Credit.

 

“ROFR”
shall mean the purchase of an additional 13.2% undivided ownership interest in
the South Texas Project pursuant to the Amended and Restated South Texas
Project Participation Agreement, dated as of November 17, 1997, among City
of San Antonio, Central Power and Light Company, Houston Lighting &
Power Company and City of Austin.

 

“Sale
Leaseback” shall mean any transaction or series of related transactions
pursuant to which the Borrower or any of the Restricted Subsidiaries (a) sells,
transfers or otherwise disposes of any property, real or personal, whether now
owned or hereafter acquired, and (b) as part of such transaction,
thereafter rents or leases such property or other property that it intends to
use for substantially the same purpose or purposes as the property being sold,
transferred or disposed of.

 

“S&P”
shall mean Standard & Poor’s Ratings Services or any successor by
merger or consolidation to its business.

 

“Scheduled
Asset Event” shall mean any Asset Sale Prepayment Event, Permitted Sale
Leaseback or Recovery Prepayment Event with respect to a Scheduled Asset (a) that
occurs within 15 months after the Credit Agreement Closing Date or (b) for
which a binding commitment to sell, transfer, lease or otherwise dispose a
Scheduled Asset is entered into within 15 months after the Credit Agreement
Closing Date, provided that the sale, transfer, lease or other disposition
thereunder is completed within 27 months after the Credit Agreement Closing
Date.

 

“Scheduled
Assets” shall mean the assets and properties of the Borrower and its
Subsidiaries listed on Schedule 1.1(c).

 

“SEC”
shall mean the Securities and Exchange Commission or any successor thereto.

 

44

 

“Second
Lien” shall mean a Lien that is subordinated to the Liens securing the
Obligations; provided that the holder of such Lien agrees to be bound by the
Collateral Trust Agreement with respect thereto.

 

“Section 11.1
Financials” shall mean the financial statements delivered, or required to
be delivered, pursuant to Section 11.1(a) or (b) together with
the accompanying officer’s certificate delivered, or required to be delivered,
pursuant to Section 11.1(e).

 

“Secured
Parties” shall have the meaning assigned to such term in the Collateral
Trust Agreement.

 

“Security
Agreement” shall mean the Security Agreement, entered into by the Borrower,
the other grantors party thereto and the Collateral Trustee for the benefit of
the Secured Parties, substantially in the form of Exhibit E-1, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and of the other Credit Documents.

 

“Security
Documents” shall mean, collectively, the Guarantee, the Security Agreement,
the Pledge Agreement, the Deeds of Trust, the Collateral Trust Agreement and
each other security agreement or other instrument or document executed and
delivered pursuant to Section 11.11, 11.12 or 11.15 or pursuant to any of
the Security Documents to secure any of the Obligations.

 

“Senior
Unsecured Note Indenture” shall mean the Indenture, dated as of December 14,
2004, among the Borrower, Texas Genco Financing Corp., the guarantors party thereto
and Wells Fargo Bank, National Association, as trustee, pursuant to which the
Senior Unsecured Notes are issued, as the same may be amended, supplemented or
otherwise modified from time to time to the extent permitted by Section 12.7(c).

 

“Senior
Unsecured Note Maturity Date” shall mean December 15, 2014.

 

“Senior
Unsecured Notes” shall have the meaning provided in the recitals to this
Agreement.

 

“Series”
shall have the meaning provided in Section 2.14(a).

 

“Sold
Entity or Business” shall have the meaning provided in the definition of
the term “Consolidated EBITDA”.

 

“Solvent”
shall mean, with respect to any Person, at any date, that (a) the sum of
such Person’s debt (including contingent liabilities) does not exceed the
present fair saleable value of such Person’s present assets, (b) such
Person’s capital is not unreasonably small in relation to its business as
contemplated on such date, (c) such Person has not incurred and does not
intend to incur, or believe that it will incur, debts including current
obligations beyond its ability to pay such debts as they become due (whether at
maturity or otherwise), and (d) such Person is “solvent” within the
meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. 
For purposes of this definition, the amount of any contingent liability
at any time shall be computed as the amount that, in light of all of the

 

45

 

facts and circumstances existing at such
time, represents the amount that can reasonably be expected to become an actual
or matured liability (irrespective of whether such contingent liabilities meet
the criteria for accrual under Statement of Financial Accounting Standard No. 5).

 

“South
Texas Project” shall mean the South Texas Electric Generating Station,
located in Matagorda County, Texas, consisting of two nuclear powered baseload
generating units.  After giving effect to
the Subsequent Transaction and the ROFR, the Borrower will, indirectly, own a 44%
undivided ownership interest in the South Texas Project or, if the Subsequent
Transaction closes, but the ROFR does not, the Borrower will, indirectly, own a
30.7% undivided ownership interest in the South Texas Project.  For the avoidance of doubt, whenever this
Agreement or any other Credit Document refers to an agreement, condition,
representation, warranty or covenant of the Borrower or any of its Subsidiaries
in respect of the South Texas Project, such agreement, condition,
representation, warranty or covenant shall apply only to the Borrower’s
indirect undivided ownership interest in the South Texas Project and shall not
include the ownership interest held by any other participant in the South Texas
Project.

 

“Special
Commodity Hedging Agreement” shall mean any Commodity Hedging Agreement
that (a) is an Eligible Commodity Hedging Agreement and (b) is
approved by the Special Letter of Credit Issuer, such approval not to be
unreasonably withheld or delayed.

 

“Special
Letter of Credit” shall have the meaning provided in Section 3.1(c).

 

“Special
Letter of Credit Commitment” shall mean, (a) with respect to each
Lender that is a Lender on the date hereof, the amount set forth opposite such
Lender’s name on Schedule 1.1(b) as such Lender’s “Special Letter of
Credit Commitment” and (b) in the case of any Lender that becomes a Lender
after the date hereof, the amount specified as such Lender’s “Special Letter of
Credit Commitment” in the Assignment and Acceptance pursuant to which such
Lender assumed a portion of the Total Special Letter of Credit Commitment, in
each case as the same may be changed from time to time pursuant to terms
hereof.  The aggregate amount of the
Special Letter of Credit Commitments as of the date hereof is $344,352,000.

 

“Special
Letter of Credit Commitment Percentage” shall mean at any time, for each
Lender, the percentage obtained by dividing (a) such Lender’s Special
Letter of Credit Commitment by (b) the aggregate amount of the Special
Letter of Credit Commitments, provided that at any time when the Total Special
Letter of Credit Commitment shall have been terminated pursuant to Section 13,
each Lender’s Special Letter of Credit Commitment Percentage shall be its
Special Letter of Credit Commitment Percentage as in effect immediately prior
to such termination.

 

“Special
Letter of Credit Draw Conditions” shall mean, with respect to any Special
Letter of Credit:

 

(a)                                  to
the extent agreed between the applicable Special LOC Counterparty and the
Letter of Credit Issuer, such Special LOC Counterparty may only draw upon such
Special Letter of Credit in an amount up to the Stated Amount thereof by
delivering a draw certificate to the Letter of Credit Issuer, certifying (i) in
the case of the GS Commodity Hedging Agreement, that an event of default has
occurred thereunder and the

 

46

 

amount being drawn is equal to
or less than the amount then due to the GS Counterparty, or (ii) in the
case of any other Special Commodity Hedging Agreement, to such customary draw
conditions as are mutually agreed upon among the Letter of Credit Issuer, the
Borrower and such Special LOC Counterparty; and

 

(b)                                 (i) in
the case of the GS Commodity Hedging Agreement, the GS Counterparty’s right to
draw on such Special Letter of Credit will expire if the GS Counterparty has
not terminated all transactions under the GS Commodity Hedging Agreement on or
prior to the date which is 10 Business Days after the filing of a bankruptcy
petition by or against the Borrower or the applicable Restricted Subsidiary,
unless the GS Counterparty reasonably determines that it would be prevented by
Applicable Law or court order from exercising its right to terminate within
such 10 Business Day period, or (ii) in the case of any other Special Commodity
Hedging Agreement, the applicable Special LOC Counterparty’s right to draw on
such Special Letter of Credit will expire on, or be conditioned upon, terms
substantially similar, but mutually agreed, to those described in clause (b)(i) above,
within a mutually agreed reasonable period of time following the filing of a
bankruptcy petition by or against the Borrower or the applicable Restricted
Subsidiary.

 

“Special
Letter of Credit Exposure” shall mean, with respect to any Lender, at any
time, the sum of (a) the amount of any Unpaid Drawings in respect of which
such Lender has made (or is required to have made) payments to the Letter of
Credit Issuer pursuant to Section 3.4(d) at such time and (b) such
Lender’s Special Letter of Credit Commitment Percentage of the Special Letters
of Credit Outstanding at such time (excluding the portion thereof consisting of
Unpaid Drawings in respect of which the Lenders have made (or are required to
have made) payments to the Letter of Credit Issuer pursuant to Section 3.4(d)).

 

“Special
Letter of Credit Facility” shall have the meaning provided in the recitals
to this Agreement.

 

“Special
Letter of Credit Fees” shall have the meaning provided in Section 4.1(e).

 

“Special
Letter of Credit Issuer” shall mean Deutsche Bank AG New York Branch, any
of its Affiliates or any successor pursuant to Section 3.6.

 

“Special
Letter of Credit Maturity Date” shall mean the date that is five years
after the Credit Agreement Closing Date (or any longer period approved in
writing by the Special Letter of Credit Issuer and each Special Letter of
Credit Participant), or, if such date is not a Business Day, the next preceding
Business Day.

 

“Special
Letter of Credit Participant” shall have the meaning provided in Section 3.3(c).

 

“Special Letter
of Credit Participation” shall have the meaning provided in Section 3.3(c).

 

47

 

“Special
Letters of Credit Outstanding” shall mean, at any time, the sum of, without
duplication, (a) the aggregate Stated Amount of all outstanding Special
Letters of Credit and (b) the aggregate amount of all Unpaid Drawings in
respect of all Special Letters of Credit.

 

“Special
LOC Counterparty” shall mean, with respect to any Special Letter of Credit,
the beneficiary under such Special Letter of Credit.

 

“Specified
Obligations” shall mean Obligations consisting of (a) the principal of
and interest on Loans and (b) reimbursement obligations in respect of
Letters of Credit.

 

“Specified
Subsidiary” shall mean, at any date of determination, (a) any Material
Subsidiary or (b) any Unrestricted Subsidiary (i) whose total assets
at the last day of the Test Period ending on the last day of the most recent
fiscal period for which Section 11.1 Financials have been delivered were
equal to or greater than 15% of the consolidated total assets of the Borrower
and its Subsidiaries at such date or (ii) whose gross revenues for such
Test Period were equal to or greater than 15% of the consolidated gross
revenues of the Borrower and its Subsidiaries for such period, in each case
determined in accordance with GAAP.

 

“Sponsors”
shall mean, collectively, Blackstone Capital Partners, Hellmann &
Friedman LLC, Kohlberg Kravis Roberts & Co. L.P. and Texas Pacific
Group and/or their respective Affiliates.

 

“Stated
Amount” of any Letter of Credit shall mean the maximum amount from time to
time available to be drawn thereunder, determined without regard to whether any
conditions to drawing could then be met.

 

“Status”
shall mean, as to the Borrower as of any date, the existence of Level I
Status or Level II Status, as the case may be, on such date.  Changes in Status resulting from changes in
the Term Loan Repayment Amount shall become effective as of the first Business
Day following the date on which the applicable payment of Initial Term Loans or
Delayed Draw Term Loans is made.

 

“Statutory
Reserve Rate” shall mean for any day as applied to any Eurodollar Loan, a
fraction (expressed as a decimal), the numerator of which is the number one and
the denominator of which is the number one minus the aggregate of the maximum
reserve percentages that are in effect on that day (including any marginal,
special, emergency or supplemental reserves), expressed as a decimal, as
prescribed by the Board and to which the Administrative Agent is subject, for
Eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board).  Such
reserve percentages shall include those imposed pursuant to such
Regulation D.  Eurodollar Loans
shall be deemed to constitute Eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation. 
The Statutory Reserve Rate shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.

 

“Subsequent
Transaction Closing Date” shall mean the date of the Borrowing of Delayed
Draw Term Loans hereunder to fund the Subsequent Transaction.

 

48

 

“Subsequent
Transaction” shall have the meaning provided in the recitals to this
Agreement.

 

“Subsidiary”
of any Person shall mean and include (a) any corporation more than 50% of
whose stock of any class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time owned by such Person directly or indirectly through
Subsidiaries and (b) any partnership, association, joint venture or other
entity in which such Person directly or indirectly through Subsidiaries has
more than a 50% equity interest at the time. 
Unless otherwise expressly provided, all references herein to a “Subsidiary”
shall mean a Subsidiary of the Borrower.

 

“Swingline
Commitment” shall mean $50,000,000.

 

“Swingline
Lender” shall mean GSCP in its capacity as lender of Swingline Loans
hereunder.

 

“Swingline
Loan” shall have the meaning provided in Section 2.1(e)(i).

 

“Swingline
Maturity Date” shall mean, with respect to any Swingline Loan, the date
that is five Business Days prior to the Revolving Credit Maturity Date.

 

“Syndication
Agent” shall mean Morgan Stanley Senior Funding Inc., together with its
affiliates, as the syndication agent for the Lenders under this Agreement and
the other Credit Documents.

 

“Synthetic
Lease” shall mean, with respect to any Person, (a) a so-called
synthetic, off-balance sheet or tax retention lease or (b) an agreement
for the use or possession of any property (whether real, personal or mixed)
creating obligations which do not appear on the balance sheet of such Person,
but upon the bankruptcy or insolvency of such Person and which obligations
would be characterized as Indebtedness of such Person (without regard to
accounting treatment).

 

“Synthetic
Lease Obligations” shall mean, as applied to any Person, all obligations
under Synthetic Leases of such Person or any of its Subsidiaries.

 

“Tax Amount”
shall mean, with respect to an Estimation Period or a taxable year, as the case
may be, an amount equal to the product of (a) the United States Federal
taxable income (determined by including all separately stated items of income
and deduction) of the Borrower for such Estimation Period or a taxable year, as
the case may be, reduced (but not below zero) by (to the extent not previously
taken into account) any United States Federal taxable loss (determined by
including all separately stated items of income and deduction) of the Borrower
for any prior period, multiplied by (b) 45%.

 

“Tax
Amounts CPA” shall mean a nationally recognized certified public accounting
firm reasonably acceptable to the Administrative Agent.

 

49

 

“Tax
Distributions” shall mean distributions made pursuant to Section 12.6(f).

 

“Term Loan”
shall mean an Initial Term Loan, a Delayed Draw Term Loan or a New Term Loan,
as applicable.

 

“Term Loan
Repayment Amount” shall mean the aggregate principal amount of Initial Term
Loans and Delayed Draw Term Loans actually repaid or prepaid since the Credit
Agreement Closing Date pursuant to Section 2.5(b), 2.5(c), 5.1, 5.2(a)(i) (other
than with respect to a Debt Incurrence Prepayment Event), 5.2(a)(ii) or
5.2(a)(iii).

 

“Test
Period” shall mean, for any determination under this Agreement, the four
consecutive fiscal quarters of the Borrower then last ended.

 

“Total Base
Letter of Credit Commitment” shall mean the sum of the Base Letter of
Credit Commitments of all the Lenders.

 

“Total
Commitment” shall mean the sum of the Total Initial Term Loan Commitment,
the Total Delayed Draw Term Loan Commitment, the Total Revolving Credit
Commitment, the Total Base Letter of Credit Commitment and the Total Special
Letter of Credit Commitment.

 

“Total
Credit Exposure” shall mean, at any date, the sum of the Total Commitment
at such date and the outstanding principal amount of all Term Loans at such
date.

 

“Total
Delayed Draw Term Loan Commitment” shall mean the sum of the Delayed Draw
Term Loan Commitments of all the Lenders.

 

“Total
Initial Term Loan Commitment” shall mean the sum of the Initial Term Loan Commitments
of all the Lenders.

 

“Total New
Term Loan Commitment” shall mean the sum of the New Term Loan Commitments
of all the New Term Lenders.

 

“Total
Revolving Credit Commitment” shall mean the sum of the Revolving Credit
Commitments of all the Lenders.

 

“Total
Special Letter of Credit Commitment” shall mean the sum of the Special
Letter of Credit Commitments of all the Lenders.

 

“Transaction
Agreement” shall mean the Transaction Agreement, dated as of July 21,
2004, among CenterPoint, Utility Holding, LLC, NN Houston Sub, Genco Holdings,
the Borrower and HPC Merger Sub,
as amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof.

 

“Transaction
Expenses” shall mean any fees or expenses incurred or paid by the Borrower
or any of its Subsidiaries in connection with the Acquisition Transactions,
this Agreement and the other Credit Documents, the Notes Offering and the
transactions contemplated hereby and thereby.

 

50

 

“Transferee”
shall have the meaning provided in Section 15.6(e).

 

“True-up
Amount” shall mean, in respect of a particular taxable year, an amount
determined by the Tax Amounts CPA equal to the difference between (a) the
aggregate Permitted Quarterly Tax Distributions actually distributed in respect
of such taxable year, without taking into account any adjustment to such
Permitted Quarterly Tax Distributions made with respect to any other taxable
year (including any adjustment to take into account a True-up Amount for the
immediately preceding taxable year) and (b) the Tax Amount in respect of
such taxable year as determined by reference to the Borrower’s IRS Form 1065
filed for such year; provided, however, that if there is an audit or other
adjustment with respect to a return filed by the Borrower (including a filing
of an amended return), upon a final determination or resolution of such audit
or other adjustment, the Tax Amounts CPA shall redetermine the True-up Amount
for the relevant taxable year.  The amount
equal to the excess, if any, of the amount described in clause (a) above
over the amount described in clause (b) above shall be referred to as
the “True-up Amount due to the Borrower” and the excess, if any, of the amount
described in clause (b) over the amount described in clause (a) shall
be referred to as the “True-up Amount due to the members.”

 

“True-up
Determination Date” shall mean the date on which the Tax Amounts CPA
delivers a statement to the Administrative Agent indicating the True-up Amount;
provided, however, that the True-up Determination Date shall not be later than
30 days after the occurrence of an event requiring the determination of the
True-up Amount (including, the filing of the Federal and state tax returns or
the final determination or resolution of an audit or other adjustment, as the
case may be).

 

“Type”
shall mean (a) as to any Term Loan, its nature as an ABR Loan or a
Eurodollar Term Loan, and (b) as to any Revolving Credit Loan, its nature
as an ABR Loan or a Eurodollar Revolving Credit Loan.

 

“Unfunded
Current Liability” of any Plan shall mean the amount, if any, by which the
present value of the accrued benefits under the Plan as of the close of its
most recent plan year, determined in accordance with Statement of Financial Accounting
Standards No. 87 as in effect on the date hereof, based upon the actuarial
assumptions that would be used by the Plan’s actuary in a termination of the
Plan, exceeds the fair market value of the assets allocable thereto.

 

“Unpaid
Drawing” shall have the meaning provided in Section 3.4(a).

 

“Unrestricted
Subsidiary” shall mean (a) any Subsidiary of the Borrower (including
any Project Finance Subsidiary) that is formed or acquired after the Credit
Agreement Closing Date and is designated as an Unrestricted Subsidiary by the
Borrower at such time (or promptly thereafter) in a written notice to the
Administrative Agent, (b) any Restricted Subsidiary subsequently
re-designated as an Unrestricted Subsidiary by the Borrower in a written notice
to the Administrative Agent, provided that (x) such designation or
re-designation shall be deemed to be an investment (and thus must be made in
accordance with Section 12.5) on the date of such designation or
re-designation in an Unrestricted Subsidiary in an amount equal to the sum of (i) the
Borrower’s direct or indirect equity ownership percentage of the net worth of
such designated or re-designated Subsidiary immediately prior to such
designation or re-designation 

 

51

 

(such net
worth to be calculated without regard to any guarantee provided by such
designated or re-designated Subsidiary) and (ii) the aggregate principal
amount of any Indebtedness owed by such designated or re-designated Subsidiary
to the Borrower or any other Restricted Subsidiary immediately prior to such designation
or re-designation, all calculated, except as set forth in the parenthetical to
clause (i), on a consolidated basis in accordance with GAAP and (y) no Default
or Event of Default would result from such designation or re-designation, and (c) each
Subsidiary of an Unrestricted Subsidiary; provided, however, that at the time
of any written designation or re-designation by the Borrower to the
Administrative Agent that any Unrestricted Subsidiary shall no longer
constitute an Unrestricted Subsidiary, such Unrestricted Subsidiary shall cease
to be an Unrestricted Subsidiary to the extent no Default or Event of Default
would result from such designation or re-designation.  On or promptly after the date of its
formation, acquisition, designation or re-designation, as applicable, each
Unrestricted Subsidiary (other than an Unrestricted Subsidiary that is a
Foreign Subsidiary) shall have entered into a tax sharing agreement containing
terms that, in the reasonable judgment of the Administrative Agent, provide for
an appropriate allocation of tax liabilities and benefits.

 

“Voting
Stock” shall mean, with respect to any Person, shares of such Person’s
Capital Stock having the right to vote for the election of directors of such
Person under ordinary circumstances.

 

(b)                                 The words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section references are to Sections of this Agreement unless otherwise
specified.  The words “include,” “includes”
and “including” shall be deemed to be followed by the phrase “without
limitation”.

 

(c)                                  Unless otherwise indicated, any
reference to any agreement or instrument will be deemed to include a reference
to that agreement or instrument as assigned, amended, supplemented, amended and
restated, or otherwise modified and in effect from time to time or replaced in
accordance with the terms of this Agreement (if applicable).

 

SECTION 2.   Amount and Terms of Credit Facilities

 

2.1.                              Loans  (a).  (a)  Subject to and upon the terms
and conditions herein set forth, each Lender having an Initial Term Loan
Commitment severally agrees to make a loan or loans (each, an “Initial Term
Loan”) to the Borrower, which Initial Term Loans (i) shall not exceed,
for any such Lender, the Initial Term Loan Commitment of such Lender, (ii) shall
not exceed, in the aggregate, the Total Initial Term Loan Commitment, (iii) shall
be made on the Credit Agreement Closing Date, (iv) shall be funded into
escrow on the Credit Agreement Closing Date in accordance with the Escrow
Agreement, (v) may at the option of the Borrower be incurred and
maintained as, and/or converted into, ABR Loans or Eurodollar Initial Term
Loans, provided that all such Initial Term Loans made by each of the Lenders
pursuant to the same Borrowing shall, unless otherwise specifically provided
herein, consist entirely of Initial Term Loans of the same Type and (vi) may
be repaid or prepaid in accordance with the provisions hereof, but once repaid
or prepaid may not be reborrowed.  The
proceeds of the Initial Term Loans shall be funded into escrow on the Credit
Agreement Closing Date in accordance with the terms of the Escrow Agreement and
held in escrow until the earlier of the Initial Transaction Closing Date and
the

 

52

 

Escrow Return Date. 
If the Initial Transaction Closing Date occurs prior to the Escrow Return
Date, the Administrative Agent shall instruct the Escrow Agent to release such
escrowed proceeds in accordance with the terms of the Escrow Agreement and pay
such proceeds to or as directed by the Borrower in accordance with written
instructions provided by the Borrower to the Administrative Agent.  If the Escrow Return Date occurs prior to the
Initial Transaction Closing Date, the Administrative Agent shall instruct the
Escrow Agent to apply such escrowed proceeds to the payment of Initial Term Loans
in accordance with the terms hereof.  On
the Initial Term Loan Maturity Date, all outstanding Initial Term Loans shall
be repaid in full.

 

(b)                                 Subject to and upon the terms and
conditions herein set forth, each Lender having a Delayed Draw Term Loan Commitment
severally agrees to make a loan or loans (each, a “Delayed Draw Term Loan”)
to the Borrower, which Delayed Draw Term Loans (i) shall not exceed, for
any such Lender, the Delayed Draw Term Loan Commitment of such Lender, (ii) shall
not exceed, in the aggregate, the Total Delayed Draw Term Loan Commitment,
provided that not more than $200,000,000 of Delayed Draw Term Loans may be used
to fund the Call Transaction, (iii) shall be made on the Subsequent
Transaction Closing Date or the Call Transaction Closing Date, as applicable
(but not both), but in any event not after April 30, 2006, (iv) may
at the option of the Borrower be incurred and maintained as, and/or converted
into, ABR Loans or Eurodollar Delayed Draw Term Loans, provided that all such
Delayed Draw Term Loans made by each of the Lenders pursuant to the same
Borrowing shall, unless otherwise specifically provided herein, consist
entirely of Delayed Draw Term Loans of the same Type and (v) may be repaid
or prepaid in accordance with the provisions hereof, but once repaid or prepaid
may not be reborrowed.  On the Delayed
Draw Term Loan Maturity Date, all outstanding Delayed Draw Term Loans shall be
repaid in full.

 

(c)                                  Subject to and upon the terms and
conditions herein set forth, each Lender having a Revolving Credit Commitment
severally agrees to make a loan or loans (each, a “Revolving Credit Loan”)
to the Borrower, which Revolving Credit Loans (i) shall not exceed, for
any such Lender, the Revolving Credit Commitment of such Lender, (ii) shall
not, after giving effect thereto and to the application of the proceeds
thereof, result in such Lender’s Revolving Credit Exposure at such time
exceeding such Lender’s Revolving Credit Commitment at such time, (iii) shall
not, after giving effect thereto and to the application of the proceeds
thereof, at any time result in the aggregate amount of all Lenders’ Revolving
Credit Exposures plus the aggregate principal amount outstanding of all
Swingline Loans at such time exceeding the Total Revolving Credit Commitment
then in effect, (iv) shall be made at any time and from time to time after
the Credit Agreement Closing Date and prior to the Revolving Credit Maturity
Date, (v) may at the option of the Borrower be incurred and maintained as,
and/or converted into, ABR Loans or Eurodollar Revolving Credit Loans, provided
that all Revolving Credit Loans made by each of the Lenders pursuant to the
same Borrowing shall, unless otherwise specifically provided herein, consist
entirely of Revolving Credit Loans of the same Type and (vi) may be repaid
and reborrowed in accordance with the provisions hereof.  On the Revolving Credit Maturity Date, all
outstanding Revolving Credit Loans shall be repaid in full.

 

(d)                                 Each Lender may at its option make
any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of
such Lender to make such Loan, provided that (i) any exercise of such
option shall not affect the obligation of the Borrower, as the case may be, to
repay such Loan and (ii) in exercising such option, such Lender shall use
its reasonable efforts to

 

53

 

minimize
any increased costs to the Borrower resulting therefrom (which obligation of
the Lender shall not require it to take, or refrain from taking, actions that
it determines would result in increased costs for which it will not be
compensated hereunder or that it determines would be otherwise disadvantageous
to it and in the event of such request for costs for which compensation is
provided under this Agreement, the provisions of Section 3.5 shall apply).

 

(e)                                  (i)  Subject to and upon the
terms and conditions herein set forth, the Swingline Lender in its individual
capacity agrees, at any time and from time to time on and after the Credit
Agreement Closing Date and prior to the Swingline Maturity Date, to make a loan
or loans (each, a “Swingline Loan”) to the Borrower, which Swingline
Loans (A) shall be ABR Loans, (B) shall have the benefit of the
provisions of Section 2.1(e)(ii), (C) shall not exceed at any time
outstanding the Swingline Commitment, (D) shall not, after giving effect
thereto and to the application of the proceeds thereof, result at any time in
the aggregate amount of all Lenders’ Revolving Credit Exposures plus the
aggregate principal amount outstanding of all Swingline Loans at such time
exceeding the Total Revolving Credit Commitment then in effect and (E) may
be repaid and reborrowed in accordance with the provisions hereof.  On the Swingline Maturity Date, all
outstanding Swingline Loans shall be repaid in full.  The Swingline Lender shall not make any
Swingline Loan after receiving a written notice from the Borrower or any Lender
stating that a Default or an Event of Default exists and is continuing until
such time as the Swingline Lender shall have received written notice of (x)
rescission of all such notices from the party or parties originally delivering
such notice or (y) the waiver of such Default or Event of Default in accordance
with the provisions of Section 15.1.

 

(ii)                                  On any Business Day, the Swingline
Lender may, in its sole discretion, give notice to the Lenders with Revolving
Credit Commitments that all then-outstanding Swingline Loans shall be funded
with a Borrowing of Revolving Credit Loans, in which case Revolving Credit
Loans constituting ABR Loans (each such Borrowing, a “Mandatory Borrowing”)
shall be made on the immediately succeeding Business Day by all Lenders with
Revolving Credit Commitments pro rata based on each such Lender’s Revolving
Credit Commitment Percentage, and the proceeds thereof shall be applied
directly to the Swingline Lender to repay the Swingline Lender for such
outstanding Swingline Loans.  Each Lender
with a Revolving Credit Commitment hereby irrevocably agrees to make such
Revolving Credit Loans upon one Business Day’s notice pursuant to each
Mandatory Borrowing in the amount and in the manner specified in the preceding
sentence and on the date specified to it in writing by the Swingline Lender
notwithstanding (i) that the amount of the Mandatory Borrowing may not
comply with the minimum amount for each Borrowing specified in Section 2.2,
(ii) whether any conditions specified in Section 7 are then
satisfied, (iii) whether a Default or an Event of Default has occurred and
is continuing, (iv) the date of such Mandatory Borrowing or (v) any
reduction in the Total Commitment after any such Swingline Loans were
made.  In the event that, in the sole
judgment of the Swingline Lender, any Mandatory Borrowing cannot for any reason
be made on the date otherwise required above (including as a result of the
commencement of a proceeding under the Bankruptcy Code in respect of the
Borrower), each Lender with a Revolving Credit Commitment hereby agrees that it
shall forthwith purchase from the Swingline Lender (without recourse or
warranty) such participation of the outstanding Swingline Loans as shall be
necessary to cause each such Lender to share in such Swingline Loans ratably
based upon their respective Revolving Credit Commitment Percentages, provided
that all principal and interest payable on such Swingline Loans shall be for
the account of the Swingline Lender until

 

54

 

the date the respective participation
is purchased and, to the extent attributable to the purchased participation,
shall be payable to the Lender purchasing same from and after such date of
purchase.

 

2.2.                              Minimum
Amount of Each Borrowing; Maximum Number of Borrowings.  The aggregate principal amount of each
Borrowing of Term Loans or Revolving Credit Loans shall be in a multiple of
$1,000,000 and Swingline Loans shall be in a multiple of $100,000 and, in each
case, shall not be less than the Minimum Borrowing Amount with respect thereto
(except that Mandatory Borrowings shall be made in the amounts required by Section 2.1(e)).  More than one Borrowing may be incurred on
any date, provided that at no time shall there be outstanding more than 20
Borrowings of Eurodollar Loans under this Agreement.

 

2.3.                              Notice
of Borrowing.  (a)  The
Borrower shall give the Administrative Agent at the Administrative Agent’s
Office (i) prior to 12:00 Noon (New York time) at least three Business
Days’ prior written notice (or telephonic notice promptly confirmed in writing)
of each Borrowing of Term Loans if all or any of such Term Loans are to be
initially Eurodollar Loans, and (ii) prior written notice (or telephonic
notice promptly confirmed in writing) prior to 10:00 a.m. (New York time)
on the date of each Borrowing of Term Loans if all such Term Loans are to be ABR
Loans.  Such notice (together with each
notice of a Borrowing of Revolving Credit Loans pursuant to Section 2.3(b) and
each notice of a Borrowing of Swingline Loans pursuant to Section 2.3(d),
a “Notice of Borrowing”) shall be irrevocable and shall specify (i) the
aggregate principal amount of the Term Loans to be made, (ii) the date of
the Borrowing (which shall be, in the case of Initial Term Loans, the Credit
Agreement Closing Date and, in the case of Delayed Draw Term Loans, the
Subsequent Transaction Closing Date or the Call Transaction Closing Date, as
applicable, and, in the case of each Series of New Term Loans, the
Increased Amount Date in respect of such Series) and (iii) whether the
Term Loans shall consist of ABR Loans and/or Eurodollar Term Loans and, if the
Term Loans are to include Eurodollar Term Loans, the Interest Period to be
initially applicable thereto.  The
Administrative Agent shall promptly give each Lender written notice (or
telephonic notice promptly confirmed in writing) of each proposed Borrowing of
Term Loans, of such Lender’s proportionate share thereof and of the other
matters covered by the related Notice of Borrowing.

 

(b)                                 Whenever the Borrower desires to
incur Revolving Credit Loans hereunder (other than Mandatory Borrowings or
borrowings to repay Unpaid Drawings under Revolving Letters of Credit), it
shall give the Administrative Agent at the Administrative Agent’s Office, (i) prior
to 12:00 Noon (New York Time) at least three Business Days’ prior written
notice (or telephonic notice promptly confirmed in writing) of each Borrowing
of Eurodollar Revolving Credit Loans, and (ii) prior to 12:00 Noon (New
York time) at least one Business Day’s prior written notice (or telephonic
notice promptly confirmed in writing) of each Borrowing of Revolving Credit
Loans that are to be ABR Loans.  Each
such Notice of Borrowing, except as otherwise expressly provided in Section 2.10,
shall be irrevocable and shall specify (i) the aggregate principal amount
of the Revolving Credit Loans to be made pursuant to such Borrowing, (ii) the
date of Borrowing (which shall be a Business Day) and (iii) whether the
respective Borrowing shall consist of ABR Loans or Eurodollar Revolving Credit
Loans and, if Eurodollar Revolving Credit Loans, the Interest Period to be
initially applicable thereto.  The
Administrative Agent shall promptly give each Lender written notice (or
telephonic notice promptly confirmed in writing) of each proposed Borrowing of
Revolving Credit Loans, of such

 

55

 

Lender’s
proportionate share thereof and of the other matters covered by the related
Notice of Borrowing.

 

(c)                                  Whenever the Borrower desires to
incur Swingline Loans hereunder, it shall give the Administrative Agent written
notice (or telephonic notice promptly confirmed in writing) of each Borrowing
of Swingline Loans prior to 2:30 p.m. (New York time) on the date of such
Borrowing.  Each such notice shall be
irrevocable and shall specify (i) the aggregate principal amount of the
Swingline Loans to be made pursuant to such Borrowing and (ii) the date of
Borrowing (which shall be a Business Day). 
The Administrative Agent shall promptly give the Swingline Lender
written notice (or telephonic notice promptly confirmed in writing) of each
proposed Borrowing of Swingline Loans and of the other matters covered by the
related Notice of Borrowing.

 

(d)                                 Mandatory Borrowings shall be made
upon the notice specified in Section 2.1(e)(ii),
with the Borrower irrevocably agreeing, by its incurrence of any Swingline
Loan, to the making of Mandatory Borrowings as set forth in such Section.

 

(e)                                  Borrowings of Revolving Credit Loans
to reimburse Unpaid Drawings under Revolving Letters of Credit shall be made
upon the notice specified in Section 3.4(a).

 

(f)                                    Without in any way limiting the
obligation of the Borrower to confirm in writing any notice it may give
hereunder by telephone, the Administrative Agent may act prior to receipt of
written confirmation without liability upon the basis of such telephonic notice
believed by the Administrative Agent in good faith to be from an Authorized
Officer of the Borrower.  In each such
case, the Borrower hereby waives the right to dispute the Administrative Agent’s
record of the terms of any such telephonic notice.

 

2.4.                              Disbursement
of Funds  (a)  No
later than 12:00 Noon (New York time) on the date specified in each Notice of
Borrowing (including Mandatory Borrowings), each Lender will make available its
pro rata portion, if any, of each Borrowing requested to be made on such date
in the manner provided below, provided that all Swingline Loans shall be made
available in the full amount thereof by the Swingline Lender no later than 3:00 p.m.
(New York time) on the date requested.

 

(b)                                 Each Lender shall make available all
amounts it is to fund to the Borrower under any Borrowing in immediately
available funds to the Administrative Agent at the Administrative Agent’s
Office and the Administrative Agent will (except in the case of Mandatory
Borrowings and Borrowings to repay Unpaid Drawings under Revolving Credit
Loans) make available to the Borrower, by depositing to an account designated
by the Borrower to the Administrative Agent in writing, the aggregate of the
amounts so made available in Dollars. 
Unless the Administrative Agent shall have been notified by any Lender
prior to the date of any such Borrowing that such Lender does not intend to
make available to the Administrative Agent its portion of the Borrowing or
Borrowings to be made on such date, the Administrative Agent may assume that
such Lender has made such amount available to the Administrative Agent on such
date of Borrowing, and the Administrative Agent, in reliance upon such
assumption, may (in its sole discretion and without any obligation to do so)
make available to the Borrower, as the case may be, a corresponding
amount.  If such corresponding amount is

 

56

 

not
in fact made available to the Administrative Agent by such Lender and the
Administrative Agent has made available same to the Borrower, the
Administrative Agent shall be entitled to recover such corresponding amount
from such Lender.  If such Lender does
not pay such corresponding amount forthwith upon the Administrative Agent’s
demand therefor, the Administrative Agent shall promptly notify the Borrower
and the Borrower shall immediately pay such corresponding amount to the
Administrative Agent.  The Administrative
Agent shall also be entitled to recover from such Lender or the Borrower, as the
case may be, interest on such corresponding amount in respect of each day from
the date such corresponding amount was made available by the Administrative
Agent to the Borrower, to the date such corresponding amount is recovered by
the Administrative Agent, at a rate per annum equal to (i) if paid by such
Lender, the Federal Funds Effective Rate or (ii) if paid by the Borrower,
the then-applicable rate of interest or fees, calculated in accordance with Section 2.8,
for the respective Loans.

 

(c)                                  Nothing in this Section 2.4
shall be deemed to relieve any Lender from its obligation to fulfill its
commitments hereunder or to prejudice any rights that the Borrower may have
against any Lender as a result of any default by such Lender hereunder (it
being understood, however, that no Lender shall be responsible for the failure
of any other Lender to fulfill its commitments hereunder).

 

2.5.                              Repayment
of Loans; Evidence of Debt.    (a)  The Borrower shall repay to
the Administrative Agent, for the benefit of the applicable Lenders, (i) on
the Initial Term Loan Maturity Date, all then outstanding Initial Term Loans, (ii) on
the Delayed Draw Term Loan Maturity Date, all then outstanding Delayed Draw
Term Loans, (iii) on the New Term Loan Maturity Date for New Term Loans of
any Series, any then outstanding New Term Loans of such Series, (iv) on
the Revolving Credit Maturity Date, all then outstanding Revolving Credit Loans
and (v) on the Swingline Maturity Date, all then outstanding Swingline
Loans.

 

(b)                                 The Borrower shall repay to the
Administrative Agent, for the benefit of the Lenders of Initial Term Loans, on
each date set forth below (each, an “Initial Term Loan Repayment Date”),
a principal amount of the Initial Term Loans equal to (x) the principal amount
of Initial Term Loans outstanding immediately after the Borrowing of Initial
Term Loans on the Credit Agreement Closing Date multiplied by (y) the
percentage set forth below opposite such Initial Term Loan Repayment Date
(each, a “Initial Term Loan Repayment Amount”):

 

57

 

	
  Initial Term Loan Repayment Date

  	
   

  	
  Initial Term Loan

  Repayment Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31,
  2005

  	
   

  	
  0.25

  	
  %

  
	
  June 30,
  2005

  	
   

  	
  0.25

  	
  %

  
	
  September 30,
  2005

  	
   

  	
  0.25

  	
  %

  
	
  December 31,
  2005

  	
   

  	
  0.25

  	
  %

  
	
  March 31,
  2006

  	
   

  	
  0.25

  	
  %

  
	
  June 30,
  2006

  	
   

  	
  0.25

  	
  %

  
	
  September 30,
  2006

  	
   

  	
  0.25

  	
  %

  
	
  December 31,
  2006

  	
   

  	
  0.25

  	
  %

  
	
  March 31,
  2007

  	
   

  	
  0.25

  	
  %

  
	
  June 30,
  2007

  	
   

  	
  0.25

  	
  %

  
	
  September 30,
  2007

  	
   

  	
  0.25

  	
  %

  
	
  December 31,
  2007

  	
   

  	
  0.25

  	
  %

  
	
  March 31,
  2008

  	
   

  	
  0.25

  	
  %

  
	
  June 30,
  2008

  	
   

  	
  0.25

  	
  %

  
	
  September 30,
  2008

  	
   

  	
  0.25

  	
  %

  
	
  December 31,
  2008

  	
   

  	
  0.25

  	
  %

  
	
  March 31,
  2009

  	
   

  	
  0.25

  	
  %

  
	
  June 30,
  2009

  	
   

  	
  0.25

  	
  %

  
	
  September 30,
  2009

  	
   

  	
  0.25

  	
  %

  
	
  December 31,
  2009

  	
   

  	
  0.25

  	
  %

  
	
  March 31,
  2010

  	
   

  	
  0.25

  	
  %

  
	
  June 30,
  2010

  	
   

  	
  0.25

  	
  %

  
	
  September 30,
  2010

  	
   

  	
  0.25

  	
  %

  
	
  December 31,
  2010

  	
   

  	
  0.25

  	
  %

  
	
  January 31,
  2011

  	
   

  	
  0.25

  	
  %

  
	
  March 31,
  2011

  	
   

  	
  0.25

  	
  %

  
	
  September 30,
  2011

  	
   

  	
  0.25

  	
  %

  
	
  Initial Term
  Loan Maturity Date

  	
   

  	
  93.25

  	
  %.

  

 

(c)                                  The Borrower shall repay to the
Administrative Agent, for the benefit of the Lenders of Delayed Draw Term
Loans, on each date set forth on Schedule 2.5(c) (each, a “Delayed
Draw Repayment Date”), a principal amount of the Delayed Draw Term Loans
equal to (x) the principal amount of Delayed Draw Term Loans outstanding
immediately after the Borrowing of Delayed Draw Term Loans on the Subsequent
Transaction Closing Date or the Call Transaction Closing Date, as applicable,
multiplied by (y) the percentage set forth on Schedule 2.5(c) opposite
such Delayed Draw Repayment Date (each, a “Delayed Draw Repayment Amount”).  Each Delayed Draw Repayment Date and each Delayed
Draw Repayment Amount shall be determined on the Subsequent Transaction Closing
Date or the Call Transaction Closing Date, as applicable, by the Borrower and
the Administrative Agent and set forth on Schedule 2.5(c) in a manner
such that the Delayed Draw Term Loans are repaid in consecutive equal quarterly
installments on the last day of each March, June, September and December in
an aggregate annual amount equal to 1.0% of the principal amount of Delayed
Draw Term Loans borrowed on the Subsequent Transaction Closing Date or the Call
Transaction 

 

58

 

Closing Date, as applicable, with the
remaining principal amount thereof payable on the Delayed Draw Term Loan
Maturity Date.

 

(d)                                 In the event any New Term Loans are
made, such New Term Loans shall be repaid on each Initial Term Loan Repayment
Date occurring on or after the applicable Increased Amount Date in the amounts
set forth in the applicable Joinder Agreement, subject to the requirements set
forth in Section 2.14.

 

(e)                                  Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to the appropriate lending office of such Lender
resulting from each Loan made by such lending office of such Lender from time
to time, including the amounts of principal and interest payable and paid to
such lending office of such Lender from time to time under this Agreement.

 

(f)                                    The Administrative Agent shall
maintain the Register pursuant to Section 15.6(b), and a subaccount for
each Lender, in which Register and subaccounts (taken together) shall be
recorded (i) the amount of each Loan made hereunder, whether such Loan is
an Initial Term Loan, a Delayed Draw Term Loan, a New Term Loan, a Revolving
Credit Loan, a New Revolving Credit Loan or a Swingline Loan, the Type of each
Loan made and the Interest Period applicable thereto, (ii) the amount of
any principal or interest due and payable or to become due and payable from the
Borrower to each Lender or the Swingline Lender hereunder and (iii) the
amount of any sum received by the Administrative Agent from the Borrower and
each Lender’s share thereof.

 

(g)                                 The entries made in the Register and
accounts and subaccounts maintained pursuant to paragraphs (e) and (f) of
this Section 2.5 shall, to the extent permitted by applicable law, be
prima facie evidence of the existence and amounts of the obligations of the
Borrower therein recorded; provided, however, that the failure of any Lender or
the Administrative Agent to maintain such account, such Register or such
subaccount, as applicable, or any error therein, shall not in any manner affect
the obligation of the Borrower to repay (with applicable interest) the Loans
made to the Borrower by such Lender in accordance with the terms of this
Agreement.

 

2.6.                              Conversions
and Continuations.  (a)  The
Borrower shall have the option on any Business Day to convert all or a portion
equal to at least the Minimum Borrowing Amount of the outstanding principal
amount of Initial Term Loans, Delayed Draw Term Loans, New Term Loans or
Revolving Credit Loans of one Type into a Borrowing or Borrowings of another
Type and the Borrower shall have the option on any Business Day to continue the
outstanding principal amount of any Eurodollar Initial Term Loans, Eurodollar
Delayed Draw Term Loans, Eurodollar New Term Loans or Eurodollar Revolving
Credit Loans as Eurodollar Initial Term Loans, Eurodollar Delayed Draw Term
Loans, Eurodollar New Term Loans or Eurodollar Revolving Credit Loans, as the
case may be, for an additional Interest Period, provided that (i) no
partial conversion of Eurodollar Initial Term Loans, Eurodollar Delayed Draw
Term Loans, Eurodollar New Term Loans or Eurodollar Revolving Credit Loans
shall reduce the outstanding principal amount of Eurodollar Initial Term Loans,
Eurodollar Delayed Draw Term Loans, Eurodollar New Term Loans or Eurodollar
Revolving Credit Loans made pursuant to a single Borrowing to less than the
Minimum Borrowing Amount, (ii) ABR Loans may not be converted into
Eurodollar Loans if a Default or an Event of Default is in existence on

 

59

 

the date of the conversion and the Administrative Agent has, or the
Required Lenders in respect of the Credit Facility that is the subject of such
conversion have, determined in its or their sole discretion not to permit such
conversion, (iii) Eurodollar Loans may not be continued as Eurodollar
Loans for an additional Interest Period if a Default or an Event of Default is
in existence on the date of the proposed continuation and the Administrative
Agent has, or the Required Lenders in respect of the Credit Facility that is
the subject of such conversion have, determined in its or their sole discretion
not to permit such continuation and (iv) Borrowings resulting from
conversions pursuant to this Section 2.6 shall be limited in number as
provided in Section 2.2.  Each such
conversion or continuation shall be effected by the Borrower by giving the
Administrative Agent at the applicable Administrative Agent’s Office prior to
12:00 Noon (New York time) at least three Business Days’ (or one Business Day’s
notice in the case of a conversion into ABR Loans) prior written notice (or
telephonic notice promptly confirmed in writing) (each, a “Notice of
Conversion or Continuation”) specifying the Loans to be so converted or
continued, the Type of Loans to be converted or continued into and, if such
Loans are to be converted into or continued as Eurodollar Loans, the Interest
Period to be initially applicable thereto. 
The Administrative Agent shall give each Lender notice as promptly as
practicable of any such proposed conversion or continuation affecting any of
its Loans.

 

(b)                                 If any Default or Event of Default
is in existence at the time of any proposed continuation of any Eurodollar
Loans and the Administrative Agent has or the Required Lenders have determined
in its or their sole discretion not to permit such continuation, Eurodollar
Loans shall be automatically converted on the last day of the current Interest
Period into ABR Loans.  If upon the
expiration of any Interest Period in respect of Eurodollar Loans, the Borrower
has failed to elect a new Interest Period to be applicable thereto as provided
in paragraph (a) above, the Borrower, shall be deemed to have elected
to convert such Borrowing of Eurodollar Loans into a Borrowing of ABR Loans,
effective as of the expiration date of such current Interest Period.

 

2.7.                              Pro
Rata Borrowings.  Each Borrowing of
Initial Term Loans under this Agreement shall be granted by the Lenders pro
rata on the basis of their then-applicable Initial Term Loan Commitments.  Each Borrowing of Delayed Draw Term Loans
under this Agreement shall be granted by the Lenders pro rata on the basis of
their then-applicable Delayed Draw Term Loan Commitments.  Each Borrowing of Revolving Credit Loans
under this Agreement shall be granted by the Lenders pro rata on the basis of
their then-applicable Revolving Credit Commitments.  Each Borrowing of New Term Loans under this
Agreement shall be granted by the Lenders pro rata on the basis of their then
applicable New Term Loan Commitments.  It
is understood that no Lender shall be responsible for any default by any other
Lender in its obligation to make Loans hereunder and that each Lender shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Lender to fulfill its commitments hereunder.

 

2.8.                              Interest.  (a)  The unpaid principal amount of
each ABR Loan shall bear interest from the date of the Borrowing thereof until
maturity (whether by acceleration or otherwise) at a rate per annum that shall
at all times be the Applicable ABR Margin plus the ABR in effect from time to
time.

 

60

 

(b)                                 The unpaid principal amount of each
Eurodollar Loan shall bear interest from the date of the Borrowing thereof
until maturity thereof (whether by acceleration or otherwise) at a rate per
annum that shall at all times be the Applicable Eurodollar Margin in effect
from time to time plus the relevant Eurodollar Rate.

 

(c)                                  If all or a portion of the principal
amount of any Loan or any interest payable thereon or fees or other amounts due
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest (including
post-petition interest in any proceeding under the Bankruptcy Code or other
applicable bankruptcy laws) at a rate per annum that is (i) in the case of
overdue principal, the rate that would otherwise be applicable thereto plus 2%
or (ii) in the case of overdue interest, fees or other amounts due hereunder,
to the extent permitted by Applicable Law, the rate described in Section 2.8(a)
plus 2% from and including the date of such non-payment to but excluding the
date on which such amount is paid in full (after as well as before
judgment).  All such interest shall be
payable on demand.

 

(d)                                 Interest on each Loan shall accrue
from and including the date of any Borrowing to but excluding the date of any
repayment thereof and shall be payable (i) in respect of each ABR Loan,
quarterly in arrears on the last day of each March, June, September and
December, (ii) in respect of each Eurodollar Loan, on the last day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three-month intervals after
the first day of such Interest Period, and (iii) in respect of each Loan
(except, other than in the case of prepayments, any ABR Loan), on any
prepayment (on the amount prepaid), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand.

 

(e)                                  All computations of interest
hereunder shall be made in accordance with Section 5.5.

 

(f)                                    The Administrative Agent, upon
determining the interest rate for any Borrowing of Eurodollar Loans, shall
promptly notify the Borrower and the relevant Lenders thereof.  Each such determination shall, absent clearly
demonstrable error, be final and conclusive and binding on all parties hereto.

 

2.9.                              Interest
Periods.  At the time the Borrower
gives a Notice of Borrowing or Notice of Conversion or Continuation in respect
of the making of, or conversion into or continuation as, a Borrowing of
Eurodollar Loans (in the case of the initial Interest Period applicable
thereto) or prior to 10:00 a.m. (New York time) on the third Business Day prior
to the expiration of an Interest Period applicable to a Borrowing of Eurodollar
Loans, the Borrower shall have the right to elect by giving the Administrative
Agent written notice (or telephonic notice promptly confirmed in writing) the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower, be a one, two, three, six or (if available to all
the Lenders making such Loans as determined by such Lenders in good faith based
on prevailing market conditions) a nine or twelve month period, provided that
the initial Interest Period may be for a period less than one month if agreed
upon by the Borrower and the Agents. 
Notwithstanding anything to the contrary contained above:

 

61

 

(i)                                     the initial Interest Period for any
Borrowing of Eurodollar Loans shall commence on the date of such Borrowing (including
the date of any conversion from a Borrowing of ABR Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall commence on the
day on which the next preceding Interest Period expires;

 

(ii)                                  if any Interest Period relating to a
Borrowing of Eurodollar Loans begins on the last Business Day of a calendar
month or begins on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period, such Interest Period
shall end on the last Business Day of the calendar month at the end of such
Interest Period;

 

(iii)                               if any Interest Period would
otherwise expire on a day that is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day, provided that if any Interest
Period in respect of a Eurodollar Loan would otherwise expire on a day that is
not a Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day; and

 

(iv)                              the Borrower shall not be entitled to
elect any Interest Period in respect of any Eurodollar Loan if such Interest
Period would extend beyond the applicable Maturity Date of such Loan.

 

2.10.                        Increased
Costs, Illegality, etc.  (a)  In the event that (x) in the case of clause
(i) below, the Administrative Agent or (y) in the case of clauses (ii) and
(iii) below, any Lender shall have reasonably determined (which determination
shall, absent clearly demonstrable error, be final and conclusive and binding
upon all parties hereto):

 

(i)                                     on any date for determining the
Eurodollar Rate for any Interest Period that (x) deposits in the principal
amounts of the Loans comprising any Eurodollar Borrowing are not generally
available in the relevant market or (y) by reason of any changes arising on or
after the Credit Agreement Closing Date affecting the interbank Eurodollar
market, adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of Eurodollar Rate;
or

 

(ii)                                  at any time, that such Lender shall
incur increased costs or reductions in the amounts received or receivable
hereunder with respect to any Eurodollar Loans (other than any such increase or
reduction attributable to taxes) because of (x) any change since the date
hereof in any applicable law, governmental rule, regulation, guideline or order
(or in the interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation, guideline or
order), such as, for example, without limitation, a change in official reserve
requirements, and/or (y) other circumstances affecting the interbank Eurodollar
market or the position of such Lender in such market; or

 

(iii)                               at any time, that the making or
continuance of any Eurodollar Loan has become unlawful by compliance by such
Lender in good faith with any law,

 

62

 

governmental rule, regulation, guideline or
order (or would conflict with any such governmental rule, regulation, guideline
or order not having the force of law even though the failure to comply
therewith would not be unlawful), or has become impracticable as a result of a
contingency occurring after the date hereof that materially and adversely
affects the interbank Eurodollar market;

 

then, and in
any such event, such Lender (or the Administrative Agent, in the case of clause
(i) above) shall within a reasonable time thereafter give notice (if by
telephone, confirmed in writing) to the Borrower and the Administrative Agent
of such determination (which notice the Administrative Agent shall promptly
transmit to each of the other Lenders). 
Thereafter (x) in the case of clause (i) above, Eurodollar Loans shall
no longer be available until such time as the Administrative Agent notifies the
Borrower and the Lenders that the circumstances giving rise to such notice by
the Administrative Agent no longer exist (which notice the Administrative Agent
agrees to give at such time when such circumstances no longer exist), and any
Notice of Borrowing or Notice of Conversion given by the Borrower with respect
to Eurodollar Loans that have not yet been incurred shall be deemed rescinded
by the Borrower, (y) in the case of clause (ii) above, the Borrower shall pay
to such Lender, promptly after receipt of written demand therefor such
additional amounts (in the form of an increased rate of, or a different method
of calculating, interest or otherwise as such Lender in its reasonable
discretion shall determine) as shall be required to compensate such Lender for
such increased costs or reductions in amounts receivable hereunder (it being
agreed that a written notice as to the additional amounts owed to such Lender,
showing in reasonable detail the basis for the calculation thereof, submitted
to the Borrower by such Lender shall, absent clearly demonstrable error, be
final and conclusive and binding upon all parties hereto) and (z) in the case
of clause (iii) above, the Borrower shall take one of the actions specified in
Section 2.10(b) as promptly as possible and, in any event, within the time
period required by law.

 

(b)                                 At any time that any Eurodollar Loan
is affected by the circumstances described in Section 2.10(a)(ii) or
(iii), the Borrower may (and in the case of a Eurodollar Loan affected pursuant
to Section 2.10(a)(iii) shall) either (x) if the affected Eurodollar Loan
is then being made pursuant to a Borrowing, cancel said Borrowing by giving the
Administrative Agent telephonic notice (confirmed promptly in writing) thereof
on the same date that the Borrower was notified by a Lender pursuant to
Section 2.10(a)(ii) or (iii) or (y) if the affected Eurodollar Loan is
then outstanding, upon at least three Business Days’ notice to the
Administrative Agent, require the affected Lender to convert each such
Eurodollar Loan into an ABR Loan, if applicable, provided that if more than one
Lender is affected at any time, then all affected Lenders must be treated in
the same manner pursuant to this Section 2.10(b).

 

(c)                                  If, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, the National Association of Insurance
Commissioners, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by a Lender or its
parent with any request or directive made or adopted after the date hereof
regarding capital adequacy (whether or not having the force of law) of any such
authority, association, central bank or comparable agency, has or would have
the effect of reducing the rate of return on such Lender’s or its parent’s
capital or assets as a consequence of such Lender’s commitments or obligations
hereunder to a level below that which

 

63

 

such Lender or its
parent could have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Lender’s or its parent’s policies
with respect to capital adequacy), then from time to time, promptly after
demand by such Lender (with a copy to the Administrative Agent), the Borrower
shall pay to such Lender such additional amount or amounts as will compensate
such Lender or its parent for such reduction, it being understood and agreed,
however, that a Lender shall not be entitled to such compensation as a result
of such Lender’s compliance with, or pursuant to any request or directive to
comply with, any such law, rule or regulation as in effect on the date
hereof.  Each Lender, upon determining in
good faith that any additional amounts will be payable pursuant to this
Section 2.10(d), will give prompt written notice thereof to the Borrower
(on its own behalf) which notice shall set forth in reasonable detail the basis
of the calculation of such additional amounts, although the failure to give any
such notice shall not, subject to Section 2.13, release or diminish any of
the Borrower’s obligations to pay additional amounts pursuant to this
Section 2.10(d) upon receipt of such notice.

 

(d)                                 This Section 2.10 shall not apply to
taxes to the extent duplicative of Section 5.4.

 

2.11.                        Compensation.  If (a) any payment of principal of a
Eurodollar Loan is made by the Borrower to or for the account of a Lender other
than on the last day of the Interest Period for such Eurodollar Loan as a
result of a payment or conversion pursuant to Section 2.5, 2.6, 2.10, 5.1,
5.2 or 15.7, as a result of acceleration of the maturity of the Loans pursuant
to Section 13 or for any other reason, (b) any Borrowing of Eurodollar
Loans is not made as a result of a withdrawn Notice of Borrowing, (c) any ABR
Loan is not converted into a Eurodollar Loan as a result of a withdrawn Notice
of Conversion or Continuation, (d) any Eurodollar Loan is not continued as a
Eurodollar Loan as a result of a withdrawn Notice of Conversion or Continuation
or (e) any prepayment of principal of a Eurodollar Loan is not made as a result
of a withdrawn notice of prepayment pursuant to Section 5.1 or 5.2, the
Borrower shall, after receipt of a written request by such Lender (which
request shall set forth in reasonable detail the basis for requesting such
amount), pay to the Administrative Agent for the account of such Lender any
amounts required to compensate such Lender for any additional losses, costs or
expenses that such Lender may reasonably incur as a result of such payment,
failure to convert, failure to continue, failure to prepay, reduction or
failure to reduce, including any loss, cost or expense (excluding loss of
anticipated profits) actually incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain such Eurodollar Loan.

 

2.12.                        Change
of Lending Office. 
Each Lender agrees that, upon the occurrence of any event giving rise to
the operation of Section 2.10(a)(ii), 2.10(a)(iii), 2.10(b), 3.5 or 5.4
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event, provided
that such designation is made on such terms that such Lender and its lending
office suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of any such
Section.  Nothing in this
Section 2.12 shall affect or postpone any of the obligations of the
Borrower or the right of any Lender provided in Section 2.10, 3.5 or 5.4.

 

64

 

2.13.                        Notice
of Certain Costs.  Notwithstanding
anything in this Agreement to the contrary, to the extent any notice required
by Section 2.10, 2.11, 3.5 or 5.4 is given by any Lender more than 180
days after such Lender has knowledge (or should have had knowledge) of the
occurrence of the event giving rise to the additional cost, reduction in
amounts, loss, tax or other additional amounts described in such Sections, such
Lender shall not be entitled to compensation under Section 2.10, 2.11, 3.5
or 5.4, as the case may be, for any such amounts incurred or accruing prior to
the giving of such notice to the Borrower.

 

2.14.                        Incremental
Facilities.  (a) The Borrower may, by
written notice to the Administrative Agent, elect to request (x) the
establishment of one or more new term loan commitments (the “New Term Loan
Commitments”) and/or (y) prior to the Revolving Credit Maturity Date,
an increase to the existing Revolving Credit Commitments (any such increase,
the “New Revolving Credit Commitments” and, together with the New Term
Loan Commitments, the “New Loan Commitments”), in each case to effect
the incurrence of Indebtedness permitted to be incurred pursuant to Sections
12.1(h)(ii) and 12.1(q) in an amount not in excess of (and not in duplication
of) the amount of Indebtedness permitted to be incurred pursuant to Sections
12.1(h)(ii) and/or 12.1(q), as applicable, in the aggregate and not less than
$50,000,000 individually (or such lesser amount which shall be approved by the
Administrative Agent or such lesser amount that shall constitute the difference
between the amount of Indebtedness permitted to be incurred pursuant to
Sections 12.1(h)(ii) and/or 12.1(q), as applicable, and all such New Loan Commitments
obtained prior to such date), and integral multiples of $5,000,000 in excess of
that amount (it being understood that any Indebtedness incurred pursuant to
this Section 2.14 shall correspondingly reduce the amount of Indebtedness
permitted to be incurred pursuant to such Sections, and vice versa).  Each such notice shall specify the date
(each, an “Increased Amount Date”) on which the Borrower proposes that
the New Loan Commitments shall be effective, which shall be a date not less
than 10 Business Days after the date on which such notice is delivered to the
Administrative Agent; provided that the Borrower shall first offer the Lenders,
on a pro rata basis, the opportunity to provide all of the New Loan Commitments
prior to offering such opportunity to any other Person that is an eligible
assignee pursuant to Section 15.6(b); provided, further, that any Lender
offered or approached to provide all or a portion of the New Loan Commitments
may elect or decline, in its sole discretion, to provide a New Loan Commitment.  Such New Loan Commitments shall become
effective, as of such Increased Amount Date; provided that (i) no Default
or Event of Default shall exist on such Increased Amount Date before or after
giving effect to such New Loan Commitments, as applicable; (ii) both
before and after giving effect to the making of any Series of New Term Loans or
New Revolving Credit Loans, each of the conditions set forth in Section 9 shall
be satisfied; (iii) the Borrower and its Subsidiaries shall be in pro
forma compliance with each of the covenants set forth in Sections 12.9 and
12.10 as of the last day of the most recently ended fiscal quarter after giving
effect to such New Loan Commitments and any investment to be consummated in connection
therewith; (iv) the New Loan Commitments shall be effected pursuant to one
or more Joinder Agreements executed and delivered by the Borrower and the
Administrative Agent, and each of which shall be recorded in the Register and
shall be subject to the requirements set forth in Section 5.4(d); (v) the
Borrower shall make any payments required pursuant to Section 2.11 in connection
with the New Loan Commitments, as applicable; and (vi) the Borrower shall
deliver or cause to be delivered any legal opinions or other documents
reasonably requested by the Administrative Agent in connection with any such
transaction.  Any New Term Loans made on

 

65

 

an Increased Amount Date shall be designated
as a separate series (a “Series”) of New Term Loans for all purposes of
this Agreement and the other Credit Documents.

 

(b)                                 On any Increased Amount Date on
which New Revolving Credit Commitments are effected, subject to the
satisfaction of the foregoing terms and conditions, (i) each of the Lenders
with Revolving Credit Commitments shall assign to each Lender with a New
Revolving Credit Commitment (each, a “New Revolving Credit Lender”) and
each of the New Revolving Credit Lenders shall purchase from each of the
Lenders with Revolving Credit Commitments, at the principal amount thereof
(together with accrued interest), such interests in the Revolving Credit Loans
outstanding on such Increased Amount Date as shall be necessary in order that,
after giving effect to all such assignments and purchases, such Revolving
Credit Loans will be held by existing Lenders with Revolving Credit Loans and
New Revolving Credit Lenders ratably in accordance with their Revolving Credit
Commitments after giving effect to the addition of such New Revolving Credit
Commitments to the Revolving Credit Commitments, (ii) each New Revolving Credit
Commitment shall be deemed for all purposes a Revolving Credit Commitment and
each loan made thereunder (a “New
Revolving Credit Loan”) shall be deemed, for all purposes, a
Revolving Credit Loan and (iii) each New Revolving Credit Lender shall become a
Lender with respect to its New Revolving Credit Commitment and all matters relating
thereto.

 

(c)                                  On any Increased Amount Date on
which any New Term Loan Commitments of any Series are effective, subject to the
satisfaction of the foregoing terms and conditions, (i) each Lender with a New
Term Loan Commitment (each, a “New Term Loan Lender”) of any Series
shall make a loan to the Borrower (a “New Term Loan”) in an amount equal to its New Term Loan
Commitment of such Series, and (ii) each New Term Loan Lender of any Series
shall become a Lender hereunder with respect to its New Term Loan Commitment of
such Series and the New Term Loans of such Series made by such Lender pursuant
thereto.

 

(d)                                 The Administrative Agent shall
notify the Lenders promptly upon receipt of the Borrower’s notice of each
Increased Amount Date and in respect thereof (i) the Series of New Term Loan
Commitments and New Term Loan Lenders of such Series or the New Revolving
Credit Commitments and New Revolving Credit Lenders, as applicable, and (ii) in
the case of each notice to any Lender with Revolving Credit Loans, the
respective interests in such Lender’s Revolving Credit Loans subject to the
assignments contemplated by clause (b) of this Section 2.14.

 

(e)                                  The terms and provisions of the New
Term Loans and New Term Loan Commitments of any Series shall be, except as
otherwise set forth herein or in the Joinder Agreement, identical to the
Initial Term Loans and the Delayed Draw Term Loans; provided, however, that (i)
the New Term Loan Maturity Date for any Series shall be determined by the
Borrower and the applicable New Term Loan Lenders and shall be set forth in the
applicable Joinder Agreement, provided that (x) the weighted average life
to maturity of all New Term Loans of any Series shall be no shorter than the
weighted average life to maturity of the Initial Term Loans, the Delayed Draw
Term Loans and the Revolving Credit Loans and (y) the applicable New Term Loan
Maturity Date of each Series shall be no shorter than the final maturity of the
Initial Term Loans, the Delayed Draw Term Loans and the Revolving Credit Loans
and (ii) the rate of interest applicable to the New Term Loans of each
Series shall be

 

66

 

determined by the Borrower and the applicable
New Term Loan Lenders and shall be set forth in the applicable Joinder
Agreement.  The terms and provisions of
the New Revolving Credit Loans and New Revolving Credit Commitments shall be
identical to the Revolving Credit Loans and the Revolving Credit Commitments.

 

(f)                                    Each Joinder Agreement may, without
the consent of any other Lenders, effect such amendments to this Agreement and
the other Credit Documents as may be necessary or appropriate, in the opinion
of the Administrative Agent, to effect the provisions of this Section 2.14.

 

SECTION 3.                                Letters
of Credit

 

3.1.                              Issuance
of Letters of Credit.  (a)
Subject to and upon the terms and conditions herein set forth, at any time and
from time to time after the Credit Agreement Closing Date and prior to the
Revolving Credit Maturity Date, the Borrower may request that the Letter of
Credit Issuer issue for the account of the Borrower or a Restricted Subsidiary
a standby letter of credit or letters of credit (each, a “Revolving Letter
of Credit”) in such form as may be approved by the Letter of Credit Issuer
in its reasonable discretion, provided
that the Borrower shall be a co-applicant, and be jointly and severally liable,
with respect to each Revolving Letter of Credit issued for the account of a
Restricted Subsidiary.  Notwithstanding
the foregoing, (i) no Revolving Letter of Credit shall be issued the Stated
Amount of which, when added to the Revolving Letters of Credit Outstanding at
such time, would exceed the Revolving Letter of Credit Commitment then in
effect, (ii) no Revolving Letter of Credit shall be issued the Stated Amount of
which, when added to the Revolving Letters of Credit Outstanding and the Revolving
Credit Loans and Swingline Loans outstanding at such time, would exceed the
Total Revolving Credit Commitment then in effect and (iii) each Revolving
Letter of Credit shall have an expiration date occurring no later than the
earlier of (x) one year after the date of issuance thereof, unless otherwise
agreed upon by the Administrative Agent and the Letter of Credit Issuer, and
(y) the Revolving Credit Maturity Date.

 

(b)                                 Subject to and upon the terms and
conditions herein set forth, at any time and from time to time on or after the
Credit Agreement Closing Date and prior to the Base Letter of Credit Maturity
Date, the Borrower may request that the Letter of Credit Issuer issue for the
account of the Borrower or a Restricted Subsidiary a standby letter of credit
or letters of credit (each, a “Base Letter of Credit”) in such form as
may be approved by the Letter of Credit Issuer in its reasonable discretion,
provided that (i) each Base Letter of Credit shall be used by the Borrower
solely to support the obligations of the Borrower and the Restricted
Subsidiaries under Eligible Commodity Hedging Agreements and (ii) the Borrower
shall be a co-applicant, and be jointly and severally liable, with respect to
each Base Letter of Credit issued for the account of a Restricted
Subsidiary.  Notwithstanding the
foregoing, (i) no Base Letter of Credit shall be issued the Stated Amount of
which, when added to the Base Letters of Credit Outstanding at such time, would
exceed the Total Base Letter of Credit Commitment then in effect and (ii) each
Base Letter of Credit shall have an expiration date occurring no later than the
earlier of (x) one year after the date of issuance thereof, unless otherwise
agreed upon by the Administrative Agent and the Letter of Credit Issuer, and
(y) the Base Letter of Credit Maturity Date.

 

67

 

(c)                                  Subject to and upon the terms and
conditions herein set forth, at any time and from time to time on or after the
Credit Agreement Closing Date and prior to the Special Letter of Credit
Maturity Date, the Borrower may request that the Letter of Credit Issuer issue
for the account of the Borrower or a Restricted Subsidiary a standby letter of
credit or letters of credit (each, a “Special Letter of Credit”) in such
form as may be approved by the Letter of Credit Issuer in its reasonable
discretion, provided that (i) each Special Letter of Credit shall be used by
the Borrower solely to support the obligations of the Borrower and the
Restricted Subsidiaries under the GS Commodity Hedging Agreement, the MS
Commodity Hedging Agreement and other Special Commodity Hedging Agreements and
(ii) the Borrower shall be a co-applicant, and be jointly and severally liable,
with respect to each Special Letter of Credit issued for the account of a
Restricted Subsidiary.  Notwithstanding
the foregoing, (i) no Special Letter of Credit shall be issued the Stated
Amount of which, when added to the Special Letters of Credit Outstanding at
such time, would exceed the Total Special Letter of Credit Commitment then in
effect, (ii) each Special Letter of Credit shall have an expiration date
occurring no later than the earlier of (x) one year after the date of issuance
thereof, unless otherwise agreed upon by the Letter of Credit Issuer, and (y)
the Special Letter of Credit Maturity Date, (iii) unless otherwise agreed upon
by the Letter of Credit Issuer and the Borrower, no Special Letter of Credit
shall be issued to support the obligations of the Borrower and the Restricted
Subsidiaries under a Special Commodity Hedging Agreement that expires, pursuant
to its terms, after the Special Letter of Credit Maturity Date unless such
Special Commodity Hedging Agreement provides that any Special Letter of Credit
issued with respect thereto cannot be drawn based on the failure of the
Borrower or the applicable Restricted Subsidiary to provide substitute
collateral at or prior to the expiration of such Special Letter of Credit, (iv)
unless otherwise agreed upon by the Letter of Credit Issuer and the Borrower,
each Special Letter of Credit shall comply with each of the applicable Special
Letter of Credit Draw Conditions (provided that in no event shall the Borrower
be obligated to cause the applicable Special LOC Counterparty to agree to such
draw conditions), (v) each GS Letter of Credit shall provide that, upon
delivery by the GS Counterparty of a reduction notice to the Letter of Credit
Issuer, the Stated Amount thereof will be reduced on each LOC Reduction Date
(as defined in the GS Commodity Hedging Agreement) to an amount equal to the
Maximum Expected Exposure (as defined in the GS Commodity Hedging Agreement)
and (vi) the MS Letter of Credit shall provide that, upon delivery by the MS
Counterparty of a reduction or increase notice to the Letter of Credit Issuer,
the Stated Amount thereof will be reduced or increased, as applicable, on each
LOC Reduction Determination Date (as defined in the MS Commodity Hedging
Agreement) to the amount specified in such reduction or increase notice.

 

(d)                                 (i) Each Letter of Credit shall be
denominated in Dollars, (ii) no Letter of Credit shall be issued if it
would be illegal under any applicable law for the beneficiary of the Letter of
Credit to have a Letter of Credit issued in its favor, and (iii) no Letter
of Credit shall be issued after the Letter of Credit Issuer has received a
written notice from the Borrower or any Lender stating that a Default or an
Event of Default has occurred and is continuing until such time as the Letter
of Credit Issuer shall have received a written notice of (x) rescission of
such notice from the party or parties originally delivering such notice or
(y) the waiver of such Default or Event of Default in accordance with the
provisions of Section 15.1.

 

3.2.                              Letter
of Credit Requests.  (a) 
Whenever the Borrower desires that a Letter of Credit be issued for its
account, it shall give the Administrative Agent and the Letter of

 

68

 

Credit Issuer at least two (or
such lesser number as may be agreed upon by the Administrative Agent and the
Letter of Credit Issuer) Business Days’ written notice thereof; provided that
with respect to any request for a Special Letter of Credit, the Special Letter
of Credit Issuer shall have previously approved the Special Commodity Hedging
Agreement to be covered thereby and the form of such Special Letter of
Credit.  Each notice shall be executed by
the Borrower and shall be in the form of Exhibit F (each, a “Letter of
Credit Request”).  The Administrative
Agent shall promptly transmit copies of each Letter of Credit Request to each
Lender.

 

(b)                                 The making of each Letter of Credit
Request shall be deemed to be a representation and warranty by the Borrower
that the Letter of Credit may be issued in accordance with, and will not
violate the requirements of, Section 3.1.

 

(c)                                  Each Letter of Credit Request for a
Special Letter of Credit (other than the GS Letters of Credit and the MS Letter
of Credit) shall be accompanied by (i) a certificate of an Authorized Officer of
the Borrower certifying that, to the best of such Authorized Officer’s
knowledge as of the date of such certification, the Borrower and the Restricted
Subsidiaries are capable of meeting their obligations under all of their
Commodity Hedging Agreements in place as of the date of the certification
(including the Special Commodity Hedging Agreement to be supported by the
proposed Special Letter of Credit) and (ii) written notification of the
aggregate estimated positive mark-to-market exposure of the proposed Special
LOC Counterparty to the Borrower and the Restricted Subsidiaries calculated as
of the date of such Letter of Credit Request.

 

3.3.                              Letter
of Credit Participations. 
(a) Immediately upon the issuance by the Revolving/Base Letter of Credit
Issuer of any Revolving Letter of Credit, the Revolving/Base Letter of Credit
Issuer shall be deemed to have sold and transferred to each other Lender that
has a Revolving Letter of Credit Commitment (each such other Lender, in its
capacity under this Section 3.3(a), a “Revolving Letter of Credit
Participant”), and each such Revolving Letter of Credit Participant shall
be deemed irrevocably and unconditionally to have purchased and received from
the Revolving/Base Letter of Credit Issuer, without recourse or warranty, an
undivided interest and participation (each, a “Revolving Letter of Credit
Participation”), to the extent of such Revolving Letter of Credit
Participant’s Revolving Credit Commitment Percentage in such Revolving Letter
of Credit, each substitute letter of credit, each drawing made thereunder and
the obligations of the Borrower under this Agreement with respect thereto, and
any security therefor or guaranty pertaining thereto (although Revolving Letter
of Credit Fees will be paid directly to the Administrative Agent for the
ratable account of the Revolving Letter of Credit Participants as provided in
Section 4.1(c) and the Revolving Letter of Credit Participants shall have
no right to receive any portion of any Fronting Fees).

 

(b)                                 Immediately upon the issuance by the
Revolving/Base Letter of Credit Issuer of any Base Letter of Credit, the
Revolving/Base Letter of Credit Issuer shall be deemed to have sold and
transferred to each other Lender that has a Base Letter of Credit Commitment
(each such other Lender, in its capacity under this Section 3.3(b), a “Base
Letter of Credit Participant”), and each such Base Letter of Credit
Participant shall be deemed irrevocably and unconditionally to have purchased
and received from the Revolving/Base Letter of Credit Issuer, without recourse
or warranty, an undivided interest and participation (each, a “Base Letter
of Credit Participation”), to the extent of such Base Letter of Credit
Participant’s Base Letter of

 

69

 

Credit Commitment
Percentage in such Base Letter of Credit, each substitute letter of credit,
each drawing made thereunder and the obligations of the Borrower under this
Agreement with respect thereto, and any security therefor or guaranty
pertaining thereto (although Base Letter of Credit Fees will be paid directly
to the Administrative Agent for the ratable account of the Base Letter of
Credit Participants as provided in Section 4.1(d) and the Base Letter of
Credit Participants shall have no right to receive any portion of any Fronting
Fees).

 

(c)                                  Immediately upon the issuance by the
Special Letter of Credit Issuer of any Special Letter of Credit, the Special
Letter of Credit Issuer shall be deemed to have sold and transferred to each
other Lender that has a Special Letter of Credit Commitment (each such other
Lender, in its capacity under this Section 3.3(c), a “Special Letter of
Credit Participant”), and each such Special Letter of Credit Participant
shall be deemed irrevocably and unconditionally to have purchased and received
from the Special Letter of Credit Issuer, without recourse or warranty, an
undivided interest and participation (each, a “Special Letter of Credit
Participation”), to the extent of such Special Letter of Credit Participant’s
Special Letter of Credit Commitment Percentage in such Special Letter of
Credit, each substitute letter of credit, each drawing made thereunder and the
obligations of the Borrower under this Agreement with respect thereto, and any
security therefor or guaranty pertaining thereto (although Special Letter of
Credit Fees will be paid directly to the Administrative Agent for the ratable
account of the Special Letter of Credit Participants as provided in
Section 4.1(e) and the Special Letter of Credit Participants shall have no
right to receive any portion of any Fronting Fees).

 

(d)                                 In determining whether to pay under
any Letter of Credit, the Letter of Credit Issuer shall have no obligation
relative to the Letter of Credit Participants other than to confirm that any documents
required to be delivered under such Letter of Credit have been delivered and
that they appear to comply on their face with the requirements of such Letter
of Credit.  Any action taken or omitted
to be taken by the Letter of Credit Issuer under or in connection with any
Letter of Credit issued by it, if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for the Letter of Credit
Issuer any resulting liability.

 

(e)                                  Whenever the Letter of Credit Issuer
receives a payment in respect of an unpaid reimbursement obligation as to which
the Administrative Agent has received for the account of the Letter of Credit
Issuer any payments from the Letter of Credit Participants pursuant to Section
3.4(c) or 3.4(d), the Letter of Credit Issuer shall pay to the Administrative
Agent and the Administrative Agent shall promptly pay to each Letter of Credit
Participant that has paid its Letter of Credit Commitment Percentage of such
reimbursement obligation, in Dollars and in immediately available funds, an
amount equal to such Letter of Credit Participant’s share (based upon the
proportionate aggregate amount originally funded or deposited by such Letter of
Credit Participant to the aggregate amount funded or deposited by all Letter of
Credit Participants) of the principal amount of such reimbursement obligation
and interest thereon accruing after the purchase of the respective Letter of
Credit Participations.

 

(f)                                    The obligations of the Letter of
Credit Participants to make payments to the Administrative Agent for the
account of the Letter of Credit Issuer with respect to Letters of Credit shall
be irrevocable and not subject to counterclaim, set-off or other defense or any
other qualification or exception whatsoever and shall be made in accordance
with the terms and

 

70

 

conditions of this Agreement under all
circumstances, including under any of the following circumstances:

 

(i)                                     any lack of validity or enforceability
of this Agreement or any of the other Credit Documents;

 

(ii)                                  the existence of any claim, set-off,
defense or other right that the Borrower may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), the Administrative
Agent, the Letter of Credit Issuer, any Lender or other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any underlying
transaction between the Borrower and the beneficiary named in any such Letter
of Credit);

 

(iii)                               any draft, certificate or any other
document presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;

 

(iv)                              the surrender or impairment of any
security for the performance or observance of any of the terms of any of the
Credit Documents; or

 

(v)                                 the occurrence of any Default or Event
of Default;

 

provided,
however, that no Letter of Credit Participant shall be obligated to pay to the
Administrative Agent for the account of the Letter of Credit Issuer its Letter
of Credit Commitment Percentage of any unreimbursed amount arising from any
wrongful payment made by the Letter of Credit Issuer under a Letter of Credit
as a result of acts or omissions constituting willful misconduct or gross
negligence on the part of the Letter of Credit Issuer.

 

3.4.                              Agreement
to Repay Letter of Credit Drawings.  (a) The Borrower hereby agrees to reimburse
the Letter of Credit Issuer, by making payment to the Administrative Agent in
immediately available funds for any payment or disbursement made by the Letter
of Credit Issuer under any Letter of Credit (each such amount so paid until
reimbursed, an “Unpaid Drawing”) immediately after, and in any event on
the date of, such payment, with interest on the amount so paid or disbursed by
the Letter of Credit Issuer, to the extent not reimbursed prior to 5:00 p.m.
(New York time) on the date of such payment or disbursement, from and including
the date paid or disbursed to but excluding the date the Letter of Credit
Issuer is reimbursed therefor at a rate per annum that shall at all times be
the rate described in Section 2.8(c)(ii); 
provided that, notwithstanding anything contained in this Agreement to
the contrary, with respect to any Revolving Letter of Credit, (i) unless the
Borrower shall have notified the Administrative Agent and the Letter of Credit
Issuer prior to 10:00 a.m. (New York time) on the date of such drawing that the
Borrower intends to reimburse the Letter of Credit Issuer for the amount of
such drawing with funds other than the proceeds of Revolving Credit Loans, the
Borrower shall be deemed to have given a Notice of Borrowing requesting that the Lenders with Revolving Credit Commitments
make Revolving Credit Loans (which shall be ABR Loans) on the date on which
such drawing is honored in an amount equal to the amount of such drawing, and
(ii) the Administrative Agent shall promptly notify each Revolving Letter
of Credit Participant of such

 

71

 

drawing
and the amount of its Revolving Credit Loan to be made in respect thereof, and
each Revolving Letter of Credit Participant shall be irrevocably obligated to
make a Revolving Credit Loan to the Borrower in the manner deemed to have been
requested in the amount of its Revolving Credit Commitment Percentage of the
applicable Unpaid Drawing by 12:00 noon (New York time) on such Business Day by
making the amount of such Revolving Credit Loan available to the Administrative
Agent.  Such Revolving Credit Loans shall
be made without regard to the Minimum Borrowing Amount.  The Administrative Agent shall use the
proceeds of such Revolving Credit Loans solely for purpose of reimbursing the
Letter of Credit Issuer for the related Unpaid Drawing.

 

(b)                                 The obligations of the Borrower
under this Section 3.4 to reimburse the Letter of Credit Issuer with
respect to Unpaid Drawings (including, in each case, interest thereon) shall be
absolute and unconditional under any and all circumstances and irrespective of
any set-off, counterclaim or defense to payment that the Borrower or any other
Person may have or have had against the Letter of Credit Issuer, the
Administrative Agent or any Lender (including in its capacity as a Letter of
Credit Participant), including any defense based upon the failure of any
drawing under a Letter of Credit (each a “Drawing”) to conform to the
terms of the Letter of Credit or any non-application or misapplication by the
beneficiary of the proceeds of such Drawing, provided that the Borrower shall
not be obligated to reimburse the Letter of Credit Issuer for any wrongful
payment made by the Letter of Credit Issuer under the Letter of Credit issued
by it as a result of acts or omissions constituting willful misconduct or gross
negligence on the part of the Letter of Credit Issuer.

 

(c)                                  In the event that the Letter of
Credit Issuer makes any payment under any Base Letter of Credit and the
Borrower shall not have repaid such amount in full to the Letter of Credit
Issuer pursuant to Section 3.4(a), the Letter of Credit Issuer shall
promptly notify the Administrative Agent and each applicable Base Letter of
Credit Participant of such failure, and each such Base Letter of Credit
Participant shall promptly and unconditionally pay to the Administrative Agent,
for the account of the Letter of Credit Issuer, the amount of such Base Letter
of Credit Participant’s applicable Base Letter of Credit Commitment Percentage
of such unreimbursed payment and in immediately available funds; provided,
however, that no Base Letter of Credit Participant shall be obligated to pay to
the Administrative Agent for the account of the Letter of Credit Issuer its
Base Letter of Credit Commitment Percentage of such unreimbursed amount arising
from any wrongful payment made by the Letter of Credit Issuer under a Base
Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of the Letter of Credit Issuer.  If the Letter of Credit Issuer so notifies,
prior to 11:00 a.m. (New York time) on any Business Day, any Base Letter of
Credit Participant required to fund a payment under a Base Letter of Credit,
such Base Letter of Credit Participant shall make available to the
Administrative Agent for the account of the Letter of Credit Issuer such Base
Letter of Credit Participant’s Base Letter of Credit Commitment Percentage of
the amount of such payment on such Business Day in immediately available
funds.  If and to the extent such Base
Letter of Credit Participant shall not have so made its Base Letter of Credit
Commitment Percentage of the amount of such payment available to the Administrative
Agent for the account of the Letter of Credit Issuer, such Base Letter of
Credit Participant agrees to pay to the Administrative Agent for the account of
the Letter of Credit Issuer, forthwith on demand, such amount, together with
interest thereon for each day from such date until the date such amount is paid
to the Administrative Agent for the account of the Letter

 

72

 

of Credit Issuer at the Federal Funds
Effective Rate.  The failure of any Base
Letter of Credit Participant to make available to the Administrative Agent for
the account of the Letter of Credit Issuer its Base Letter of Credit Commitment
Percentage of any payment under any Base Letter of Credit shall not relieve any
other Base Letter of Credit Participant of its obligation hereunder to make
available to the Administrative Agent for the account of the Letter of Credit
Issuer its Base Letter of Credit Commitment Percentage of any payment under
such Base Letter of Credit on the date required, as specified above, but no
Base Letter of Credit Participant shall be responsible for the failure of any
other Base Letter of Credit Participant to make available to the Administrative
Agent such other Base Letter of Credit Participant’s Base Letter of Credit
Commitment Percentage of any such payment.

 

(d)                                 In the event that the Letter of
Credit Issuer makes any payment under any Special Letter of Credit and the
Borrower shall not have repaid such amount in full to the Letter of Credit
Issuer pursuant to Section 3.4(a), the Letter of Credit Issuer shall
promptly notify the Administrative Agent and each applicable Special Letter of
Credit Participant of such failure, and each such Special Letter of Credit
Participant shall promptly and unconditionally pay to the Administrative Agent,
for the account of the Letter of Credit Issuer, the amount of such Special
Letter of Credit Participant’s applicable Special Letter of Credit Commitment
Percentage of such unreimbursed payment and in immediately available funds;
provided, however, that no Special Letter of Credit Participant shall be
obligated to pay to the Administrative Agent for the account of the Letter of
Credit Issuer its Special Letter of Credit Commitment Percentage of such
unreimbursed amount arising from any wrongful payment made by the Letter of
Credit Issuer under a Special Letter of Credit as a result of acts or omissions
constituting willful misconduct or gross negligence on the part of the Letter
of Credit Issuer.  If the Letter of
Credit Issuer so notifies, prior to 11:00 a.m. (New York time) on any Business
Day, any Special Letter of Credit Participant required to fund a payment under
a Special Letter of Credit, such Special Letter of Credit Participant shall
make available to the Administrative Agent for the account of the Letter of
Credit Issuer such Special Letter of Credit Participant’s Special Letter of
Credit Commitment Percentage of the amount of such payment on such Business Day
in immediately available funds.  If and
to the extent such Special Letter of Credit Participant shall not have so made
its Special Letter of Credit Commitment Percentage of the amount of such
payment available to the Administrative Agent for the account of the Letter of
Credit Issuer, such Special Letter of Credit Participant agrees to pay to the
Administrative Agent for the account of the Letter of Credit Issuer, forthwith
on demand, such amount, together with interest thereon for each day from such
date until the date such amount is paid to the Administrative Agent for the
account of the Letter of Credit Issuer at the Federal Funds Effective
Rate.  The failure of any Special Letter
of Credit Participant to make available to the Administrative Agent for the
account of the Letter of Credit Issuer its Special Letter of Credit Commitment
Percentage of any payment under any Special Letter of Credit shall not relieve
any other Special Letter of Credit Participant of its obligation hereunder to
make available to the Administrative Agent for the account of the Letter of Credit
Issuer its Special Letter of Credit Commitment Percentage of any payment under
such Special Letter of Credit on the date required, as specified above, but no
Special Letter of Credit Participant shall be responsible for the failure of
any other Special Letter of Credit Participant to make available to the
Administrative Agent such other Special Letter of Credit Participant’s Special
Letter of Credit Commitment Percentage of any such payment.

 

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3.5.                              Increased
Costs.  If after the date hereof, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or actual compliance by the Letter of Credit Issuer or
any Letter of Credit Participant with any request or directive made or adopted
after the date hereof (whether or not having the force of law), by any such
authority, central bank or comparable agency shall either (a) impose, modify or
make applicable any reserve, deposit, capital adequacy or similar requirement
against letters of credit issued by the Letter of Credit Issuer, or any Letter
of Credit Participant’s Letter of Credit Participation therein, or (b) impose
on the Letter of Credit Issuer or any Letter of Credit Participant any other
conditions affecting its obligations under this Agreement in respect of Letters
of Credit or Letter of Credit Participations therein or any Letter of Credit or
such Letter of Credit Participant’s Letter of Credit Participation therein, and
the result of any of the foregoing is to increase the cost to the Letter of
Credit Issuer or such Letter of Credit Participant of issuing, maintaining or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by the Letter of Credit Issuer or such Letter of Credit
Participant hereunder (other than any such increase or reduction attributable to
taxes) in respect of Letters of Credit or Letter of Credit Participations
therein, then, promptly after receipt of written demand to the Borrower by the
Letter of Credit Issuer or such Letter of Credit Participant, as the case may
be (a copy of which notice shall be sent by the Letter of Credit Issuer or such
Letter of Credit Participant to the Administrative Agent), the Borrower shall
pay to the Letter of Credit Issuer or such Letter of Credit Participant such
additional amount or amounts as will compensate the Letter of Credit Issuer or
such Letter of Credit Participant for such increased cost or reduction, it
being understood and agreed, however, that the Letter of Credit Issuer or a
Letter of Credit Participant shall not be entitled to such compensation as a
result of such Person’s compliance with, or pursuant to any request or
directive to comply with, any such law, rule or regulation as in effect on the
date hereof.  A certificate submitted to
the Borrower by the Letter of Credit Issuer or a Letter of Credit Participant,
as the case may be (a copy of which certificate shall be sent by the Letter of
Credit Issuer or such Letter of Credit Participant to the Administrative Agent)
setting forth in reasonable detail the basis for the determination of such additional
amount or amounts necessary to compensate the Letter of Credit Issuer or such
Letter of Credit Participant as aforesaid shall be conclusive and binding on
the Borrower absent clearly demonstrable error.

 

3.6.                              Successor
Letter of Credit Issuer.  The Letter
of Credit Issuer may resign as Letter of Credit Issuer upon 60 days’ prior
written notice to the Administrative Agent, the Lenders and the Borrower.  If the Letter of Credit Issuer shall resign
as Letter of Credit Issuer under this Agreement, then the Borrower shall
appoint from among the Lenders with Letter of Credit Commitments a successor
issuer of Letters of Credit, whereupon such successor issuer shall succeed to
the rights, powers and duties of the Letter of Credit Issuer, and the term “Letter
of Credit Issuer” shall mean such successor issuer effective upon such
appointment.  At the time such
resignation shall become effective, the Borrower shall
pay to the resigning Letter of Credit Issuer all accrued and unpaid fees
pursuant to Sections 4.1(b) and (f).  The
acceptance of any appointment as the Letter of Credit Issuer hereunder by a
successor Lender shall be evidenced by an agreement entered into by such
successor, in a form satisfactory to the Borrower and the Administrative Agent
and, from and after the effective date of such agreement, such successor Lender
shall have all the rights and obligations of the previous Letter of Credit
Issuer under this Agreement and the other Credit Documents.  After the resignation of the Letter of Credit
Issuer

 

74

 

hereunder,
the resigning Letter of Credit Issuer shall remain a party hereto and shall
continue to have all the rights and obligations of a Letter of Credit Issuer
under this Agreement and the other Credit Documents with respect to Letters of
Credit issued by it prior to such resignation, but shall not be required to
issue additional Letters of Credit. 
After any retiring Letter of Credit Issuer’s resignation as Letter of
Credit Issuer, the provisions of this Agreement relating to the Letter of
Credit Issuer shall inure to its benefit as to any actions taken or omitted to
be taken by it (a) while it was Letter of Credit Issuer under this Agreement or
(b) at any time with respect to Letters of Credit issued by such Letter of
Credit Issuer.

 

SECTION 4.                                Fees;
Commitment Reductions and Terminations

 

4.1.                              Fees.
 (a)  (i)  The
Borrower agrees to pay to the Administrative Agent for the account of:

 

(A)                              each Lender having a Delayed Draw
Term Loan Commitment, a commitment fee which shall accrue from and including
the Credit Agreement Closing Date to but excluding the day on which the Total
Delayed Draw Term Loan Commitment terminates in accordance with Section 4.3(b)
at a rate per annum equal to
(x) from the Credit Agreement Closing Date to but excluding October 29, 2005,
1.25% and (y) thereafter, 1.50%, in each case of the Delayed Draw Term Loan
Commitment of such Lender and which shall be payable quarterly in arrears on
the last day of each March, June, September and December and on the day on
which the Total Delayed Draw Term Loan Commitment terminates in accordance with
Section 4.3(b) (in each case pro rata according to the respective Commitments
of all such Lenders);

 

(B)                                each Lender having a Revolving
Credit Commitment, a commitment fee which shall accrue from and including the
Credit Agreement Closing Date to but excluding the applicable Final Date at a
rate per annum equal to 0.50%
of the daily average unused portion of the Revolving Credit Commitment of such
Lender, and which shall be payable quarterly in arrears on the last day of each
March, June, September and December and on the applicable Final Date;

 

(C)                                each Lender having a Base Letter of
Credit Commitment, a commitment fee which shall accrue from and including the
Credit Agreement Closing Date to but excluding the applicable Final Date at a
rate per annum equal to 0.50%
of the daily average unused portion of the Base Letter of Credit Commitment of
such Lender and which shall be payable quarterly in arrears on the last day of
each March, June, September and December and on the applicable Final Date; and

 

(D)                               each Lender having a Special Letter
of Credit Commitment, a commitment fee which shall accrue from and including
the Credit Agreement Closing Date to but excluding the applicable Final Date at
a rate per annum equal to (x) in the case of any portion of the Special Letter
of Credit Commitment that is unused as of 5:00 p.m. (New York time) on the
Initial Transaction Closing Date, 1.25% or (y) in the case of any portion of
the Special Letter of Credit Commitment that was used as of 5:00 p.m. (New York
time) on the Initial Transaction Closing Date and becomes unused thereafter,
0.50%, in each case of the daily average unused portion of the Special Letter of
Credit

 

75

 

Commitment of such Lender (provided that for
purposes of this clause (D), until the MS Initial LOC Reduction Date, the
Stated Amount of the MS Letter of Credit shall be deemed to be $26,352,000) and
which shall be payable quarterly in arrears on the last day of each March,
June, September and December and on the applicable Final Date.

 

(b)                                 The Borrower agrees to pay to the
Administrative Agent for the account of the Letter of Credit Issuer a fee in
respect of each Letter of Credit issued hereunder (the “Fronting Fee”),
for the period from and including the date of issuance of such Letter of Credit
to but excluding the termination or expiration date of such Letter of Credit,
computed at the rate for each day equal to (i) in the case of each Revolving
Letter of Credit and Base Letter of Credit, 0.125% per annum and (ii) in the
case of each Special Letter of Credit, 0.20% per annum, in each case on the
average daily Stated Amount of such Letter of Credit (provided that for
purposes of this clause (b)(ii), until the MS Initial LOC Reduction Date, the
Stated Amount of the MS Letter of Credit shall be deemed to be
$26,352,000).  The Fronting Fee shall be
due and payable quarterly in arrears on the last day of each March, June,
September and December and on each Final Date.

 

(c)                                  The Borrower agrees to pay to the
Administrative Agent for the account of each Lender having a Revolving Credit
Commitment, pro rata according to the Revolving Letter of Credit Exposure of
such Lender, a fee in respect of each Revolving Letter of Credit (the “Revolving
Letter of Credit Fee”), for the period from and including the date of
issuance of such Revolving Letter of Credit to but excluding the termination or
expiration date of such Revolving Letter of Credit, computed at the per annum
rate for each day equal to (x) the Applicable Eurodollar Margin then in effect
for Revolving Letters of Credit times (y) the average daily Stated Amount of
such Revolving Letter of Credit.  The Revolving
Letter of Credit Fee shall be payable quarterly in arrears on the last day of
each March, June, September and December and on the applicable Final Date.

 

(d)                                 The Borrower agrees to pay to the
Administrative Agent for the account of each Lender having a Base Letter of
Credit Commitment, pro rata according to the Base Letter of Credit Exposure of
such Lender, a fee in respect of each Base Letter of Credit (the “Base
Letter of Credit Fee”), for the period from and including the date of
issuance of such Base Letter of Credit to but excluding the termination or
expiration date of such Base Letter of Credit, computed at the per annum rate
for each day equal to (x) the Applicable Eurodollar Margin then in effect for
Base Letters of Credit times (y) the average daily Stated Amount of such Base
Letter of Credit.  The Base Letter of
Credit Fee shall be payable quarterly in arrears on the last day of each March,
June, September and December and on the applicable Final Date.

 

(e)                                  The Borrower agrees to pay to the
Administrative Agent for the account of each Lender having a Special Letter of
Credit Commitment, pro rata according to the Special Letter of Credit Exposure
of such Lender:

 

(i)                                     a fee in respect of each Special
Letter of Credit (other than the GS Letters of Credit and the MS Letter of
Credit), for the period from and including the date of issuance of such Special
Letter of Credit to but excluding the termination or expiration date of such
Special Letter of Credit, computed at the per annum rate for each day equal

 

76

 

to (x) the Applicable Eurodollar Margin then
in effect for Special Letters of Credit times (y) the average daily Stated
Amount of such Special Letter of Credit;

 

(ii)                                  a fee in respect of each GS Letter
of Credit, for the period from and including the date of issuance of such GS
Letter of Credit to but excluding the termination or expiration date of such GS
Letter of Credit, computed at the rate per annum for each day equal to (x)
1.00% times (y) the average daily Stated Amount of such GS Letter of Credit;

 

(iii)                               a fee in respect of each GS Letter
of Credit, for the period from and including the date of issuance of such GS
Letter of Credit to but excluding the termination or expiration date of such GS
Letter of Credit, computed at a rate per annum for each day equal to (x) 1.00%
times (y) the lesser of (1) the average daily Stated Amount of such GS Letter
of Credit and (2) the average daily Mark-to-Market Exposure of the GS
Counterparty to the Borrower under the GS Commodity Hedging Agreement;

 

(iv)                              a fee in respect of the MS Letter of
Credit, for the period from and including the date of issuance of such MS
Letter of Credit to but excluding the termination or expiration date of such MS
Letter of Credit, computed at the rate per annum for each day equal to (x)
1.00% times (y) the average daily Stated Amount of such MS Letter of Credit
(provided that for purposes of this clause (iv), until the MS Initial LOC
Reduction Date, the Stated Amount of the MS Letter of Credit shall be deemed to
be $26,352,000); and

 

(v)                                 a fee in respect of the MS Letter of
Credit, for the period from and including the date of issuance of such MS
Letter of Credit to but excluding the termination or expiration date of such MS
Letter of Credit, computed at a rate per annum for each day equal to (x) 1.00%
times (y) the lesser of (1) the average daily Stated Amount of such MS Letter
of Credit (provided that for purposes of this clause (v), until the MS Initial
LOC Reduction Date, the Stated Amount of the MS Letter of Credit shall be
deemed to be $26,352,000) and (2) the average daily Mark-to-Market Exposure of
the MS Counterparty to the Borrower under the MS Commodity Hedging Agreement
(the fees described in clauses (i) through (v) of this clause (e), the “Special
Letter of Credit Fees”).

 

The Special Letter of
Credit Fees shall be payable quarterly in arrears on the last day of each
March, June, September and December and on the applicable Final Date.

 

(f)                                    The Borrower agrees to pay directly
to the Letter of Credit Issuer upon each issuance of, drawing under and/or
amendment of a Letter of Credit issued by it such amount as the Letter of
Credit Issuer and the Borrower shall have agreed upon for issuances of,
drawings under or amendments of, letters of credit issued by it.

 

(g)                                 Notwithstanding the foregoing, the
Borrower shall not be obligated to pay any amounts to any Defaulting Lender
pursuant to this Section 4.1 until the event or circumstances giving rise
to such Lender being designated as a Defaulting Lender have been cured.

 

77

 

4.2.                              Voluntary
Reduction of Commitments.  (a) Upon
at least one Business Day’s prior written notice (or telephonic notice promptly
confirmed in writing) to the Administrative Agent at the Administrative Agent’s
Office (which notice the Administrative Agent shall promptly transmit to each
of the Lenders), the Borrower shall have the right, without premium or penalty,
on any day prior to the date on which the Total Delayed Draw Term Loan
Commitment terminates pursuant to Section 4.3(b), permanently to terminate or
reduce the Delayed Draw Term Loan Commitments in whole or in part, provided
that (i) any partial reduction pursuant to this Section 4.2(a) shall
be in the amount of at least $1,000,000 and (ii) after giving effect to such
termination or reduction and to any prepayments of Delayed Draw Term Loans made
on the date thereof in accordance with this Agreement, the aggregate principal
amount of Delayed Draw Term Loans shall not exceed the Total Delayed Draw Term
Loan Commitment.

 

(b)                                 Upon at least one Business Day’s
prior written notice (or telephonic notice promptly confirmed in writing) to
the Administrative Agent at the Administrative Agent’s Office (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), the
Borrower shall have the right, without premium or penalty, on any day,
permanently to terminate or reduce the Revolving Credit Commitments in whole or
in part, provided that (i) any partial reduction pursuant to this
Section 4.2(b) shall be in the amount of at least $1,000,000 and (ii)
after giving effect to such termination or reduction and to any prepayments of
Revolving Credit Loans or cancellation or cash collateralization of Revolving
Letters of Credit made on the date thereof in accordance with this Agreement,
the aggregate amount of the Lenders’ Revolving Credit Exposures shall not
exceed the Total Revolving Credit Commitment.

 

(c)                                  Upon at least one Business Day’s
prior written notice (or telephonic notice promptly confirmed in writing) to
the Administrative Agent at the Administrative Agent’s Office (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), the
Borrower shall have the right, without premium or penalty, on any day,
permanently to terminate or reduce the Base Letter of Credit Commitments in
whole or in part, provided that (i) any partial reduction pursuant to this
Section 4.2(c) shall be in the amount of at least $1,000,000 and (ii)
after giving effect to such termination or reduction and to any cancellation or
cash collateralization of Base Letters of Credit made on the date thereof in
accordance with this Agreement, the aggregate amount of the Lenders’ Base
Letter of Credit Exposures shall not exceed the Total Base Letter of Credit
Commitment.

 

(d)                                 Upon at least one Business Day’s
prior written notice (or telephonic notice promptly confirmed in writing) to
the Administrative Agent at the Administrative Agent’s Office (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), the
Borrower shall have the right, without premium or penalty, on any day,
permanently to terminate or reduce the Special Letter of Credit Commitments in
whole or in part, provided that (i) any partial reduction pursuant to this
Section 4.2(d) shall be in the amount of at least $1,000,000 and (ii)
after giving effect to such termination or reduction and to any cancellation or
cash collateralization of Special Letters of Credit made on the date thereof in
accordance with this Agreement, the aggregate amount of the Lenders’ Special
Letter of Credit Exposures shall not exceed the Total Special Letter of Credit
Commitment.

 

78

 

4.3.                              Mandatory
Termination of Commitments.  (a)  The Total Initial Term Loan Commitment shall
terminate on the earlier of (i) at 5:00 p.m. (New York time) on October 28,
2005 and (ii) 5:00 p.m. (New York time) on the Credit Agreement Closing Date.

 

(b)                                 The Total Delayed Draw Term Loan
Commitment shall terminate on the earliest of (i) at 5:00 p.m. (New York time)
on April 30, 2006, (ii) at 5:00 p.m. (New York time) on the earlier of the
Subsequent Transaction Closing Date or the Call Transaction Closing Date and
(iii) the date on which the Borrower notifies the Administrative Agent in
writing that the Borrower intends to consummate neither the Subsequent
Transaction nor the Call Transaction.

 

(c)                                  The Total Revolving Credit
Commitment shall terminate at 5:00 p.m. (New York time) on the Revolving Credit
Maturity Date.

 

(d)                                 The Total Base Letter of Credit
Commitment shall terminate at 5:00 p.m. (New York time) on the Base
Letter of Credit Maturity Date.

 

(e)                                  The Total Special Letter of Credit
Commitment shall terminate at 5:00 p.m. (New York time) on the
Special Letter of Credit Maturity Date.

 

(f)                                    The Swingline Commitment shall
terminate at 5:00 p.m. (New York time) on the Swingline Maturity Date.

 

(g)                                 The New Term Loan Commitment for any
Series shall terminate at 5:00 p.m. (New York time) on the Increased Amount
Date for such Series.

 

SECTION 5.                                Payments

 

5.1.                              Voluntary
Prepayments.  The
Borrower shall have the right to prepay Term Loans, Revolving Credit Loans and
Swingline Loans, without premium or penalty, in whole or in part from time to
time on the following terms and conditions: 
(a) the Borrower shall give the Administrative Agent at the
Administrative Agent’s Office written notice (or telephonic notice promptly
confirmed in writing) of its intent to make such prepayment, the amount of such
prepayment and in the case of Eurodollar Loans, the specific Borrowing(s)
pursuant to which made, which notice shall be given by the Borrower no later
than (i) in the case of Term Loans or Revolving Credit Loans, 10:00 a.m. (New York
time) one Business Day prior to, or (ii) in the case of Swingline Loans, 10:00
a.m. (New York time) on, the date of such prepayment and shall promptly be
transmitted by the Administrative Agent to each of the Lenders or the Swingline
Lender, as the case may be; (b) each partial prepayment of any Borrowing of
Term Loans or Revolving Credit Loans shall be in a multiple of $100,000 and in
an aggregate principal amount of at least $1,000,000 and each partial
prepayment of Swingline Loans shall be in a multiple of $100,000 and in an
aggregate principal amount of at least $100,000, provided that no partial
prepayment of Eurodollar Loans made pursuant to a single Borrowing shall reduce
the outstanding Eurodollar Loans made pursuant to such Borrowing to an amount
less than the Minimum Borrowing Amount for Eurodollar Loans; (c) any prepayment
of Eurodollar Loans pursuant to this Section 5.1 on any day other than the
last day of an Interest Period applicable thereto shall be subject to
compliance by the Borrower with the applicable provisions of
Section 2.11.  Each prepayment in
respect of any tranche of Term Loans pursuant to this Section 5.1 shall be
(a) applied to Term Loans in such manner as the Borrower may determine

 

79

 

and
(b) applied to reduce Repayment Amounts in such order as the Borrower may
determine.  At the Borrower’s election in
connection with any prepayment pursuant to this Section 5.1, such
prepayment shall not be applied to any Loan of a Defaulting Lender.

 

5.2.                              Mandatory
Prepayments.  (a)  Term Loan Prepayments.  (i)  On
each occasion that a Prepayment Event (other than a Scheduled Asset Event)
occurs, the Borrower shall, within one Business Day after the occurrence of a
Debt Incurrence Prepayment Event and within five Business Days after the
receipt of Net Cash Proceeds in connection with the occurrence of any other
Prepayment Event (other than a Scheduled Asset Event), prepay, in accordance
with paragraphs (c) and (d) below, a principal amount of Term Loans in an
amount equal to 100% of the Net Cash Proceeds from such Prepayment Event.

 

(ii)                                  On each occasion that a Scheduled
Asset Event occurs, the Borrower shall, within five Business Days after the
receipt of Distributable Scheduled Asset Proceeds (other than any Excepted
Distributable Scheduled Asset Proceeds) in connection with the occurrence of
such Scheduled Asset Event, prepay, in accordance with paragraphs (c) and (d)
below, a principal amount of Term Loans in an amount equal to 100% of any Distributable
Scheduled Asset Proceeds (other than any Excepted Distributable Scheduled Asset
Proceeds) from such Scheduled Asset Event.

 

(iii)                               Not later than the date that is
ninety days after the last day of any fiscal year (commencing with the fiscal
year ending December 31, 2005), the Borrower shall prepay, in accordance with
paragraphs (c) and (d) below, a principal of Term Loans in an amount equal to
(x) 75% of Excess Cash Flow for such fiscal year (provided such percentage
shall be reduced to (i) 50% for any period in which the Term Loan Repayment
Amount is at least (x) if the Subsequent Transaction Closing Date has occurred,
$625,000,000 or (y) if the Subsequent Transaction Closing Date has not
occurred, $500,000,000 or (ii) 25% for any period in which the Term Loan
Repayment Amount is at least (x) if the Subsequent Transaction Closing Date has
occurred, $950,000,000 or (y) if the Subsequent Transaction Closing Date has
not occurred, $760,000,000, minus (y) the amount of any such Excess Cash Flow
that the Borrower has, after the end of such fiscal year, and prior to such
date, reinvested in the Business of the Borrower and the Restricted
Subsidiaries (subject to Section 11.14), minus (z) the principal amount of Term
Loans voluntarily prepaid pursuant to Section 5.1 during such fiscal year.

 

(b)                                 Repayment of Revolving Credit Loans. 
If on any date the aggregate amount of the Lenders’ Revolving Credit
Exposures plus the aggregate principal amount of all Swingline Loans exceeds
the Total Revolving Credit Commitment as then in effect, the Borrower shall
forthwith repay on such date the principal amount of Swingline Loans and, after
all Swingline Loans have been paid in full, Revolving Credit Loans in an amount
equal to such excess.  If, after giving
effect to the prepayment of all outstanding Swingline Loans and Revolving
Credit Loans, the aggregate amount of the Lenders’ Revolving Credit Exposures
exceed the Total Revolving Credit Commitment then in effect, the Borrower shall
pay to the Administrative Agent an amount in cash equal to such excess and the
Administrative Agent shall hold such payment for the benefit of the Lenders as
security for the obligations of the Borrower hereunder (including obligations
in respect of Revolving Letter of Credit Outstandings) pursuant to a cash
collateral agreement to be entered into in form and substance satisfactory to
the Administrative Agent (which shall permit certain investments in Permitted
Investments

 

80

 

satisfactory to the Administrative Agent, until
the proceeds are applied to the secured obligations).

 

(c)                                  Application to Repayment Amounts. 
Each prepayment of Term Loans required by Section 5.2(a) shall be
applied to reduce Repayment Amounts, pro rata between Initial Term Loan
Repayment Amounts and Delayed Draw Term Loan Repayment Amounts, if any, (i)
first to the Repayment Amounts due within the 12 month period following the
date on which the applicable Prepayment Event occurred and (ii) second to the
remaining Repayment Amounts on a pro rata basis.  With respect to each such prepayment, (i) the
Borrower will, not later than the date specified in Section 5.2(a) for offering
to make such prepayment, give the Administrative Agent telephonic notice
(promptly confirmed in writing) requesting that the Administrative Agent
provide notice of such prepayment to each Lender of Term Loans, (ii) each
Lender of Term Loans will have the right to refuse any such prepayment by
giving written notice of such refusal to the Borrower within fifteen Business
Days after such Lender’s receipt of notice from the Administrative Agent of
such prepayment (and the Borrower shall not prepay any such Term Loans until
the date that is specified in the immediately following clause), (iii) the
Borrower will make all such prepayments not so refused upon the earlier of (x)
such fifteenth Business Day and (y) such time as the Borrower has received
notice from each Lender that it consents to or refuses such prepayment and (iv)
any prepayment so refused may be retained by the Borrower or, in the case of
the refusal of prepayment by any Lender in respect of Distributable Scheduled
Asset Proceeds, any such prepayment so refused may be distributed by the
Borrower pursuant to Section 12.6(e); provided that any prepayment so refused
that relates to Net Cash Proceeds from a Debt Incurrence Prepayment Event in
respect of the issuance of Permitted Additional Notes shall be allocated to the
then outstanding Term Loans and shall be applied as set forth above in this
paragraph (c).

 

(d)                                 Application to Term Loans. 
With respect to each prepayment of Term Loans required by Section
5.2(a), the Borrower may designate the Types of Loans that are to be prepaid
and the specific Borrowing(s) pursuant to which made, provided that (i) the
Borrower pays any amounts, if any, required to be paid pursuant to Section 2.11
with respect to prepayments of Eurodollar Term Loans made on any date other
than the last day of the applicable Interest Period and (ii) Eurodollar Term
Loans made pursuant to a single Borrowing shall reduce the outstanding Term
Loans made pursuant to such Borrowing to an amount less than the Minimum
Borrowing Amount for Eurodollar Loans such Borrowing shall immediately be
converted into ABR Loans .  In the
absence of a designation by the Borrower as described in the preceding
sentence, the Administrative Agent shall, subject to the above, make such
designation in its reasonable discretion with a view, but no obligation, to
minimize breakage costs owing under Section 2.11.

 

(e)                                  Application to Revolving Credit
Loans.  With respect to each prepayment of Revolving
Credit Loans elected by the Borrower pursuant to Section 5.1 or required by
Section 5.2(b), the Borrower may designate (i) the Types of Loans that are to
be prepaid and the specific Borrowing(s) pursuant to which made and (ii) the
Revolving Credit Loans to be prepaid, provided that (w) Eurodollar Revolving
Credit Loans may be designated for prepayment pursuant to this Section 5.2 only
on the last day of an Interest Period applicable thereto unless all Eurodollar
Loans with Interest Periods ending on such date of required prepayment and all
ABR Loans have been paid in full; (x) if any prepayment by the Borrower of
Eurodollar Revolving

 

81

 

Credit Loans made
pursuant to a single Borrowing shall reduce the outstanding Revolving Credit
Loans made pursuant to such Borrowing to an amount less than the Minimum
Borrowing Amount for Eurodollar Revolving Credit Loans, such Borrowing shall
immediately be converted into ABR Loans; (y) each prepayment of any Loans made
pursuant to a Borrowing shall be applied pro rata among such Loans; and (z)
notwithstanding the provisions of the preceding clause (y), no prepayment made
pursuant to Section 5.1 or Section 5.2(b) of Revolving Credit Loans shall be
applied to the Revolving Credit Loans of any Defaulting Lender.  In the absence of a designation by the
Borrower as described in the preceding sentence, the Administrative Agent
shall, subject to the above, make such designation in its reasonable discretion
with a view, but no obligation, to minimize breakage costs owing under Section
2.11.

 

(f)                                    Eurodollar Interest Periods. 
In lieu of making any payment pursuant to this Section 5.2 in respect of
any Eurodollar Loan other than on the last day of the Interest Period therefor
so long as no Default or Event of Default shall have occurred and be
continuing, the Borrower at its option may deposit with the Administrative
Agent an amount equal to the amount of the Eurodollar Loan to be prepaid and
such Eurodollar Loan shall be repaid on the last day of the Interest Period
therefor in the required amount.  Such
deposit shall be held by the Administrative Agent in a corporate time deposit
account established on terms reasonably satisfactory to the Administrative
Agent, earning interest at the then-customary rate for accounts of such
type.  Such deposit shall constitute cash
collateral for the Specified Obligations, provided that the Borrower may at any
time direct that such deposit be applied to make the applicable payment
required pursuant to this Section 5.2.

 

(g)                                 Minimum Amount. 
No prepayment shall be required pursuant to Section 5.2(a)(i) unless and until the amount at any time of Net Cash
Proceeds from Prepayment Events required to be applied at or prior to such time
pursuant to such Section and not yet applied at or prior to such time to prepay
Term Loans pursuant to such Section exceeds (i) $10,000,000 for any single
Prepayment Event or series of related Prepayment Events and (ii) $25,000,000 in
the aggregate for all such Prepayment Events.

 

(h)                                 Reduction of Base Letter of Credit
Exposures.  If on any date the aggregate amount of the
Lenders’ Base Letter of Credit Exposures exceeds the Total Base Letter of
Credit Commitment as then in effect, the Borrower shall forthwith pay to the
Administrative Agent an amount in cash equal to such excess and the
Administrative Agent shall hold such payment for the benefit of the Lenders as
security for the Base Letters of Credit Outstanding pursuant to a cash
collateral agreement to be entered into in form and substance satisfactory to
the Administrative Agent (which shall permit certain investments in Permitted
Investments satisfactory to the Administrative Agent, until the proceeds are
applied to the secured obligations).

 

(i)                                     Reduction of Special Letter of
Credit Exposures.  If on any date the aggregate amount of the
Lenders’ Special Letter of Credit Exposures exceeds the Total Special Letter of
Credit Commitment as then in effect, the Borrower shall forthwith pay to the
Administrative Agent an amount in cash equal to such excess and the
Administrative Agent shall hold such payment for the benefit of the Lenders as
security for the Special Letters of Credit Outstanding pursuant to a cash
collateral agreement to be entered into in form and substance satisfactory to
the Administrative Agent (which shall permit certain investments in Permitted

 

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Investments
satisfactory to the Administrative Agent, until the proceeds are applied to the
secured obligations).

 

(j)                                     Foreign Asset Sales. 
Notwithstanding any other provisions of this Section 5.2, (i) to the
extent that any of or all the Net Cash Proceeds of any asset sale by a Restricted
Foreign Subsidiary giving rise to an Asset Sale Prepayment Event (a “Foreign
Asset Sale”), the Net Cash Proceeds of any Recovery Event from a Restricted
Foreign Subsidiary (a “Foreign Recovery Event”), or Excess Cash Flow are
prohibited or delayed by applicable local law from being repatriated to the
United States, the portion of such Net Cash Proceeds or Excess Cash Flow so
affected will not be required to be applied to repay Term Loans at the times
provided in this Section 5.2 but may be retained by the applicable Restricted
Foreign Subsidiary so long, but only so long, as the applicable local law will
not permit repatriation to the United States (the Borrower hereby agreeing to
cause the applicable Restricted Foreign Subsidiary to promptly take all actions
required by the applicable local law to permit such repatriation), and once
such repatriation of any of such affected Net Cash Proceeds or Excess Cash Flow
is permitted under the applicable local law, such repatriation will be
immediately effected and such repatriated Net Cash Proceeds or Excess Cash Flow
will be promptly (and in any event not later than two Business Days after such
repatriation) applied (net of additional taxes payable or reserved against as a
result thereof) to the repayment of the Term Loans pursuant to this Section 5.2
and (ii) to the extent that the Borrower has determined in good faith that
repatriation of any of or all the Net Cash Proceeds of any Foreign Asset Sale,
any Foreign Recovery Event or Excess Cash Flow would have a material adverse
tax cost consequence with respect to such Net Cash Proceeds or Excess Cash
Flow, the Net Cash Proceeds or Excess Cash Flow so affected may be retained by
the applicable Restricted Foreign Subsidiary, provided that, in the case
of this clause (ii), on or before the date on which any Net Cash Proceeds so
retained would otherwise have been required to be applied to reinvestments or
prepayments pursuant to Section 5.2(a) (or such Excess Cash Flow would have
been so required if it were Net Cash Proceeds), (x) the Borrower applies an
amount equal to such Net Cash Proceeds or Excess Cash Flow to such
reinvestments or prepayments as if such Net Cash Proceeds or Excess Cash Flow
had been received by the Borrower rather than such Restricted Foreign Subsidiary,
less the amount of additional taxes that would have been payable or reserved
against if such Net Cash Proceeds or Excess Cash Flow had been repatriated (or,
if less, the Net Cash Proceeds or Excess Cash Flow that would be calculated if
received by such Foreign Subsidiary) or (y) such Net Cash Proceeds or Excess
Cash Flow are applied to the repayment of Indebtedness of a Restricted Foreign
Subsidiary.

 

5.3.                              Method
and Place of Payment. 
(a)  Except as otherwise
specifically provided herein, all payments under this Agreement shall be made
by the Borrower, without set-off, counterclaim or deduction of any kind, to the
Administrative Agent for the ratable account of the Lenders entitled thereto,
the Letter of Credit Issuer or the Swingline Lender, as the case may be, not
later than 12:00 Noon (New York time) on the date when due and shall be made in
immediately available funds in Dollars at the Administrative Agent’s Office, it
being understood that written or facsimile notice by the Borrower to the Administrative
Agent to make a payment from the funds in the Borrower’s account at the
Administrative Agent’s Office shall constitute the making of such payment to
the extent of such funds held in such account. 
The Administrative Agent will thereafter cause to be distributed on the
same day (if payment was actually received by the Administrative Agent prior to
2:00 p.m. (New York time) on such day)

 

83

 

like
funds relating to the payment of principal or interest or Fees ratably to the
Lenders entitled thereto or to the Letter of Credit Issuer or the Swingline
Lender, as applicable.

 

(b)                                 For purposes of computing interest
or fees, any payments under this Agreement that are made later than 2:00 p.m.
(New York time) shall be deemed to have been made on the next succeeding
Business Day.  Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest shall be payable during such
extension at the applicable rate in effect immediately prior to such extension.

 

5.4.                              Net
Payments.  (a)  Subject to the following sentence, all
payments made by or on behalf of the Borrower under this Agreement or any other
Credit Document shall be made free and clear of, and without deduction or
withholding for or on account of, any current or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding (i) net income taxes and franchise taxes
(imposed in lieu of net income taxes) and capital taxes imposed on the
Administrative Agent or any Lender and (ii) any taxes imposed on the
Administrative Agent or any Lender as a result of a current or former
connection between the Administrative Agent or such Lender and the jurisdiction
of the Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from the Administrative Agent or such Lender having executed, delivered
or performed its obligations or received a payment under, or enforced, this
Agreement).  If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings (“Non-Excluded
Taxes”) are required to be withheld from any amounts payable under this
Agreement, the Borrower shall increase the amounts payable to the
Administrative Agent or such Lender to the extent necessary to yield to the
Administrative Agent or such Lender (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement; provided, however, that the Borrower shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state thereof (a “Non-U.S.
Lender”) if such Lender fails to comply with the requirements of
paragraph (b) of this Section 5.4. 
Whenever any Non-Excluded Taxes are payable by the Borrower, as promptly
as possible thereafter the Borrower shall send to the Administrative Agent for
its own account or for the account of such Lender, as the case may be, a
certified copy of an original official receipt (or other evidence acceptable to
such Lender, acting reasonably) received by the Borrower showing payment
thereof.  If the Borrower fails to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest, costs or penalties that may
become payable by the Administrative Agent or any Lender as a result of any
such failure.  The agreements in this
Section 5.4(a) shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.

 

84

 

(b)                                 Each Non-U.S. Lender shall:

 

(i)                                     deliver to the Borrower and the
Administrative Agent two copies of either (x) in the case of Non-U.S. Lender
claiming exemption from U.S. Federal withholding tax under Section 871(h)
or 881(c) of the Code with respect to payments of “portfolio interest”, United
States Internal Revenue Service Form W-8BEN (together with a certificate
representing that such Non-U.S. Lender is not a bank for purposes of
Section 881(c) of the Code, is not a 10-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code)), or (y) Internal Revenue Service Form
W-8BEN or Form W-8ECI, in each case properly completed and duly executed by
such Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments by the Borrower under this Agreement;

 

(ii)                                  deliver to the Borrower and the
Administrative Agent two further copies of any such form or certification (or
any applicable successor form) on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrower; and

 

(iii)                               obtain such extensions of time for filing
and complete such forms or certifications as may reasonably be requested by the
Borrower or the Administrative Agent;

 

unless in any
such case any change in treaty, law or regulation has occurred prior to the
date on which any such delivery would otherwise be required that renders any
such form inapplicable or would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender so advises the
Borrower and the Administrative Agent. 
Each Person that shall become a Participant pursuant to Section 15.6
or a Lender pursuant to Section 15.6 shall, upon the effectiveness of the
related transfer, be required to provide all the forms and statements required
pursuant to this Section 5.4(b), provided that in the case of a
Participant such Participant shall furnish all such required forms and statements
to the Lender from which the related participation shall have been purchased.

 

(c)                                  The Borrower shall not be required
to indemnify any Non-U.S. Lender, or to pay any additional amounts to any
Non-U.S. Lender, in respect of U.S. Federal withholding tax pursuant to
paragraph (a) above to the extent that (i) the obligation to withhold
amounts with respect to U.S. Federal withholding tax existed on the date such
Non-U.S. Lender became a party to this Agreement (or, in the case of a
Participant that is not organized under the laws of the United States of
America or a state thereof (a “Non-U.S. Participant”), on the date such
Non-U.S. Participant became a Participant hereunder); provided, however, that
this clause (i) shall not apply to the extent that (x) the indemnity payments
or additional amounts any Lender (or Participant) would be entitled to receive
(without regard to this clause (i)) do not exceed the indemnity payment or
additional amounts that the person making the assignment, participation or
transfer to such Lender (or Participant) would have been entitled to receive in
the absence of such assignment, participation or transfer, or (y) such
assignment, participation or transfer had

 

85

 

been requested by the
Borrower or, (ii) the obligation to pay such additional amounts would not have
arisen but for a failure by such Non-U.S. Lender or Non-U.S. Participant to
comply with the provisions of paragraph (b) above or (iii) any of the
representations or certifications made by a Non-U.S. Lender or Non-U.S.
Participant pursuant to paragraph (b) above are incorrect at the time a
payment hereunder is made, other than by reason of any change in treaty, law or
regulation having effect after the date such representations or certifications
were made.

 

(d)                                 If the Borrower determines in good
faith that a reasonable basis exists for contesting any taxes for which
indemnification has been demanded hereunder, the relevant Lender or the
Administrative Agent, as applicable, shall cooperate with such Borrower in
challenging such taxes at Borrower’s expense if so requested by Borrower.  If any Lender or the Administrative Agent
receives a refund of a tax for which a payment has been made by the Borrower
pursuant to this Agreement, which refund in the good faith judgment of such
Lender or the Administrative Agent, as the case may be, is attributable to such
payment made by such Borrower, then such Lender or the Administrative Agent, as
the case may be, shall reimburse the Borrower for such amount (together with
any interest received thereon) as such Lender or the Administrative Agent, as
the case may be, determines to be the proportion of the refund as will leave
it, after such reimbursement, in no better or worse position than it would have
been in if the payment had not been required. 
Any Lender or the Administrative Agent shall claim any refund that it
determines is available to it, unless it concludes in its reasonable discretion
that it would be adversely affected by making such a claim.  Neither any Lender nor the Administrative
Agent shall be obliged to disclose any information regarding its tax affairs or
computations to the Borrower in connection with this paragraph (d) or any
other provision of this Section 5.4.

 

(e)                                  Each Lender represents and agrees
that, on the date hereof and at all times during the term of this Agreement, it
is not and will not be a conduit entity participating in a conduit financing
arrangement (as defined in Section 7701(1) of the Code and the regulations
thereunder) with respect to the Borrowings hereunder unless the Borrower has
consented to such arrangement prior thereto.

 

5.5.                              Computations
of Interest and Fees. 
(a)  Interest on Eurodollar Loans
and, except as provided in the next succeeding sentence, ABR Loans shall be
calculated on the basis of a 360-day year for the actual days elapsed.  Interest on ABR Loans in respect of which the
rate of interest is calculated on the basis of the Prime Rate and interest on
overdue interest shall be calculated on the basis of a 365- (or 366-, as the
case may be) day year for the actual days elapsed.

 

(b)                                 Other than in respect of Special
Letter of Credit Commitments and Special Letter of Credit Exposures, Fees and
Letters of Credit Outstanding shall be calculated on the basis of a 365- (or
366-, as the case may be) day year for the actual days elapsed.  Fees in respect of Special Letter of Credit
Commitments and Special Letter of Credit Exposures, and Special Letters of
Credit Outstanding, shall be calculated on the basis of a 360-day year for the
actual days elapsed.

 

5.6.                              Limit
on Rate of Interest. 
(a)  No Payment shall exceed Lawful Rate.  Notwithstanding any other term of this
Agreement, the Borrower shall not be obliged to pay any

 

86

 

interest
or other amounts under or in connection with this Agreement in excess of the
amount or rate permitted under or consistent with any applicable law, rule or
regulation.

 

(b)                                 Payment at Highest Lawful Rate. 
If the Borrower is not obliged to make a payment which it would
otherwise be required to make, as a result of Section 5.6(a), the Borrower
shall make such payment to the maximum extent permitted by or consistent with
applicable laws, rules and regulations.

 

(c)                                  Adjustment if any Payment exceeds
Lawful Rate.  If any provision of this Agreement or any of
the other Credit Documents would obligate the Borrower to make any payment of
interest or other amount payable to any Lender in an amount or calculated at a
rate which would be prohibited by any applicable law, rule or regulation, then
notwithstanding such provision, such amount or rate shall be deemed to have
been adjusted with retroactive effect to the maximum amount or rate of
interest, as the case may be, as would not be so prohibited by law (in the case
of the Borrower), such adjustment to be effected, to the extent necessary, as
follows:

 

(i)                                     firstly, by reducing the amount or
rate of interest required to be paid by the Borrower to the affected Lender
under Section 2.8; and

 

(ii)                                  thereafter, by reducing any fees, commissions,
premiums and other amounts required to be paid by the Borrower to the affected
Lender.

 

Notwithstanding
the foregoing, and after giving effect to all adjustments contemplated thereby,
if any Lender shall have received from the Borrower an amount in excess of the
maximum permitted by any applicable law, rule or regulation, then the Borrower
shall be entitled, by notice in writing to the Administrative Agent, to obtain
reimbursement from such Lender in an amount equal to such excess, and pending
such reimbursement, such amount shall be deemed to be an amount payable by such
Lender to the Borrower.

 

SECTION 6.                                Conditions
Precedent to Initial Credit Event

 

The occurrence of the initial Credit Event is
subject to the satisfaction of the following conditions precedent:

 

6.1.                              Credit
Documents.  The
Administrative Agent shall have received:

 

(a)                                  this Agreement, executed and delivered
by a duly authorized officer of each of the Borrower, each Agent and each
Lender;

 

(b)                                 the Escrow Agreement, executed and
delivered by a duly authorized officer of each of the Escrow Agent and the
other parties thereto;

 

(c)                                  the Guarantee, executed and delivered
by a duly authorized officer of each Person that is a Guarantor as of the Credit
Agreement Closing Date;

 

87

 

(d)                                 the Security Agreement, executed and
delivered by a duly authorized officer of the Borrower and each other grantor
party thereto as of the Credit Agreement Closing Date;

 

(e)                                  the Pledge Agreement, executed and
delivered by a duly authorized officer of the Borrower and each other pledgor
party thereto as of the Credit Agreement Closing Date; and

 

(f)                                    the Collateral Trust Agreement,
executed and delivered by a duly authorized officer of the Borrower and each
Person that is a Credit Party as of the Credit Agreement Closing Date.

 

6.2.                              Collateral.  (a) 
All outstanding equity interests in whatever form of each Subsidiary of
the Borrower owned by or on behalf of any Credit Party as of the Credit
Agreement Closing Date shall have been pledged pursuant to the Pledge Agreement
(except that the Credit Parties shall not be required to pledge more than 65%
of the outstanding voting equity interests of any first tier Foreign Subsidiary)
and the Collateral Trustee shall have received all certificates representing
such securities pledged under the Pledge Agreement, accompanied by instruments
of transfer and undated stock powers endorsed in blank.

 

(b)                                 All evidences of Indebtedness of the
Borrower and each Domestic Subsidiary that are owing to any Credit Party that
is a party to the Pledge Agreement as of the Credit Agreement Closing Date
shall, to the extent exceeding $10,000,000 in aggregate principal amount, be
evidenced by one or more global promissory notes and shall have been pledged
pursuant to the Pledge Agreement, and the Collateral Trustee shall have
received all such promissory notes, together with instruments of transfer with
respect thereto endorsed in blank.

 

(c)                                  All documents and instruments,
including Uniform Commercial Code or other applicable personal property
security financing statements, required by law or reasonably requested by the
Administrative Agent or the Collateral Trustee to be filed, registered or
recorded to create the Liens intended to be created by the Security Documents
and perfect such Liens to the extent required by, and with the priority
required by, the Security Documents shall have been filed, registered or
recorded or delivered to the Collateral Trustee for filing, registration or
recording.

 

6.3.                              Legal
Opinions.  The
Administrative Agent shall have received executed legal opinions substantially
in the form of Exhibit G-1.

 

6.4.                              No
Defaults; Representations and Warranties.  After giving effect to each Credit Event
occurring on the Credit Agreement Closing Date, the Public Company Merger and
the other transactions contemplated hereby to occur on or prior to the Credit
Agreement Closing Date, (a) no Default or Event of Default shall have occurred
and be continuing and (b) all representations and warranties made on the Credit
Agreement Closing Date by any Credit Party contained herein or in the other
Credit Documents shall be true and correct as of the Credit Agreement Closing
Date (except where such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties shall have been
true and correct as of such earlier date).

 

88

 

6.5.                              Senior
Unsecured Notes.  The
Borrower shall have deposited, or caused the deposit of, into escrow in
accordance with the Escrow Agreement, gross proceeds of not less than
$1,125,000,000 from the issuance of the Senior Unsecured Notes under the Senior
Unsecured Note Indenture in the Notes Offering. 
The terms and conditions of the Senior Unsecured Notes (including, but
not limited to, maturity, covenants, events of default, remedies, redemption and prepayment events) shall be reasonably
satisfactory to the Administrative Agent.

 

6.6.                              Equity
Investment.  A portion
of the Equity Investment in an amount equal to at least $752,500,000 shall have
been irrevocably committed on the terms set forth in the Equity Commitment
Letter.

 

6.7.                              Structure
and Terms of the Acquisition Transactions and Public Company
Merger.  The Administrative Agent
shall have received a fully executed or conformed copy of the Transaction
Agreement, which shall be in full force and effect and in form and substance
reasonably satisfactory to the Administrative Agent.  Concurrently with the initial Credit Event
hereunder, the Public Company Merger shall have been consummated in accordance
with the terms of the Transaction Agreement and on terms and conditions
reasonably satisfactory to the Administrative Agent.

 

6.8.                              Discharge
of Existing Debt and Redemption of Preferred Stock.  The Borrower and its Subsidiaries shall have
(i) repaid, retired or redeemed in full all existing Indebtedness of the
Borrower and its Subsidiaries, other than the Senior Unsecured Notes, (ii)
delivered to the Administrative Agent a payoff letter releasing all Liens
securing such Indebtedness and made arrangements reasonably satisfactory to the
Administrative Agent for the delivery of all documents or instruments necessary
to terminate of record all Liens securing such existing Indebtedness and (iii)
repaid, retired or redeemed in full all preferred stock (if any) of the
Borrower and its Subsidiaries.

 

6.9.                              Closing
Certificates.  The
Administrative Agent shall have received a certificate of each Person that is a
Credit Party as of the Credit Agreement Closing Date, dated the Credit
Agreement Closing Date, substantially in the form of Exhibit H, with
appropriate insertions, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of such Credit Party, and attaching the
documents referred to in Sections 6.10 and 6.11.

 

6.10.                        Corporate
Proceedings.  The Administrative
Agent shall have received a copy of the resolutions, in form and substance
satisfactory to the Administrative Agent, of the Board of Directors or Board of
Managers, as applicable, of each Person that is a Credit Party as of the Credit
Agreement Closing Date (or a duly authorized committee thereof) authorizing (a)
if applicable, the consummation of the Public Company Merger, (b) the
execution, delivery and performance of the Credit Documents (and any agreements
relating thereto) to which it is a party and (c) in the case of the
Borrower, the extensions of credit contemplated hereunder.

 

6.11.                        Corporate
Documents.  The
Administrative Agent shall have received true and complete copies of the
certificate of incorporation and by laws (or equivalent organizational
documents) of each Person that is a Credit Party as of the Credit Agreement
Closing Date.

 

89

 

6.12.                        Fees
and Expenses.  The fees
in the amounts previously agreed in writing by the Agents and the Lenders to be
received on the Credit Agreement Closing Date and all expenses (including the
reasonable fees, disbursements and other charges of counsel) for which invoices
have been presented on or prior to the Credit Agreement Closing Date shall have
been funded into escrow in accordance with the Escrow Agreement.

 

6.13.                        Solvency
Certificate.  The
Administrative Agent shall have received a certificate from the chief financial
officer of the Borrower in form, scope and substance satisfactory to
Administrative Agent, with appropriate attachments and demonstrating that after
giving effect to the consummation of the Public Company Merger, the Acquisition
Transactions and the related financings and other transactions contemplated to
occur in connection therewith, the Borrower and its Subsidiaries, taken as a
whole, are Solvent.

 

6.14.                        Financial
Statements.  The
Administrative Agent shall have received: 
(a) the Historical Financial Statements, which financial statements
shall be prepared in a manner consistent with the requirements of Section 11.1
and shall otherwise be in form and scope satisfactory to the Administrative
Agent; and (b) pro forma consolidated balance sheets of the Borrower and its
Subsidiaries as at the Credit Agreement Closing Date reflecting the
consummation of the Public Company Merger, the Acquisition Transactions and the
related financings and other transactions contemplated to occur in connection
therewith, which pro forma financial statements shall be in form and substance
reasonably satisfactory to the Administrative Agent and shall demonstrate that
the Consolidated Total Debt to Consolidated EBITDA Ratio for the four quarter
period ending September 30, 2004, after giving effect to the Acquisition
Transactions, shall not be greater than 5.00 to 1.00.

 

6.15.                        Consents
and Approvals.  All
governmental, shareholder and third-party consents and approvals necessary to
consummate the Public Company Merger and the other transactions contemplated by
the Credit Documents to occur on or prior to the Credit Agreement Closing Date
shall have been obtained and shall be in full force and effect, and all
applicable waiting periods shall have expired without any materially adverse
action being taken by any applicable authority.

 

6.16.                        Environmental
Matters.  The Administrative Agent
shall have received “phase I environmental site assessments” for each of the
electric generating facilities contemplated to be included in the Acquisition
Transactions in form and substance reasonably satisfactory to the
Administrative Agent.

 

6.17.                        Patriot
Act, etc.  The Administrative
Agent shall have received all documentation and other information required by
bank regulatory authorities under applicable “know your customer” and
anti-money laundering rules and regulations, including, without limitation, the
USA Patriot Act.

 

90

 

SECTION 7.                                Conditions
Precedent to Initial Transaction Closing Date

 

The Escrow Release is subject to the
satisfaction of the following conditions precedent:

 

7.1.                              Previous
Closing Date.  The Credit Agreement
Closing Date shall have occurred.

 

7.2.                              Credit
Documents.  The Administrative
Agent shall have received:

 

(a)                                  supplements to the Guarantee, the
Security Agreement and the Pledge Agreement, executed and delivered by a duly
authorized officer of each Person intended to become a Subsidiary of the
Borrower upon giving effect to the Initial Transaction to the extent required
by Sections 11.11 and 11.12; and

 

(b)                                 a Deed of Trust in respect of each
Mortgaged Property to be mortgaged on the Initial Transaction Closing Date,
executed and delivered by a duly authorized officer of each mortgagor party
thereto.

 

7.3.                              Collateral.  (a) 
All outstanding equity interests in whatever form of each Subsidiary of
the Borrower owned by or on behalf of any Person intended to become a Credit
Party as of the Initial Transaction Closing Date shall have been pledged
pursuant to the Pledge Agreement (except that the Credit Parties shall not be
required to pledge more than 65% of the outstanding voting equity interests of
any first tier Foreign Subsidiary) and the Collateral Trustee shall have
received all certificates representing such securities pledged under the Pledge
Agreement, accompanied by instruments of transfer and undated stock powers
endorsed in blank.

 

(b)                                 All evidences of Indebtedness of the
Borrower and each Domestic Subsidiary that are owing to any Credit Party that
is a party to the Pledge Agreement as of the Initial Transaction Closing Date
shall, to the extent exceeding $10,000,000 in aggregate principal amount, be
evidenced by one or more global promissory notes and shall have been pledged
pursuant to the Pledge Agreement, and the Collateral Trustee shall have
received all such promissory notes, together with instruments of transfer with
respect thereto endorsed in blank.

 

(c)                                  All documents and instruments,
including Uniform Commercial Code or other applicable personal property
security financing statements, required by law or reasonably requested by the
Administrative Agent or the Collateral Trustee to be filed, registered or
recorded to create the Liens intended to be created by the Security Documents
and perfect such Liens to the extent required by, and with the priority
required by, the Security Documents shall have been filed, registered or
recorded or delivered to the Collateral Trustee for filing, registration or
recording.

 

(d)                                 The Collateral Trustee shall have
received, in respect of each Mortgaged Property listed on Schedule 7.3(d) under
the caption “Initial Transaction Closing Date”: 
(i) a policy or policies of title insurance using the forms required by
the Texas Department of Insurance and issued by a nationally recognized title
insurance company insuring the Lien of each Deed of Trust listed on Schedule
7.3(d) under the caption “Initial Transaction Closing Date” as a valid Lien
(with the priority described therein) on the Mortgaged Property described
therein, free of any other Liens except as expressly permitted by
Section 12.2, together with such endorsements and reinsurance as the
Administrative Agent or the Collateral Trustee may reasonably request; and (ii)
a survey
(A) prepared by a surveyor acceptable to the Administrative Agent, (B) dated
not earlier than three months prior to the Initial Transaction Closing Date,
(C)

 

91

 

certified
to the Administrative Agent, the Collateral Trustee and the title insurance
company issuing the title insurance policy for such Mortgaged Property pursuant
to clause (i), which certification shall be reasonably acceptable to the
Administrative Agent and the Collateral Trustee and (D) complying with the “Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys,” jointly
established and adopted by ALTA, ACSM and NSPS in 1999 (except for such
deviations as are acceptable to the Administrative Agent), and if applicable,
based on ortho-rectified aerial photographs conforming to National Map Accuracy
Standards, and identifying by specific notation significant changes since the
date of acquisition of such aerial photographs.

 

7.4.                              Legal
Opinions.  The
Administrative Agent shall have received executed legal opinions substantially
in the form of Exhibit G-2.

 

7.5.                              No
Defaults; Representations and Warranties.  After giving effect to each Credit Event
occurring on the Initial Transaction Closing Date, the Initial Transaction and
the other transactions contemplated hereby to occur on or prior to the Initial
Transaction Closing Date, (a) no Default or Event of Default shall have
occurred and be continuing and (b) all representations and warranties made on
the Initial Transaction Closing Date by any Credit Party contained herein or in
the other Credit Documents shall be true and correct as of the Initial
Transaction Closing Date (except where such representations and warranties
expressly relate to an earlier date, in which case such representations and warranties
shall have been true and correct as of such earlier date).

 

7.6.                              Senior
Unsecured Notes.  The
proceeds of the Senior Unsecured Notes shall be released from escrow
simultaneously with the proceeds of the Initial Term Loans pursuant to the
Escrow Agreement.

 

7.7.                              Equity
Investment.  A portion
of the Equity Investment in an amount equal to at least $752,500,000 shall have
been funded and the Borrower shall have received the proceeds thereof which,
together with the proceeds of the Initial Term Loans and the Senior Unsecured
Notes, shall be sufficient to consummate the Initial Transaction and to pay all
related Transaction Expenses.

 

7.8.                              Initial
Transaction.  The
Initial Transaction shall have been consummated in accordance with the terms of
the Transaction Agreement and on terms reasonably satisfactory to the
Administrative Agent.

 

7.9.                              Discharge
of Existing Debt.  The
Borrower and its Subsidiaries shall have (i) repaid, retired or redeemed in
full all existing Indebtedness of the Borrower and its Subsidiaries, other than
Initial Transaction Closing Date Indebtedness, and (ii) delivered to the
Administrative Agent a payoff letter releasing all Liens securing such
Indebtedness and made arrangements reasonably satisfactory to the
Administrative Agent for the delivery of all documents or instruments necessary
to terminate of record all Liens securing such existing Indebtedness.

 

7.10.                        Closing
Certificates.  The
Administrative Agent shall have received a certificate of each Person intended
to become a Credit Party as of the Initial Transaction Closing

 

92

 

Date, dated
the Initial Transaction Closing Date, substantially in the form of
Exhibit H, with appropriate insertions, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of such Credit
Party, and attaching the documents referred to in Sections 7.11 and 7.12.

 

7.11.                        Corporate
Proceedings.  The
Administrative Agent shall have received a copy of the resolutions, in form and
substance satisfactory to the Administrative Agent, of the Board of Directors
or Board of Managers, as applicable, of each Person intended to become a Credit
Party as of the Initial Transaction Closing Date (or a duly authorized
committee thereof) authorizing (a) if applicable, the consummation of the
Initial Transaction, and (b) the execution, delivery and performance of the
Credit Documents (and any agreements relating thereto) to which it is a party.

 

7.12.                        Corporate
Documents.  The Administrative Agent
shall have received true and complete copies of the certificate of
incorporation and by laws (or equivalent organizational documents) of each
Person intended to become a Credit Party as of the Initial Transaction Closing
Date.

 

7.13.                        Fees
and Expenses.  The fees
and expenses paid into escrow on the Credit Agreement Closing Date as
contemplated by Section 6.12 shall be released from escrow to the applicable
Agents and Lenders pursuant to the Escrow Agreement.

 

7.14.                        Consents
and Approvals.  All
governmental, shareholder and third-party consents and approvals necessary to
consummate the Initial Transaction and the other transactions contemplated by
the Credit Documents to occur on or prior to the Initial Transaction Closing
Date shall have been obtained and shall be in full force and effect, and all
applicable waiting periods shall have expired without any materially adverse
action being taken by any applicable authority.

 

7.15.                        Perfection
Certificate.  The Administrative Agent shall have
received a completed Perfection Certificate, dated the Initial Transaction
Closing Date and signed by an Authorized Officer and the chief legal officer of
each Credit Party, together with all attachments contemplated thereby.

 

7.16.                        Insurance
Certificates.  The
Administrative Agent shall have received insurance certificates in form and
substance satisfactory to the Administrative Agent evidencing the insurance
required to be maintained by the Borrower and the Material Subsidiaries
pursuant to Section 11.3.

 

SECTION 8.                                Condition
Precedent to Borrowing of Delayed Draw Term Loans

 

The Borrowing of any Delayed Draw Term Loan
is subject to the satisfaction of the following conditions precedent:

 

8.1.                              Previous
Closing Dates.  Each of
the Credit Agreement Closing Date and the Initial Transaction Closing Date
shall have occurred.

 

93

 

8.2.                              Credit
Documents.  Except with respect to
the Call Transaction, the Administrative Agent shall have received:

 

(a)                                  supplements to the Guarantee, the
Security Agreement and the Pledge Agreement, executed and delivered by a duly
authorized officer of each Person intended to become a Subsidiary of the
Borrower upon giving effect to the Subsequent Transaction to the extent
required by Sections 11.11 and 11.12; and

 

(b)                                 a Deed of Trust in respect of each
Mortgaged Property to be mortgaged on the Subsequent Transaction Closing Date,
executed and delivered by a duly authorized officer of each mortgagor party
thereto.

 

8.3.                              Collateral.  (a) 
Except with respect to the Call Transaction, all outstanding equity
interests in whatever form of each Subsidiary of the Borrower owned by or on
behalf of any Person intended to become a Credit Party as of the Subsequent
Transaction Closing Date shall have been pledged pursuant to the Pledge
Agreement (except that the Credit Parties shall not be required to pledge more
than 65% of the outstanding voting equity interests of any first tier Foreign
Subsidiary) and the Collateral Trustee shall have received all certificates
representing such securities pledged under the Pledge Agreement, accompanied by
instruments of transfer and undated stock powers endorsed in blank.

 

(b)                                 Except with respect to the Call
Transaction, all Indebtedness of the Borrower and each Subsidiary that is owing
to any Credit Party that is a party to the Pledge Agreement as of the
Subsequent Transaction Closing Date shall, to the extent exceeding $10,000,000
in aggregate principal amount, be evidenced by one or more global promissory
notes and shall have been pledged pursuant to the Pledge Agreement, and the
Collateral Trustee shall have received all such promissory notes, together with
instruments of transfer with respect thereto endorsed in blank.

 

(c)                                  Except with respect to the Call
Transaction, all documents and instruments, including Uniform Commercial Code
or other applicable personal property security financing statements, required
by law or reasonably requested by the Administrative Agent or the Collateral
Trustee to be filed, registered or recorded to create the Liens intended to be
created by the Security Documents and perfect such Liens to the extent required
by, and with the priority required by, the Security Documents shall have been
filed, registered or recorded or delivered to the Collateral Trustee for
filing, registration or recording.

 

(d)                                 Except with respect to the Call
Transaction, the Collateral Trustee shall have received, in respect of each
Mortgaged Property listed on Schedule 7.3(d) under the caption “Subsequent
Transaction Closing Date”:  (i) a policy
or policies of title insurance using the forms required by the Texas Department
of Insurance and issued by a nationally recognized title insurance company
insuring the Lien of each Deed of Trust listed on Schedule 7.3(d) under the
caption “Subsequent Transaction Closing Date” as a valid Lien (with the
priority described therein) on the Mortgaged Property described therein, free
of any other Liens except as expressly permitted by Section 12.2, together
with such endorsements and reinsurance as the Administrative Agent or the
Collateral Trustee may reasonably request; and (ii) a survey
(A) prepared by a surveyor acceptable to the Administrative Agent, (B) dated
not earlier than three

 

94

 

months
prior to the Subsequent Transaction Closing Date, (C) certified to the
Administrative Agent, the Collateral Trustee and the title insurance company
issuing the title insurance policy for such Mortgaged Property pursuant to
clause (i), which certification shall be reasonably acceptable to the
Administrative Agent and the Collateral Trustee and (D) complying with the “Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys,” jointly
established and adopted by ALTA, ACSM and NSPS in 1999 (except for such
deviations as are acceptable to the Administrative Agent), and if applicable,
based on ortho-rectified aerial photographs conforming to National Map Accuracy
Standards, and identifying by specific notation significant changes since the
date of acquisition of such aerial photographs.

 

8.4.                              Legal
Opinions.  Except with
respect to the Call Transaction, the Administrative Agent shall have received
executed legal opinions substantially in the form of the opinions delivered
pursuant to Section 7.4 and otherwise reasonably acceptable to the
Administrative Agent, which opinions shall (a) cover all Persons intended to
become Credit Parties on the Subsequent Transaction Closing Date and (b)
include no conflicts and consents and approvals opinions with respect to
nuclear regulatory matters.

 

8.5.                              Equity
Investment.  Except
with respect to the Call Transaction, the remaining portion of the Equity
Investment not funded pursuant to Section 7.7 (which remaining portion shall
not be required to exceed $145,600,000) shall have been funded and the Borrower
shall have received the proceeds thereof which, together with the proceeds of
the Delayed Draw Term Loans and the Revolving Credit Loans to be borrowed on
the Subsequent Transaction Closing Date, shall be sufficient to consummate the
Subsequent Transaction and to pay all related Transaction Expenses.

 

8.6.                              Subsequent
Transaction.  Except with respect to
the Call Transaction, the Subsequent Transaction shall have been consummated in
accordance with the terms of the Transaction Agreement and on terms reasonably
satisfactory to the Administrative Agent.

 

8.7.                              Closing
Certificates.  Except
with respect to the Call Transaction, the Administrative Agent shall have
received a certificate of each Person intended to become a Credit Party as of
the Subsequent Transaction Closing Date, dated the Subsequent Transaction
Closing Date, substantially in the form of Exhibit H, with appropriate
insertions, executed by the President or any Vice President and the Secretary
or any Assistant Secretary of such Credit Party, and attaching the documents
referred to in Sections 8.8 and 8.9.

 

8.8.                              Corporate
Proceedings.  Except
with respect to the Call Transaction, the Administrative Agent shall have
received a copy of the resolutions, in form and substance satisfactory to the
Administrative Agent, of the Board of Directors or Board of Managers, as
applicable, of each Person intended to become a Credit Party as of the
Subsequent Transaction Closing Date (or a duly authorized committee thereof)
authorizing (a) if applicable, the consummation of the Subsequent Transaction,
and (b) the execution, delivery and performance of the Credit Documents (and
any agreements relating thereto) to which it is a party.

 

8.9.                              Corporate
Documents.  Except with
respect to the Call Transaction, the Administrative Agent shall have received
true and complete copies of the certificate of

 

95

 

incorporation
and by laws (or equivalent organizational documents) of each Person intended to
become a Credit Party as of the Subsequent Transaction Closing Date.

 

8.10.                        Consents
and Approvals.  Except
with respect to the Call Transaction, all governmental, shareholder and
third-party approvals and consents necessary to consummate the Subsequent
Transaction and the related financings and the other transactions contemplated
by the Credit Documents to occur on or prior to the Subsequent Transaction
Closing Date shall have been obtained and shall be in full force and effect,
and all applicable waiting periods shall have expired without any materially
adverse action being taken by any applicable authority.

 

8.11.                        Fees
and Expenses.  The
Lenders shall have received the fees in the amounts previously agreed in
writing by the Agents and such Lenders to be received on the Subsequent
Transaction Closing Date or the Call Transaction Closing Date, as applicable,
and all expenses (including the reasonable fees, disbursements and other
charges of counsel) for which invoices have been presented on or prior to the
Subsequent Transaction Closing Date or the Call Transaction Closing Date, as
applicable, shall have been paid.

 

8.12.                        Call
Transaction.  The
Administrative Agent shall have received written notice from the Borrower that
the Borrower intends to exercise the Call Transaction in accordance with the
terms of the Senior Unsecured Note Indenture, which notice shall include the
proposed Call Transaction Closing Date and shall be provided at least five
Business Days before the proposed Call Transaction Closing Date.

 

SECTION 9.                                Conditions
Precedent to All Credit Events

 

The agreement of each Lender to make any Loan
requested to be made by it on any date (excluding Mandatory Borrowings) and the
obligation of the Letter of Credit Issuer to issue Letters of Credit on any
date is subject to the satisfaction of the following conditions precedent:

 

9.1.                              No
Default; Representations and Warranties.  At the time of each Credit Event and also
after giving effect thereto (a) no Default or Event of Default shall have
occurred and be continuing and (b) all representations and warranties made by
any Credit Party contained herein or in the other Credit Documents shall be
true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event (except where such representations and warranties expressly relate
to an earlier date, in which case such representations and warranties shall
have been true and correct in all material respects as of such earlier date).

 

9.2.                              Notice
of Borrowing; Letter of Credit Request.  (a) 
Prior to the making of each Term Loan, each Revolving Credit Loan (other
than any Revolving Credit Loan made pursuant to Section 3.4(a)) and each
Swingline Loan, the Administrative Agent shall have received a Notice of
Borrowing (whether in writing or by telephone) meeting the requirements of
Section 2.3.

 

(b)                                 Prior to the issuance of each Letter
of Credit, the Administrative Agent and the Letter of Credit Issuer shall have
received a Letter of Credit Request meeting the

 

96

 

requirements of
Section 3.2(a) and, in the case of any Special Letter of Credit, the
documents described in Section 3.2(c).

 

The acceptance
of the benefits of each Credit Event shall constitute a representation and
warranty by each Credit Party to each of the Lenders that all the applicable
conditions specified above exist as of that time.

 

SECTION 10.                          Representations,
Warranties and Agreements

 

In order to induce the Lenders to enter into
this Agreement, make the Loans and issue or participate in Letters of Credit as
provided for herein, and in order to induce the Administrative Agent to
authorize the Escrow Release, the Borrower makes the following representations
and warranties to, and agreements with, the Lenders, all of which shall survive
the execution and delivery of this Agreement, the making of the Loans, the
issuance of the Letters of Credit and the Escrow Release:

 

10.1.                        Corporate
Status.  The Borrower and each
Material Subsidiary (a) is a duly organized and validly existing corporation or
other entity in good standing under the laws of the jurisdiction of its
organization and has the corporate or other organizational power and authority
to own its property and assets and to transact the business in which it is
engaged and (b) has duly qualified and is authorized to do business and is in
good standing in all jurisdictions where it is required to be so qualified,
except where the failure to be so qualified could not reasonably be expected to
result in a Material Adverse Effect.

 

10.2.                        Corporate
Power and Authority.  Each
Credit Party has the corporate or other organizational power and authority to
execute, deliver and carry out the terms and provisions of the Credit Documents
to which it is a party and has taken all necessary corporate or other organizational
action to authorize the execution, delivery and performance of the Credit
Documents to which it is a party.  Each
Credit Party has duly executed and delivered each Credit Document to which it
is a party and each such Credit Document constitutes the legal, valid and
binding obligation of such Credit Party enforceable in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors’ rights generally and subject to
general principles of equity.

 

10.3.                        No
Violation.  None of (a)
the execution, delivery and performance by any Credit Party of the Credit
Documents to which it is a party and compliance with the terms and provisions
thereof, (b) the consummation of the Public Company Merger, (c) from and after
the Initial Transaction Closing Date, the consummation of the Initial
Transactions, (d) from and after the Subsequent Transaction Closing Date, the
consummation of the Subsequent Transactions, (e) from and after the Call Transaction
Closing Date, the consummation of the Call Transaction or (e) the consummation
of the other transactions contemplated hereby or thereby on the relevant dates
therefor will (i) contravene any applicable provision of any material law,
statute, rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality, (ii) result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose)
any Lien upon any of the property or assets of any of the Borrower or any of
the Restricted Subsidiaries (other than Liens created under the Credit
Documents) pursuant to, the terms of any

 

97

 

material
indenture (including the Senior Unsecured Note Indenture), loan agreement,
lease agreement, mortgage, deed of trust, agreement or other material
instrument to which the Borrower or any of the Restricted Subsidiaries is a party
or by which it or any of its property or assets is bound or (iii) violate
any provision of the certificate of incorporation, By-Laws or other
constitutional documents of the Borrower or any of the Restricted Subsidiaries.

 

10.4.                        Litigation.  There are no actions, suits or proceedings
(including Environmental Claims) pending or, to the knowledge of the Borrower,
threatened with respect to the Borrower or any of its Subsidiaries that could
reasonably be expected to result in a Material Adverse Effect.

 

10.5.                        Margin
Regulations.  Neither the making of
any Loan hereunder nor the use of the proceeds thereof will violate the
provisions of Regulation T, U or X of the Board.

 

10.6.                        Governmental
Approvals.  No order,
consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any Governmental Authority is
required to authorize or is required in connection with (a) the execution,
delivery and performance of any Credit Document or (b) the legality, validity,
binding effect or enforceability of any Credit Document, except any of the
foregoing the failure to obtain or make could not reasonably be expected to
have a Material Adverse Effect.

 

10.7.                        Investment
Company Act.  The
Borrower is not an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

 

10.8.                        True
and Complete Disclosure. 
(a)  None of the factual
information and data (taken as a whole) heretofore or contemporaneously
furnished by the Borrower, any of its Subsidiaries or any of their respective
authorized representatives in writing to any Agent or any Lender on or before
the Credit Agreement Closing Date (including (i) the Confidential Information
Memorandum and (ii) all information contained in the Credit Documents) for
purposes of or in connection with this Agreement or any transaction
contemplated herein contained any untrue statement or omitted to state any
material fact necessary to make such information and data (taken as a whole)
not misleading at such time in light of the circumstances under which such
information or data was furnished, it being understood and agreed that for
purposes of this Section 10.8(a), such factual information and data shall
not include projections and pro forma financial information.

 

(b)                                 The projections and pro forma
financial information contained in the information and data referred to in
paragraph (a) above were based on good faith estimates and assumptions
believed by such Persons to be reasonable at the time made, it being recognized
by the Lenders that such projections as to future events are not to be viewed
as facts and that actual results during the period or periods covered by any
such projections may differ from the projected results.

 

10.9.                        Financial
Condition; Financial Statements.  The (a) unaudited historical consolidated
financial information as set forth in the Confidential Information Memorandum
and (b) the Historical Financial Statements, in each case present or will, when
provided, present fairly in all material respects the financial position and
results of operations of the Borrower and

 

98

 

its Subsidiaries at the respective dates of
such information and for the respective periods covered thereby.  The financial statements referred to in
clause (b) of this Section 10.9 have been prepared in accordance with GAAP
consistently applied except to the extent provided in the notes thereto.  There has been no Material Adverse Change since
December 31, 2003, other than solely as a result of changes in general economic
conditions.

 

10.10.                  Tax
Returns and Payments.  The
Borrower and its Subsidiaries have filed all Federal income tax returns and all
other material tax returns, domestic and foreign, required to be filed by them
and has paid all material taxes and assessments payable by them that have
become due, other than those not yet delinquent or contested in good
faith.  The Borrower and its Subsidiaries
have paid, or have provided adequate reserves (in the good faith judgment of
the management of the Borrower) in accordance with GAAP for the payment of, all
material Federal, state, provincial and foreign income taxes applicable for all
prior fiscal years and for the current fiscal year to the Credit Agreement
Closing Date.

 

10.11.                  Compliance
with ERISA.  Each Plan is in compliance with
ERISA, the Code and any Applicable Law; no Reportable Event has occurred (or is
reasonably likely to occur) with respect to any Plan; no Plan is insolvent or
in reorganization (or is reasonably likely to be insolvent or in
reorganization), and no written notice of any such insolvency or reorganization
has been given to any of the Borrower, any Subsidiary thereof or any ERISA
Affiliate; no Plan (other than a multiemployer plan) has an accumulated or
waived funding deficiency (or is reasonably likely to have such a deficiency);
none of the Borrower, any Subsidiary thereof or any ERISA Affiliate has
incurred (or is reasonably likely expected to incur) any liability to or on
account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the
Code or has been notified in writing that it will incur any liability under any
of the foregoing Sections with respect to any Plan; no proceedings have been
instituted (or are reasonably likely to be instituted) to terminate or to
reorganize any Plan or to appoint a trustee to administer any Plan, and no
written notice of any such proceedings has been given to any of the Borrower,
any Subsidiary thereof or any ERISA Affiliate; and no lien imposed under the
Code or ERISA on the assets of any of the Borrower, any Subsidiary thereof or
any ERISA Affiliate exists (or is reasonably likely to exist) nor has the
Borrower, any Subsidiary thereof or any ERISA Affiliate been notified in
writing that such a lien will be imposed on the assets of any of the Borrower,
any Subsidiary thereof or any ERISA Affiliate on account of any Plan, except to
the extent that a breach of any of the representations, warranties or
agreements in this Section 10.11 would not result, individually or in the
aggregate, in an amount of liability that would be reasonably likely to have a
Material Adverse Effect or relates to any matter disclosed in the financial
statements of the Borrower contained in the Confidential Information
Memorandum.  No Plan (other than a
multiemployer plan) has an Unfunded Current Liability that would, individually
or when taken together with any other liabilities referenced in this
Section 10.11, be reasonably likely to have a Material Adverse
Effect.  With respect to Plans that are
multiemployer plans (as defined in Section 3(37) of ERISA), the
representations and warranties in this Section 10.11, other than any made
with respect to (a) liability under Section 4201 or 4204 of ERISA or (b)
liability for termination or reorganization of such Plans under ERISA, are made
to the best knowledge of the Borrower.

 

10.12.                  Subsidiaries  On the Credit Agreement Closing Date, the
Borrower does not have any Subsidiaries other than the Subsidiaries listed on
Part A of Schedule 10.12.  On the

 

99

 

Initial Transaction Closing
Date, the Borrower does not have any Subsidiaries other than the Subsidiaries
listed on Part B of Schedule 10.12.  Part
A of Schedule 10.12 describes the direct and indirect ownership interest of the
Borrower in each Subsidiary as of the Credit Agreement Closing Date and Part B
of Schedule 10.12 describes the direct and indirect ownership interest of the
Borrower in each Subsidiary as of the Initial Transaction Closing Date.  To the knowledge of the Borrower, after due
inquiry, each Material Subsidiary and Specified Subsidiary as of the Credit
Agreement Closing Date has been so designated on Part A of Schedule 10.12 and
as of the Initial Transaction Closing Date has been so designated on Part B of
Schedule 10.12.

 

10.13.                  Patents,
etc.  The Borrower and
each of the Restricted Subsidiaries have obtained all patents, trademarks,
servicemarks, trade names, copyrights, licenses and other rights, free from
burdensome restrictions, that are necessary for the operation of their
respective businesses as currently conducted and as proposed to be conducted,
except where the failure to obtain any such rights could not reasonably be
expected to have a Material Adverse Effect.

 

10.14.                  Environmental
Laws.  (a)  Except as could not reasonably be expected to
have a Material Adverse Effect, (i) the Borrower and each of its Subsidiaries
are in compliance with all Environmental Laws in all jurisdictions in which the
Borrower and each of its Subsidiaries are currently doing business (including
having obtained all material permits required under Environmental Laws) and
(ii) neither the Borrower nor any of its Subsidiaries has become subject to any
Environmental Claim or any other liability under any Environmental Law.

 

(b)                                 Neither the Borrower nor any of its
Subsidiaries has treated, stored, transported, released or disposed of
Hazardous Materials at or from any currently or formerly owned Real Estate or
facility relating to its business in a manner that could reasonably be expected
to have a Material Adverse Effect.

 

10.15.                  Properties,
Assets and Rights.  As of the Initial
Transaction Closing Date and as of the date of each Credit Event thereafter,
the Borrower and each of its Subsidiaries have good and marketable title to or
valid leasehold interest in all properties that are necessary for the operation
of their respective businesses as currently conducted and as proposed to be
conducted, free and clear of all Liens (other than Liens permitted by Section
12.2) and except where the failure to have such good title could not reasonably
be expected to have a Material Adverse Effect. 
As of the Initial Transaction Closing Date, the Borrower and each of its
Subsidiaries possess or have the right to use, under contract or otherwise, all
assets and rights that are material to the operation of their respective
businesses as currently conducted and as proposed to be conducted.

 

10.16.                  Commodity
Hedging Agreements.  As
of the Initial Transaction Closing Date, each of the GS Commodity Hedging
Agreement and the MS Commodity Hedging Agreement is in full force and effect
and no default, event of default, termination event or equivalent event exists
thereunder.

 

SECTION 11.                          Affirmative
Covenants

 

The Borrower
hereby covenants and agrees that on the Credit Agreement Closing Date and
thereafter, until the Commitments and all Letters of Credit have terminated and
the

 

100

 

Loans and
Unpaid Drawings, together with interest, Fees and all other Obligations
incurred hereunder, are paid in full:

 

11.1.                        Information
Covenants.  The Borrower will furnish
to each Lender and the Administrative Agent:

 

(a)                                  Annual Financial Statements. 
As soon as available and in any event on or before the date on which
such financial statements are required to be filed with the SEC (or, if such
financial statements are not required to be filed with the SEC, on or before
the date that is 90 days after the end of each such fiscal year), the
consolidated balance sheet of the Borrower and its Subsidiaries as at the end
of such fiscal year, and the related consolidated statement of operations and
cash flows for such fiscal year, setting forth comparative consolidated figures
for the preceding fiscal year, and certified by independent certified public
accountants of recognized national standing whose opinion shall not be
qualified as to the scope of audit or as to the status of the Borrower or any of
the Material Subsidiaries as a going concern, together in any event with a
certificate of such accounting firm stating that in the course of its regular
audit of the business of the Borrower and the Material Subsidiaries, which
audit was conducted in accordance with generally accepted auditing standards,
such accounting firm has obtained no knowledge of any Default or Event of
Default relating to Section 12.9 or 12.10 that has occurred and is continuing
or, if in the opinion of such accounting firm such a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof.

 

(b)                                 Quarterly Financial Statements. 
As soon as available and in any event on or before the date on which
such financial statements are required to be filed with the SEC with respect to
each of the first three quarterly accounting periods in each fiscal year of the
Borrower (or, if such financial statements are not required to be filed with
the SEC, on or before the date that is 45 days after the end of each such
quarterly accounting period), the consolidated balance sheet of the Borrower
and its Subsidiaries as at the end of such quarterly period and the related
consolidated statement of operations for such quarterly accounting period and
for the elapsed portion of the fiscal year ended with the last day of such
quarterly period, and the related consolidated statement of cash flows for the
elapsed portion of the fiscal year ended with the last day of such quarterly
period, and setting forth comparative consolidated figures for the related
periods in the prior fiscal year or, in the case of such consolidated balance
sheet, for the last day of the prior fiscal year, all of which shall be
certified by an Authorized Officer of the Borrower, subject to changes resulting
from audit and normal year-end audit adjustments.

 

(c)                                  Budgets. 
Within 60 days after the commencement of each fiscal year of the
Borrower, a budget of the Borrower and its Subsidiaries in reasonable detail
for the fiscal year as customarily prepared by management of the Borrower for
its internal use consistent in scope with the financial statements provided
pursuant to Section 11.1(a), setting forth the principal assumptions upon which
such budget is based.

 

(d)                                 Officer’s Certificates. 
At the time of the delivery of the financial statements provided for in
Sections 11.1(a) and (b), a certificate of an Authorized Officer of the
Borrower to the effect that no Default or Event of Default exists or, if any
Default or Event of Default does exist, specifying the nature and extent
thereof, which certificate shall set forth (i) the calculations required to
establish whether the Borrower and its Subsidiaries were in

 

101

 

compliance with the
provisions of Sections 12.9 and 12.10 as at the end of such fiscal year or
period, as the case may be, (ii) a specification of any change in the identity
of the Restricted Subsidiaries, Unrestricted Subsidiaries and Foreign
Subsidiaries as at the end of such fiscal year or period, as the case may be,
from the Restricted Subsidiaries, Unrestricted Subsidiaries and Foreign
Subsidiaries, respectively, provided to the Lenders on the Credit Agreement
Closing Date or the most recent fiscal year or period, as the case may be,
(iii) the then applicable Status and (iv) the amount of any Pro Forma
Adjustment not previously set forth in a Pro Forma Adjustment Certificate or
any change in the amount of a Pro Forma Adjustment set forth in any Pro Forma
Adjustment Certificate previously provided and, in either case, in reasonable
detail, the calculations and basis therefor. 
At the time of the delivery of the financial statements provided for in
Section 11.1(a), (i) a certificate of an Authorized Officer of the Borrower
setting forth in reasonable detail the Available Amount as at the end of the
fiscal year to which such financial statements relate and (ii) a certificate of
an Authorized Officer and the chief legal officer of the Borrower (x) setting
forth the information required pursuant to Section 2 of the Perfection
Certificate or confirming that there has been no change in such information
since the Credit Agreement Closing Date or the date of the most recent
certificate delivered pursuant to this subsection (d)(ii), as the case may be,
and (ii) certifying that all Uniform Commercial Code and other applicable
financing statements (including fixture filings, as applicable) or other
appropriate filings, recordings or registrations, including all refilings,
rerecordings and reregistrations, containing a description of the Collateral
have been filed of record in each governmental, municipal or other appropriate
office in each jurisdiction identified pursuant to clause (x) above to the
extent necessary to protect and perfect the security interests under the
Security Documents.

 

(e)                                  Notice of Default or Litigation. 
Promptly after an Authorized Officer of the Borrower or any of its
Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of any
event that constitutes a Default or an Event of Default, which notice shall
specify the nature thereof, the period of existence thereof and what action the
Borrower proposes to take with respect thereto, and (ii) any litigation or
governmental proceeding pending against the Borrower or any of its Subsidiaries
that could reasonably be expected to result in a Material Adverse Effect.

 

(f)                                    Environmental Matters. 
Promptly after obtaining knowledge of any one or more of the following
environmental matters, unless such environmental matters would not, individually
or when aggregated with all other such matters, be reasonably expected to
result in a Material Adverse Effect:

 

(i)                                     any pending or threatened
Environmental Claim against the Borrower or any of its Subsidiaries or any Real
Estate;

 

(ii)                                  any condition or occurrence on any
Real Estate that (x) results in noncompliance by the Borrower or any of its
Subsidiaries with any applicable Environmental Law or (y) could reasonably be
anticipated to form the basis of an Environmental Claim against the Borrower or
any of its Subsidiaries or any Real Estate;

 

(iii)                               any condition or occurrence on any
Real Estate that could reasonably be anticipated to cause such Real Estate to
be subject to any restrictions on the

 

102

 

ownership, occupancy,
use or transferability of such Real Estate under any Environmental Law; and

 

(iv)                              the taking of any removal or
remedial action in response to the actual or alleged presence of any Hazardous
Material on any Real Estate.

 

All such notices
shall describe in reasonable detail the nature of the claim, investigation,
condition, occurrence or removal, remedial action and the response
thereto.  The term “Real Estate” shall
mean land, buildings and improvements owned or leased by the Borrower or any of
its Subsidiaries, but excluding all operating fixtures and equipment, whether
or not incorporated into improvements.

 

(g)                                 Other Information. 
Promptly upon filing thereof, copies of any filings (including on Form
10-K, 10-Q or 8-K) or registration statements with, and reports to, the SEC or
any analogous Government Authority in any relevant jurisdiction by the Borrower
or any of its Subsidiaries (other than amendments to any registration statement
(to the extent such registration statement, in the form it becomes effective,
is delivered to the Lenders), exhibits to any registration statement and, if
applicable, any registration statements on Form S-8) and copies of all
financial statements, proxy statements, notices and reports that the Borrower
or any of its Subsidiaries shall send to the holders of any publicly issued
debt of the Borrower and/or any of its Subsidiaries (including the Senior
Unsecured Notes (whether publicly issued or not)) in their capacity as such
holders (in each case to the extent not theretofore delivered to the Lenders
pursuant to this Agreement) and, with reasonable promptness, such other
information (financial or otherwise) as the Administrative Agent on its own
behalf or on behalf of any Lender may reasonably request in writing from time
to time.

 

(h)                                 Pro Forma Adjustment Certificate. 
Not later than any date on which financial statements are delivered with
respect to any four-quarter period in which a Pro Forma Adjustment is made as a
result of the consummation of the acquisition of any Acquired Entity or
Business by the Borrower or any Restricted Subsidiary for which there shall be
a Pro Forma Adjustment, a certificate of an Authorized Officer of the Borrower
setting forth the amount of such Pro Forma Adjustment and, in reasonable
detail, the calculations and basis therefor.

 

11.2.                        Books,
Records and Inspections.  The
Borrower will, and will cause each of its Subsidiaries to, permit officers and
designated representatives of the Administrative Agent or the Required Lenders
to visit and inspect any of the properties or assets of the Borrower and any
such Subsidiary in whomsoever’s possession to the extent that it is within such
party’s control to permit such inspection, and to examine the books of account
of the Borrower and any such Subsidiary and discuss the affairs, finances and
accounts of the Borrower and any such Subsidiary with, and be advised as to the
same by, its and their officers and independent accountants, all at such
reasonable times and intervals and to such reasonable extent as the
Administrative Agent or the Required Lenders may desire.

 

11.3.                        Maintenance
of Insurance.  The Borrower will, and
will cause each of the Material Subsidiaries to, at all times maintain in full
force and effect, with insurance companies that the Borrower believes (in the
good faith judgment of the management of the Borrower) are financially sound
and responsible at the time the relevant coverage is placed or renewed,

 

103

 

insurance in at
least such amounts and against at least such risks (and with such risk
retentions) as are usually insured against in the same general area by
companies engaged in the independent electric power generation industry; and
will furnish to the Lenders, upon written request from the Administrative
Agent, information presented in reasonable detail as to the insurance so
carried.

 

11.4.                        Payment
of Taxes.  The Borrower will pay and
discharge, and will cause each of its Subsidiaries to pay and discharge, all
material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits, or upon any properties belonging to it, prior to
the date on which material penalties attach thereto, and all lawful material
claims that, if unpaid, could reasonably be expected to become a material Lien
upon any properties of the Borrower or any of the Restricted Subsidiaries,
provided that neither the Borrower nor any of its Subsidiaries shall be
required to pay any such tax, assessment, charge, levy or claim that is being
contested in good faith and by proper proceedings if it has maintained adequate
reserves (in the good faith judgment of the management of the Borrower) with
respect thereto in accordance with GAAP.

 

11.5.                        Consolidated
Corporate Franchises.  The Borrower
will do, and will cause each Material Subsidiary to do, or cause to be done,
all things necessary to preserve and keep in full force and effect its
existence, corporate rights and authority, except to the extent that the
failure to do so could not reasonably be expected to have a Material Adverse
Effect; provided, however, that the Borrower and its Subsidiaries may
consummate any transaction permitted under Section 12.3, 12.4 or 12.5.

 

11.6.                        Compliance
with Statutes.  The Borrower will,
and will cause each of its Subsidiaries to, comply with all applicable laws,
rules, regulations and orders (including Environmental Laws and permits
required thereunder), except to the extent the failure to do so could not
reasonably be expected to have a Material Adverse Effect.

 

11.7.                        ERISA.  Promptly after the Borrower or any of its
Subsidiaries or any ERISA Affiliate knows or has reason to know of the
occurrence of any of the following events that, individually or in the
aggregate (including in the aggregate such events previously disclosed or
exempt from disclosure hereunder, to the extent the liability therefor remains
outstanding), would be reasonably likely to have a Material Adverse Effect, the
Borrower will deliver to each of the Lenders a certificate of an Authorized
Officer or any other senior officer of the Borrower setting forth details as to
such occurrence and the action, if any, that the Borrower, such Subsidiary or
such ERISA Affiliate is required or proposes to take, together with any notices
(required, proposed or otherwise) given to or filed with or by the Borrower,
such Subsidiary, such ERISA Affiliate, the PBGC, a Plan participant (other than
notices relating to an individual participant’s benefits) or the Plan
administrator with respect thereto: that a Reportable Event has occurred; that
an accumulated funding deficiency has been incurred or an application is to be
made to the Secretary of the Treasury for a waiver or modification of the
minimum funding standard (including any required installment payments) or an
extension of any amortization period under Section 412 of the Code with respect
to a Plan; that a Plan having an Unfunded Current Liability has been or is to
be terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA (including the giving of written notice thereof); that a Plan has an
Unfunded Current Liability that has or will result in a lien under ERISA or the
Code; that proceedings will be or have been instituted to terminate a Plan
having an Unfunded Current

 

104

 

Liability
(including the giving of written notice thereof); that a proceeding has been
instituted against the Borrower, a Subsidiary thereof or an ERISA Affiliate
pursuant to Section 515 of ERISA to collect a delinquent contribution to a
Plan; that the PBGC has notified the Borrower, any Subsidiary thereof or any
ERISA Affiliate of its intention to appoint a trustee to administer any Plan;
that the Borrower, any Subsidiary thereof or any ERISA Affiliate has failed to
make a required installment or other payment pursuant to Section 412 of the
Code with respect to a Plan; or that the Borrower, any Subsidiary thereof or
any ERISA Affiliate has incurred or will incur (or has been notified in writing
that it will incur) any liability (including any contingent or secondary
liability) to or on account of a Plan pursuant to Section 409, 502(i), 502(l),
515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of
the Code.

 

11.8.                        Good
Repair.  The Borrower will, and will
cause each of the Restricted Subsidiaries to, ensure that its properties and
equipment used or useful in its business in whomsoever’s possession they may be
to the extent that it is within the control of such party to cause same, are
kept in good repair, working order and condition, normal wear and tear
excepted, and that from time to time there are made in such properties and
equipment all needful and proper repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto, to the extent and in the
manner customary for companies in the independent electric power generation
industry and consistent with third party leases, except in each case to the
extent the failure to do so could not be reasonably expected to have a Material
Adverse Effect.

 

11.9.                        Transactions
with Affiliates.  The Borrower will
conduct, and cause each of the Restricted Subsidiaries to conduct, all
transactions with any of its Affiliates on terms that are substantially as
favorable to the Borrower or such Restricted Subsidiary as it would obtain in a
comparable arm’s-length transaction with a Person that is not an Affiliate,
provided that the foregoing restrictions shall not apply to (a) the payment of
customary annual fees to the Sponsors for management, consulting and financial
services rendered to the Borrower and its Subsidiaries and customary investment
banking fees paid to the Sponsors for services rendered to the Borrower and its
Subsidiaries in connection with divestitures, acquisitions, financings and
other transactions, (b) customary fees paid to members of the Board of
Directors or Board of Managers, as applicable, of the Borrower and its
Subsidiaries, (c) the repayment of a $6,400,000 loan to the Sponsors on or
within five days after the Initial Transaction Closing Date and (d)
transactions permitted by Section 12.6.

 

11.10.                  End
of Fiscal Years; Fiscal Quarters.  The Borrower will, for financial reporting
purposes, cause (a) each of its, and each of its Subsidiaries’, fiscal years to
end on December 31 of each year and (b) each of its, and each of its
Subsidiaries’, fiscal quarters to end on dates consistent with such fiscal
year-end and the Borrower’s past practice; provided, however, that the Borrower
may, upon written notice to the Administrative Agent, change the financial
reporting convention specified above to any other financial reporting
convention reasonably acceptable to the Administrative Agent, in which case the
Borrower and the Administrative Agent will, and are hereby authorized by the
Lenders to, make any adjustments to this Agreement that are necessary in order
to reflect such change in financial reporting.

 

11.11.                  Additional
Guarantors and Grantors.  Except as
provided in Section 12.1(j) or (k) and subject to any applicable limitations
set forth in the Guarantee or the Security Agreement, as applicable, the
Borrower will cause (i) any direct or indirect Domestic Subsidiary

 

105

 

(other than any Unrestricted
Subsidiary, any Domestic Subsidiary of a Foreign Subsidiary or, if applicable,
STP Nuclear Operating Company) formed or otherwise purchased or acquired after
the Credit Agreement Closing Date (including pursuant to a Permitted
Acquisition), and (ii) any Subsidiary of the Borrower (other than any
Unrestricted Subsidiary, any Domestic Subsidiary of a Foreign Subsidiary or, if
applicable, STP Nuclear Operating Company) that is not a Domestic Subsidiary on
the Credit Agreement Closing Date hereof but subsequently becomes a Domestic
Subsidiary (other than any Unrestricted Subsidiary, any Domestic Subsidiary of
a Foreign Subsidiary or, if applicable, STP Nuclear Operating Company), in each
case to execute a supplement to each of the Guarantee and the Security Agreement,
substantially in the form of Annex B or Annex 1, as applicable, to the
respective agreement in order to become a Guarantor under the Guarantee and a
grantor under the Security Agreement.

 

11.12.                  Pledges
of Additional Stock and Evidence of Indebtedness.  (a) 
Except as provided in Section 12.1(j) or (k) and subject to any
applicable limitations set forth in the Pledge Agreement, the Borrower will
pledge, and, if applicable, will cause each Domestic Subsidiary to pledge, to
the Collateral Trustee for the benefit of the Secured Parties under the Credit
Agreement and other Secured Parties holding First Liens, (i) all the Capital
Stock of each Domestic Subsidiary (other than any Unrestricted Subsidiary, any
Domestic Subsidiary of a Foreign Subsidiary or, if applicable, STP Nuclear
Operating Company) and 65% of the issued and outstanding Capital Stock of each
Foreign Subsidiary directly held by the Borrower or a Domestic Subsidiary, in
each case, formed or otherwise purchased or acquired after the Credit Agreement
Closing Date, in each case pursuant to a supplement to the Pledge Agreement
substantially in the form of Annex A thereto, (ii) all evidences of
Indebtedness in excess of $10,000,000 received by the Borrower or any Domestic
Subsidiary (other than any Unrestricted Subsidiary, any Domestic Subsidiary of
a Foreign Subsidiary or, if applicable, STP Nuclear Operating Company) in
connection with any disposition of assets pursuant to Section 12.4(e), in each
case pursuant to a supplement to the Pledge Agreement substantially in the form
of Annex A thereto, and (iii) any global promissory notes executed after the
Credit Agreement Closing Date evidencing Indebtedness of the Borrower and each
of its Subsidiaries that is owing to the Borrower or any Domestic Subsidiary
(other than any Unrestricted Subsidiary, any Domestic Subsidiary of a Foreign
Subsidiary or, if applicable, STP Nuclear Operating Company), in each case
pursuant to a supplement to the Pledge Agreement in the form of Annex A
thereto.

 

(b)                                 The Borrower agrees that all
Indebtedness in excess of $15,000,000 of the Borrower and each of its
Subsidiaries that is owing to any Credit Party that is a party to the Pledge
Agreement shall be evidenced by one or more global promissory notes.

 

11.13.                  Use
of Proceeds.  The
Borrower will use the Letters of Credit and the proceeds of all Loans for the
purposes set forth in the introductory statement to this Agreement.

 

11.14.                  Changes
in Business.  The Borrower and its
Subsidiaries, taken as a whole, will not fundamentally and substantively alter
the character of their business, taken as a whole, from the business conducted
by the Borrower and its Subsidiaries, taken as a whole, on the Initial
Transaction Closing Date and other business activities incidental or related to
any of the foregoing.

 

106

 

11.15.                  Further
Assurances.  (a)  The Borrower will, and will cause each other
Credit Party to, execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements, fixture filings, mortgages, deeds
of trust and other documents), which may be required under any applicable law,
or which the Administrative Agent, the Collateral Trustee or the Required
Lenders may reasonably request, in order to grant, preserve, protect and
perfect the validity and priority of the security interests created or intended
to be created by the Security Agreement, the Pledge Agreement or any Deed of
Trust, all at the expense of the Borrower and its Subsidiaries.

 

(b)                                 Except as provided in Section
12.1(j) or 12.1(k) and subject to any applicable limitations set forth in the
Security Agreement or any Deed of Trust, if any assets (including any real estate
or improvements thereto or any interest therein) with a book value or fair
market value in excess of $3,000,000 are acquired by the Borrower or any other
Credit Party after the Credit Agreement Closing Date (other than assets
constituting Collateral under the Security Agreement that become subject to the
Lien of the Security Agreement upon acquisition thereof) that are of the nature
secured by the Security Agreement or any Deed of Trust, as the case may be, the
Borrower will notify the Administrative Agent, the Collateral Trustee and the
Lenders thereof, and, if requested by the Administrative Agent, the Collateral
Trustee or the Required Lenders, the Borrower will cause such assets to be
subjected to a Lien securing the applicable Obligations and will take, and
cause the other Credit Parties to take, such actions as shall be necessary or
reasonably requested by the Administrative Agent or the Collateral Trustee to
grant and perfect such Liens consistent with the applicable requirements of the
Security Documents, including actions described in paragraph (a) of this
Section, all at the expense of the Credit Parties.  Any Deed of Trust delivered to the Collateral
Trustee in accordance with the preceding sentence shall be accompanied by (x) a
policy or policies of title insurance issued by a nationally recognized title
insurance company insuring the Lien of each Deed of Trust as a valid Lien (with
the priority described therein) on the Mortgaged Property described therein,
free of any other Liens except as expressly permitted by Section 12.2, together
with such endorsements and reinsurance as the Administrative Agent or the
Collateral Trustee may reasonably request and (y) an opinion of local counsel
to the Borrower (or in the event a Subsidiary of the Borrower is the Mortgagor,
to such Subsidiary) substantially in the form of the local counsel opinion
delivered on the Initial Transaction Closing Date pursuant to Section 7.4.

 

SECTION 12.                          Negative
Covenants

 

The Borrower hereby covenants and agrees that
on the Credit Agreement Closing Date and thereafter, until the Commitments and
all Letters of Credit have terminated and the Loans and Unpaid Drawings,
together with interest, Fees and all other Obligations incurred hereunder, are
paid in full:

 

12.1.                        Limitation
on Indebtedness.  The Borrower will
not, and will not permit any of the Restricted Subsidiaries to, create, incur,
assume or suffer to exist any Indebtedness, except:

 

107

 

(a)                                  Indebtedness arising under the
Credit Documents (other than Indebtedness constituting New Term Loans or New
Revolving Credit Loans, which is addressed pursuant Sections 12.1(h)(ii) and
12.1(q));

 

(b)                                 Indebtedness of (i) the Borrower to
any Guarantor and (ii) any Subsidiary to the Borrower or any Restricted
Subsidiary;

 

(c)                                  Indebtedness in respect of any
bankers’ acceptance, letter of credit, warehouse receipt or similar facilities
entered into in the ordinary course of business and not in respect of Hedging
Agreements;

 

(d)                                 except as provided in clauses (j)
and (k) below, Guarantee Obligations incurred by (i) any Restricted Subsidiary
in respect of Indebtedness of the Borrower or any other Restricted Subsidiary
that is permitted to be incurred under this Agreement and (ii) the Borrower in
respect of Indebtedness of any Restricted Subsidiary that is permitted to be
incurred under this Agreement, provided that there shall be no Guarantee by a
Restricted Foreign Subsidiary of any Indebtedness of the Borrower;

 

(e)                                  Guarantee Obligations incurred in
the ordinary course of business in respect of obligations of suppliers,
customers, franchisees, lessors and licensees;

 

(f)                                    (i) Indebtedness (including
Indebtedness arising under Capital Leases) the proceeds of which are used to
finance the acquisition, construction or improvement of fixed or capital assets
or otherwise incurred in respect of Capital Expenditures permitted by Section
12.11, (ii) Indebtedness arising under Capital Leases and Synthetic Leases
entered into in connection with Permitted Sale Leasebacks and (iii)
Indebtedness arising under Capital Leases and Synthetic Leases, other than
Capital Leases and Synthetic Leases in effect on the Initial Transaction
Closing Date (and set forth on Schedule 12.1) and Capital Leases and Synthetic
Leases entered into pursuant to subclauses (i) and (ii) above, provided that
the aggregate amount of Indebtedness incurred pursuant to this subclause (iii)
shall not exceed $75,000,000 at any time outstanding, and (iv) any refinancing,
refunding, renewal or extension of any Indebtedness specified in subclause (i),
(ii) or (iii) above, provided that, except to the extent otherwise expressly
permitted hereunder, the principal amount thereof is not increased above the
principal amount thereof outstanding immediately prior to such refinancing,
refunding, renewal or extension;

 

(g)                                 Initial Transaction Closing Date
Indebtedness (other than the Senior Unsecured Notes) and any refinancing,
refunding, renewal or extension thereof, provided that, except to the extent
otherwise expressly permitted hereunder, (i) the principal amount thereof is
not increased above the principal amount thereof outstanding immediately prior
to such refinancing, refunding, renewal or extension and (ii) the direct and
contingent obligors with respect to such Indebtedness are not changed;

 

(h)                                 (i) Indebtedness in respect of
Hedging Agreements and (ii) Hedging Credit Support Facilities in an aggregate
amount not to exceed the amount permitted to be secured by Liens described in
clauses (ii) and (iii) of Section 12.2(h); provided that any Liens securing
such Hedging Credit Support Facilities shall be subject to Section 12.2(h);

 

108

 

(i)                                     (i) Indebtedness in respect of
Senior Unsecured Notes and any refinancing, refunding, renewal or extension
thereof; provided that, except to the extent otherwise expressly permitted
hereunder, (x) the principal amount thereof is not increased above the
principal amount thereof outstanding immediately prior to such refinancing,
refunding, renewal or extension, (y) the direct and contingent obligations with
respect to such Indebtedness are not changed and (z) such Indebtedness has
terms material to the interests of the Lenders not materially less advantageous
to the Lenders than those of the Senior Unsecured Notes being refinanced (such
refinancing, refunding, renewed or extended Indebtedness, “Refinanced Senior
Unsecured Notes”), and (ii) Indebtedness in respect of Permitted Additional
Notes to the extent the Net Cash Proceeds therefrom are, immediately after the
receipt thereof, applied to the prepayment of Term Loans in accordance with
Section 5.2(a)(i);

 

(j)                                     (i) Indebtedness of a Person or
Indebtedness attaching to assets of a Person that, in either case, becomes a
Restricted Subsidiary or Indebtedness attaching to assets that are acquired by
the Borrower or any Restricted Subsidiary, in each case after the Credit
Agreement Closing Date as the result of a Permitted Acquisition, provided that
(x) such Indebtedness existed at the time such Person became a Restricted
Subsidiary or at the time such assets were acquired and, in each case, was not
created in anticipation thereof, (y) such Indebtedness is not guaranteed in any
respect by the Borrower or any Restricted Subsidiary (other than any such
person that so becomes a Restricted Subsidiary) and (z)(A) the Capital Stock of
such Person is pledged to the Administrative Agent to the extent required under
Section 11.12 and (B) such Person executes a supplement to each of the Guarantee,
the Security Agreement and the Pledge Agreement (or alternative guarantee and
security arrangements in relation to the Obligations) to the extent required
under Section 11.11 or 11.12, as applicable, provided that the requirements of
this subclause (z) shall not apply to an aggregate amount at any time
outstanding of up to (and including) the Guarantee and Collateral Exception
Amount at such time of the aggregate of (1) such Indebtedness and (2) all
Indebtedness as to which the proviso to clause (k)(i)(y) below then applies,
and (ii) any refinancing, refunding, renewal or extension of any Indebtedness
specified in subclause (i) above, provided that, except to the extent otherwise
expressly permitted hereunder, (x) the principal amount of any such Indebtedness
is not increased above the principal amount thereof outstanding immediately
prior to such refinancing, refunding, renewal or extension and (y) the direct
and contingent obligors with respect to such Indebtedness are not changed;

 

(k)                                  (i) Indebtedness of the Borrower or
any Restricted Subsidiary incurred to finance a Permitted Acquisition, provided
that (x) such Indebtedness is not guaranteed in any respect by any Restricted
Subsidiary (other than any Person acquired (the “acquired Person”) as a
result of such Permitted Acquisition or the Restricted Subsidiary so incurring
such Indebtedness) or, in the case of Indebtedness of any Restricted
Subsidiary, by the Borrower, and (y)(A) the Borrower pledges the Capital Stock
of such acquired Person to the Administrative Agent to the extent required
under Section 11.12 and (B) such acquired Person executes a supplement to the
Guarantee, the Security Agreement and the Pledge Agreement (or alternative
guarantee and security arrangements in relation to the Obligations) to the
extent required under Sections 11.11 or 11.12, as applicable, provided that the
requirements of this subclause (y) shall not apply to an aggregate amount at
any time outstanding of up to (and including) the amount of the Guarantee and
Collateral Exception Amount at such time of the aggregate of (1) such
Indebtedness and (2) all Indebtedness as to which the proviso to clause
(j)(i)(z) above then

 

109

 

applies, and (ii) any
refinancing, refunding, renewal or extension of any Indebtedness specified in
subclause (i) above, provided that, except to the extent otherwise expressly
permitted hereunder, (x) the principal amount of any such Indebtedness is not
increased above the principal amount thereof outstanding immediately prior to
such refinancing, refunding, renewal or extension and (y) the direct and
contingent obligors with respect to such Indebtedness are not changed;

 

(l)                                     (i) Indebtedness incurred in
connection with any Permitted Sale Leaseback and (ii) any refinancing,
refunding, renewal or extension of any Indebtedness specified in subclause (i)
above, provided that, except to the extent otherwise expressly permitted
hereunder, (x) the principal amount of any such Indebtedness is not increased above
the principal amount thereof outstanding immediately prior to such refinancing,
refunding, renewal or extension and (y) the direct and contingent obligors with
respect to such Indebtedness are not changed;

 

(m)                               unsecured Indebtedness in respect of
obligations of the Borrower or any Restricted Subsidiary to pay the deferred
purchase price of goods or services or progress payments in connection with
such goods and services; provided that such obligations are incurred in
connection with open accounts extended by suppliers on customary trade terms
(which require that all such payments be made within 60 days after the
incurrence of the related obligation) in the ordinary course of business and
not in connection with the borrowing of money or Hedging Agreements;

 

(n)                                 Indebtedness arising from agreements
of the Borrower or any Restricted Subsidiary providing for indemnification,
adjustment of purchase price or similar obligations, in each case incurred or
assumed in connection with the disposition of any business, assets or Capital
Stock permitted hereunder, other than Guarantee Obligations incurred by any
Person acquiring all or any portion of such business, assets or Capital Stock
for the purpose of financing such acquisition; provided that (i) such Indebtedness
is not reflected on the balance sheet of the Borrower or any Restricted
Subsidiary (contingent obligations referred to in a footnote to financial
statements and not otherwise reflected on the balance sheet will not be deemed
to be reflected on such balance sheet for purposes of this clause (i)) and (ii)
the maximum assumable liability in respect of all such Indebtedness shall at no
time exceed the gross proceeds, including noncash proceeds (the fair market
value of such noncash proceeds being measured at the time received and without
giving effect to any subsequent changes in value), actually received by the
Borrower and the Restricted Subsidiaries in connection with such disposition;

 

(o)                                 Indebtedness in respect of
performance bonds, bid bonds, appeal bonds, surety bonds, completion guarantees
and similar obligations incurred in the ordinary course of business and not in
connection with the borrowing of money or Hedging Agreements;

 

(p)                                 Indebtedness of the Borrower or any
Restricted Subsidiary consisting of (i) obligations to pay insurance premiums
or (ii) take-or-pay obligations contained in supply agreements, in each case
arising in the ordinary course of business and not in connection with the
borrowing of money or Hedging Agreements; and

 

(q)                                 additional Indebtedness and any
refinancing, refunding, renewal or extension thereof, provided that (i) the
aggregate principal amount of Indebtedness outstanding

 

110

 

at any time pursuant
to this clause (q) shall not at any time exceed the sum of (x) $450,000,000 and
(y) (1) 40% of the aggregate amount of all consideration paid or costs
incurred, as the case may be, in connection with the acquisition, expansion,
upgrading or construction, after the Initial Transaction Closing Date, of any
assets of the Borrower and the Restricted Subsidiaries constituting Collateral
(any such assets, “Basket Assets”) (excluding (x) fuel and consumable
inventory purchased in the ordinary course of business and (y) the assets
acquired in connection with the Subsequent Transaction) less (2) 40% of the
consideration paid or costs incurred, as the case may be, in respect of Basket
Assets financed with Indebtedness incurred pursuant to this clause (q) that are
sold or otherwise disposed of by the Borrower and the Restricted Subsidiaries
after the Initial Acquisition Closing Date to the extent the proceeds of such
sale or other disposition are not actually applied to the prepayment of Term
Loans pursuant to Section 5.2(c), and (ii) the Borrower shall be in compliance,
on a pro forma basis after giving effect to the incurrence of such
Indebtedness, with the covenants set forth in Sections 12.9 and 12.10, as
such covenants are recomputed as at the last day of the most recently ended
Test Period under such Sections as if such Indebtedness had been incurred on
the first day of such Test Period.

 

12.2.                        Limitation
on Liens.  The Borrower
will not, and will not permit any of the Restricted Subsidiaries to, create,
incur, assume or suffer to exist any Lien upon any property or assets of any
kind (real or personal, tangible or intangible) of the Borrower or any
Restricted Subsidiary, whether now owned or hereafter acquired, except:

 

(a)                                  Liens securing the Obligations
(other than Liens securing New Term Loans or New Revolving Credit Loans, which
are addressed pursuant Sections 12.2(h)(ii) and 12.2(i));

 

(b)                                 Permitted Liens;

 

(c)                                  Liens securing Indebtedness
permitted pursuant to Section 12.1(f); provided that such Liens attach at all
times only to the assets financed with such Indebtedness;

 

(d)                                 Liens existing on the Initial
Transaction Closing Date and listed on Schedule 12.2;

 

(e)                                  the replacement, extension or
renewal of any Lien permitted by clauses (a) through (d) above and clauses (f),
(g) and (i) of this Section 12.2 upon or in the same assets theretofore subject
to such Lien or the replacement, extension or renewal (without increase in the
amount or change in any direct or contingent obligor except to the extent
otherwise expressly permitted hereunder) of the Indebtedness secured thereby;

 

(f)                                    Liens existing on the assets of any
Person that becomes a Restricted Subsidiary, or existing on assets acquired,
pursuant to a Permitted Acquisition to the extent the Liens on such assets
secure Indebtedness permitted by Section 12.1(j), provided that such Liens
attach at all times only to the same assets that such Liens attached to, and
secure only the same Indebtedness that such Liens secured, immediately prior to
such Permitted Acquisition;

 

(g)                                 (i) Liens placed upon the Capital
Stock of any Restricted Subsidiary acquired pursuant to a Permitted Acquisition
to secure Indebtedness of the Borrower or any other Restricted Subsidiary
incurred pursuant to Section 12.1(k) in connection with such Permitted

 

111

 

Acquisition and (ii)
Liens placed upon the assets of such Restricted Subsidiary to secure a
guarantee by such Restricted Subsidiary of any such Indebtedness of the
Borrower or any other Restricted Subsidiary;

 

(h)                                 (i)                                     Second Liens securing obligations of
the Borrower and the Restricted Subsidiaries under the GS Commodity Hedging
Agreement and the MS Commodity Hedging Agreement (the amount of such
obligations to be measured by the Hedge Outstanding Amount) in an aggregate
amount not to exceed the amount in effect as of the Initial Transaction Closing
Date;

 

(ii)                                  First Liens securing obligations of
the Borrower and the Restricted Subsidiaries under Eligible Commodity Hedging
Agreements (the amount of such obligations to be measured by the Hedge
Outstanding Amount) and Hedging Credit Support Facilities related to Eligible
Commodity Hedging Agreements in an aggregate amount not to exceed the sum of
(A) the product of (x) the aggregate principal amount of Initial Term Loans and
Delayed Draw Term Loans actually repaid or prepaid pursuant to Section 2.5(b),
2.5(c), 5.1 or 5.2(a)(iii) on or prior to the date on which such First Liens
are granted, multiplied by (y) 50%, plus (B) 30% of the aggregate amount of
consideration paid or costs incurred, as the case may be, in connection with
the acquisition, expansion, upgrading or construction, after the Initial
Transaction Closing Date, of any assets (excluding (x) fuel and consumable
inventory purchased in the ordinary course of business and (y) the assets
acquired in connection with the Subsequent Transaction) of the Borrower and the
Restricted Subsidiaries constituting both Baseload Assets and Collateral, plus
(C) the aggregate principal amount of all permanent reductions in the size of
the Base Letter of Credit Commitment and the Special Letter of Credit
Commitment pursuant to Section 4.2 or 4.3;

 

(iii)                               First Liens securing obligations of
the Borrower and the Restricted Subsidiaries under Hedging Credit Support
Facilities in an aggregate amount not to exceed the aggregate principal amount
of all permanent reductions in the size of the Revolving Letter of Credit
Commitment pursuant to Section 4.2 or 4.3;

 

(iv)                              Second Liens securing obligations of
the Borrower and the Restricted Subsidiaries under Eligible Commodity Hedging
Agreements (the amount of such obligations to be measured by the Hedge
Outstanding Amount) with terms ending on or prior to the date that is five
years after the Credit Agreement Closing Date covering not more than 80% of the
aggregate Available Capacity held by the Borrower and the Restricted
Subsidiaries; and

 

(v)                                 Second Liens securing obligations of
the Borrower and the Restricted Subsidiaries under Eligible Commodity Hedging
Agreements (the amount of such obligations to be measured by the Hedge
Outstanding Amount) with terms extending more than five years after the Credit
Agreement Closing Date in an aggregate amount not to exceed the sum of (x) 10%
of Consolidated Total Assets as of the end of the fiscal quarter of the
Borrower immediately preceding the date on which such Liens are granted plus
(y) 50% of the amount of Senior Unsecured Notes or Refinanced Senior Unsecured
Notes that are prepaid, repurchased or redeemed since the Credit Agreement

 

112

 

Closing Date in compliance with Section
12.7(a) other than with the proceeds of asset sales, casualty or condemnation
events or issuances of Indebtedness (including Refinanced Senior Unsecured
Notes);

 

(i)                                     Liens securing Indebtedness
permitted pursuant to Section 12.1(q); provided that the holders of any such
Liens securing Collateral shall enter into the Collateral Trust Agreement with
respect thereto;

 

(j)                                     Liens on any cash collateral account
securing the reimbursement obligations of Genco Holdings under letters of
credit issued in connection with the ROFR;

 

(k)                                  up to $200,000,000 of Liens on
Scheduled Assets;

 

(l)                                     Liens on interests in the South
Texas Project other than any interest of the Borrower or any Restricted Subsidiary
therein;

 

(m)                               Liens securing Indebtedness or other
obligations of the Borrower or a Subsidiary in favor of the Borrower or any
Guarantor; and

 

(n)                                 Liens on cash and Permitted
Investments (i) deposited by the Borrower or any of the Restricted Subsidiaries
in margin accounts with or on behalf of futures contract brokers or paid over
to other counterparties or (ii) pledged or deposited as collateral to a
contract counterparty or issuer of surety bonds by the Borrower or any of the
Restricted Subsidiaries, in each case to secure obligations with respect to (A)
contracts for commercial and trading activities in the ordinary course of
business and contracts (including without limitation, physical delivery, option
(whether cash or financial), exchange, swap and futures contracts) for the
purchase, transmission, transportation, distribution, sale, lease or hedge of
any fuel-related or power-related commodity or service or (B) Hedging
Agreements.

 

12.3.                        Limitation
on Fundamental Changes. 
Except as expressly permitted by Section 12.4 or 12.5, the Borrower will
not, and will not permit any of the Restricted Subsidiaries to, enter into any
merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of all or substantially all its business units,
assets or other properties, except that:

 

(a)                                  any Subsidiary of the Borrower or
any other Person may be merged, amalgamated or consolidated with or into the
Borrower, provided that (i) the Borrower shall be the continuing or surviving
corporation or the Person formed by or surviving any such merger, amalgamation
or consolidation (if other than the Borrower) shall be an entity organized or
existing under the laws of the United States, any state thereof, the District
of Columbia or any territory thereof (the Borrower or such Person, as the case
may be, being herein referred to as the “Successor Borrower”), (ii) the
Successor Borrower (if other than the Borrower) shall expressly assume all the
obligations of the Borrower under this Agreement and the other Credit Documents
pursuant to a supplement hereto or thereto in form reasonably satisfactory to
the Administrative Agent, (iii) no Default or Event of Default would result
from the consummation of such merger, amalgamation or consolidation, (iv) the
Successor Borrower shall be in compliance, on a pro forma basis after giving
effect to such merger, amalgamation or consolidation, with the

 

113

 

covenants set forth
in Sections 12.9 and 12.10, as such covenants are recomputed as at the last day
of the most recently ended Test Period under such Section as if such merger,
amalgamation or consolidation had occurred on the first day of such Test
Period, (v) each Guarantor, unless it is the other party to such merger or
consolidation, shall have by a supplement to the Guarantee confirmed that its
Guarantee shall apply to the Successor Borrower’s obligations under this Agreement,
(vi) each Subsidiary grantor and each Subsidiary pledgor, unless it is the
other party to such merger, amalgamation or consolidation, shall have by a
supplement to the Security Agreement and the Pledge Agreement confirmed that
its obligations thereunder shall apply to the Successor Borrower’s obligations
under this Agreement, (vii) each mortgagor of a Mortgaged Property, unless it
is the other party to such merger or consolidation, shall have by an amendment
to or restatement of the applicable Deed of Trust confirmed that its
obligations thereunder shall apply to the Successor Borrower’s obligations
under this Agreement, and (viii) the Borrower shall have delivered to the
Administrative Agent an officer’s certificate and an opinion of counsel, each
stating that such merger, amalgamation or consolidation and such supplements to
this Agreement or any Security Document comply with this Agreement; provided
further that if the foregoing are satisfied, the Successor Borrower (if other
than the Borrower) will succeed to, and be substituted for, the Borrower under
this Agreement;

 

(b)                                 any Subsidiary of the Borrower or
any other Person may be merged, amalgamated or consolidated with or into any
one or more Subsidiaries of the Borrower, provided that (i) in the case of any
merger, amalgamation or consolidation involving one or more Restricted
Subsidiaries, (A) a Restricted Subsidiary shall be the continuing or surviving
corporation or (B) the Borrower shall take all steps necessary to cause the
Person formed by or surviving any such merger, amalgamation or consolidation
(if other than a Restricted Subsidiary) to become a Restricted Subsidiary, (ii)
in the case of any merger, amalgamation or consolidation involving one or more
Guarantors, a Guarantor shall be the continuing or surviving corporation or the
Person formed by or surviving any such merger, amalgamation or consolidation
(if other than a Guarantor) shall execute a supplement to the Guarantee, the
Security Agreement, the Pledge Agreement and any applicable Deed of Trust in
form and substance reasonably satisfactory to the Administrative Agent in order
to become a Guarantor and pledgor, mortgagor and grantor of Collateral for the
benefit of the Secured Parties, (iii) no Default or Event of Default would result
from the consummation of such merger, amalgamation or consolidation, (iv) the
Borrower shall be in compliance, on a pro forma basis after giving effect to
such merger, amalgamation or consolidation, with the covenants set forth in
Sections 11.9 and 11.10, as such covenants are recomputed as at the last day of
the most recently ended Test Period under such Section as if such merger,
consolidation or amalgamation had occurred on the first day of such Test
Period, and (v) the Borrower shall have delivered to the Administrative Agent
an officer’s certificate stating that such merger, amalgamation or
consolidation and such supplements to any Security Document comply with this
Agreement;

 

(c)                                  any Restricted Subsidiary that is
not a Guarantor may sell, lease, transfer or otherwise dispose of any or all of
its assets (upon voluntary liquidation or otherwise) to the Borrower, a
Guarantor or any other Restricted Subsidiary of the Borrower;

 

(d)                                 any Guarantor may sell, lease,
transfer or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or any other Guarantor; and

 

114

 

(e)                                  any Restricted Subsidiary may
liquidate or dissolve if (x) the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders and (y) to the extent such Restricted
Subsidiary is a Credit Party, any assets or business not otherwise disposed of
or transferred in accordance with Section 12.4 or 12.5, or, in the case of any
such business, discontinued, shall be transferred to, or otherwise owned or
conducted by, another Credit Party after giving effect to such liquidation or
dissolution.

 

12.4.                        Limitation
on Sale of Assets.  The
Borrower will not, and will not permit any of the Restricted Subsidiaries to,
(i) convey, sell, lease, assign, transfer or otherwise dispose of any of its
property, business or assets (including receivables and leasehold interests),
whether now owned or hereafter acquired (other than any such sale, transfer,
assignment or other disposition resulting from a Recovery Event), or (ii) sell
to any Person (other than the Borrower or a Guarantor) any shares owned by it
of any Restricted Subsidiary’s Capital Stock, except that:

 

(a)                                  the Borrower and the Restricted
Subsidiaries may sell, transfer or otherwise dispose of the following in the
ordinary course of business:  (i)
obsolete, worn-out, used or surplus assets to the extent such assets are not
necessary for the operation of the Borrower’s and its Subsidiaries’ business;
(ii) inventory and goods held for sale; (iii) power, capacity, fuel, emissions
credits and similar products and related services; and (iv) cash and Permitted
Investments;

 

(b)                                 the Borrower and the Restricted
Subsidiaries may lease or sublease real or personal property in the ordinary
course of business;

 

(c)                                  the Borrower and the Restricted
Subsidiaries may effect any Scheduled Asset Event;

 

(d)                                 the Borrower and the Restricted
Subsidiaries may sell, transfer or otherwise dispose of other assets (other
than accounts receivable) for fair value, provided that (i) the aggregate
amount of such sales, transfers and disposals by the Borrower and the
Restricted Subsidiaries, taken as a whole, pursuant to this clause (d) shall
not exceed in the aggregate the greater of (x) $400,000,000 and (y) 10% of the
Consolidated Total Assets of the Borrower and the Restricted Subsidiaries, (ii)
any consideration in excess of $15,000,000 received by the Borrower or any
Guarantor in connection with such sales, transfers and other dispositions of
assets pursuant to this clause (d) that is in the form of Indebtedness shall be
pledged to the Administrative Agent pursuant to Section 11.12, (iii) with respect
to any such sale, transfer or disposition (or series of related sales,
transfers or dispositions) in an aggregate amount in excess of $30,000,000, the
Borrower shall be in compliance, on a pro forma basis after giving effect to
such sale, transfer or disposition, with the covenants set forth in Sections
12.9 and 12.10, as such covenants are recomputed as at the last day of the most
recently ended Test Period under such Sections as if such sale, transfer or
disposition had occurred on the first day of such Test Period and (iv) after
giving effect to any such sale, transfer or disposition, no Default or Event of
Default shall have occurred and be continuing;

 

(e)                                  the Borrower and the Restricted
Subsidiaries may (i) sell or discount without recourse accounts receivable
arising in the ordinary course of business in connection

 

115

 

with the compromise
or collection thereof and (ii) sell or transfer accounts receivable and related
rights pursuant to customary receivables financing facilities so long as, in
each case, the Net Cash Proceeds thereof to the Borrower and the Restricted
Subsidiaries (except in the case of transactions described in clause (i) to the
extent the Net Cash Proceeds thereof do not exceed $30,000) are promptly
applied to the prepayment of Term Loans pursuant to Section 5.2;

 

(f)                                    the Borrower and the Restricted
Subsidiaries may sell, transfer or otherwise dispose of any of the Initial
Baseload Assets, so long as the provisions of Section 5.2(a)(i) are complied
with in connection with such sale, transfer or other disposition;

 

(g)                                 the Borrower and the Restricted
Subsidiaries may make sales of assets to the Borrower or to any Restricted
Subsidiary, provided that (i) any such sales to Restricted Foreign Subsidiaries
shall be for fair value and (ii) any such sales relating to Initial Baseload
Assets shall be made only to the Borrower or any Guarantor; and

 

(h)                                 the Restricted Subsidiaries may
effect any transaction permitted by Section 12.3 and the Borrower and the
Restricted Subsidiaries may effect any transaction permitted by Section 12.8.

 

12.5.                        Limitation
on Investments.  The
Borrower will not, and will not permit any of the Restricted Subsidiaries to,
make any advance, loan, extensions of credit or capital contribution to, or
purchase any stock, bonds, notes, debentures or other securities of or any
assets of, or make any other investment in, any Person, except:

 

(a)                                  extensions of trade credit, asset
purchases (including purchases of inventory, supplies and materials) and the
licensing or contribution of intellectual property pursuant to joint marketing
arrangements with other Persons, in each case in the ordinary course of
business;

 

(b)                                 Permitted Investments;

 

(c)                                  loans and advances to officers, directors
and employees of the Borrower or any of its Subsidiaries (i) to finance the
purchase of Capital Stock of the Borrower (provided that the amount of such
loans and advances used to acquire such Capital Stock shall be contributed to
the Borrower in cash as common equity), (ii) for reasonable and customary
business related travel expenses, moving expenses and similar expenses, in each
case incurred in the ordinary course of business, and (iii) for additional
purposes not contemplated by subclause (i) or (ii) above in an aggregate
principal amount at any time outstanding with respect to this clause (iii) not
exceeding $10,000,000;

 

(d)                                 investments existing on the Initial
Transaction Closing Date and listed on Schedule 12.5 and any extensions,
renewals or reinvestments thereof, so long as the aggregate amount of all
investments pursuant to this clause (d) is not increased at any time above the
amount of such investments existing on the Initial Transaction Closing Date;

 

(e)                                  investments in Hedging Agreements
permitted by Section 12.1(h)(i);

 

116

 

(f)                                    investments received in connection
with the bankruptcy or reorganization of suppliers or customers and in
settlement of delinquent obligations of, and other disputes with, customers
arising in the ordinary course of business;

 

(g)                                 investments to the extent that
payment for such investments is made solely with Capital Stock of the Borrower;

 

(h)                                 investments constituting non-cash
proceeds of sales, transfers and other dispositions of assets to the extent
permitted by Section 12.4;

 

(i)                                     investments in the Borrower or any
Guarantor;

 

(j)                                     investments constituting Permitted
Acquisitions, provided that the aggregate amount of any such investment, as
valued at the fair market value of such investment at the time each such
investment is made, made by the Borrower or any Restricted Subsidiary in any
Restricted Foreign Subsidiary shall not exceed the Available Amount at the time
of such investment plus an amount equal to any repayments, interest, returns,
profits, distributions, income and similar amounts actually received in cash in
respect of any such investment (which amount shall not exceed the amount of
such investment valued at the fair market value of such investment at the time
such investment was made);

 

(k)                                  investments in the equity interests
of one or more newly formed Persons that are received in consideration of the
contribution by the Borrower or the applicable Restricted Subsidiaries of
assets (including Capital Stock) to such person or persons, provided that (i)
the fair market value of such assets, determined on an arms’-length basis, so
contributed pursuant to this paragraph (k) shall not in the aggregate exceed
$250,000,000 and (ii) in respect of each such contribution, an Authorized
Officer of the Borrower shall certify, in a form to be agreed upon by the
Borrower and the Administrative Agent (x) after giving effect to such
contribution, no Default or Event of Default shall have occurred and be
continuing, (y) the fair market value of the assets so contributed and (z) that
the requirements of paragraph (i) of this proviso remain satisfied;

 

(l)                                     investments made to repurchase or
retire common stock of the Borrower owned by any employee stock ownership plan
or key employee stock ownership plan of the Borrower;

 

(m)                               (i) additional investments
(including investments in Minority Investments and Unrestricted Subsidiaries)
and (ii) investments in joint ventures or similar entities that do not
constitute Restricted Subsidiaries, in each case as valued at the fair market
value of such investment at the time each such investment is made, (A) in an
aggregate amount that, at the time such investment is made, would not exceed
the sum of (x) the Available Amount at such time plus (y) an amount equal to
any repayments, interest, returns, profits, distributions, income and similar
amounts actually received in cash in respect of any such investment (which
amount shall not exceed the amount of such investment valued at the fair market
value of such investment at the time such investment was made), and/or (B) in
the case of investments described in clause (ii) above only, in an aggregate
amount that, at the time such investment is made, would be permitted to be
expended as a Capital Expenditure under Section 12.11, to the extent that (x)
the

 

117

 

applicable joint
venture owns an interest in assets the addition of which would have been a
Capital Expenditure if acquired or constructed, and owned, directly by the
Borrower or a Restricted Subsidiary and (y) the ability of the Borrower and/or
one or more Restricted Subsidiaries to receive cash flows attributable to its
interest therein is not restricted by contract, Applicable Law or otherwise;

 

(n)                                 the Acquisition Transactions, the
ROFR and any other investment in the South Texas Project; provided that the
aggregate investment of the Borrower and the Restricted Subsidiaries in the
South Texas Project made pursuant to this clause (n) shall not exceed a 50%
undivided ownership interest;

 

(o)                                 investments in Project Finance
Subsidiaries, as valued at the fair market value of such investment at the time
each such investment is made, in an aggregate amount that, at the time such
investment is made, would not exceed the sum of (i) $100,000,000 plus (ii) the
Available Amount at such time plus (iii) an amount equal to any repayments,
interest, returns, profits, distributions, income and similar amounts actually
received in cash in respect of any such investment (which amount shall not
exceed the amount of such investment valued at the fair market value of such
investment at the time such investment was made); and

 

(p)                                 (i) investments permitted under
Section 12.6 or the proviso to Section 11.9 and (ii) Guarantee Obligations
permitted under Section 12.1.

 

12.6.                        Limitation
on Dividends.  The
Borrower will not declare or pay any dividends (other than dividends payable
solely in its Capital Stock) or return any capital to its stockholders or make
any other distribution, payment or delivery of property or cash to its
stockholders as such, or redeem, retire, purchase or otherwise acquire,
directly or indirectly, for consideration, any shares of any class of its
Capital Stock or the Capital Stock of any direct or indirect parent now or
hereafter outstanding (or any options or warrants or stock appreciation rights
issued with respect to any of its Capital Stock), or set aside any funds for
any of the foregoing purposes, or permit any of the Restricted Subsidiaries to
purchase or otherwise acquire for consideration (other than in connection with
an investment permitted by Section 12.5) any shares of any class of the Capital
Stock of the Borrower, now or hereafter outstanding (or any options or warrants
or stock appreciation rights issued with respect to any of its Capital Stock)
(all of the foregoing “Dividends”), provided that, other than with
respect to clause (f) below, so long as no Default or Event of Default exists
or would exist after giving effect thereto:

 

(a)                                  the
Borrower may redeem in whole or in part any of its Capital Stock for another
class of Capital Stock or rights to acquire its Capital Stock or with proceeds
from substantially concurrent equity contributions or issuances of new shares
of its Capital Stock, provided that such other class of Capital Stock contains
terms and provisions at least as advantageous to the Lenders in all respects
material to their interests as those contained in the Capital Stock redeemed
thereby;

 

(b)                                 the
Borrower may repurchase shares of its Capital Stock (or any options or warrants
or stock appreciation rights issued with respect to any of its Capital Stock)
held by current or former officers, directors and employees of the Borrower and
its Subsidiaries, so long as such repurchase is pursuant to, and in accordance
with the terms of, management and/or

 

118

 

employee stock
plans, stock subscription agreements, employment agreements or shareholder
agreements;

 

(c)                                  the
Borrower and the Restricted Subsidiaries may make investments permitted by
Section 12.5;

 

(d)                                 the
Borrower may declare and make distributions on its Capital Stock at any time
after the date which is one year after the Credit Agreement Closing Date,
provided that (i) the aggregate amount of such distributions paid by the
Borrower pursuant to this clause (d) shall not at any time exceed 50% of
cumulative Consolidated Net Income for the period (taken as one accounting
period) commencing on the Credit Agreement Closing Date and ending on the last
day of the most recent fiscal quarter for which Section 11.1 Financials
have been delivered to the Lenders under Section 11.1 less cash
distributions paid by the Borrower with respect to its Capital Stock pursuant
to this clause (d) during such period, and (ii) at the time of the payment of
any such distributions, the Term Loan Repayment Amount shall be at least (x) if
the Subsequent Transaction Closing Date has occurred, $250,000,000 and (y) if
the Subsequent Transaction Closing Date has not occurred, $200,000,000;

 

(e)                                  notwithstanding
clause (d) above, the Borrower may declare and make distributions on its
Capital Stock with Excepted Distributable Scheduled Asset Proceeds and
Distributable Scheduled Asset Proceeds; provided that distributions made
pursuant to this clause (e) cannot exceed $200,000,000 in the aggregate;

 

(f)                                    for
so long as the Borrower is a limited liability company that is treated as a
partnership for Federal income tax purposes, the Borrower may make cash
distributions to its members, during each Quarterly Payment Period, in an
aggregate amount not to exceed the Permitted Quarterly Tax Distribution in
respect of the related Estimation Period, and if any portion of the Permitted
Quarterly Tax Distribution is not distributed during such Quarterly Payment
Period, the Permitted Quarterly Tax Distribution payable during the immediately
following four quarter period shall be increased by such undistributed portion;

 

(g)                                 the
Borrower may make any of the payments expressly permitted by the proviso to
Section 11.9;

 

(h)                                 if
the cash on hand at Genco Holdings immediately prior to the consummation of the
Subsequent Transaction exceeds $89,400,000 (any such excess, “Excess Cash On
Hand”), following the consummation of the Subsequent Transaction the
Borrower may declare and make distributions on its Capital Stock with such
Excess Cash On Hand in an aggregate not to exceed $75,000,000; and

 

(i)                                     notwithstanding
the foregoing, the Borrower may declare and make distributions on its Capital
Stock at any time in an aggregate amount not to exceed $25,000,000.

 

12.7.                        Limitations
on Debt Payments and Amendments.  (a)     The Borrower will not prepay, repurchase
or redeem or otherwise defease any Senior Unsecured Notes or Refinanced Senior
Unsecured Notes (it being understood that any payment of principal prior to the
Senior Unsecured Note Maturity Date shall be deemed a prepayment for purposes
of this Section 12.7(a)); provided, however, that so long as no Default or
Event of Default has occurred

 

119

 

and is continuing,
(i) the Borrower may consummate the Call Transaction and (ii) the Borrower or
any Restricted Subsidiary may prepay, repurchase or redeem any Senior Unsecured
Notes or Refinanced Senior Unsecured Notes (x) for an aggregate price not in
excess of the Available Amount at the time of such prepayment, repurchase or
redemption or (y) with the proceeds of Refinanced Senior Unsecured Notes or
Indebtedness subordinated to the Obligations that is permitted by Section 12.1
(other than Permitted Additional Notes) and that has terms that are not
materially less favorable to the Lenders than the Senior Unsecured Notes.

 

(b)                                 The Borrower will not prepay,
repurchase or redeem or otherwise defease any Permitted Additional Notes (it
being understood that any payment of principal prior to the Senior Unsecured
Note Maturity Date shall be deemed a prepayment for purposes of this Section
12.7(b)); provided, however, that so long as no Default or Event of Default has
occurred and is continuing, the Borrower or any Restricted Subsidiary may
prepay, repurchase or redeem any Permitted Additional Notes (i) for an
aggregate price not in excess of the Available Amount at the time of such
prepayment, repurchase or redemption or (ii) with the proceeds of other
Permitted Additional Notes or other Indebtedness subordinated to the
Obligations that is permitted by Section 12.1 and that has terms that are not
materially less favorable to the Lenders than the Senior Unsecured Notes.

 

(c)                                  The Borrower will not waive, amend,
modify, terminate or release the Senior Unsecured Note Indenture or any
indenture governing Refinanced Senior Unsecured Notes to the extent that any
such waiver, amendment, modification, termination or release would be adverse
to the Lenders in any material respect.

 

12.8.                        Limitations
on Sale Leasebacks.  The
Borrower will not, and will not permit any of the Restricted Subsidiaries to,
enter into or effect any Sale Leasebacks, other than Permitted Sale Leasebacks.

 

12.9.                        Consolidated
Total Debt to Consolidated EBITDA Ratio.  The Borrower will not permit the Consolidated
Total Debt to Consolidated EBITDA Ratio for any Test Period ending during any
period set forth below to be greater than the ratio set forth below opposite
such period:

 

	
  Period

  	
   

  	
  Ratio

  
	
  April 1, 2005 to December 31, 2009

  	
   

  	
  7.00 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1, 2010 to December 31, 2010

  	
   

  	
  6.50 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1, 2011 to December 31, 2011

  	
   

  	
  6.00 to 1.00

  

 

12.10.                  Consolidated
EBITDA to Consolidated Interest Expense Ratio.  The Borrower will not permit the Consolidated
EBITDA to Consolidated Interest Expense Ratio for any Test Period ending during
any period set forth below to be less than the ratio set forth below opposite
such period:

 

120

 

	
  Period

  	
   

  	
  Ratio

  	
   

  
	
  April 1,
  2005 to December 31. 2009

  	
   

  	
  1.50 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2010 to December 31, 2010

  	
   

  	
  1.75 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2011 to December 31, 2011

  	
   

  	
  2.00 to 1.00

  	
   

  

 

12.11.
               Capital
Expenditures.  The Borrower will not,
and will not permit any of the Restricted Subsidiaries to, make any Capital
Expenditures (other than Permitted Acquisitions that constitute Capital
Expenditures, Environmental Capital Expenditures and Necessary Capital
Expenditures), that would cause the aggregate amount of such Capital
Expenditures (including any investments made pursuant to Section 12.5(m)(ii)(B))
made by the Borrower and the Restricted Subsidiaries in any fiscal year of the
Borrower set forth below to exceed the sum of (a) the amount set forth in
the table below opposite such fiscal year (such amount, the “Permitted
Capital Expenditure Amount”) and (b) the Available Amount as of the
last day of such fiscal year.

 

	
  Fiscal Year

  	
   

  	
  Permitted Capital Expenditure Amount

  	
   

  
	
  2004

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2005

  	
   

  	
  $

  	
  123,100,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2006

  	
   

  	
  $

  	
  100,400,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2007

  	
   

  	
  $

  	
  62,100,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2008

  	
   

  	
  $

  	
  39,600,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2009

  	
   

  	
  $

  	
  42,200,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2010

  	
   

  	
  $

  	
  54,400,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2011

  	
   

  	
  $

  	
  46,300,000

  	
   

  

 

To the extent that Capital
Expenditures (other than Permitted Acquisitions that constitute Capital
Expenditures, Environmental Capital Expenditures and Necessary Capital
Expenditures) made by the Borrower and the Restricted Subsidiaries during any
fiscal year (including any investments made pursuant to Section 12.5(m)(ii)(B))
are less than the Permitted Capital Expenditure Amount for such fiscal year,
100% of such unused amount (each such amount, a “carry-forward amount”)
may be carried forward to any succeeding fiscal year and utilized to make such
Capital Expenditures in any such succeeding fiscal year in the event the amount
set forth above for such succeeding fiscal year has been used.

 

121

 

12.12.                  Special
Letter of Credit Covenants.  Until
all Special Letter of Credit Commitments have terminated and there are no
Special Letter of Credit Exposures outstanding, (a) the Borrower and the
Restricted Subsidiaries shall not enter into any Special Commodity Hedging
Agreement supported by a Special Letter of Credit if, at the time the Borrower
or the applicable Restricted Subsidiary enters into such Special Commodity
Hedging Agreement and giving effect thereto, the ratio of (x) the Available Capacity
of the Borrower and the Restricted Subsidiaries that is subject to Commodity
Hedging Agreements to (y) the aggregate Available Capacity of the Borrower and
the Restricted Subsidiaries would exceed 1.00 to 1.00, and (b) the
Borrower and the Restricted Subsidiaries shall not amend or otherwise modify,
or consent to the amendment or other modification of, any Special Commodity
Hedging Agreement in a manner that is materially adverse to the Special Letter
of Credit Issuer or the Special Letter of Credit Participants, without the
prior consent of the Special Letter of Credit Issuer, such consent not to be
unreasonably withheld or delayed; provided that, notwithstanding this clause
(b), any such Commodity Hedging Agreement may be terminated by agreement of the
parties thereto without the consent of the Special Letter of Credit Issuer or
the Special Letter of Credit Participants so long as any termination payment to
be made by the Borrower in connection therewith is properly paid when due by
the Borrower through a deposit with the Special Letter of Credit Issuer for
payment to the applicable Special LOC Counterparty upon execution of the
applicable termination documentation (or through such other mechanism agreed to
by the parties to such Commodity Hedging Agreement resulting in there being no
drawing on the applicable Special Letter of Credit).

 

SECTION 13.   Events
of Default

 

Upon the
occurrence of any of the following specified events (each an “Event of
Default”):

 

13.1.                        Payments.  The Borrower shall (a) default in the
payment when due of any principal of the Loans or (b) default, and such
default shall continue for five or more days, in the payment when due of any
interest on the Loans or any Fees or any Unpaid Drawings or of any other
amounts owing hereunder or under any other Credit Document; or

 

13.2.                        Representations,
etc.  Any representation, warranty or
statement made or deemed made by any Credit Party herein or in any other Credit
Document or any certificate, statement, report or other document delivered or
required to be delivered pursuant hereto or thereto (other than pursuant to Section 3.2(c))
shall prove to be untrue in any material respect on the date as of which made
or deemed made; or

 

13.3.                        Covenants.  Any Credit Party shall (a) default in
the due performance or observance by it of any term, covenant or agreement
contained in Section 11.1(e) or Section 12 (other than Section 12.12)
or (b) default in the due performance or observance by it of any term,
covenant or agreement (other than those referred to in Section 13.1 or 13.2
or clause (a) of this Section 13.3) contained in this Agreement or any
other Credit Document (other than Section 12.12) and such default shall
continue unremedied for a period of at least 30 days after receipt of written
notice by the Borrower from the Administrative Agent or the Required Lenders;
or

 

122

 

13.4.                        Default
Under Other Agreements.  (a) The
Borrower or any of the Restricted Subsidiaries shall (i) default in any
payment with respect to any Indebtedness (other than the Specified Obligations
or obligations under Commodity Hedging Agreements) in excess of $25,000,000 in
the aggregate for the Borrower and such Subsidiaries, beyond the period of
grace, if any, provided in the instrument or agreement under which such
Indebtedness was created or (ii) default in the observance or performance
of any agreement or condition relating to any such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist (other than, with respect to Indebtedness
consisting of any Hedging Agreements, termination events or equivalent events
pursuant to the terms of such Hedging Agreements), the effect of which default
or other event or condition is to cause, or to permit the holder or holders of
such Indebtedness (or a trustee or agent on behalf of such holder or holders)
to cause, any such Indebtedness to become due prior to its stated maturity; or (b) without
limiting the provisions of clause (a) above, any such Indebtedness shall
be declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment or as a mandatory prepayment (and, with
respect to Indebtedness consisting of any Hedging Agreements, other than due to
a termination event or equivalent event pursuant to the terms of such Hedging
Agreements), prior to the stated maturity thereof; or

 

13.5.                        Bankruptcy,
etc.  The Borrower or any Specified
Subsidiary shall commence a voluntary case, proceeding or action concerning
itself under Title 11 of the United States Code entitled “Bankruptcy,”; or an
involuntary case, proceeding or action is commenced against the Borrower or any
Specified Subsidiary and the petition is not controverted within 10 days after
commencement of the case, proceeding or action; or an involuntary case,
proceeding or action is commenced against the Borrower or any Specified
Subsidiary and the petition is not dismissed within 60 days after commencement
of the case, proceeding or action; or a custodian (as defined in the Bankruptcy
Code) receiver, receiver manager, trustee or similar person is appointed for,
or takes charge of, all or substantially all of the property of the Borrower or
any Specified Subsidiary; or the Borrower or any Specified Subsidiary commences
any other proceeding or action under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar law of any jurisdiction whether now or hereafter in effect relating
to the Borrower or any Specified Subsidiary; or there is commenced against the
Borrower or any Specified Subsidiary any such proceeding or action that remains
undismissed for a period of 60 days; or the Borrower or any Specified
Subsidiary is adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding or action is entered; or the
Borrower or any Specified Subsidiary suffers any appointment of any custodian
receiver, receiver manager, trustee or the like for it or any substantial part
of its property to continue undischarged or unstayed for a period of 60 days;
or the Borrower or any Specified Subsidiary makes a general assignment for the
benefit of creditors; or any corporate action is taken by the Borrower or any
Specified Subsidiary for the purpose of effecting any of the foregoing; or

 

13.6.                        ERISA.  (a) Any Plan shall fail to satisfy the
minimum funding standard required for any plan year or part thereof or a waiver
of such standard or extension of any amortization period is sought or granted
under Section 412 of the Code; any Plan is or shall have been terminated
or is the subject of termination proceedings under ERISA (including the giving
of written notice thereof); an event shall have occurred or a condition shall
exist in either case

 

123

 

entitling the PBGC to terminate
any Plan or to appoint a trustee to administer any Plan (including the giving
of written notice thereof); any Plan shall have an accumulated funding
deficiency (whether or not waived); any of the Borrower, any Subsidiary thereof
or any ERISA Affiliate has incurred or is likely to incur a liability to or on
account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063,
4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code (including
the giving of written notice thereof); (b) there could result from any
event or events set forth in clause (a) of this Section 13.6 the
imposition of a lien, the granting of a security interest, or a liability, or
the reasonable likelihood of incurring a lien, security interest or liability;
and (c) such lien, security interest or liability will or would be
reasonably likely to have a Material Adverse Effect; or

 

13.7.                        Guarantee.  The Guarantee or any material provision
thereof shall cease to be in full force or effect or any Guarantor thereunder
or any Credit Party shall deny or disaffirm in writing any Guarantor’s
obligations under the Guarantee; or

 

13.8.                        Security
Documents.  Any Security Document or
any material provision thereof shall cease to be in full force or effect (other
than pursuant to the terms hereof or thereof or as a result of acts or
omissions of the Administrative Agent, the Collateral Trustee or any Lender) or
any grantor, pledgor or mortgagor thereunder or any Credit Party shall deny or
disaffirm in writing any grantor’s, pledgor’s or mortgagor’s obligations under
such Security Document; or

 

13.9.                        Subordination.  The Specified Obligations or the obligations
of the Restricted Subsidiaries pursuant to the Guarantee shall cease to constitute
senior indebtedness under the subordination provisions of any document or
instrument evidencing any permitted subordinated Indebtedness or such
subordination provisions shall be invalidated or otherwise cease to be legal,
valid and binding obligations of the parties thereto, enforceable in accordance
with their terms; or

 

13.10.                  Judgments.  One or more judgments or decrees shall be
entered against the Borrower or any of the Restricted Subsidiaries involving a
liability of $25,000,000 or more in the aggregate for all such judgments and
decrees for the Borrower and the Restricted Subsidiaries (to the extent not
paid or fully covered by insurance provided by a carrier not disputing
coverage) and any such judgments or decrees shall not have been satisfied,
vacated, discharged, stayed or bonded pending appeal within 60 days from the
entry thereof; or

 

13.11.                  Change
of Control.  A Change of Control
shall occur; or

 

13.12.                  Defaults
Under Commodity Hedging Agreements.  The
Borrower or any of the Restricted Subsidiaries shall default in any required
payment obligation under any one or more Commodity Hedging Agreements in excess
of $25,000,000 in the aggregate for the Borrower and the Restricted Subsidiaries,
after giving effect to any grace periods, dispute resolution provisions or
similar provisions contained in such Commodity Hedging Agreements;

 

then, and in
any such event, and at any time thereafter, if any Event of Default shall then
be continuing, the Administrative Agent shall, upon the written request of the
Required Lenders, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the

 

124

 

rights of the
Administrative Agent or any Lender to enforce its claims against the Borrower,
except as otherwise specifically provided for in this Agreement (provided that,
if an Event of Default specified in Section 13.5 shall occur with respect
to the Borrower or any Specified Subsidiary, the result that would occur upon
the giving of written notice by the Administrative Agent as specified in
clauses (i), (ii), (iii) and (v) below shall occur automatically
without the giving of any such notice):  (i) declare
the Total Revolving Credit Commitment, the Total Swingline Commitment, the Total
Base Letter of Credit Commitment or the Total Special Letter of Credit
Commitment terminated and whereupon any such Commitment, if any, of each Lender
or the Swingline Lender, as the case may be, shall forthwith terminate
immediately and any Fees theretofore accrued shall forthwith become due and
payable without any other notice of any kind, (ii) if such Event of
Default occurs on or prior to the Subsequent Transaction Closing Date or the
Call Transaction Closing Date, as applicable, declare the Total Delayed Draw
Term Loan Commitment terminated and whereupon the Delayed Draw Term Loan
Commitment, if any, of each Lender shall forthwith terminate immediately and
any Fees theretofore accrued shall forthwith become due and payable without any
other notice of any kind; (iii) declare the principal of and any accrued
interest and fees in respect of all Loans and all Obligations owing hereunder
and thereunder to be, whereupon the same shall become, forthwith due and
payable without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Borrower; (iv) terminate any Letter of
Credit that may be terminated in accordance with its terms; and/or (v) direct
the Borrower to pay (and the Borrower agrees that upon receipt of such notice,
or upon the occurrence of an Event of Default specified in Section 13.5
with respect to the Borrower or any Specified Subsidiary, it will pay) to the
Administrative Agent at the Administrative Agent’s Office such additional
amounts of cash, to be held as security for the Borrower’s reimbursement
obligations for Drawings that may subsequently occur thereunder, equal to the
aggregate Stated Amount of all Letters of Credit issued and then outstanding.

 

13.13.                  Termination
of Special Letter of Credit Commitments. 
If (a) any Credit Party shall default in the due performance or
observance by it of any term, covenant or agreement contained in Section 12.12
or (b) any representation, warranty or statement made or deemed made by
any Credit Party in any certificate or notice delivered pursuant to Section 3.2(c) shall
prove to be untrue in any material respect on the date as of which made or
deemed made, then, and in any such event, and at any time thereafter, if any
such event shall then be continuing, the Administrative Agent shall, upon the
written request of the Required Special Letter of Credit Participants, by
written notice to the Borrower, (i) declare the Total Special Letter of
Credit Commitment terminated and whereupon the Special Letter of Credit Commitment
of each Special Letter of Credit Participant shall forthwith terminate
immediately and any Fees theretofore accrued shall forthwith become due and
payable without any other notice of any kind, (ii) terminate any Special
Letter of Credit that may be terminated in accordance with its terms, and/or (iii) direct
the Borrower to pay (and the Borrower agrees that upon receipt of such notice
it will pay) to the Administrative Agent at the Administrative Agent’s Office
such additional amounts of cash, to be held as security for the Borrower’s
reimbursement obligations for Drawings that may subsequently occur thereunder,
equal to the aggregate Stated Amount of all Special Letters of Credit issued
and then outstanding.

 

125

 

13.14.                  Borrower’s
Right to Cure.

 

(a)                                  Financial Performance Covenants. 
Notwithstanding anything to the contrary contained in this Section 13,
in the event that the Borrower fails to comply with the requirements of any
Financial Performance Covenant, until the expiration of the 10th day subsequent
to the date the certificate calculating such Financial Performance Covenant is
required to be delivered pursuant to Section 11.1(d), the Borrower shall
have the right to issue Permitted Cure Securities for cash or otherwise receive
cash contributions to the capital of the Borrower (collectively, the “Cure
Right”), and upon the receipt by the Borrower of such cash (the “Cure
Amount”) pursuant to the exercise by the Borrower of such Cure Right such
Financial Performance Covenant shall be recalculated giving effect to the
following pro forma adjustments:

 

(i)                                     Consolidated EBITDA shall be
increased, solely for the purpose of measuring the Financial Performance
Covenants and not for any other purpose under this Agreement, by an amount
equal to the Cure Amount; and

 

(ii)                                  If, after giving effect to the
foregoing recalculations, the Borrower shall then be in compliance with the
requirements of all Financial Performance Covenants, the Borrower shall be
deemed to have satisfied the requirements of the Financial Performance
Covenants as of the relevant date of determination with the same effect as
though there had been no failure to comply therewith at such date, and the
applicable breach or default of the Financial Performance Covenants that had
occurred shall be deemed cured for this purposes of this Agreement.

 

(b)                                 Limitation on Exercise of Cure Right. 
Notwithstanding anything herein to the contrary, (a) in each
four-fiscal-quarter period there shall be at least one fiscal quarter in which
the Cure Right is not exercised, (b) in each eight-fiscal-quarter period,
there shall be a period of at least four consecutive fiscal quarters during
which the Cure Right is not exercised and (c) the Cure Amount shall be no
greater than the amount required for purposes of complying with the Financial
Performance Covenants.

 

SECTION 14.   The
Administrative Agent

 

14.1.                        Appointment.  Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Credit Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Credit Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental
thereto.  Notwithstanding any provision
to the contrary elsewhere in this Agreement, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Credit Document or otherwise exist against the
Administrative Agent.  Neither the
Syndication Agent nor the Co-Documentation Agents, in their respective capacities
as such, shall have any obligations, duties or responsibilities under this
Agreement but shall be entitled to all benefits of this Section 14.

 

126

 

14.2.                        Delegation
of Duties.  The Administrative Agent
may execute any of its duties under this Agreement and the other Credit
Documents by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties.  The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.

 

14.3.                        Exculpatory Provisions.  Neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (a) liable for any action lawfully taken or omitted to be taken
by it or such Person under or in connection with this Agreement or any other
Credit Document (except for its or such Person’s own gross negligence or
willful misconduct) or (b) responsible in any manner to any of the Lenders
for any recitals, statements, representations or warranties made by the
Borrower, any Guarantor, any other Credit Party or any officer thereof
contained in this Agreement or any other Credit Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with, this Agreement or any
other Credit Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Credit Document or
for any failure of the Borrower, any Guarantor or any other Credit Party to
perform its obligations hereunder or thereunder.  The Administrative Agent shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Credit Document, or to inspect the properties, books or
records of the Borrower.

 

14.4.                        Reliance
by Administrative Agent.  The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent.  The Administrative Agent may deem and treat
the Lender specified in the Register with respect to any amount owing hereunder
as the owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Administrative
Agent.  The Administrative Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Credit Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense that may be incurred by it by reason of taking or continuing to
take any such action.  The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Credit Documents in accordance with
a request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.

 

14.5.                        Notice
of Default.  The Administrative Agent
shall not be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder unless the Administrative Agent has
received notice from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a “notice
of default”.  In the event that the
Administrative Agent receives such a notice, the Administrative

 

127

 

Agent shall
give notice thereof to the Lenders.  The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders,
provided that unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Lenders (except to the extent that this Agreement requires that such action
be taken only with the approval of the Required Lenders or each of the Lenders,
as applicable).

 

14.6.                        Non-Reliance
on Administrative Agent and Other Lenders. 
Each Lender expressly acknowledges that neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and that no act by
the Administrative Agent hereinafter taken, including any review of the affairs
of the Borrower, any Guarantor or any other Credit Party, shall be deemed to
constitute any representation or warranty by the Administrative Agent to any
Lender.  Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower, any Guarantor and any other
Credit Party and made its own decision to make its Loans hereunder and enter
into this Agreement.  Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Credit Documents, and to make such investigation
as it deems necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of the Borrower,
any Guarantor and any other Credit Party. 
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, assets,
operations, properties, financial condition, prospects or creditworthiness of
the Borrower, any Guarantor or any other Credit Party that may come into the
possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.

 

14.7.                        Indemnification.  The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective portions of the Total Credit Exposure in
effect on the date on which indemnification is sought (or, if indemnification
is sought after the date upon which the Commitments shall have terminated and
the Loans shall have been paid in full, ratably in accordance with their
respective portions of the Total Credit Exposure in effect immediately prior to
such date), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever that may at any time (including at any time following
the payment of the Loans) be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of, the Commitments,
this Agreement, any of the other Credit Documents or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Administrative

 

128

 

Agent under or
in connection with any of the foregoing, provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Administrative Agent’s gross negligence or willful
misconduct.  The agreements in this Section 14.7
shall survive the payment of the Loans and all other amounts payable hereunder.

 

14.8.                        Administrative
Agent in its Individual Capacity.  The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower, any Guarantor
and any other Credit Party as though the Administrative Agent were not the
Administrative Agent hereunder and under the other Credit Documents.  With respect to the Loans made by it, the
Administrative Agent shall have the same rights and powers under this Agreement
and the other Credit Documents as any Lender and may exercise the same as
though it were not the Administrative Agent, and the terms “Lender” and “Lenders”
shall include the Administrative Agent in its individual capacity.

 

14.9.                        Successor
Agent.  The Administrative Agent may
resign as Administrative Agent upon 20 days’ prior written notice to the
Lenders and the Borrower.  If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Credit Documents, then the Required Lenders shall appoint from
among the Lenders a successor agent for the Lenders, which successor agent
shall be approved by the Borrower (which approval shall not be unreasonably
withheld), whereupon such successor agent shall succeed to the rights, powers
and duties of the Administrative Agent, and the term “Administrative Agent”
shall mean such successor agent effective upon such appointment and approval,
and the former Administrative Agent’s rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Loans. 
After any retiring Administrative Agent’s resignation as Administrative
Agent, the provisions of this Section 14 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement and the other Credit Documents.

 

14.10.                  Withholding
Tax.  To the extent required by any
applicable law, the Administrative Agent may withhold from any interest payment
to any Lender an amount equivalent to any applicable withholding tax, except
taxes imposed as a result of a current or former connection unrelated to this
Agreement between the Administrative Agent and any jurisdiction outside of the
United States imposing such tax.  If the
Internal Revenue Service or any authority of the United States or other
jurisdiction asserts a claim that the Administrative Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify the Administrative Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason), such Lender shall indemnify the
Administrative Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including penalties and interest,
together with all expenses incurred, including legal expenses, allocated staff
costs and any out of pocket expenses.

 

14.11.                  Collateral
Trustee.  Each Lender hereby further
authorizes the Administrative Agent to appoint the Collateral Trustee under the
Collateral Trust Agreement to

 

129

 

act on behalf of
the Lenders, and authorizes the Collateral Trustee, on behalf of and for the
benefit of Lenders, to be the agent for and representative of the Lenders with
respect to the Collateral and the Security Documents.

 

SECTION 15.   Miscellaneous

 

15.1.                        Amendments
and Waivers.  Neither this Agreement
nor any other Credit Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this Section 15.1.  The Required Lenders may, or, with the
written consent of the Required Lenders, the Administrative Agent may, from
time to time, subject to the Collateral Trust Agreement, (a) enter into
with the relevant Credit Party or Credit Parties written amendments,
supplements or modifications hereto and to the other Credit Documents for the
purpose of adding any provisions to this Agreement or the other Credit
Documents or changing in any manner the rights of the Lenders or the Credit
Parties hereunder or thereunder or (b) waive, on such terms and conditions
as the Required Lenders or the Administrative Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Credit Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver, amendment, supplement or modification
shall directly (i) forgive any portion of any Loan or extend the final
scheduled maturity date of any Loan or reduce the stated rate, or forgive any
portion, or extend the date for the payment, of any interest or fee payable
hereunder (other than as a result of waiving the applicability of any
post-default increase in interest rates), or reduce or extend the date for
payment of any Unpaid Drawings, or extend the final expiration date of any
Lender’s Commitment or extend the final expiration date of any Letter of Credit
beyond the applicable Maturity Date, or increase the aggregate amount of any
Commitment of any Lender, or amend or modify any provisions of Section 15.8(a) or
any other provision that provides for the pro rata nature of disbursements by
or payments to Lenders, in each case without the written consent of each Lender
directly and adversely affected thereby, or (ii) amend, modify or waive
any provision of this Section 15.1 or reduce the percentages specified in
the definitions of the terms “Required Initial Term Loan Lenders”, “Required
Delayed Draw Term Loan Lenders”, “Required Revolving Credit Lenders”, “Required
Base Letter of Credit Participants”, “Required Special Letter of Credit
Participants” and “Required Lenders” or consent to the assignment or transfer
by the Borrower of its rights and obligations under any Credit Document to
which it is a party (except as permitted pursuant to Section 12.3), in
each case without the written consent of each Lender directly and adversely
affected thereby, or (iii) amend, modify or waive any provision of Section 14
without the written consent of the then-current Administrative Agent, or (iv) amend,
modify or waive any provision of Section 3 without the written consent of
the Letter of Credit Issuer, or (v) amend, modify or waive any provisions
hereof relating to Swingline Loans without the written consent of the Swingline
Lender, or (vi) change any Commitment to a Commitment of a different Class in
each case without the prior written consent of each Lender directly and
adversely affected thereby, or (vii) release all or substantially all of
the Guarantors under the Guarantee (except as expressly permitted by the
Guarantee), or release all or substantially all of the Collateral under the
Security Agreement, the Pledge Agreement and the Deeds of Trust, in each case
without the prior written consent of each Lender, or (viii) amend Section 2.9(a) so
as to permit Interest Period intervals greater than six months without regard
to availability to Lenders, without the written consent of each Lender directly
and adversely affected thereby, or (ix) decrease any Initial Term Loan
Repayment Amount, extend any

 

130

 

scheduled
Initial Term Loan Repayment Date or decrease the amount or allocation of any
mandatory prepayment to be received by any Lender holding any Initial Term
Loans, in each case without the written consent of the Required Initial Term
Loan Lenders, or (x) decrease any Delayed Draw Term Loan Repayment Amount, extend
any scheduled Delayed Draw Term Loan Repayment Date or decrease the amount or
allocation of any mandatory prepayment to be received by any Lender holding any
Delayed Draw Term Loans, in each case without the written consent of the
Required Delayed Draw Term Loan Lenders, or (xi) amend, modify or waive any
provisions of Section 3 or 12.12 without the written consent of the
Required Special Letter of Credit Participants, or (xii) amend, modify or waive
any provision of any Credit Document that would disproportionately affect the
obligation of the Borrower to make payments with respect to any Credit Facility
without the written consent of the Required Initial Term Loan Lenders, Required
Delayed Draw Term Loan Lenders, Required Revolving Credit Lenders, Required
Base Letter of Credit Participants or Required Special Letter of Credit
Participants, as applicable; provided that at any time that no Default or Event
of Default has occurred and is continuing, the Revolving Credit Commitment of
any Lender may be increased to finance a Permitted Acquisition, with the
consent of such Lender, the Borrower and the Administrative Agent (which
consent, in the case of the Administrative Agent, shall not be unreasonably
withheld) and without the consent of the Required Lenders, so long as (A) the
Increased Commitment Amount (as defined below) at such time, when added to the
amount of Indebtedness incurred pursuant to Section 12.1(k) and
outstanding at such time, does not exceed the limits set forth therein, (B) the
Borrower or its applicable Restricted Subsidiary shall pledge the Capital Stock
of any person acquired pursuant thereto to the Administrative Agent for the
benefit of the Lenders to the extent required under Section 11.12 and (C) to
the extent determined by the Administrative Agent to be necessary to ensure pro
rata borrowings commencing with the initial borrowing after giving effect to
such increase, the Borrower shall prepay Eurodollar Loans outstanding
immediately prior to such initial borrowing; as used herein, the “Increased
Commitment Amount” means, at any time, aggregate amount of all increases
pursuant to this proviso made at or prior to such time less the aggregate
amount of all voluntary reductions of the Revolving Credit Commitments made
prior to such time.  Any such waiver and
any such amendment, supplement or modification shall apply equally to each of
the affected Lenders and shall be binding upon the Borrower, such Lenders, the
Administrative Agent and all future holders of the affected Loans.  In the case of any waiver, the Borrower, the
Lenders and the Administrative Agent shall be restored to their former
positions and rights hereunder and under the other Credit Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing, it being understood that no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.

 

15.2.                        Notices.  All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered, or three days after
being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth on Schedule 1.1(b) in the case
of the other parties hereto, or to such other address as may be hereafter
notified by the respective parties hereto:

 

131

 

	
  The Borrower:

  
	
   

  
	
  Texas Genco LLC

  
	
  12301 Kurland Drive, 4th Floor

  
	
  Houston, Texas 77034

  
	
  Phone: (713) 945-3500

  
	
  Facsimile: (713) 945-3526

  
	
  Attention: Chief Executive Officer

  
	
   

  
	
  The Administrative Agent:

  
	
   

  
	
  Goldman Sachs Credit Partners L.P.

  
	
  30 Hudson Street

  
	
  Jersey City, New Jersey 07302

  
	
  Phone: (212) 357-8585

  
	
  Facsimile: (212) 357-4597

  
	
  Attention: Sharon Babick,

  
	
   

  
	
  with a copy to:

  
	
   

  
	
  Goldman Sachs Credit Partners L.P.

  
	
  85 Broad Street

  
	
  New York, New York 10004

  
	
  Phone: (212) 902-7862

  
	
  Facsimile: (212) 902-3000

  
	
  Attention: Lawrence Writer

  

 

provided that
any notice, request or demand to or upon the Administrative Agent or the
Lenders pursuant to Sections 2.3, 2.6, 2.9, 4.2 and 5.1 shall not be effective
until received.

 

15.3.                        No
Waiver; Cumulative Remedies.  No
failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder or under the other Credit Documents shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.

 

15.4.                        Survival
of Representations and Warranties.  All
representations and warranties made hereunder, in the other Credit Documents
and in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.

 

15.5.                        Payment
of Expenses and Taxes; Indemnification. 
The Borrower agrees (a) to pay or reimburse the Agents for all
their reasonable out-of-pocket costs and expenses incurred in connection with
the development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the other Credit Documents and any other
documents prepared in connection herewith or therewith, and the consummation
and

 

132

 

administration
of the transactions contemplated hereby and thereby, including the reasonable
fees, disbursements and other charges of counsel to the Agents, (b) to pay
or reimburse each Lender and the Administrative Agent for all their reasonable
and documented costs and expenses incurred in connection with the enforcement
or preservation of any rights under this Agreement, the other Credit Documents
and any such other documents, including the reasonable fees, disbursements and
other charges of counsel to each Lender and of counsel to the Administrative
Agent, (c) to pay, indemnify, and hold harmless each Lender and the
Administrative Agent from any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other similar taxes, if any, that may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Credit Documents and any such other documents, and (d) to
pay, indemnify and hold harmless each Lender and the Administrative Agent and
their respective directors, officers, employees, trustees and agents from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever, including reasonable and documented fees, disbursements and
other charges of counsel, with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Credit Documents
and any such other documents, including any of the foregoing relating to the
violation of, noncompliance with or liability under, any Environmental Law or
any actual or alleged presence of Hazardous Materials applicable to the
operations of the Borrower, any of its Subsidiaries or any of the Real Estate
(all the foregoing in this clause (d), collectively, the “indemnified
liabilities”), provided that the Borrower shall have no obligation
hereunder to the Administrative Agent or any Lender nor any of their respective
directors, officers, employees and agents with respect to indemnified
liabilities arising from (i) the gross negligence or willful misconduct of
the party to be indemnified or (ii) disputes among the Administrative
Agent, the Lenders and/or their transferees. 
The agreements in this Section 15.5 shall survive repayment of the
Loans and all other amounts payable hereunder.

 

15.6.                        Successors
and Assigns; Participations and Assignments.  (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
the Letter of Credit Issuer that issues any Letter of Credit), except that (i) the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby (including any
Affiliate of the Letter of Credit Issuer that issues any Letter of Credit),
Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent, the Letter of Credit Issuer and the
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

(b)                                 (i) 
Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitments
and the Loans at the time owing to

 

133

 

it) with the
prior written consent (such consent not be unreasonably withheld or delayed; it
being understood that, without limitation, the Borrower shall have the right to
withhold its consent to any assignment if, in order for such assignment to
comply with applicable law, the Borrower would be required to obtain the
consent of, or make any filing or registration with, any Governmental
Authority) of:

 

(A)                              the
Borrower, provided that (x) no consent of the Borrower shall be required for an
assignment to a Lender, an Affiliate of a Lender (unless increased costs would
result therefrom, except if an Event of Default under Section 13.1 or Section 13.5
has occurred and is continuing), an Approved Fund or, if an Event of Default
under Section 13.1 or Section 13.5 has occurred and is continuing,
any other assignee and (y) no consent of the Borrower shall be required for an
assignment of any Unpaid Drawings in respect of Special Letters of Credit that
remain unreimbursed beyond the due date therefor; and

 

(B)                                the
Administrative Agent, and, in the case of Revolving Credit Commitments or
Revolving Credit Loans, the Swingline Lender, and in the case of Revolving
Credit Commitments, Base Letter of Credit Commitments or Special Letter of
Credit Commitments, the applicable Letter of Credit Issuer, provided that (x)
no consent of the Administrative Agent, the Swingline Lender or the Letter of Credit
Issuer shall be required for an assignment of (1) any Commitment to an
assignee that is a Lender with a Commitment of the same Class immediately
prior to giving effect to such assignment or (2) any Term Loan to a
Lender, an Affiliate of a Lender or an Approved Fund and (y) no consent of the
Administrative Agent shall be required for an assignment of any Special Letter
of Credit Commitment or Special Letter of Credit Exposure.

 

(ii)                                  Assignments shall be subject to the
following additional conditions:

 

(A)                              except
in the case of an assignment to a Lender, an Affiliate of a Lender or an
Approved Fund or an assignment of the entire remaining amount of the assigning
Lender’s Commitments or Loans of any Class, the amount of the Commitments or
Loans of the assigning Lender subject to each such assignment (determined as of
the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $2,500,000 or, in
the case of an Initial Term Loan Commitment, a Delayed Draw Term Loan
Commitment or a Term Loan, $1,000,000 (provided that for purposes of
calculating such minimum amounts, (x) any assignment of a Revolving Credit
Commitment together with a Base Letter of Credit Commitment shall be aggregated
and (y) any assignment of an Initial Term Loan Commitment together with a
Delayed Draw Term Loan Commitment shall be aggregated), unless each of the
Borrower and the Administrative Agent otherwise consents; provided that no such
consent of the Borrower shall be required if an Event of Default under Section 13.1
or Section 13.5 has occurred and is continuing; and provided further that
contemporaneous assignments to a single assignee made by affiliated Lenders

 

134

 

shall be aggregated for purposes of meeting the minimum assignment
amount requirements stated above;

 

(B)                                each
partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement;
provided that this paragraph shall not be construed to prohibit the assignment
of a proportionate part of all the assigning Lender’s rights and obligations in
respect of one Class of Commitments or Loans;

 

(C)                                the
parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Acceptance; and

 

(D)                               the
assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire in a form approved by the Administrative
Agent.

 

For the
purpose of this Section 15.6(b), the term “Approved Fund” has the
following meaning:

 

“Approved
Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered,
advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers, advises or manages a
Lender.

 

(iii)                               Subject to acceptance and recording
thereof pursuant to paragraph (b)(v) of this Section, from and after
the effective date specified in each Assignment and Acceptance, the assignee thereunder
shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.10, 2.11, 3.5, 5.4 and 15.5).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this Section 15.6
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.

 

(iv)                              The Administrative Agent, acting for
this purpose as an agent of the Borrower, shall maintain at the Administrative
Agent’s Office a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amount of the Loans and any payment made by the
Letter of Credit Issuer under any Letter of Credit owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”).  Further, the Register shall contain the name
and address of the Administrative Agent and

 

135

 

the lending office through which each such
Person acts under this Agreement.  The
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent, the Letter of Credit Issuer and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary.  The Register, as
in effect at the close of business on the preceding Business Day, shall be
available for inspection by the Borrower, the Letter of Credit Issuer and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.

 

(v)                                 Upon its receipt of a duly completed
Assignment and Acceptance executed by an assigning Lender and an assignee, the
assignee’s completed Administrative Questionnaire (unless the assignee shall
already be a Lender hereunder) and any written consent to such assignment
required by paragraph (b)(i) of this Section, the Administrative
Agent shall accept such Assignment and Acceptance and record the information
contained therein in the Register.  No
assignment shall be effective for purposes of this Agreement unless and until
it has been recorded in the Register as provided in this paragraph.

 

(c)                                  (i)  Any Lender
may, without the consent of the Borrower, the Administrative Agent, the Letter
of Credit Issuer or the Swingline Lender, sell participations to one or more
banks or other entities (each, a “Participant”) in all or a portion of
such Lender’s rights and obligations under this Agreement (including all or a
portion of its Commitments and the Loans owing to it), provided that (A) such
Lender’s obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (C) the Borrower, the Administrative
Agent, the Letter of Credit Issuer and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights
and obligations under this Agreement. 
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement or any other Credit Document, provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 15.1 that affects such
Participant.  Notwithstanding the
foregoing, a Participant in a Special Letter of Credit Commitment or Special
Letter of Credit Exposure may be entitled to the same voting rights as a Lender
under this Agreement if, prior to the sale of a participation to any such
Participant, (1) the Borrower shall have been informed by the relevant
Lender and the Special Letter of Credit Issuer that it intends to sell a
participation in the Special Letter of Credit Facility to a Participant and
accord such Participant with voting rights in excess of those accorded to a
Participant pursuant to the preceding sentence, (2) the Borrower shall
have been notified of the name of such Participant and the voting rights
actually being accorded thereto and (3) such Participant shall be approved
by the Borrower, such consent not to be unreasonably withheld or delayed.  Subject to paragraph (c)(ii) of
this Section, the Borrower agrees that each Participant shall be entitled to
the benefits of Sections 2.10, 2.11 and 5.4 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section.  To the extent permitted by
law,

 

136

 

each Participant also shall be entitled to
the benefits of Section 15.8(b) as though it were a Lender, provided
such Participant agrees to be subject to Section 15.8(a) as though it
were a Lender.

 

(ii)                                  A Participant shall not be entitled
to receive any greater payment under Section 2.10 or 5.4 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Non-U.S. Lender
if it were a Lender shall not be entitled to the benefits of Section 5.4
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 5.4(b) as
though it were a Lender.

 

(d)                                 Any Lender may, without the consent
of the Borrower or the Administrative Agent, at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to
any such pledge or assignment of a security interest, provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.  In order to
facilitate such pledge or assignment, the Borrower hereby agrees that, upon
request of any Lender at any time and from time to time after the Borrower has
made its initial borrowing hereunder, the Borrower, as the case may be, shall
provide to such Lender, at the Borrower’s own expense, a promissory note,
substantially in the form of Exhibit I-1, I-2 or I-3, as the case may be,
evidencing the Initial Term Loans, Delayed Draw Term Loans, New Term Loans and
Revolving Credit Loans and Swingline Loans, respectively, owing to such Lender.

 

(e)                                  Subject to Section 15.16, the
Borrower authorizes each Lender to disclose to any Participant, secured
creditor of such Lender or assignee (each, a “Transferee”) and any
prospective Transferee any and all financial information in such Lender’s
possession concerning the Borrower and its Affiliates that has been delivered
to such Lender by or on behalf of the Borrower and its Affiliates pursuant to
this Agreement or which has been delivered to such Lender by or on behalf of
the Borrower and its Affiliates in connection with such Lender’s credit
evaluation of the Borrower and its Affiliates prior to becoming a party to this
Agreement.

 

15.7.                        Replacements
of Lenders under Certain Circumstances. 
(a) The Borrower shall be permitted to replace any Lender (or any
Participant) that (a) requests reimbursement for amounts owing pursuant to
Section 2.10, 2.12, 3.5 or 5.4, (b) is affected in the manner
described in Section 2.10(a)(iii) and as a result thereof any of the
actions described in such Section is required to be taken or (c) becomes
a Defaulting Lender, with a replacement bank or other financial institution,
provided that (i) such replacement does not conflict with any Applicable
Law, (ii) no Event of Default shall have occurred and be continuing at the
time of such replacement, (iii) the Borrower shall repay (or the
replacement bank or institution shall purchase, at par) all Loans and other
amounts (other than any disputed amounts) pursuant to Section 2.10, 2.11,
2.12, 3.5 or 5.4, as the case may be, owing to such replaced Lender prior to
the date of replacement, (iv) the replacement bank or institution, if not
already a Lender, and the terms and conditions of such replacement, shall be
reasonably satisfactory to the Administrative Agent, (v)

 

137

 

the replaced
Lender shall be obligated to make such replacement in accordance with the
provisions of Section 15.6 and (vi) any such replacement shall not be
deemed to be a waiver of any rights that the Borrower, the Administrative Agent
or any other Lender shall have against the replaced Lender.

 

(b)                                 If
any Lender or, in the case of any Participant holding a Special Letter of
Credit Commitment and having been accorded voting rights pursuant to the third
sentence of Section 15.6(c)(i) (such Lender or Participant, a “Non-Consenting
Lender”) has failed to consent to a proposed amendment, waiver, discharge
or termination, which pursuant to the terms of Section 15.1 requires the
consent of all of the Lenders affected and with respect to which the Required
Lenders shall have granted their consent, then provided no Default or Event of
Default then exists, the Borrower shall have the right (unless such
Non-Consenting Lender grants such consent) to replace such Non-Consenting
Lender by requiring such Non-Consenting Lender to assign its Loans and
Commitments to one or more assignees reasonably acceptable to the
Administrative Agent, provided that: (i) all Obligations of the Borrower
owing to such Non-Consenting Lender being replaced shall be paid in full to
such Non-Consenting Lender concurrently with such assignment, and (ii) the
replacement Lender shall purchase the foregoing by paying to such
Non-Consenting Lender a price equal to the principal amount thereof plus
accrued and unpaid interest thereon.  In
connection with any such assignment, the Borrower, the Administrative Agent,
such Non-Consenting Lender and the replacement Lender shall otherwise comply
with Section 15.6.

 

15.8.                        Adjustments;
Set-off.  (a) If any Lender (a “benefited
Lender”) shall at any time receive any payment of all or part of its Loans,
or interest thereon, or receive any collateral in respect thereof (whether voluntarily
or involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 12.5, or otherwise), in a greater proportion than
any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender’s Loans or interest thereon, such benefited Lender
shall purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender’s Loans, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion
of such excess payment or benefits is thereafter recovered from such benefited
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest.

 

(b)                                 After the occurrence and during the
continuance of an Event of Default, in addition to any rights and remedies of
the Lenders provided by law, each Lender shall have the right, without prior
notice to the Borrower, any such notice being expressly waived by the Borrower
to the extent permitted by applicable law, upon any amount becoming due and
payable by the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or any branch or
agency thereof to or for the credit or the account of the Borrower, as the case
may be.  Each Lender agrees promptly to
notify the Borrower, as the case may be, and the Administrative Agent after any
such set-off and

 

138

 

application
made by such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application.

 

15.9.                        Counterparts.  This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts
(including by facsimile or other electronic transmission), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.  A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.

 

15.10.                  Severability.  Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

15.11.                  Integration.  This Agreement and the other Credit Documents
represent the agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Credit Documents.

 

15.12.                  GOVERNING
LAW.  THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

15.13.                  Submission
to Jurisdiction; Waivers.  The
Borrower hereby irrevocably and unconditionally:

 

(a)                                  submits for itself and its property
in any legal action or proceeding relating to this Agreement and the other
Credit Documents to which it is a party, or for recognition and enforcement of
any judgment in respect thereof, to the non-exclusive general jurisdiction of
the courts of the State of New York, the courts of the United States of America
for the Southern District of New York and appellate courts from any thereof;

 

(b)                                 consents that any such action or
proceeding may be brought in such courts and waives any objection that it may
now or hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient court
and agrees not to plead or claim the same;

 

(c)                                  agrees that service of process in
any such action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to the Borrower at its address set forth in Section 15.2
or at such other address of which the Administrative Agent shall have been
notified pursuant thereto;

 

(d)                                 agrees that nothing herein shall
affect the right to effect service of process in any other manner permitted by
law or shall limit the right to sue in any other jurisdiction; and

 

139

 

(e)                                  waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover in any legal
action or proceeding referred to in this Section 15.13 any special,
exemplary, punitive or consequential damages.

 

15.14.                  Acknowledgments.  The Borrower hereby acknowledges that:

 

(a)                                  it has been advised by counsel in
the negotiation, execution and delivery of this Agreement and the other Credit
Documents;

 

(b)                                 neither the Administrative Agent nor
any Lender has any fiduciary relationship with or duty to the Borrower arising
out of or in connection with this Agreement or any of the other Credit
Documents, and the relationship between Administrative Agent and Lenders, on
one hand, and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and

 

(c)                                  no joint venture is created hereby
or by the other Credit Documents or otherwise exists by virtue of the
transactions contemplated hereby among the Lenders or among the Borrower and
the Lenders.

 

14.15                 WAIVERS OF JURY TRIAL.  THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

15.16.                  Confidentiality.  The Administrative Agent and each Lender
shall hold all non-public information furnished by or on behalf of the Borrower
in connection with such Lender’s evaluation of whether to become a Lender
hereunder or obtained by such Lender or the Administrative Agent pursuant to
the requirements of this Agreement (“Confidential Information”)
confidential in accordance with its customary procedure for handling
confidential information of this nature and (in the case of a Lender that is a
bank) in accordance with safe and sound banking practices and in any event may
make disclosure as required or requested by any governmental agency or
representative thereof or pursuant to legal process or to such Lender’s or the
Administrative Agent’s attorneys, professional advisors or independent auditors
or Affiliates, provided that unless specifically prohibited by applicable law
or court order, each Lender and the Administrative Agent shall notify the
Borrower of any request by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Lender by such governmental agency) for disclosure of any
such non-public information prior to disclosure of such information, and provided
further that in no event shall any Lender or the Administrative Agent be
obligated or required to return any materials furnished by the Borrower or any
Subsidiary of the Borrower.  Each Lender
and the Administrative Agent agrees that it will not provide to prospective
Transferees or to prospective direct or indirect contractual counterparties
under Interest Rate Hedging Agreements to be entered into in connection with
Loans made hereunder any of the Confidential Information unless such Person is
advises of and agrees to be bound by the provisions of this Section 15.16.

 

140

 

15.17.                  USA PATRIOT Act.  Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Patriot Act”), it is
required to obtain, verify and record information that identifies the Borrower,
which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Borrower in accordance
with the Patriot Act.

 

[SIGNATURE PAGE FOLLOWS]

 

141

 

IN WITNESS
WHEREOF, each of the parties hereto has caused a counterpart of this Agreement
to be duly executed and delivered as of the date first above written.

 

	
   

  	
  TEXAS GENCO
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

 

	
   

  	
  GOLDMAN SACHS CREDIT PARTNERS L.P.,

  as Administrative Agent, a Joint Lead Arranger, a

  Joint Bookrunner and a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert
  Wagner

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert Wagner

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
						

 

 

	
   

  	
  MORGAN
  STANLEY SENIOR FUNDING INC.,

  as Syndication Agent, a Joint Lead Arranger, a Joint

  Bookrunner and a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

 

	
   

  	
  DEUTSCHE
  BANK AG, CAYMAN ISLANDS

  BRANCH, as a Co-Documentation Agent, a

  Joint Bookrunner and a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marcus
  Tarkington

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Marcus Tarkington

  
	
   

  	
   

  	
  Title:

  	
  Director

  
						

 

 

	
   

  	
  CITICORP
  USA, INC., as a Co-Documentation

  Agent, a Joint Bookrunner and a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

 

	
   

  	
  DEUTSCHE
  BANK SECURITIES INC., as a Joint

  Lead Arranger for the Special Letter of Credit

  Facility

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tim
  Dowling

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Tim Dowling

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
									

 

 

	
   

  	
  NEWCOURT
  CAPITAL USA INC., as a Co-

  
	
   

  	
   

  
	
   

  	
  Documentation
  Agent and a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Guy A.
  Piazza

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Guy A. Piazza

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
						

 

 

	
   

  	
  Royal Bank
  of Canada

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda M.
  Stephens

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Linda M. Stephens

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
						

 

 

	
   

  	
  General
  Electric Capital Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Simon
  Duncan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Simon Duncan

  
	
   

  	
   

  	
  Title:

  	
  Manager – Operations

  
						

 

 

	
   

  	
  National
  City Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen
  Monto

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Stephen Monto

  
	
   

  	
   

  	
  Title:

  	
  Assistant Vice President

  
						

 

 

	
   

  	
  ABN AMRO Bank
  N.V.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bill
  Hale

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Bill Hale

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert
  Scheuermann

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert Scheuermann

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

 

	
   

  	
  Erste Bank
  Der Oesterreichischen Sparkassen AG

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bryan J.
  Lynch

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Bryan J. Lynch

  
	
   

  	
   

  	
  Title:

  	
  First Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patrick
  W. Kunkel

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Patrick W. Kunkel

  
	
   

  	
   

  	
  Title:

  	
  Director

  
						

 

 

	
   

  	
  Allied Irish
  Banks, P.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert
  F. Moyle

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert F. Moyle

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Aidan
  Lanigan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Aidan Lanigan

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

 

	
   

  	
  Natexis
  Banques Populaires.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anadi
  Jauhari

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Anadi Jauhari

  
	
   

  	
   

  	
  Title:

  	
  Head of Project Finance for the

  Americas

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pierre
  Audrain

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Pierre Audrain

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

 

	
   

  	
  Bank of
  Tokyo-Mitsubishi Trust Company.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anna
  Bezdenezhnykh Guiller

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Anadi Jauhari

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

 

	
   

  	
  Union Bank
  of California, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chad L.
  Canfield

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Chad L. Canfield

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

 

	
   

  	
  The Bank of
  Nova Scotia

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela
  McDougall

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Pamela McDougall

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
						

 

 

	
   

  	
  Sun Trust
  Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James M.
  Warren

  	
   

  
	
   

  	
   

  	
  Name:

  	
  James M. Warren

  
	
   

  	
   

  	
  Title:

  	
  Director

  
						

 

 

	
   

  	
  Nationwide
  Mutual Insurance Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark W.
  Poeppelman

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark W. Poeppelman

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
						

 

 

	
   

  	
  Nationwide
  Life Insurance Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark W.
  Poeppelman

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark W. Poeppelman

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}]]