Document:

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                                                                    EXHIBIT 10.4

                            INTERCREDITOR AGREEMENT

     INTERCREDITOR AGREEMENT dated as of September [17], 2001 among

     AEP Credit, Inc., a Delaware corporation (the "Initial Receivables
     Purchaser"),

     [identify Receivables Trustee] (the "Receivables Trustee"),

     Reliant Energy, Incorporated, a Texas corporation (in its individual
     capacity, the "Company" and in its capacity as the initial servicer of the
     Eligible Assets referred to below, including any successor in such
     capacity, the "Receivables Servicer"), and

     Reliant Energy Transition Bond Company, LLC, a Delaware limited liability
     company (the "Transition Bond Issuer"),

     Bankers Trust Company, a New York banking corporation (the "Transition Bond
     Trustee"),

     Reliant Energy, Incorporated, a Texas corporation, in its capacity as the
     initial servicer of the Transition Property referred to below (including
     any successor in such capacity, the "TC Servicer"),

     Reliant Energy, Incorporated, a Texas corporation (together with its
     successors and assigns, in its capacity as collection agent for the benefit
     of the TC Servicer, the Receivables Servicer and any Other Receivables
     Servicers, the "Utility"),

     WHEREAS, pursuant to the terms of the Receivables Agreements (as such term
and the other terms used but not otherwise defined herein are defined in Annex I
hereto), the Company has sold and may hereafter sell its Outstanding Receivables
other than Excluded Receivables (the "Eligible Assets") and the Collections to
the Initial Receivables Purchaser and the Initial Receivables Purchaser has
engaged or will engage in one or more Receivables Financings; and

     WHEREAS, pursuant to the terms of [identify Transition Property Sale
Agreement] (as it may hereafter from time to time be amended, restated or
modified, the "Sale Agreement"), the Company has sold to the Transition Bond
Issuer certain assets known as "Transition Property" which includes the
"Transition Charges"; and

     WHEREAS, pursuant to the terms of [identify Bond Indenture] (as it may
hereafter from time to time be amended, restated or modified and as supplemented
from time to time by one or more Series Supplements, such Series Supplements and
Indenture being collectively referred to herein as the "Indenture"), the
Transition Bond Issuer, among other things, has granted to the Transition Bond
Trustee a security interest in certain of its assets, including the Transition
Property, to secure the Transition Bonds issued pursuant to the Indenture
("Transition Bonds"); and

     WHEREAS, pursuant to the terms of the Transition Property Servicing
Agreement dated as of the date hereof between the Transition Bond Issuer and the
TC Servicer (as it may hereafter from time to time be amended, restated or
modified, the "Servicing Agreement"), the

                                       1
<PAGE>

TC Servicer has agreed to provide for the benefit of the Transition Bond Issuer
servicing functions with respect to the Transition Charges; and

     WHEREAS, pursuant to the terms of the Receivables Agreements, the
Receivables Servicer has agreed with the Initial Receivables Purchaser to
provide servicing, subservicing and collection functions with respect to the
Eligible Assets and the Collections related to Eligible Assets; and

     WHEREAS, the Purchase Agreement provides that the Transition Property and
the Transition Charges do not constitute Outstanding Receivables; and

     WHEREAS, Collections with respect to Outstanding Receivables are and will
be the subject of the Receivables Agreements, and collections with respect to
Transition Charges are the subject of the Sale Agreement, the Indenture and the
Servicing Agreement; and

     WHEREAS, the parties hereto wish to agree upon their respective rights
relating to such Collections, collections and any bank accounts into which the
same may be deposited, as well as other matters of common interest to them which
arise under or result from the coexistence of the Receivables Agreements, the
Sale Agreement, the Indenture and the Servicing Agreement;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:

SECTION 1. Acknowledgment of Ownership Interests and Security Interests.  The
Initial Receivables Purchaser and the Receivables Trustee (collectively, the
"Receivables Parties") and the Receivables Servicer hereby acknowledge the
ownership interest of the Transition Bond Issuer in the Transition Property,
including the Transition Charges and the revenues, collections, claims, rights,
payments, money and proceeds arising therefrom, and the security interest in
favor of the Transition Bond Trustee for the benefit of itself, the holders of
Transition Bonds and any credit enhancement provider (as defined in the
Indenture) in the Transition Property (the "Transition Bond Trustee Collateral")
as granted by the Transition Bond Issuer in the Granting Clause of the
Indenture.  The Transition Bond Trustee, the Transition Bond Issuer and the TC
Servicer hereby acknowledge the ownership interest of the Initial Receivables
Purchaser in the Outstanding Receivables and the revenues, Collections, claims,
rights, payments, money and proceeds arising therefrom, and the interests of the
Receivables Financing Entities, whether now existing or hereafter created, in
the Eligible Assets and the related property.  The Receivables Parties further
acknowledge that, notwithstanding anything in the Receivables Agreements to the
contrary, none of the Receivables Parties has any interest in the Transition
Property or the Transition Bond Trustee Collateral and each of the Transition
Bond Trustee, the Transition Bond Issuer and the TC Servicer further acknowledge
that, notwithstanding anything in the Sale Agreement or the Indenture to the
contrary, it has no interest in the Eligible Assets.

SECTION 2. Deposit Accounts.  The Receivables Parties, the Receivables
Servicer, the Transition Bond Issuer, the Transition Bond Trustee and the TC
Servicer each  acknowledge that Collections relating to the Eligible Assets and
collections with respect to Transition Property may from time to time be
deposited into one or more [designated] accounts of the Utility (the

                                       2
<PAGE>

"Deposit Accounts"). Subject to Section 5 below, the Utility agrees to (i)
maintain the Deposit Accounts for the benefit of the TC Servicer, the Transition
Bond Trustee and the Transition Bond Issuer and for the benefit of the
Receivables Servicer and the Receivables Parties (and any future Receivables
Financing Entities), as their respective interests may appear; (ii) allocate and
remit funds from the Deposit Accounts on a daily basis to the Transition Bond
Trustee in the case of collections relating to the Transition Property and the
Initial Receivables Purchaser in the case of Collections relating to the
Eligible Assets, provided that in the case of a shortfall in payment of amounts
billed, such allocation and remittances shall be made, first, on a pro rata
basis as between Transition Charges and Eligible Assets, excluding late charges,
based on the respective amounts of Transition Charges and Eligible Assets billed
to each retail electric provider and, if any retail electric customer is billed
directly, to such retail electric customer, and second, by allocating any late
charges to the Company; and (iii) maintain records as to the amounts deposited
into the Deposit Accounts, the amounts remitted therefrom and the allocation as
provided in clause (ii) above. The Transition Bond Trustee, the Transition Bond
Issuer, the Initial Receivables Purchaser and the Receivables Financing Entities
shall each have the right to require an accounting from time to time of
collections, allocations and remittances by the Utility relating to the Deposit
Accounts.

     The Transition Bond Trustee, the Transition Bond Issuer and the TC Servicer
waive any interest in deposits to the Deposit Accounts to the extent that they
constitute Collections on account of Eligible Assets, and the Receivables
Parties and the Receivables Servicer waive any interest in deposits to the
Deposit Accounts to the extent that they constitute collections on account of
Transition Property.  Each of the parties hereto acknowledges the respective
security interests of the others in amounts on deposit in the Deposit Accounts
to the extent of their respective interests as described in this Agreement.

SECTION 3. Collections.  The Receivables Parties hereby acknowledge that,
notwithstanding anything in the Receivables Agreements to the contrary, all
collections of Transition Property are property of the Transition Bond Issuer
pledged by the Transition Bond Issuer to the Transition Bond Trustee for the
benefit of itself, the holders of the Transition Bonds and any credit
enhancement provider.  Each of the Transition Bond Issuer, the Transition Bond
Trustee and the TC Servicer hereby acknowledge that, notwithstanding anything in
the Sale Agreement or the Indenture to the contrary, all Collections related to
Eligible Assets are the property of the Initial Receivables Purchaser and are
and will be the subject of Receivables Financings, subject to the terms of the
Receivables Agreements.

     If any of the Receivables Parties or the Receivables Servicer receives any
payments in respect of the Transition Property or the Transition Bond Trustee
Collateral, it agrees to pay to the Transition Bond Trustee all such payments
received by it in respect thereof as soon as practicable after receipt thereof
by it, and prior to such remittance to the Transition Bond Trustee it agrees
that such amounts are held in trust for the Transition Bond Trustee.  If any of
the Transition Bond Issuer, the Transition Bond Trustee or the TC Servicer
receives any payments in respect of the Eligible Assets, it agrees to pay to or
at the direction of the Initial Receivables Purchaser all such payments received
by it in respect thereof as soon as practicable after receipt thereof by it, and
prior to such remittance to the Initial Receivables Purchaser it agrees that
such amounts are held in trust for the Initial Receivables Purchaser.

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<PAGE>

SECTION 4. Time or Order of Attachment.  The acknowledgments contained in
Sections 1, 2 and 3 of this Agreement are applicable irrespective of the time or
order of attachment or perfection of security or ownership interests or the time
or order of filing or recording of financing statements or mortgages or filings
under the Texas Electric Choice Plan (as defined in the Indenture).

SECTION 5. Servicing.  (a) The Receivables Parties recognize the existence of
rights in favor of the Transition Bond Trustee under the Indenture and the
Servicing Agreement to (i) replace the Company as TC Servicer thereunder and
(ii) take control over collections relating to the Transition Property, under
certain limited circumstances described in the Indenture and the Servicing
Agreement, subject to applicable law and regulations and the Financing Order (as
defined in Appendix A to the Indenture) and the terms of this Section 5.  The
Transition Bond Issuer and the Transition Bond Trustee recognize the existence
of rights in favor of the Receivables Financing Entities under the Receivables
Agreements to (i) replace the Company as Receivables Servicer, subservicer or
collection agent thereunder and (ii) take control over Collections relating to
Eligible Assets, under certain limited circumstances described in the
Receivables Agreements, subject to applicable law and regulations and the terms
of this paragraph 5.

     (b) Notwithstanding the provisions of Section 5(a) above, the Receivables
Parties acknowledge that (i) under the terms of the Financing Order under
certain limited circumstances specified in the Financing Order upon a default by
a retail electric provider, among alternative options to be selected and
implemented by the retail electric provider, certain revenues and receipts from
retail electric customers of such retail electric provider, including
collections relating to the Transition Property and Collections relating to
Eligible Assets, may be paid directly into a lock-box account controlled by the
TC Servicer and in that case amounts in such account must be applied first to
pay Transition Charges then due and owing before the remaining amounts are
released to the retail electric provider, and (ii) under the terms of the
Servicing Agreement upon a default by the TC Servicer under the Servicing
Agreement the Transition Bond Trustee is required to exercise its right to
appoint a replacement TC Servicer upon the instruction of the requisite
percentage holders of the Transition Bonds.

     (c) (i) In the event that the Transition Bond Trustee is entitled to and
desires to exercise its right to replace the Company as TC Servicer, or a
Receivables Financing Entity is entitled to and desires to exercise its right to
replace the Company as Receivables Servicer, the party desiring to exercise such
right shall consult with the other with respect to the Person who would replace
the Company in such capacities.  Any successor in such capacities shall be
agreed to by both the Transition Bond Trustee and the Receivables Financing
Entities and shall be subject to satisfaction of the Rating Agency Condition (as
defined below).  The parties hereto acknowledge and agree that at all times the
TC Servicer and Receivables Servicer shall be the same Person.  The Person named
as replacement TC Servicer and replacement Receivables Servicer in accordance
with this Section 5 is referred to herein as the "Replacement Servicer".  The
parties hereto agree that no retail electric provider affiliated with the
Company will constitute a successor to the Company under this Agreement.

     (ii) In the event that the Transition Bond Trustee is entitled to and
desires to exercise its rights to redirect collections relating to the
Transition Property, or a Receivables Financing

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<PAGE>

Entity is entitled to and desires to exercise its rights to redirect Collections
relating to the Eligible Assets, any redirection of funds shall be either to (A)
the Replacement Servicer or (B) if there is no Replacement Servicer, to the
Designated Account with the Designated Account Holder. The "Designated Account"
shall be an "Eligible Deposit Account" (as defined in the Indenture) and shall
be held for the benefit of the Transition Bond Trustee and the Receivables
Financing Entities as their interests may appear. The "Designated Account
Holder" shall be a financial institution selected by the Transition Bond Trustee
and the Receivables Financing Entities, subject to satisfaction of the Rating
Agency Condition to hold and allocate amounts in the Designated Account for the
benefit of the Transition Bond Trustee and the Receivables Financing Entities as
their interests may appear as provided in paragraph (d) below.

     (d) Upon exercise by the Transition Bond Trustee of its rights to redirect
collections relating to the Transition Property or by a Receivables Financing
Entity of its rights to redirect Collections relating to the Eligible Assets,
and in the absence of (x) a Replacement Servicer and (y) the circumstance
referred to in Section 5(b) above, the parties agree that all collections
relating to the Transition Property and all Collections relating to Eligible
Assets shall be deposited into the Designated Account and that the Designated
Account Holder shall be instructed by the Utility to (i) allocate and remit
funds from such account on a daily basis to the persons entitled thereto, being
the Transition Bond Trustee in the case of all collections relating to the
Transition Property and the Receivables Financing Entities in the case of all
Collections relating to the Eligible Assets, provided that, subject to Section
5(b)(i) above, in the case of a shortfall of funds in the Designated Account
such allocation and remittances shall be made, first, on a pro rata basis as
between Transition Charges and Eligible Assets, excluding late charges, based on
the respective amounts of Transition Charges and Eligible Assets billed to each
retail electric provider and, if any retail electric customer is billed
directly, to such retail electric customer, and second, by allocating any late
charges to the Company; and (ii) maintain records as to the amounts deposited
into such account, the amounts remitted therefrom and the allocation as provided
in clause (i).  The fees and expenses of the Designated Account Holder shall be
payable from amounts deposited into the Designated Account on a pro rata basis
as between collections relating to the Transition Property and Collections
relating to the Eligible Assets, provided that that portion of those fees and
expenses allocable to collections relating to the Transition Property shall be
payable by the TC Servicer from the servicer fees provided for in the Servicing
Agreement, and that portion of those fees and expenses allocable to Collections
relating to the Eligible Assets shall be payable by the Receivables Servicer
from the servicer fees provided for in the Receivables Agreements.  The
Transition Bond Trustee, the Transition Bond Issuer, the Initial Receivables
Purchaser and the Receivables Financing Entities shall each have the right to
require an accounting from time to time of collections, allocations and
remittances by the Designated Account Holder.

     (e) If a Replacement Servicer cannot be appointed in accordance with
Section 5(c)(i) above, then either the Transition Bond Trustee or the
Receivables Financing Entities may exercise its rights under Section 5(c)(ii)(B)
above.

     (f) Anything in this Agreement to the contrary notwithstanding, any action
taken by either the Transition Bond Trustee or a Receivables Financing Entity to
appoint a Replacement Servicer or designate the Designated Account pursuant to
this paragraph 5 shall be subject to the Rating Agency Condition and the
consent, if required by law or the Financing Order, of the

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<PAGE>

Public Utility Commission of Texas. For the purposes of this Agreement, the
"Rating Agency Condition" means, with respect to any such action, notification
to each rating agency then rating any class or series of the Transition Bonds
and any securities issued pursuant to any Receivables Financing Documents or any
commercial paper issued to fund the related sale or financing of Outstanding
Receivables (collectively, the "Securities") of such action, and the receipt of
written notification from each such rating agency, other than, with respect to
the Transition Bonds only, Moody's (as defined in the Indenture), that such
action will not result in a reduction or withdrawal of its then current rating
on the Transition Bonds or the Securities. The parties hereto acknowledge and
agree that the approval or the consent of the rating agencies which is required
in order to satisfy the Rating Agency Condition is not subject to any standard
of commercial reasonableness, and the parties are bound to satisfy this
condition whether or not the rating agencies are unreasonable or arbitrary.

SECTION 6. Sharing of Information. The parties hereto agree to cooperate with
each other and make available to each other or any Replacement Servicer any and
all records and other data relevant to the Transition Property and Eligible
Assets which it may have in its possession or may from time to time receive from
the Company or any predecessor TC Servicer and Receivables Servicer, including,
without limitation, any and all computer programs, data files, documents,
instruments, files and records and any receptacles and cabinets containing the
same. The Company hereby consents to the release of information regarding the
Company pursuant to this Section 6.

SECTION 7. No Joint Venture.  Nothing herein contained shall be deemed as
effecting a joint venture among any of the Receivables Parties, the Transition
Bond Issuer, the Transition Bond Trustee and the Company.

SECTION 8. Method of Adjustment and Allocation. Notwithstanding any provision
herein to the contrary, for the purpose of this Agreement only, the Receivables
Parties hereby consent and agree to (a) the method of adjustment of the
Transition Charge in accordance with Section 7 of Annex I to the Servicing
Agreement in the form attached hereto and (b) the method of calculation and
allocation of payments in accordance with Sections 3.02 and 3.03 of the
Servicing Agreement in the form attached hereto and irrevocably waive any right
to object to or enjoin such adjustment, calculation, payment or allocation. Such
consent and agreement shall not relieve the Company of any of its obligations to
make payments in accordance with the terms of the Receivables Agreements.

SECTION 9. Termination.  This Agreement shall terminate upon the payment in
full of the Transition Bonds, except that the understandings and acknowledgments
contained in paragraphs 1, 2, 3 and 4 shall survive the termination of this
Agreement.

SECTION 10. Governing Law.  This Agreement shall be governed by the laws of
the State of Texas.

SECTION 11. Further Assurances.  The parties hereto each agree to execute any
and all agreements, instruments, financing statements, releases and any and all
other documents reasonably requested by the other in order to effectuate the
intent of this Agreement.  In each case where a release is to be given pursuant
to this Agreement, the term release shall include any

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<PAGE>

documents or instruments necessary to effect a release, as contemplated by this
Agreement. All releases, subordinations and other instruments submitted to the
executing party are to be prepared at no expense to such party.

SECTION 12. Limitation on Rights of Others. This Agreement is solely for the
benefit of the Receivables Parties (and any future Receivables Financing
Entities), including without limitation the Receivables Trustee, for the benefit
of the Noteholders (as defined in the Receivables Indenture), the Transition
Bond Issuer, the Transition Bond Trustee for the benefit of itself, the holders
of Transition Bonds and any credit enhancement provider, and the Company and no
other person or entity shall have any rights, benefits, priority or interest
under or because of the existence of this Agreement.

SECTION 13. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same instrument.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.

SECTION 14. Nonpetition Covenant. Notwithstanding any prior termination of this
Agreement or the Indenture, each of the parties hereto hereby covenants and
agrees that it shall not, prior to the date which is one year and one day after
the termination of the Indenture and the payment in full of the Transition
Bonds, any other amounts owed under the Indenture, including, without
limitation, any amounts owed to third-party credit enhancers or under any
interest rate swap agreement, acquiesce, petition or otherwise invoke or cause
the Transition Bond Issuer to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the
Transition Bond Issuer under any federal or State bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Transition Bond Issuer or any
substantial part of the property of the Transition Bond Issuer, or ordering the
winding up or liquidation of the affairs of the Transition Bond Issuer.

     Notwithstanding any prior termination of this Agreement or the Receivables
Agreements, each of the parties hereto hereby covenants and agrees that it shall
not, prior to the date which is one year and one day after the termination of
the Receivables Agreements and the payment in full of the Securities, any other
amounts owed under the Receivables Agreements, acquiesce, petition or otherwise
invoke or cause AEP Credit, Inc. or any Receivables Financing Entity (and, for
long as the Receivables Trustee acts as trustee for the related Receivables
Financing, any entity that issues commercial paper in connection with such
Receivables Financing) that issues commercial paper (a "CP Conduit") to invoke
the process of any court or government authority for the purpose of commencing
or sustaining a case against AEP Credit, Inc. or any CP Conduit under any
federal or State bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of AEP Credit, Inc. or any CP Conduit or any substantial part of the property of
AEP Credit, Inc. or any CP Conduit, or ordering the winding up or liquidation of
the affairs of AEP Credit, Inc. or any CP Conduit.

                                       7
<PAGE>

SECTION 15. Trustees.  [                       ], as Receivables Trustee, in
acting hereunder is entitled to all rights, benefits, protections, immunities
and indemnities accorded to it under the [Receivables Indenture]. Bankers Trust
Company, as Transition Bond Trustee, in acting hereunder is entitled to all
rights, benefits, protections, immunities and indemnities accorded to it under
the Indenture.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

                                    AEP CREDIT, INC.

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

                                    RELIANT ENERGY, INCORPORATED, as Company and
                                    Receivables Servicer

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

                                    RELIANT ENERGY, INCORPORATED, as TC Servicer

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

                                    RELIANT ENERGY, INCORPORATED, as Utility

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

                                       8
<PAGE>

                                    RELIANT ENERGY TRANSITION BOND COMPANY, LLC

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

                                    BANKERS TRUST COMPANY

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

                                       9
<PAGE>

                                    ANNEX I

"Collections" mean, with respect to any Receivable, all cash collections,
negotiable instruments, other cash or non-cash proceeds or any other form of
payment in respect of such Receivable and shall include all proceeds of any
other form of payment in respect of such Receivable and shall include all
proceeds of any Receivable within the meaning of Section 9-102(a)(64)of the
applicable Uniform Commercial Code.  "Collections" shall also mean that portion
of any security deposit applied in satisfaction of a Receivable.

"Excluded Receivables" means any Receivables that are "Excluded Receivables"
under the Purchase Agreement in the form attached hereto.

"Outstanding Receivables" means Receivables that are "Outstanding Receivables"
under the Purchase Agreement in the form attached hereto.

"Purchase Agreement" means the purchase agreement dated as of May 29, 1992,
between CSW Credit, Inc. and Houston Lighting & Power Company, as amended by
Amendment No. 1 thereto dated as of February 1, 1996 and as amended by the
Global Amendment between such parties dated as of the date hereof.

"Receivable" means any Outstanding Receivable (other than Excluded Receivables)
that has been purchased by the Initial Receivables Purchaser from the Company.

"Receivables Agreements" means the (i) Purchase Agreement, (ii) the Agency
Agreement dated as of May 29, 1992, between CSW Credit, Inc. and Houston
Lighting & Power Company as amended by the Global Amendment between such parties
dated as of the date hereof, and (iii) any other Receivables Financing
Documents.

"Receivables Financing" means any sale, pledge or other transfer of an interest
in Outstanding Receivables by the Initial Receivables Purchaser.

"Receivables Financing Documents" means each indenture, receivables transfer
agreement or other document or agreement executed by the Receivables Parties
any/or any future Receivables Financing Entities in connection with a
Receivables Financing.

"Receivables Financing Entity" means, initially, the Receivables Trustee, and
shall mean, after the Notes issued pursuant to the Receivables Financing for
which the Receivables Trustee acts as trustee have been paid in full, any
trustee, purchaser, administrative agent or other entity purchasing or providing
financing for (or acting as agent for such person) Outstanding Receivables
provided that such person has agreed to be bound by this Intercreditor Agreement
or is otherwise satisfactory to the Company.

"Transition Charges" means nonbypassable amounts to be charged for the use or
availability of electric services, approved by the Texas Public Utility
Commission in the Financing Order to recover Qualified Costs (as defined in the
Financing Order), that shall be collected by TC Servicer, its successors,
assignees or other collection agents as provided for in the Financing Order.
<PAGE>

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

                                                                    EXHIBIT 10.1

                    ---------------------------------------

                         COMMON STOCK PURCHASE AGREEMENT

                                  BY AND AMONG

                            ERGO SCIENCE CORPORATION,

                              ESC MERGER SUB, INC.

                                       AND

                          COURT SQUARE CAPITAL LIMITED

                            DATED AS OF MAY 23, 2001

                     ---------------------------------------

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                            PAGE
<S>      <C>                                                                                <C>
1.       AUTHORIZATION AND SALE OF STOCK......................................................1

         1.1.     Authorization of Common Stock...............................................1
         1.2.     Sale of Common Stock........................................................1
         1.3.     Limitation On Other Issuances of Common Stock...............................2
         1.4.     Proceeds....................................................................2

2.       THE CLOSING..........................................................................2

3.       REPRESENTATIONS OF THE COMPANY.......................................................3

         3.1.     Organization and Corporate Power............................................3
         3.2.     Authorization...............................................................3
         3.3.     Effect of Transactions......................................................4
         3.4.     Brokerage...................................................................4

4.       REPRESENTATIONS OF THE PURCHASERS....................................................4

         4.1.     Accredited Investor.........................................................4
         4.2.     Investment..................................................................4
         4.3.     Suitability.................................................................4
         4.4.     Lack of Liquidity...........................................................5
         4.5.     Knowledge and Experience....................................................5
         4.6.     Access to Management........................................................5
         4.7.     Brokerage...................................................................5

5.       CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER.......................................5

         5.1.     Accuracy of Representations and Warranties; Performance.....................5
         5.2.     Certificate.................................................................5
         5.3.     Stockholder Approval........................................................5
         5.4.     Consummation of Merger......................................................5
         5.5.     Purchaser Satisfaction with Acquisition.....................................5

6.       CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.........................................6

         6.1.     Accuracy of Representations and Warranties; Performance.....................6
         6.2.     Certificate.................................................................6
         6.3.     Stockholder Approval........................................................6
         6.4.     Consummation of Merger......................................................6
         6.5.     Company Satisfaction with Acquisition.......................................6

7.       SUCCESSORS AND ASSIGNS...............................................................6

8.       SURVIVAL OF REPRESENTATIONS AND WARRANTIES...........................................6

                                             i
<PAGE>

9.       EXPENSES.............................................................................6

10.      NOTICES..............................................................................6

11.      NO CONDITIONS TO EFFECTIVENESS, ENTIRE AGREEMENT.....................................7

12.      AMENDMENTS AND WAIVERS...............................................................7

13.      COUNTERPARTS.........................................................................8

14.      CAPTIONS.............................................................................8

15.      SEVERABILITY.........................................................................8

16.      GOVERNING LAW........................................................................8

17.      TERMINATION AND EXPIRATION...........................................................8
</TABLE>

                                       ii

<PAGE>

                         COMMON STOCK PURCHASE AGREEMENT

         This Common Stock Purchase Agreement (this "AGREEMENT"), dated as of
May 23, 2001, is made by and among Ergo Science Corporation, a Delaware
corporation ("ERGO"), ESC Merger Sub, Inc., a Delaware corporation and
wholly-owned subsidiary of Ergo ("MERGER SUB"), and Court Square Capital
Limited, a Delaware corporation ("COURT SQUARE" and together with its permitted
assignees, the "PURCHASERS"). When used herein, the term "COMPANY" shall refer
to (i) Ergo prior to the effective time of the Merger (as hereinafter defined),
and (ii) Merger Sub at and after the effective time of the Merger.

         WHEREAS, subject to the approval of its stockholders, Ergo is
implementing certain restrictions on the transfer of its Common Stock (as
hereinafter defined) by means of the merger of Ergo with and into Merger Sub,
with Merger Sub being the surviving corporation and pursuant to which Merger Sub
shall change its name to "Ergo Science Corporation" (the "MERGER");

         WHEREAS, the Company wishes to acquire one or more operating businesses
(the "ACQUISITION") for such consideration as may then be agreed upon including,
without limitation, consideration in the form of cash;

         WHEREAS, the Company and Court Square entered into an agreement to
induce Court Square to assist the Company in identifying suitable targets for
the Acquisition by granting Court Square certain rights with respect to the
issuance and sale of shares of Common Stock (as defined herein) to finance the
Acquisition (the "ORIGINAL AGREEMENT"); and

         WHEREAS, the parties wish to, and hereby do, amend and restate the
Original Agreement as follows.

         NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, and intending to be legally bound by the terms and
conditions of this Agreement, the parties hereto hereby agree as follows:

1.       AUTHORIZATION AND SALE OF STOCK.

         1.1. AUTHORIZATION OF COMMON STOCK. The Company has duly authorized the
sale and issuance of up to 7,500,000 shares of its Common Stock, par value $0.01
per share (the "COMMON STOCK").

         1.2. SALE OF COMMON STOCK.

                  (a) Subject to the terms and conditions of this Agreement, at
         the Closing, the Company shall issue and sell to the Purchasers, and
         the Purchasers shall purchase from the Company that number of shares of
         Common Stock (the "COMMON SHARES") as may be determined by mutual
         agreement of the parties, up to an aggregate maximum of 7,500,000
         shares (such maximum number subject to adjustment as provided below) of
         Common Stock at a purchase price per share equal to the SUM of (i)
         $1.15 AND (ii) the Book Value Increase (as defined below) per share

                                       1
<PAGE>

         (such purchase price per share subject to adjustment as provided below,
         the "PURCHASE PRICE"). The Purchasers shall pay the Purchase Price to
         the Company for the Common Shares, and such Common Shares shall be sold
         and issued, in accordance with Section 2 of this Agreement.

                  (b) The maximum number of Common Shares subject to issuance
         and sale pursuant to this Section 1.2, the Purchase Price and the Book
         Value Per Share (as defined below) shall each be equitably adjusted for
         any stock split, stock dividend, combination of shares, reorganization,
         recapitalization, reclassification or similar event involving or
         affecting the Common Stock (including, without limitation, the effect
         of the Merger).

                  (c) For purposes of this Section 1.2: (i) the term "BOOK VALUE
         INCREASE" shall mean any increase in the Book Value Per Share occurring
         between May 23, 2001 and the Closing Date attributable to (A) the
         Company's receipt of Cash in consideration of the sale of the Company's
         non-Cash assets or (B) the reduction or elimination of the Liquidation
         Preference; (ii) the term "BOOK VALUE PER SHARE" shall mean the
         QUOTIENT of (A) the Company's then total amount of assets LESS the SUM
         of its then total amount of liabilities AND the Liquidation Preference
         DIVIDED BY (B) the number of shares of the Company's Common Stock then
         outstanding; (iii) the term "LIQUIDATION PREFERENCE" shall mean the
         then aggregate accrued liquidation preference on all outstanding shares
         of the Company's preferred stock; and (iv) the term "CASH" shall mean
         cash, cash equivalents and short-term investments.

         1.3. LIMITATION ON OTHER ISSUANCES OF COMMON STOCK. The Company hereby
covenants and agrees that it shall not issue any shares of Common Stock or other
security exercisable for or convertible into Common Stock to any party (other
than as specifically contemplated herein) in connection with the financing of an
Acquisition of a business introduced to the Company by Court Square either
directly or indirectly (i.e. through an intermediary introduced to the Company
by Court Square) unless and until either (i) the Company has issued and sold all
of the Common Shares to the Purchasers or (ii) the Purchasers have declined to
purchase the Common Shares offered to them pursuant to this Agreement in
connection with such Acquisition.

         1.4. PROCEEDS. Proceeds from the sale of the Common Shares may be used
for any corporate purpose, including without limitation as consideration for an
Acquisition and/or general working capital purposes.

2. THE CLOSING. The closing of the sale and purchase of the Common Shares
pursuant to this Agreement shall take place, if at all, in such place, on such
date and at such time as shall be mutually agreed by the Company and the
Purchasers (the "CLOSING"). The date of the Closing is hereinafter referred to
as the "CLOSING DATE." At the Closing, the Company shall deliver to each
Purchaser a certificate representing the number of Common Shares purchased by
such Purchaser as provided in Section 1.2 hereof registered in the name of the
Purchaser. The Purchase Price shall be paid by wire transfer, certified or
cashier's check or other method acceptable to the Company and which shall
facilitate the consummation of the

                                       2
<PAGE>

Acquisition. If, at the Closing, any of the conditions specified in Section 5 of
this Agreement shall not have been fulfilled, each Purchaser shall, at its
election, be relieved of all of its obligations under this Agreement without
thereby waiving any other right it may have by reason of such failure or such
non-fulfillment. If, at the Closing, any of the conditions specified in Section
6 of this Agreement shall not have been fulfilled, the Company shall, at its
election, be relieved of all of its obligations under this Agreement without
thereby waiving any other right it may have by reason of such failure or such
non-fulfillment.

3. REPRESENTATIONS OF THE COMPANY. The Company hereby represents and warrants to
the Purchasers as follows:

         3.1. ORGANIZATION AND CORPORATE POWER. The Company is a corporation
duly organized, validly existing and in corporate good standing under the laws
of the State of Delaware and is qualified to do business as a foreign
corporation in each jurisdiction in which such qualification is required, except
where the failure to be so qualified would not have a material and adverse
effect on the business, operations, financial condition, assets, prospects,
liabilities or contractual rights of the Company (a "MATERIAL ADVERSE EFFECT").
The Company has all required corporate power and authority to own its property,
to carry on its business as presently conducted or contemplated, to enter into
and perform this Agreement and the other agreements, documents and instruments
contemplated hereby (collectively with this Agreement, the "TRANSACTION
DOCUMENTS"), and generally to carry out the transactions contemplated hereby.
The Company is not in violation of any term of its Certificate of Incorporation
or By-laws, or in violation of any term of any agreement, instrument, judgment,
decree, order, statute, rule or government regulation applicable to the Company
or to which the Company is a party, where any violation, noncompliance or
default would result in a Material Adverse Effect.

         3.2. AUTHORIZATION. Other than obtaining the approval of the Company's
stockholders with regard to the issuance of the Common Shares:

                  (a) The Transaction Documents are valid and binding
         obligations of the Company, enforceable against the Company in
         accordance with their terms, except as may be limited by (A) applicable
         bankruptcy, insolvency, reorganization or other laws of general
         application relating to or affecting the enforcement of creditors'
         rights generally and (B) the effects of rules of law governing the
         availability of equitable remedies.

                  (b) The execution, delivery and performance of the Transaction
         Documents have been duly authorized by all necessary corporate or other
         action of the Company.

                  (c) The issuance, sale and delivery of the Common Shares in
         accordance with this Agreement have been, or will be prior to the
         Closing, duly authorized and reserved for issuance, as the case may be,
         by all necessary corporate action on the part of the Company.

                  (d) The Common Shares, when so issued, sold and delivered
         against payment therefor in accordance with the provisions of this
         Agreement will be duly and validly issued, fully paid and
         non-assessable.

                                       3
<PAGE>

                  (e) No consent, approval or authorization of, or designation,
         declaration or filing with, any governmental authority or any other
         person or entity is required of the Company in connection with the
         execution and delivery of the Transaction Documents, or the issuance,
         sale and delivery of the Common Shares in accordance with the terms of
         this Agreement or the consummation of any other transaction
         contemplated hereby or by the other Transaction Documents.

         3.3. EFFECT OF TRANSACTIONS. The execution, delivery and performance by
the Company of the Transaction Documents will not conflict with or result in any
default under any material contract, obligation or commitment of the Company, or
any provision of the Company's Certificate of Incorporation or By-laws, or in
any corporate restriction of the Company or the creation of any lien, charge or
encumbrance of any nature upon any of the properties or assets of the Company
which could have a Material Adverse Effect. The Company's execution and delivery
of the Transaction Documents and its performance of the transactions
contemplated thereby will not violate any instrument, agreement, judgment,
decree, order, statute, rule or regulation of any federal, state or local
government or agency applicable to the Company which could reasonably be
expected to have a Material Adverse Effect.

         3.4. BROKERAGE. There are no claims for brokerage commissions, finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of the
Company, except as described herein.

4. REPRESENTATIONS OF THE PURCHASERS. Each Purchaser severally represents and
warrants to the Company, as follows:

         4.1. ACCREDITED INVESTOR. Except as otherwise disclosed to the Company,
it is an "accredited investor" as such term is defined in Regulation D under the
Securities Act of 1933, as amended (the "SECURITIES ACT").

         4.2. INVESTMENT. It is acquiring Common Shares for its own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same, and it has no present or contemplated agreement, undertaking,
arrangement, obligation, indebtedness or commitment providing for the
disposition thereof.

         4.3. SUITABILITY. It understands and has fully considered for purposes
of this investment the risks of this investment and understands that (i) this
investment is suitable only for an investor who is able to bear the economic
consequences of losing its entire investment; (ii) the Company is substantially
similar to an early-stage enterprise with no operating history, and no revenues
or net income from operations to date; (iii) the purchase of Common Shares is a
speculative investment which involves a high degree of risk of loss of the
entire investment; and (iv) there are substantial restrictions on the
transferability of the Common Shares, and accordingly, it may not be possible
for it to liquidate its investment in case of emergency or otherwise.

                                       4
<PAGE>

         4.4. LACK OF LIQUIDITY. It is able (i) to bear the economic risk of
this investment, (ii) to hold the Common Shares for an indefinite period of
time, and (iii) presently to afford a complete loss of its investment. It has
sufficient liquid assets so that the illiquidity associated with this investment
will not cause any undue financial difficulties or affect its ability to provide
for its current needs and possible financial contingencies, and that its
commitment to all speculative investments (including the investment contemplated
by this Purchase Agreement) is reasonable in relation to its net worth or
investment portfolio.

         4.5. KNOWLEDGE AND EXPERIENCE. It has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of an investment in the Common Shares and of making an informed investment
decision and can bear a complete loss of its investment.

         4.6. ACCESS TO MANAGEMENT. It, in making its decision to purchase
Common Shares, has been given the opportunity to ask questions of, and to
receive answers from, management and other persons acting on behalf of the
Company concerning the Company and the terms and conditions of transaction
contemplated by this Agreement, and to obtain any additional information, to the
extent such persons possess such information.

         4.7. BROKERAGE. There are no claims for brokerage commissions, finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
such Purchaser, except as described herein.

5. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The obligations of each
Purchaser under this Agreement are subject to the fulfillment, or the waiver by
such Purchaser, of the conditions set forth in this Section 5 on or before the
Closing Date.

         5.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The
representations and warranties of the Company contained in Section 3 of this
Agreement shall be true on and as of the Closing Date with the same effect as
though such representation and warranty had been made on and as of that date,
other than as would not, taken as a whole, have an Material Adverse Effect. The
Company shall have performed and complied with all agreements and conditions
contained in this Agreement required to be performed or complied with by the
Company prior to or at the Closing.

         5.2. CERTIFICATE. The Company shall have delivered to each Purchaser a
certificate, executed by the President of the Company as of the Closing Date,
certifying to the fulfillment of the conditions to the Purchasers' obligations
under this Agreement set forth in Section 5.1.

         5.3. STOCKHOLDER APPROVAL. The stockholders of Ergo shall have approved
(i) the Merger and (ii) the issuance of Common Shares contemplated herein.

         5.4. CONSUMMATION OF MERGER. The Merger shall have been consummated.

         5.5. PURCHASER SATISFACTION WITH ACQUISITION. The Acquisition shall be
acceptable in all respects to such Purchaser in its sole discretion.

                                       5
<PAGE>

6. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the Company
under this Agreement are subject to the fulfillment, or the waiver in writing by
the Company, of the conditions set forth in this Section 6 on or before each
Closing Date.

         6.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The
representations and warranties of each Purchaser contained in Section 4 shall be
true on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of that date. Each
Purchaser shall have performed and complied with all agreements contained in
this Agreement required to be performed and complied with by it prior to or at
the Closing.

         6.2. CERTIFICATE. Each Purchaser shall have delivered to the Company a
certificate, duly executed by or on behalf of it as of the Closing Date,
certifying to the fulfillment of the conditions to the Company's obligations
under this Agreement set forth in Section 6.1.

         6.3. STOCKHOLDER APPROVAL. The stockholders of Ergo shall have approved
(i) the Merger and (ii) the issuance of the Common Shares contemplated herein.

         6.4. CONSUMMATION OF MERGER. The Merger shall have been consummated.

         6.5. COMPANY SATISFACTION WITH ACQUISITION. The Acquisition shall be
acceptable in all respects to the Company in its sole discretion.

7. SUCCESSORS AND ASSIGNS. No assignment or transfer of this Agreement or any
right or privilege hereunder by any party, including any assignment by operation
of law pursuant to a merger, liquidation, foreclosure, or involuntary sale in
bankruptcy, shall be effective or binding on the other party without such other
party's prior written consent. Notwithstanding the foregoing, (i) Ergo may
assign its rights and obligations hereunder to Merger Sub in connection with the
Merger and (ii) Court Square may assign its rights and obligations, in whole or
in part, to any of its "affiliates" (as such term is defined in Regulation D
under the Securities Act) or any employee or director of Court Square of any
such affiliate. The provisions of this Agreement shall bind and inure to the
benefit of the respective permitted successors, assigns, heirs, executors, and
administrators of the parties hereto.

8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations, warranties
and covenants shall terminate at, and be of no further force and effect after,
the Closing.

9. EXPENSES. Each party shall bear its own costs and expenses in connection with
the transactions contemplated hereby.

10. NOTICES. All notices, requests, consents and other communications under this
Agreement shall be in writing and shall be delivered by hand, by telecopier, by
express overnight courier service or mailed by first class mail, postage
prepaid, as follows:

                                       6
<PAGE>

If to Purchaser, addressed to:

         Court Square Capital Limited
         c/o Citicorp Venture Capital, Ltd.
         399 Park Avenue
         New York, NY 10043
         Attn: President
         Telephone: (212) 559-3765
         Fax:       (212) 888-2940

If to Company, addressed to:

         Ergo Science Corporation
         790 Turnpike Street; Suite 205
         North Andover, MA 01845
         Attn: President
         Telephone: (978) 974-9474
         Fax:       (978) 974-0688

With a copy to:

         Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
         One Financial Center
         Boston, MA 02111
         Attention: Douglas A. Zingale, Esq.
         Telephone: (617) 542-6000
         Fax:       (617) 542-2241

or to such other place and with such other copies as either party may designate
as to itself by written notice to the other.

         Notices provided in accordance with this Section 10 shall be deemed
delivered upon personal delivery, receipt by telecopier or overnight mail, or 48
hours after deposit in the mail in accordance with the above.

11. NO CONDITIONS TO EFFECTIVENESS, ENTIRE AGREEMENT. This Agreement, together
with the instruments and other documents hereby contemplated to be executed and
delivered in connection herewith, contains the entire agreement and
understanding of the parties hereto, and supersedes any prior agreements or
understandings between or among them, with respect to the subject matter hereof,
including without limitation the Original Agreement.

12. AMENDMENTS AND WAIVERS. Except as otherwise expressly set forth in this
Agreement, any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and the Purchasers. No waivers of or exceptions to any term,
condition or provision of this Agreement, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such term,
condition or provision.

                                       7
<PAGE>

13. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

14. CAPTIONS. The captions of the sections, subsections and paragraphs of this
Agreement have been added for convenience only and shall not be deemed to be a
part of this Agreement.

15. SEVERABILITY. Each provision of this Agreement shall be interpreted in such
manner as to validate and give effect thereto to the fullest lawful extent, but
if any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid or unenforceable under applicable law, such provision
shall be ineffective only to the extent so determined and such invalidity or
unenforceability shall not affect the remainder of such provision or the
remaining provisions of this Agreement.

16. GOVERNING LAW. This Agreement shall be governed by, interpreted, construed
and enforced in accordance with, the substantive laws of the State of Delaware,
without reference to principles of conflict of laws.

17. TERMINATION AND EXPIRATION. Unless otherwise terminated earlier by mutual
agreement of the Company and Court Square, the term of this Agreement shall
expire on the second anniversary of the date hereof.

                                       8
<PAGE>

         IN WITNESS WHEREOF, Ergo, Merger Sub and Court Square have executed
this Common Stock Purchase Agreement as of the day and year first above written.

                                              ERGO SCIENCE CORPORATION

                                              By:  /s/ David R. Burt
                                                   ---------------------------
                                                   Name:  David R. Burt
                                                   Title: President

                                              ESC MERGER SUB, INC.

                                              By:  /s/ David R. Burt
                                                   ---------------------------
                                                   Name:  David R. Burt
                                                   Title: President

                                              COURT SQUARE CAPITAL LIMITED

                                              By:  /s/ Thomas F. McWilliams
                                                   ---------------------------
                                                   Name:  Thomas F. McWilliams
                                                   Title:

                                       9

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