Document:

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                                                                    EXHIBIT 10.1

                              SEPARATION AGREEMENT

                                     BETWEEN

                            CENTERPOINT ENERGY, INC.

                                       AND

                           TEXAS GENCO HOLDINGS, INC.

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                                TABLE OF CONTENTS

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ARTICLE I DEFINITIONS.......................................................................................    2

         1.1        Action..................................................................................    2
         1.2        Affiliates..............................................................................    2
         1.3        Ancillary Agreements....................................................................    2
         1.4        Business................................................................................    2
         1.5        Business Day............................................................................    2
         1.6        Business Separation Plan................................................................    2
         1.7        CenterPoint's Auditors..................................................................    2
         1.8        CenterPoint Business....................................................................    2
         1.9        CenterPoint Field of Use................................................................    3
         1.10       CenterPoint Group.......................................................................    3
         1.11       CenterPoint Indemnitees.................................................................    3
         1.12       CenterPoint Intellectual Property.......................................................    3
         1.13       Code....................................................................................    3
         1.14       Commission..............................................................................    3
         1.15       Distribution Shares.....................................................................    3
         1.16       Exchange Act............................................................................    3
         1.17       Final Order.............................................................................    3
         1.18       Genco Assets............................................................................    3
         1.19       Genco Auditors..........................................................................    3
         1.20       Genco Balance Sheet.....................................................................    3
         1.21       Genco Business..........................................................................    4
         1.22       Genco Common Stock......................................................................    4
         1.23       Genco Debt Obligations..................................................................    4
         1.24       Genco Distribution Agent................................................................    4
         1.25       Genco Distribution Date.................................................................    4
         1.26       Genco Excluded Liabilities..............................................................    4
         1.27       Genco Group.............................................................................    4
         1.28       Genco Indemnitees.......................................................................    4
         1.29       Genco Intellectual Property.............................................................    4
         1.30       Genco Liabilities.......................................................................    4
         1.31       Genco LP................................................................................    5
         1.32       Genco Option............................................................................    5
         1.33       Genco Option Agreement..................................................................    5
         1.34       Genco Option Agreement Undertaking......................................................    5
         1.35       Genco Separation Date...................................................................    5
         1.36       Genco Tax Allocation Agreement..........................................................    5
         1.37       Genco Transition Services Agreement.....................................................    5
         1.38       Governmental Approvals..................................................................    6
         1.39       Governmental Authority..................................................................    6
         1.40       Holding Company Restructuring...........................................................    6
         1.41       Indebtedness............................................................................    6
         1.42       Indemnifying Party......................................................................    6
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         1.43       Indemnitee..............................................................................    6
         1.44       Indemnity Payment.......................................................................    6
         1.45       Information.............................................................................    6
         1.46       Insurance Proceeds......................................................................    6
         1.47       Intellectual Property...................................................................    7
         1.48       Liabilities.............................................................................    7
         1.49       Losses..................................................................................    7
         1.50       Master Separation Agreement.............................................................    7
         1.51       NYSE....................................................................................    7
         1.52       Person..................................................................................    7
         1.53       PUCT....................................................................................    7
         1.54       Record Date.............................................................................    7
         1.55       Regulatory Proceedings..................................................................    8
         1.56       REI.....................................................................................    8
         1.57       Resources...............................................................................    8
         1.58       Subsidiary..............................................................................    8
         1.59       Taxes...................................................................................    8
         1.60       Technical Services Agreement............................................................    8
         1.61       Technical Services Assignment and Assumption Agreement..................................    8
         1.62       Third Party Claim.......................................................................    8
         1.63       Utilities Code..........................................................................    8

ARTICLE II THE GENCO DISTRIBUTION AND THE ACTIONS PENDING...................................................    9

         2.1        Delivery of Shares for Genco Distribution...............................................    9
         2.2        Actions Prior to the Genco Distribution.................................................    9
         2.3        Conditions Precedent to the Genco Distribution..........................................    9
         2.4        Cooperation............................................................................    10
         2.5        Fractional Shares......................................................................    10

ARTICLE III MUTUAL RELEASES; INDEMNIFICATION...............................................................    11

         3.1        Release of Pre-Distribution Claims.....................................................    11
         3.2        Indemnification by Genco...............................................................    13
         3.3        Indemnification by CenterPoint.........................................................    13
         3.4        Indemnification Obligations Net of Insurance Proceeds and Other Amounts................    14
         3.5        Procedures for Indemnification of Third Party Claims...................................    15
         3.6        Additional Matters.....................................................................    16
         3.7        Remedies Cumulative....................................................................    16
         3.8        Survival of Indemnities................................................................    16
         3.9        Indemnification of Directors and Officers..............................................    17

ARTICLE IV CORPORATE GOVERNANCE AND CERTAIN OTHER MATTERS..................................................    17

         4.1        Charter, Bylaws and Board of Directors of Genco........................................    17
         4.2        Issuance of Stock......................................................................    17

ARTICLE V INTELLECTUAL PROPERTY............................................................................    17
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         5.1        Assignment.............................................................................    17
         5.2        License Grants.........................................................................    17
         5.3        Cooperation and Further Undertakings...................................................    18
         5.4        CenterPoint Disclaimer of Warranties...................................................    18
         5.5        Genco Disclaimer of Warranties.........................................................    18

ARTICLE VI ENVIRONMENTAL MATTERS...........................................................................    18

         6.1        Definitions............................................................................    18
         6.2        Environmental Liabilities..............................................................    20
         6.3        Genco Excluded Liabilities.............................................................    20
         6.4        Genco Liabilities......................................................................    20
         6.5        Post-Separation Date Environmental Arrangements........................................    20

ARTICLE VII ARBITRATION; DISPUTE RESOLUTION................................................................    21

         7.1        Agreement to Arbitrate.................................................................    21
         7.2        Escalation.............................................................................    21
         7.3        Demand for Arbitration.................................................................    22
         7.4        Arbitrators............................................................................    22
         7.5        Hearings...............................................................................    23
         7.6        Discovery and Certain Other Matters....................................................    24
         7.7        Certain Additional Matters.............................................................    24
         7.8        Continuity of Service and Performance..................................................    25
         7.9        Law Governing Arbitration Procedures...................................................    25

ARTICLE VIII COVENANTS AND OTHER MATTERS...................................................................    25

         8.1        Other Agreements.......................................................................    25
         8.2        Agreement for Exchange of Information..................................................    26
         8.3        Auditors and Audits; Annual and Quarterly Statements and Accounting....................    27
         8.4        Audit Rights...........................................................................    29
         8.5        Preservation of Legal Privileges.......................................................    29
         8.6        Payment of Expenses....................................................................    30
         8.7        Governmental Approvals.................................................................    30
         8.8        Regulatory Proceedings.................................................................    30
         8.9        Continuance of CenterPoint Credit Support; Borrowings..................................    31
         8.10       [Reserved Section].....................................................................    32
         8.11       Confidentiality........................................................................    32
         8.12       Capacity Auctions......................................................................    33
         8.13       Nuclear Decommissioning Trust and Investment...........................................    33

ARTICLE IX MISCELLANEOUS...................................................................................    33

         9.1        Limitation of Liability................................................................    33
         9.2        Entire Agreement.......................................................................    34
         9.3        Governing Law..........................................................................    34
         9.4        Termination............................................................................    34
         9.5        Notices................................................................................    34
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         9.6        Counterparts...........................................................................    34
         9.7        Binding Effect; Assignment.............................................................    34
         9.8        Severability...........................................................................    34
         9.9        Failure or Indulgence Not Waiver; Remedies Cumulative..................................    35
         9.10       Amendment..............................................................................    35
         9.11       Authority..............................................................................    35
         9.12       Interpretation.........................................................................    35
         9.13       Conflicting Agreements.................................................................    35
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                              SEPARATION AGREEMENT

                  THIS SEPARATION AGREEMENT (this "Agreement") is entered into
effective as of August 31, 2002 between CenterPoint Energy, Inc., a Texas
corporation ("CenterPoint"), and Texas Genco Holdings, Inc., a Texas corporation
("Genco"). Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in Article I hereof.

                                    RECITALS

                  WHEREAS, Genco was incorporated on August 24, 2001 and
organized as a wholly owned direct Subsidiary of Reliant Energy, Incorporated, a
Texas corporation ("REI"), on September 21, 2001; and

                  WHEREAS, effective August 31, 2002, REI consummated a
restructuring transaction (the "Holding Company Restructuring") as a result of
which it became an indirect wholly owned subsidiary of CenterPoint; and

                  WHEREAS, as part of the Holding Company Restructuring, REI
conveyed the Genco Assets to Genco and Genco contributed the Genco Assets to
Texas Genco, LP, a Texas limited partnership and a wholly owned subsidiary of
Genco ("Genco LP"); and

                  WHEREAS, as part of the Holding Company Restructuring REI was
converted into a Texas limited liability company named CenterPoint Energy
Houston Electric, LLC ("CenterPoint Houston"); and

                  WHEREAS, under the Texas Electric Choice Plan (the "Texas
Electric Restructuring Law"), CenterPoint Houston is entitled to recover its
"stranded costs" associated with the Genco Assets; and

                  WHEREAS, the Texas Electric Restructuring Law allows alternate
methods for establishing a market value for the Genco Assets, and under the
Business Separation Plan, REI agreed that the fair market value of the Genco
Assets will be determined using the partial stock market valuation method
permitted under the law; and

                  WHEREAS, CenterPoint intends to distribute (the "Genco
Distribution") approximately 19% of the outstanding shares of Genco Common Stock
to CenterPoint's common shareholders on a pro rata basis in order to effect the
partial stock valuation method for the Genco Assets as contemplated under the
Business Separation Plan; and

                  WHEREAS, in 2004 following the Genco Distribution, Reliant
Resources, Inc., a Delaware corporation ("Resources"), will have the option
purchase all of the shares of Genco Common Stock then owned by CenterPoint
pursuant to the Genco Option Agreement; and

                  WHEREAS, the parties intend in this Agreement, including the
Exhibits and Schedules hereto, to set forth the principal arrangements between
them regarding the separation of the Genco Business from the CenterPoint
Business and the Genco Distribution.

                                       1
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                  NOW, THEREFORE, in consideration of the foregoing and the
covenants and agreements set forth below, the parties hereto agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

         1.1      Action. "Action" means any demand, action, suit, countersuit,
arbitration, inquiry, proceeding or investigation by or before any federal,
state, local, foreign or international Governmental Authority or any arbitration
or mediation tribunal.

         1.2      Affiliates. An "Affiliate" of any Person means another Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For this purpose
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of the Person controlled,
whether through ownership of voting securities, by contract or otherwise. The
fact that any Person may be deemed at any time an Affiliate of another Person
for purposes of the Utilities Code shall not create any implication that such
Persons are "affiliates" for purposes of this Agreement. Notwithstanding
anything herein to the contrary, no member of the Genco Group shall be deemed an
Affiliate of any member of the CenterPoint Group and no member of the
CenterPoint Group shall be deemed an Affiliate of any member of the Genco Group.

         1.3      Ancillary Agreements. "Ancillary Agreements" means (i) the
Genco Transition Services Agreement and the Genco Tax Allocation Agreement
between the parties hereto of even date herewith, (ii) the conveyances and other
related documents delivered in connection with the transfer of the Genco Assets
to Genco LP in connection with the Holding Company Restructuring, (iii) the
Technical Services Assignment and Assumption Agreement, (iv) the Genco Option
Agreement Undertaking, and (v) such other agreements, documents or instruments
as the parties may agree are necessary or desirable and which specifically state
that they are Ancillary Agreements within the meaning of this Agreement.

         1.4      Business. "Business" means either of the CenterPoint Business
or the Genco Business, as the context requires.

         1.5      Business Day. "Business Day" means a day other than a
Saturday, a Sunday or a day on which banking institutions located in the State
of Texas are authorized or obligated by law or executive order to close.

         1.6      Business Separation Plan. "Business Separation Plan" means the
Business Separation Plan, as amended, filed by REI with the PUCT in accordance
with Section 39.051 of the Utilities Code and approved by the PUCT at its open
meeting on December 1, 2000 (Docket No. 21956).

         1.7      CenterPoint's Auditors. "CenterPoint's Auditors" means
CenterPoint's independent certified public accountants.

         1.8      CenterPoint Business. "CenterPoint Business" means any
business of CenterPoint and its Subsidiaries other than the Genco Business.

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         1.9      CenterPoint Field of Use. "CenterPoint Field of Use" means
electric power transmission and distribution; natural gas distribution; thermal
utilities and systems; and interstate pipeline and gathering activities.

         1.10     CenterPoint Group. "CenterPoint Group" means CenterPoint, each
Subsidiary of CenterPoint (other than any member of the Genco Group) immediately
after the Genco Separation Date and each Person that becomes a Subsidiary of
CenterPoint after the Genco Separation Date.

         1.11     CenterPoint Indemnitees. "CenterPoint Indemnitees" has the
meaning assigned to that term in Section 3.2.

         1.12     CenterPoint Intellectual Property. "CenterPoint Intellectual
Property" means that Intellectual Property owned, in whole or in part,
immediately prior to the Genco Separation Date, by any entity that, subsequent
to the Separation Date, will be a part of the CenterPoint Group.

         1.13     Code. "Code" means the Internal Revenue Code of 1986, as
amended from time to time.

         1.14     Commission. "Commission" means the Securities and Exchange
Commission.

         1.15     Distribution Shares. "Distribution Shares" has the meaning set
forth in Section 2.1.

         1.16     Exchange Act. "Exchange Act" means the Securities Exchange Act
of 1934, as amended.

         1.17     Final Order. Unless the context requires otherwise, "Final
Order," "Order," "Injunction," "Decree," "Legal Restraint," "Prohibition,"
"Writ" or other words of similar import shall mean final adjudication by a court
or regulatory agency that is no longer subject to rehearing or appeal.

         1.18     Genco Assets. "Genco Assets" means all of the generation
assets (as that term is defined in Section 39.251(3) of the Utilities Code) that
belonged to the Reliant Energy HL&P Division of REI before such assets were
conveyed, assigned, transferred and delivered to Genco LP pursuant to a Bill of
Sale and Assignment dated as of August 31, 2002 (the "Genco Bill of Sale"). The
Genco Assets include, without limitation, the generation plants and other assets
and contract and permit rights associated with those generation plants as
described in the Genco Bill of Sale. The methodology for determining the
demarcation between Genco Assets and CenterPoint's transmission and distribution
assets is set forth in Section D of the Business Separation Plan.

         1.19     Genco Auditors. "Genco Auditors" means Genco's independent
certified public accountants.

         1.20     Genco Balance Sheet. "Genco Balance Sheet" means the
consolidated balance sheet of Genco and affiliates as of August 31, 2002.

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         1.21     Genco Business. "Genco Business" means the electric generation
business and operations conducted with the Genco Assets.

         1.22     Genco Common Stock. "Genco Common Stock" means the Common
Stock, par value $.001 per share, of Genco.

         1.23     Genco Debt Obligations. "Genco Debt Obligations" means all
Indebtedness of Genco or any other member of the Genco Group, excluding all
Indebtedness of any member of the CenterPoint Group to the extent it constitutes
Indebtedness of Genco by virtue of clause (f) or clause (g) of the definition of
Indebtedness. Genco Debt Obligations shall include, as of the date of the Genco
Balance Sheet, the Indebtedness of Genco reflected on such balance sheet.

         1.24     Genco Distribution Agent. "Genco Distribution Agent" has the
meaning set forth in Section 2.1.

         1.25     Genco Distribution Date. "Genco Distribution Date" has the
meaning set forth in Section 2.1.

         1.26     Genco Excluded Liabilities. "Genco Excluded Liabilities" means
any and all Liabilities that are expressly contemplated by this Agreement or any
Ancillary Agreement as Liabilities to be retained or assumed by CenterPoint or
any other member of the CenterPoint Group, and all agreements and obligations of
any member of the CenterPoint Group under this Agreement or any of the Ancillary
Agreements.

         1.27     Genco Group. "Genco Group" means Genco, each Subsidiary of
Genco immediately after the Genco Separation Date, including the Subsidiaries
set forth in Schedule 1.27, and each Person that becomes a Subsidiary of Genco
after the Genco Separation Date.

         1.28     Genco Indemnitees. "Genco Indemnitees" has the meaning set
forth in Section 3.3.

         1.29     Genco Intellectual Property. "Genco Intellectual Property"
means that Intellectual Property owned, in whole or in part, immediately prior
to the Genco Separation Date, by any entity which, subsequent to the Genco
Separation Date, will be a part of the Genco Group.

         1.30     Genco Liabilities. "Genco Liabilities" means:

                           (i)      any and all Liabilities under contracts for
                  the purchase of fuel, equipment or other goods and services
                  for use in the Genco Business;

                           (ii)     any and all Liabilities that are expressly
                  contemplated by this Agreement or any Ancillary Agreement as
                  Liabilities to be assumed by Genco or any member of the Genco
                  Group, including Liabilities under the Technical Services
                  Agreement and the contracts, agreements and permits included
                  in the Genco Assets; and

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                           (iii)    all Liabilities (other than Taxes based on,
                  or measured by reference to, net income), primarily relating
                  to, arising out of, or resulting from:

                                    (A)      the operation of the Genco
                           Business, as conducted at any time prior to, on or
                           after, the Genco Separation Date (including any
                           Liability relating to, arising out of or resulting
                           from any act or failure to act by any director,
                           officer, employee, agent or representative (whether
                           or not such act or failure to act is or was within
                           such Person's authority));

                                    (B)      the operation of any business
                           conducted by the Genco Group at any time after the
                           Genco Separation Date (including any Liability
                           relating to, arising out of or resulting from any act
                           or failure to act by any director, officer, employee,
                           agent or representative (whether or not such act or
                           failure to act is or was within such Person's
                           authority));

                                    (C)      the ownership or use of the Genco
                           Assets; and

                                    (D)      the Genco Debt Obligations.

Notwithstanding the foregoing, the Genco Liabilities shall not include the Genco
Excluded Liabilities.

         1.31     Genco LP. "Genco LP" means Texas Genco, LP, a Texas limited
partnership and a wholly owned direct Subsidiary of Genco.

         1.32     Genco Option. "Genco Option" means the "Option" as defined in
the Genco Option Agreement.

         1.33     Genco Option Agreement. "Genco Option Agreement" means the
Texas Genco Option Agreement dated as of December 31, 2000 between REI and
Resources.

         1.34     Genco Option Agreement Undertaking. "Genco Option Agreement
Undertaking" means that certain Undertaking to Comply with Certain Provisions of
Option Agreement entered into as of August 31, 2002 by Genco under which Genco
has agreed to observe and comply with certain covenants of the Genco Option
Agreement.

         1.35     Genco Separation Date. "Genco Separation Date" means August
31, 2002, the date on which the Genco Assets were transferred to Genco LP and
the Genco Liabilities were assumed by Genco or Genco LP pursuant to that certain
Bill of Sale and Assignment of even date therewith.

         1.36     Genco Tax Allocation Agreement. "Genco Tax Allocation
Agreement" means the Tax Allocation Agreement of even date herewith between
CenterPoint and Genco.

         1.37     Genco Transition Services Agreement. "Genco Transition
Services Agreement" means the Transition Services Agreement of even date
herewith between CenterPoint and Genco.

                                       5

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         1.38     Governmental Approvals. "Governmental Approvals" means any
notices, reports or other filings to be made, or any consents, registrations,
approvals, permits or authorizations to be obtained from, any Governmental
Authority.

         1.39     Governmental Authority. "Governmental Authority" means any
federal, state, local, foreign or international court, government, department,
commission, board, bureau, agency, official or other regulatory, administrative
or governmental authority.

         1.40     Holding Company Restructuring. "Holding Company Restructuring"
has the meaning set forth in the recitals hereto.

         1.41     Indebtedness. "Indebtedness" of any Person means (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid, (d)
all obligations of such Person under conditional sale or other title retention
agreements relating to property or assets purchased by such Person, (e) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services, (f) all Indebtedness of others secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any mortgage, lien, pledge, or other encumbrance on property
owned or acquired by such Person, whether or not the obligations secured thereby
have been assumed, (g) all guarantees by such Person of Indebtedness of others,
(h) all capital lease obligations of such Person, and (i) all securities or
other similar instruments convertible or exchangeable into any of the foregoing,
but excluding daily cash overdrafts associated with routine cash operations.

         1.42     Indemnifying Party. "Indemnifying Party" has the meaning set
forth in Section 3.4.

         1.43     Indemnitee. "Indemnitee" has the meaning set forth in Section
3.4.

         1.44     Indemnity Payment. "Indemnity Payment" has the meaning set
forth in Section 3.4.

         1.45     Information. "Information" means information, whether or not
patentable or copyrightable, in written, oral, electronic or other tangible or
intangible forms, stored in any medium, including studies, reports, records,
books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data.

         1.46     Insurance Proceeds. "Insurance Proceeds" means those monies:

                  (a)      received by an insured from an insurance carrier; or

                  (b)      paid by an insurance carrier on behalf of the
         insured;

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in any such case net of any applicable premium adjustments (including reserves
and retrospectively rated premium adjustments) and net of any costs or expenses
(including allocated costs of in-house counsel and other personnel) incurred in
the collection thereof.

         1.47     Intellectual Property. "Intellectual Property" means all U.S.
and foreign intellectual and industrial property, including patent applications,
patents and any reissues or reexaminations thereof, trademarks, service marks,
trademark/service mark registrations and applications, brand names, trade names,
all other names and slogans embodying business or product goodwill (or both),
copyright registrations, mask works, copyrights, (including copyrights in
computer programs, software, computer code, documentation, programming tools,
drawings, specifications and data), moral rights of authorship, rights in
designs, trade secrets, technology, inventions, discoveries, improvements,
know-how, proprietary rights, formulae, processes, methods, technical
information, confidential and proprietary information, and all other
intellectual and industrial property rights, whether or not subject to statutory
registration or protection.

         1.48     Liabilities. "Liabilities" means any and all Indebtedness,
liabilities and obligations, whether accrued, fixed or contingent, mature or
inchoate, known or unknown, reflected on a balance sheet or otherwise,
including, but not limited to, those arising under any law, rule, regulation,
Action, order, injunction or consent decree of any Governmental Authority or any
judgment of any court of any kind or any award of any arbitrator of any kind,
and those arising under any contract, commitment or undertaking.

         1.49     Losses. "Losses" means any and all damages, losses,
deficiencies, Liabilities, obligations, penalties, judgments, settlements,
claims, payments, fines, interest costs and expenses (including, without
limitation, the costs and expenses of any and all Actions and demands,
assessments, judgments, settlements and compromises relating thereto and the
costs and expenses of attorneys', accountants', consultants' and other
professionals' fees and expenses incurred in the investigation or defense
thereof or the enforcement of rights hereunder), including direct and
consequential damages, but excluding punitive damages (other than punitive
damages awarded to any third party against an Indemnified Party).

         1.50     Master Separation Agreement. "Master Separation Agreement"
means that certain Master Separation Agreement dated as of December 31, 2000
between REI and Resources.

         1.51     NYSE. "NYSE" means the New York Stock Exchange.

         1.52     Person. "Person" means an individual, a partnership, a limited
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision thereof.

         1.53     PUCT. "PUCT" means the Public Utility Commission of Texas.

         1.54     Record Date. "Record Date" means the close of business on the
date determined by the Board of Directors of CenterPoint as the record date for
determining the shareholders of CenterPoint entitled to receive shares of Genco
Common Stock in the Genco Distribution.

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         1.55     Regulatory Proceedings. "Regulatory Proceedings" means
filings, notices, adjudicatory proceedings, rulemakings, enforcement actions
before an agency or in court relative to regulatory activity, and any other
proceedings at or before any regulatory or administrative agency. The term shall
refer also to appellate activities relative to any of the foregoing, including
actions seeking injunctions, writs of mandamus and appeals.

         1.56     REI. "REI" has the meaning set forth in the recitals hereto.

         1.57     Resources. "Resources" has the meaning set forth in the
recitals hereto.

         1.58     Subsidiary. A "Subsidiary" of any Person means any corporation
or other organization whether incorporated or unincorporated of which at least a
majority of the securities or interests having by the terms thereof ordinary
voting power to elect at least a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries.

         1.59     Taxes. "Taxes" has the meaning set forth in the Genco Tax
Allocation Agreement.

         1.60     Technical Services Agreement. "Technical Services Agreement"
means that certain Technical Services Agreement dated as of December 31, 2000
between REI and Resources.

         1.61     Technical Services Assignment and Assumption Agreement.
"Technical Services Assignment and Assumption Agreement" means that certain
Assignment and Assumption Agreement for the Technical Services Agreement entered
into as of August 31, 2002 by and between Genco LP and REI under which Genco LP
assumed certain obligation of REI and REI assigned certain rights to Genco LP
under the Technical Services Agreement.

         1.62     Third Party Claim. "Third Party Claim" has the meaning set
forth in Section 3.5.

         1.63     Utilities Code. "Utilities Code" means the Utilities Code of
Texas.

                                       8

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                                   ARTICLE II

                 THE GENCO DISTRIBUTION AND THE ACTIONS PENDING
                             THE GENCO DISTRIBUTION

         2.1      DELIVERY OF SHARES FOR GENCO DISTRIBUTION. (a) On or prior to
the date the Genco Distribution is made (the "Genco Distribution Date"),
CenterPoint will deliver or cause to be delivered to the distribution agent to
be appointed by CenterPoint (the "Genco Distribution Agent") a single stock
certificate, endorsed by CenterPoint in blank, representing approximately 19.0%
of the shares of Genco Common Stock then owned by CenterPoint (the "Distribution
Shares") and shall cause the transfer agent for the shares of CenterPoint common
stock to instruct the Genco Distribution Agent to distribute on a prorata basis
on the Genco Distribution Date the appropriate number of such Distribution
Shares to each such holder of record or designated transferee or transferees of
such holder of record of CenterPoint common stock as of the Record Date.

                  (b)      Obligation to Provide Information. CenterPoint and
Genco, as the case may be, will provide to the Genco Distribution Agent all
share certificates and any information required in order to complete the Genco
Distribution on the basis specified above.

         2.2      ACTIONS PRIOR TO THE GENCO DISTRIBUTION. CenterPoint and Genco
shall use their reasonable commercial efforts to consummate the Genco
Distribution. Such efforts shall include, but not necessarily be limited to, the
following:

                  (a)      CenterPoint and Genco shall cooperate in preparing,
filing with the Commission and causing to become effective a registration
statement on Form 10 registering the Genco Common Stock under the Exchange Act.
CenterPoint and Genco shall each use its reasonable commercial efforts to obtain
all necessary approvals from the Commission with respect thereto as soon as
practicable.

                  (b)      CenterPoint and Genco shall prepare and mail, prior
to the Genco Distribution Date, to the holders of record of CenterPoint common
stock as of the Record Date such information concerning Genco and the Genco
Distribution and such other matters as CenterPoint shall reasonably determine
are necessary and as may be required by law.

                  (c)      CenterPoint and Genco shall take all such actions as
may be necessary or appropriate under the securities or blue sky laws of the
United States (and any comparable laws under any foreign jurisdiction) in
connection with the Genco Distribution.

                  (d)      Genco shall prepare and file, and shall use its
reasonable commercial efforts to have approved, an application for the listing
of the Genco Common Stock to be distributed in the Genco Distribution on the
NYSE, subject to official notice of distribution.

         2.3      CONDITIONS PRECEDENT TO THE GENCO DISTRIBUTION. The parties
hereto shall use their reasonable commercial efforts to satisfy the conditions
listed below to the consummation of the Genco Distribution. The obligations of
the parties to use their reasonable commercial efforts

                                       9

<PAGE>

to consummate the Genco Distribution shall be conditioned on the satisfaction,
or waiver by CenterPoint, of the following conditions:

                  (a)      The registration statement on Form 10 related to the
Genco Distribution shall have been filed with and declared effective by the
Commission, and no stop order shall be in effect with respect thereto.

                  (b)      The information concerning Genco and the Genco
Distribution described in Section 2.2(b) shall have been prepared and mailed to
the holders of common stock of CenterPoint.

                  (c)      The actions and filings with regard to state
securities and blue sky laws of the United States (and any comparable laws under
any foreign jurisdictions) described in Section 2.2(c) shall have been taken
and, where applicable, have become effective or been accepted.

                  (d)      The Genco Common Stock to be issued in the Genco
Distribution shall have been approved for listing on the NYSE, on official
notice of distribution.

                  (e)      CenterPoint shall be satisfied in its sole discretion
that it will satisfy the stock ownership requirements of Section 1504(a)(2) of
the Code with respect to the stock of Genco.

                  (f)      Any material Governmental Approvals necessary to
consummate the Genco Distribution shall have been obtained and be in full force
and effect.

                  (g)      No order, injunction or decree issued by any court or
agency of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Genco Distribution or any of the other
transactions contemplated by this Agreement or any Ancillary Agreement shall be
in effect and no other event outside the control of Genco shall have occurred or
failed to occur that prevents the consummation of the Genco Distribution.

                  (h)      Such other actions as the parties hereto may, based
upon the advice of counsel, reasonably request to be taken prior to the Genco
Distribution in order to assure the successful completion of the Genco
Distribution shall have been taken.

                  (i)      This Agreement and all Ancillary Agreements have been
executed and shall not have been terminated.

                  (j)      No events or developments shall have occurred that,
in the judgment of the Board of Directors of CenterPoint, would result in the
Genco Distribution's having a material adverse effect on CenterPoint or on the
shareholders of CenterPoint.

         2.4      COOPERATION. Genco shall consult with, and cooperate in all
respects with, CenterPoint in connection with the Genco Distribution and shall,
at CenterPoint's direction, promptly take any and all actions necessary or
desirable to consummate the Genco Distribution.

         2.5      FRACTIONAL SHARES. CenterPoint shall direct the Genco
Distribution Agent to determine the number of whole shares and fractional shares
of Genco Common Stock allocable

                                       10

<PAGE>

to each holder of record of CenterPoint common stock as of the Record Date, to
aggregate all such fractional shares and to appoint an independent broker-dealer
that is not an Affiliate of CenterPoint or Genco (the "Independent
Broker-Dealer") to sell the whole shares obtained thereby in open market
transactions. The Independent Broker-Dealer shall, in its sole discretion,
determine when, how and at what price to make its sales. The Genco Distribution
Agent shall cause to be distributed to each such holder or for the benefit of
each such beneficial owner to which a fractional share shall be allocable such
holder's or owner's ratable share of the proceeds of such sales by the
Independent Broker Dealer, after making appropriate deductions of any amount
required to be withheld for federal income tax purposes. CenterPoint shall
direct the Genco Distribution Agent to aggregate the shares of CenterPoint
common stock known to be held by any beneficial owner thereof through more than
one account in determining the fractional share allocable to such beneficial
owner.

                                  ARTICLE III

                        MUTUAL RELEASES; INDEMNIFICATION

         3.1      RELEASE OF PRE-DISTRIBUTION CLAIMS.

                  (a)      Except as provided in Section 3.1(c), effective as of
the Genco Distribution Date, Genco does hereby, for itself and each other member
of the Genco Group, their respective Affiliates (other than any member of the
CenterPoint Group), successors and assigns, and all Persons who at any time
prior to the Genco Distribution Date have been shareholders, directors,
officers, agents or employees of any member of the Genco Group (in each case, in
their respective capacities as such), remise, release and forever discharge
CenterPoint, each member of the CenterPoint Group and their respective
Affiliates (other than any member of the Genco Group), successors and assigns,
and all Persons who at any time prior to the Genco Distribution Date have been
shareholders, directors, officers, agents or employees of any member of the
CenterPoint Group (in each case, in their respective capacities as such), and
their respective heirs, executors, administrators, successors and assigns, from
any and all Liabilities whatsoever to Genco and each other member of the Genco
Group, whether at law or in equity (including any right of contribution),
whether arising under any contract or agreement, by operation of law or
otherwise, existing or arising from any acts or events occurring or failing to
occur or alleged to have occurred or to have failed to occur or any conditions
existing or alleged to have existed on or before the Genco Distribution Date,
including in connection with the transactions and all other activities to
implement the Genco Distribution.

                  (b)      Except as provided in Section 3.1(c), effective as of
the Genco Distribution Date, CenterPoint does hereby, for itself and each other
member of the CenterPoint Business, their respective Affiliates (other than any
member of the Genco Group), successors and assigns, and all Persons who at any
time prior to the Genco Distribution Date have been shareholders, directors,
officers, agents or employees of any member of the CenterPoint Group (in each
case, in their respective capacities as such), remise, release and forever
discharge Genco, each member of the Genco Group, and their respective Affiliates
(other than any member of the CenterPoint Group), successors and assigns, and
all Persons who at any time prior to the Genco Distribution Date have been
shareholders, directors, officers, agents or employees of any member of the
Genco Business (in each case, in their respective capacities as such), and their

                                       11

<PAGE>

respective heirs, executors, administrators, successors and assigns, from any
and all Liabilities whatsoever to CenterPoint and each other member of the
CenterPoint Group, whether at law or in equity (including any right of
contribution), whether arising under any contract or agreement, by operation of
law or otherwise, existing or arising from any acts or events occurring or
failing to occur or alleged to have occurred or to have failed to occur or any
conditions existing or alleged to have existed on or before the Genco
Distribution Date, including in connection with the transactions and all other
activities to implement the Genco Distribution.

                  (c)      Nothing contained in Section 3.1(a) or (b) shall
impair any right of any Person to enforce this Agreement, any Ancillary
Agreement or any agreements, arrangements, commitments or understandings that
are specified in this Agreement or in any Ancillary Agreement. Nothing contained
in Section 3.1(a) or (b) shall release any Person from:

                           (i)      any Liability, contingent or otherwise,
                  assumed, transferred, assigned or allocated to the Group of
                  which such Person is a member in accordance with, or any other
                  Liability of any member of any Group under, this Agreement or
                  any Ancillary Agreement;

                           (ii)     any Liability for the sale, lease,
                  construction or receipt of goods, property or services
                  purchased, obtained or used in the ordinary course of business
                  by a member of one Group from a member of any other Group
                  prior to the Genco Distribution Date;

                           (iii)    any Liability for unpaid amounts for
                  products or services or refunds owing on products or services
                  due on a value-received basis for work done by a member of one
                  Group at the request or on behalf of a member of another
                  Business;

                           (iv)     any Liability that the parties may have with
                  respect to indemnification or contribution pursuant to this
                  Agreement for claims brought against the parties by third
                  Persons, which Liability shall be governed by the provisions
                  of this Article III and, if applicable, the appropriate
                  provisions of the Ancillary Agreements; or

                           (v)      any Liability the release of which would
                  result in the release of any Person other than a Person
                  released pursuant to this Section 3.1; provided that the
                  parties agree not to bring suit or permit any of their
                  Subsidiaries to bring suit against any Person with respect to
                  any Liability to the extent that such Person would be released
                  with respect to such Liability by this Section 3.1 but for the
                  provisions of this clause (v).

                  (d)      Genco shall not make, and shall not permit any member
of the Genco Group to make, any claim or demand, or commence any Action
asserting any claim or demand, including any claim of contribution or any
indemnification, against CenterPoint or any member of the CenterPoint Group, or
any other Person released pursuant to Section 3.1(a), with respect to any
Liabilities released pursuant to Section 3.1(a). CenterPoint shall not make, and
shall not permit any member of the CenterPoint Group to make, any claim or
demand, or commence any

                                       12

<PAGE>

Action asserting any claim or demand, including any claim of contribution or any
indemnification, against Genco or any member of the Genco Group, or any other
Person released pursuant to Section 3.1(b), with respect to any Liabilities
released pursuant to Section 3.1(b).

                  (e)      It is the intent of each of CenterPoint and Genco by
virtue of the provisions of this Section 3.1 to provide for a full and complete
release and discharge of all Liabilities existing or arising from all acts and
events occurring or failing to occur or alleged to have occurred or to have
failed to occur and all conditions existing or alleged to have existed on or
before the Genco Distribution Date, between or among Genco or any member of the
Genco Group, on the one hand, and CenterPoint or any member of the CenterPoint
Group, on the other hand (including any contractual agreements or arrangements
existing or alleged to exist between or among any such members on or before the
Genco Distribution Date), except as expressly set forth in Section 3.1(c). At
any time, at the request of any other party, each party shall cause each member
of its respective Group to execute and deliver releases reflecting the
provisions hereof.

         3.2      INDEMNIFICATION BY GENCO. Except as provided in Section 3.4,
Genco shall, and in the case of clauses (a), (b) and (c) below shall in addition
cause the Appropriate Member of the Genco Group (as defined below) to,
indemnify, defend and hold harmless CenterPoint, each member of the CenterPoint
Group and each of their respective directors, officers and employees, and each
of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "CenterPoint Indemnitees") from and against any and all
Losses of the CenterPoint Indemnitees relating to, arising out of or resulting
from any of the following (without duplication):

                  (a)      the failure of Genco or any other member of the Genco
Group or any other Person to pay, perform or otherwise promptly discharge any
Genco Liabilities in accordance with their respective terms, whether prior to or
after the Genco Distribution Date or the date thereof;

                  (b)      the Genco Business or any Genco Liability;

                  (c)      any breach by Genco or any member of the Genco Group
of this Agreement or any of the Ancillary Agreements; and

                  (d)      any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
with respect to all information contained in the registration statement on Form
10 and the related information statement sent to the holders of CenterPoint's
common stock related to the Genco Distribution (other than information regarding
CenterPoint provided by CenterPoint to Genco for inclusion therein).

As used in this Section 3.2, "Appropriate Member of the Genco Group" means the
member or members of the Genco Group, if any, whose acts, conduct or omissions
or failures to act caused, gave rise to or resulted in the loss from and against
which indemnity is provided.

         3.3      INDEMNIFICATION BY CENTERPOINT. Except as provided in Section
3.4, CenterPoint shall, and in the case of clauses (a), (b) and (c) below shall
in addition cause the Appropriate Member of the CenterPoint Group (as defined
below) to, indemnify, defend and hold harmless Genco, each member of the Genco
Group and each of their respective directors,

                                       13

<PAGE>

officers and employees, and each of the heirs, executors, successors and assigns
of any of the foregoing (collectively, the "Genco Indemnitees") from and against
any and all Losses of the Genco Indemnitees relating to, arising out of or
resulting from any of the following (without duplication):

                  (a)      the failure of CenterPoint or any other member of the
CenterPoint Group or any other Person to pay, perform or otherwise promptly
discharge any Liabilities of any member of the CenterPoint Group other than the
Genco Liabilities, in accordance with their respective terms, whether prior to
or after the Genco Distribution Date or the date hereof;

                  (b)      the CenterPoint Business or any Liability of any
member of the CenterPoint Group other than the Genco Liabilities;

                  (c)      any breach by CenterPoint or any member of the
CenterPoint Group of this Agreement or any of the Ancillary Agreements; and

                  (d)      any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
with respect to information regarding CenterPoint provided by CenterPoint to
Genco for inclusion in the registration statement on Form 10 or the information
statement sent to the holders of CenterPoint's common stock related to the Genco
Distribution.

As used in this Section 3.3, "Appropriate Member of the CenterPoint Group" means
the member or members of the CenterPoint Group, if any, whose acts, conduct or
omissions or failures to act caused, gave rise to or resulted in the Loss from
and against which indemnity is provided.

         3.4      INDEMNIFICATION OBLIGATIONS NET OF INSURANCE PROCEEDS AND
OTHER AMOUNTS. (a) The parties intend that any Loss subject to indemnification
or reimbursement pursuant to this Article III will be net of Insurance Proceeds
that actually reduce the amount of the Loss. Accordingly, the amount which any
party (an "Indemnifying Party") is required to pay to any Person entitled to
indemnification hereunder (an "Indemnitee") will be reduced by any Insurance
Proceeds theretofore actually recovered by or on behalf of the Indemnitee in
reduction of the related Loss. If an Indemnitee receives a payment (an
"Indemnity Payment") required by this Agreement from an Indemnifying Party in
respect of any Loss and subsequently receives Insurance Proceeds, then the
Indemnitee will pay to the Indemnifying Party an amount equal to the excess of
the Indemnity Payment received over the amount of the Indemnity Payment that
would have been due if the Insurance Proceeds recovery had been received,
realized or recovered before the Indemnity Payment was made.

                  (b)      An insurer who would otherwise be obligated to pay
any claims shall not be relieved of the responsibility with respect thereto or,
solely by virtue of the indemnification provisions hereof, have any subrogation
rights with respect thereto, it being expressly understood and agreed that no
insurer or any other third party shall be entitled to a "windfall" (i.e., a
benefit they would not be entitled to receive in the absence of the
indemnification provisions) by virtue of the indemnification provisions hereof.
Nothing contained in this Agreement or any Ancillary

                                       14

<PAGE>

Agreement shall obligate any member of any Business to seek to collect or
recover any Insurance Proceeds.

         3.5      PROCEDURES FOR INDEMNIFICATION OF THIRD PARTY CLAIMS. (a) If
an Indemnitee shall receive notice or otherwise learn of the assertion by a
Person (including any Governmental Authority) who is not a member of the
CenterPoint Group or the Genco Group of any claims or of the commencement by any
such Person of any Action (collectively, a "Third Party Claim") with respect to
which an Indemnifying Party may be obligated to provide indemnification to such
Indemnitee pursuant to Section 3.2 or 3.3, or any other Section of this
Agreement or any Ancillary Agreement, such Indemnitee shall give such
Indemnifying Party written notice thereof within 20 days after becoming aware of
such Third Party Claim. Any such notice shall describe the Third Party Claim in
reasonable detail. Notwithstanding the foregoing, the failure of any Indemnitee
or other Person to give notice as provided in this Section 3.5(a) shall not
relieve the related Indemnifying Party of its obligations under this Article
III, except to the extent that such Indemnifying Party is actually prejudiced by
such failure to give notice.

                  (b)      An Indemnifying Party may elect to defend (and,
unless the Indemnifying Party has specified any reservations or exceptions, to
seek to settle or compromise), at such Indemnifying Party's own expense and by
such Indemnifying Party's own counsel, any Third Party Claim. Within 30 days
after the receipt of notice from an Indemnitee in accordance with Section 3.5(a)
(or sooner, if the nature of such Third Party Claim so requires), the
Indemnifying Party shall notify the Indemnitee of its election whether the
Indemnifying Party will assume responsibility for defending such Third Party
Claim, which election shall specify any reservations or exceptions. After notice
from an Indemnifying Party to an Indemnitee of its election to assume the
defense of a Third Party Claim, such Indemnitee shall have the right to employ
separate counsel and to participate in (but not control) the defense,
compromise, or settlement thereof, but the fees and expenses of such counsel
shall be the expense of such Indemnitee except as set forth in the next
sentence. In the event that the Indemnifying Party has elected to assume the
defense of the Third Party Claim but has specified, and continues to assert, any
reservations or exceptions in such notice, then, in any such case, the
reasonable fees and expenses of one separate counsel for all Indemnitees shall
be borne by the Indemnifying Party.

                  (c)      If an Indemnifying Party elects not to assume
responsibility for defending a Third Party Claim, or fails to notify an
Indemnitee of its election as provided in Section 3.5(b), such Indemnitee may
defend such Third Party Claim at the cost and expense (included allocated costs
of in-house counsel and other personnel) of the Indemnifying Party.

                  (d)      Unless the Indemnifying Party has failed to assume
the defense of the Third Party Claim in accordance with the terms of this
Agreement, no Indemnitee may settle or compromise any Third Party Claim without
the consent of the Indemnifying Party.

                  (e)      No Indemnifying Party shall consent to entry of any
judgment or enter into any settlement of the Third Party Claim without the
consent of an Indemnitee if the effect thereof is to permit any injunction,
declaratory judgment, other order or other nonmonetary relief to be entered,
directly or indirectly, against such Indemnitee.

                                       15

<PAGE>

                  (f)      The provisions of Section 3.2 through 3.5 shall not
apply to Taxes (which are covered by the Genco Tax Allocation Agreement).

         3.6      ADDITIONAL MATTERS. (a) Any claim on account of a Loss that
does not result from a Third Party Claim shall be asserted by written notice
given by the Indemnitee to the related Indemnifying Party. Such Indemnifying
Party shall have a period of 30 days after the receipt of such notice within
which to respond thereto. If such Indemnifying Party does not respond within
such 30-day period, such Indemnifying Party shall be deemed to have refused to
accept responsibility to make payment. If such Indemnifying Party does not
respond within such 30-day period or rejects such claim in whole or in part,
such Indemnitee shall be free to pursue such remedies as may be available to
such party as contemplated by this Agreement and the Ancillary Agreements.

                  (b)      In the event of payment by or on behalf of any
Indemnifying Party to any Indemnitee in connection with any Third Party Claim,
such Indemnifying Party shall be subrogated to and shall stand in the place of
such Indemnitee as to any events or circumstances in respect of which such
Indemnitee may have any right, defense or claim relating to such Third Party
Claim against any claimant or plaintiff asserting such Third Party Claim or
against any other person. Such Indemnitee shall cooperate with such Indemnifying
Party in a reasonable manner, and at the cost and expense (including allocated
costs of in-house counsel and other personnel) of such Indemnifying Party, in
prosecuting any subrogated right, defense or claim.

                  (c)      In the event of an Action in which the Indemnifying
Party is not a named defendant, if either the Indemnified Party or Indemnifying
Party shall so request, the parties shall endeavor to substitute the
Indemnifying Party for the named defendant, if at all practicable. If such
substitution or addition cannot be achieved for any reason or is not requested,
the named defendant shall allow the Indemnifying Party to manage the Action as
set forth in this Section 3.6 and the Indemnifying Party shall fully indemnify
the named defendant against all costs of defending the Action (including court
costs, sanctions imposed by a court, attorneys' fees, experts' fees and all
other external expenses, and the allocated costs of in-house counsel and other
personnel), the costs of any judgment or settlement, and the cost of any
interest or penalties relating to any judgment or settlement.

                  (d)      THE PARTIES UNDERSTAND AND AGREE THAT THE
INDEMNIFICATION OBLIGATIONS HEREUNDER AND UNDER THE ANCILLARY AGREEMENTS MAY
INCLUDE INDEMNIFICATION FOR LOSSES RESULTING FROM, OR ARISING OUT OF, DIRECTLY
OR INDIRECTLY, AN INDEMNIFIED PARTY'S OWN NEGLIGENCE OR STRICT LIABILITY.

         3.7      REMEDIES CUMULATIVE. The remedies provided in this Article III
shall be cumulative and, subject to the provisions of Article VII, shall not
preclude assertion by any Indemnitee of any other rights or the seeking of any
and all other remedies against any Indemnifying Party.

         3.8      SURVIVAL OF INDEMNITIES. The rights and obligations of each
CenterPoint and Genco and their respective Indemnitees under this Article III
shall survive the sale or other transfer by any party of any Assets or
businesses or the assignment by it of any Liabilities.

                                       16

<PAGE>

         3.9      INDEMNIFICATION OF DIRECTORS AND OFFICERS. For purpose of
Sections 3.2 through 3.8, inclusive, and notwithstanding anything to the
contrary contained herein, Persons who serve on both the Board of Directors of
Genco and the Board of Directors of CenterPoint and persons who serve as
officers of both Genco and CenterPoint shall be deemed both Genco Indemnitees
and CenterPoint Indemnitees.

                                   ARTICLE IV

                 CORPORATE GOVERNANCE AND CERTAIN OTHER MATTERS

         4.1      CHARTER, BYLAWS AND BOARD OF DIRECTORS OF GENCO. As of the
Genco Distribution Date, (i) the Amended and Restated Articles of Incorporation
and Amended and Restated Bylaws of Genco shall be in the forms attached to
Schedule 4.1(a) and 4.1(b) hereto, respectively, which shall comply in all
material respects with the requirements set forth in Sections 2.3 and 8.2 of the
Genco Option Agreement, and (ii) the individuals named in Schedule 4.1(c) shall
constitute the Board of Directors of Genco.

         4.2      ISSUANCE OF STOCK. In addition to and without limiting the
scope of any restrictions arising under Section 3.6 of the Genco Option
Agreement, following the Genco Distribution Date, without the prior consent of
CenterPoint, Genco shall not issue any stock of Genco or any securities,
options, warrants or rights convertible into or exercisable or exchangeable for
stock of Genco.

                                    ARTICLE V

                              INTELLECTUAL PROPERTY

         5.1      ASSIGNMENT. CenterPoint hereby assigns to Genco all of its
right, title and interest in and to the Genco Intellectual Property; the
goodwill of CenterPoint symbolized by any trademarks or service marks assigned
hereunder; and all rights of action accrued or to accrue under or by virtue of
any of the Genco Intellectual Property, including the right to sue and recover
for past infringement or misappropriation.

         5.2      LICENSE GRANTS

                  (a)      Grants to CenterPoint. Except as provided below in
this Section 5.2(a), Genco grants to each Person within the CenterPoint Group a
worldwide, perpetual, royalty-free license to use in the CenterPoint Field of
Use the Genco Intellectual Property, including the right to sublicense customers
or suppliers of CenterPoint or its Subsidiaries to the extent necessary for such
customers to use in the CenterPoint Field of Use products or services of
CenterPoint or its Subsidiaries and for such suppliers to provide equipment or
services to CenterPoint or its Subsidiaries in connection with their operations
in the CenterPoint Field of Use. This license specifically excludes any grant to
any Person within the CenterPoint Group of any rights to use any trademarks,
service marks, trademark/service mark registrations and applications, brand
names, trade names, or other names and slogans embodying business or product
goodwill (or both) which are a part of the Genco Intellectual Property.

                                       17

<PAGE>

                  (b)      Grants to Genco. Except as provided below in this
Section 5.2(b), CenterPoint grants to each Person within the Genco Group a
worldwide, perpetual, royalty-free license to use the CenterPoint Intellectual
Property, including the right to sublicense customers or suppliers of Genco or
its Subsidiaries to the extent necessary for such customers to use the products
or services of Genco or its Subsidiaries and for such suppliers to provide
equipment or services to Genco or its Subsidiaries in connection with their
operations. This license specifically excludes any grant to any Person within
the Genco Group of any rights to use any trademarks, service marks,
trademark/service mark registrations and applications, brand names, trade names,
or other names and slogans embodying business or product goodwill (or both)
which are a part of the CenterPoint Intellectual Property.

         5.3      COOPERATION AND FURTHER UNDERTAKINGS. CenterPoint agrees that
it and its Subsidiaries shall, without additional compensation, execute and
deliver further instruments of conveyance, transfer and assignment as requested
by Genco, its successors, or assigns; reasonably cooperate and assist in
providing information for making and completing regulatory and other filings;
and take any and all other actions as Genco, its successors, or assigns may
reasonably require to (1) effectively assign, convey and transfer the Genco
Intellectual Property and any associated goodwill, and all rights therein to
Genco, its successors, or assigns and (2) to protect, enforce and exploit the
Genco Intellectual Property. Genco agrees that it will continue to prosecute any
patent applications which it is currently prosecuting, but if it determines that
any such application should be abandoned, it will inform CenterPoint of its
decision and on request will assign to CenterPoint all its rights.

         5.4      CENTERPOINT DISCLAIMER OF WARRANTIES. CENTERPOINT AND ITS
SUBSIDIARIES DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NON-INFRINGEMENT, WITH RESPECT TO THE GENCO INTELLECTUAL PROPERTY
AND THE CENTERPOINT INTELLECTUAL PROPERTY. CENTERPOINT AND ITS SUBSIDIARIES MAKE
NO REPRESENTATIONS OR WARRANTIES AS TO THE QUALITY, SUITABILITY, VALIDITY OR
ADEQUACY OF THE GENCO INTELLECTUAL PROPERTY OR THE CENTERPOINT INTELLECTUAL
PROPERTY FOR ANY PURPOSE OR USE.

         5.5      GENCO DISCLAIMER OF WARRANTIES. GENCO AND ITS SUBSIDIARIES
DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT, WITH RESPECT TO THE GENCO INTELLECTUAL PROPERTY. GENCO AND ITS
SUBSIDIARIES MAKE NO REPRESENTATIONS OR WARRANTIES AS TO THE QUALITY,
SUITABILITY, VALIDITY OR ADEQUACY OF THE GENCO INTELLECTUAL PROPERTY FOR ANY
PURPOSE OR USE.

                                   ARTICLE VI

                              ENVIRONMENTAL MATTERS

         6.1      DEFINITIONS. The following definitions apply to this Article
                  VI:

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<PAGE>

                  (a)      "CenterPoint Real Property" means land and
improvements as to which fee title, or (except where fee title thereto has been
conveyed to Genco as part of the Genco Assets) any leasehold, easement or other
real property interest therein, is owned by CenterPoint or any Affiliate thereof
which is located adjacent to or in the vicinity of any land constituting, or any
interest in which constitutes, Genco Real Property.

                  (b)      "Environmental Conditions" means any pollution,
contamination, degradation, damage or injury caused by, related to, arising
from, or in connection with the generation, handling, use, treatment, storage,
transportation, disposal, discharge, Release (as that term is defined below), or
emission of any "Waste Materials."

                  (c)      "Environmental Law" or "Environmental Laws" means all

laws, rules, regulations, statutes, ordinances, decrees or orders, now,
heretofore or hereafter in force, of any Governmental Authority and relating to
(i) the control of any potential pollutant or protection of the air, water or
land, (ii) solid, gaseous or liquid waste generation, handling, treatment,
storage, disposal or transportation, and (iii) exposure to hazardous, toxic or
other substances alleged to be harmful, and includes without limitation, (1) the
terms and conditions of any license, permit, approval, or other authorization by
any governmental entity, and (2) judicial, administrative, or other regulatory
decrees, judgments, and orders of any governmental entity. The term
"Environmental Laws" shall include, but not be limited to the following statutes
and the regulations promulgated thereunder: the Clean Air Act, 42 U.S.C. Section
1401 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Resource
Conservation Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et seq., the
Superfund Amendments and Reauthorization Act, 42 U.S.C. Section 11011 et seq.,
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Water
Pollution Control Act, 33 U.S.C. Section 1251, et seq., the Safe Drinking Water
Act, 42 U.S.C. Section 300f et seq., the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., and
any state, county, or local regulations similar thereto.

                  (d)      "Environmental Liabilities" shall mean any and all
Liabilities, responsibilities, claims, suits, Losses, costs (including
remediation, removal, response, abatement, clean-up, investigative, and/or
monitoring costs and any other related costs and expenses), other causes of
action recognized now or at any later time, damages, settlements, expenses,
charges, assessments, liens, penalties, fines, pre-judgment and post-judgment
interest, attorney fees and other legal fees (a) pursuant to any agreement,
order, notice, requirement, responsibility, or directive (including directives
embodied in Environmental Laws), injunction, judgment or similar documents
(including settlements), or (b) pursuant to any claim by a governmental entity
or other person or entity for personal injury, property damage, damage to
natural resources, remediation, or similar costs or expenses incurred or
asserted by such entity or person pursuant to common law or statute.

                  (e)      "Genco Real Property" means all land and improvements
as to which fee title, or (except where fee title thereto was retained by
CenterPoint or any Affiliate thereof) any leasehold, easement or other real
property interest therein, has been conveyed to Genco as part of the Genco
Assets.

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<PAGE>

                  (f)      "Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, or disposing into the environment.

                  (g)      "Waste Materials" means any (i) toxic or hazardous
materials or substances; (ii) solid wastes; (iii) radioactive materials; (iv)
petroleum wastes and Releases of petroleum products; (v) Releases of any other
substance that is regulated; and (iv) Releases which could be required to be
remediated by any Governmental Authority under any applicable Environmental Law.

         6.2      ENVIRONMENTAL LIABILITIES. Notwithstanding the general
definitions of Genco Liabilities and Genco Excluded Liabilities contained in
Article I, Environmental Liabilities related to the Genco Business and Genco
Real Property and CenterPoint Business and CenterPoint Real Property shall be
allocated between Genco (and thus included in Genco Liabilities) and CenterPoint
(and thus included in Genco Excluded Liabilities) as set forth in this Article
VI.

         6.3      GENCO EXCLUDED LIABILITIES. Genco Excluded Liabilities shall
include the following Environmental Liabilities:

                  (a)      those resulting from or arising in connection with
operation of the CenterPoint Business, including any such Environmental
Liabilities resulting from Releases of Waste Materials to, from, at, on or
beneath the Genco Real Property ("CenterPoint Business Environmental
Liabilities").

                  (b)      those, other than Genco Business Environmental
Liabilities (as defined below), resulting from or arising in connection with
Releases of Waste Materials to, from, at, on or beneath the CenterPoint Real
Property.

         6.4      GENCO LIABILITIES. Genco Liabilities shall include the
following Environmental Liabilities:

                  (a)      those resulting from or arising in connection with
operation of the Genco Business, including any such Environmental Liabilities
resulting from Releases of Waste Materials to, from, at, on or beneath the
CenterPoint Real Property ("Genco Business Environmental Liabilities").

                  (b)      those, other than CenterPoint Business Environmental
Liabilities, resulting from or arising in connection with Releases of Waste
Materials to, from, at, on or beneath the Genco Real Property.

         6.5      POST-SEPARATION DATE ENVIRONMENTAL ARRANGEMENTS. Each Party
shall cooperate with the other on a reasonable basis with respect to
Environmental Conditions as to which such other Party reasonably anticipates
liability or the first Party anticipates that such other Party may have
liability. Such cooperation shall include sharing relevant information on a
timely basis (other than that protected by attorney-client or other
non-disclosure privilege according to law). It shall also include, subject to
the reasonable needs and requirements of the first Party based on its own
operations, reasonable access for investigatory and/or remedial

                                       20

<PAGE>

purposes, and reasonable use of on-site facilities and utilities, all at such
other Party's cost insofar as out-of-pocket expenses incurred as a result of
such activities are concerned. Further, each Party agrees to act in good faith
in undertaking work to investigate or remediate Environmental Conditions that
may give rise to a claim for indemnification hereunder with a view to avoiding
unnecessary or excessive costs.

                                  ARTICLE VII

                         ARBITRATION; DISPUTE RESOLUTION

         7.1      AGREEMENT TO ARBITRATE. Except as otherwise specifically
provided in any Ancillary Agreement, the procedures for discussion, negotiation
and arbitration set forth in this Article VII shall apply to all disputes,
controversies or claims (whether sounding in contract, tort or otherwise) that
may arise out of, under or in connection with, or relate to, this Agreement or
any Ancillary Agreement, the transactions contemplated hereby or thereby
(including all actions taken in furtherance of the transactions contemplated
hereby or thereby on or prior to the date hereof), or (for a period of ten years
after the date hereof) the commercial or economic relationship of the parties
relating hereto or thereto, between or among any member of the CenterPoint Group
and the Genco Group. Each party agrees on behalf of itself and each member of
its respective Group that the procedures set forth in this Article VII shall be
the sole and exclusive remedy in connection with any dispute, controversy or
claim relating to any of the foregoing matters and irrevocably waives any right
to commence any Action in or before any Governmental Authority, except as
expressly provided in Section 7.7 and except to the extent provided under the
Federal Arbitration Act in the case of judicial review of arbitration results or
awards. Each party on behalf of itself and each member of its respective Group
irrevocably waives any right to any trial by jury with respect to any claim,
controversy or dispute set forth in this Section 7.1.

         7.2      ESCALATION. (a) It is the intent of the parties to use their
respective reasonable best efforts to resolve expeditiously and on a mutually
acceptable negotiated basis any dispute, controversy or claim between or among
them with respect to the matters covered hereby that may arise from time to
time. In furtherance of the foregoing, any party involved in a dispute,
controversy or claim may deliver a notice (an "Escalation Notice") demanding an
in-person meeting involving representatives of the parties at a senior level of
management of the parties (or if the parties agree, of the appropriate strategic
business unit or division within such entity). A copy of any such Escalation
Notice shall be given to the General Counsel or like officer or official of each
party involved in the dispute, controversy or claim (which copy shall state that
it is an Escalation Notice pursuant to this Agreement). Any agenda, location or
procedures for such discussions or negotiations between the parties may be
established by the parties from time to time; provided, however, that the
parties shall use their reasonable efforts to meet within 30 days of the date of
delivery of the Escalation Notice.

                  (b)      The parties may, by mutual consent, retain a mediator
to aid the parties in their discussions and negotiations by informally providing
advice to parties. Any opinion expressed by the mediator shall be strictly
advisory and shall not be binding on the parties, nor shall any opinion
expressed by the mediator be admissible in any arbitration proceedings. The
mediator may be chosen from a list of mediators previously selected by the
parties or by other

                                       21

<PAGE>

agreement of the parties. Costs of the mediation shall be borne equally by the
parties involved in the matter, except that each party shall be responsible for
its own expenses. Mediation is not a prerequisite to a demand for arbitration
under Section 7.3.

         7.3      DEMAND FOR ARBITRATION. (a) At any time after the first to
occur of (i) the date of the meeting actually held pursuant to the applicable
Escalation Notice or (ii) 45 days after the delivery of an Escalation Notice (as
applicable, the "Arbitration Demand Date"), any party involved in the dispute,
controversy or claim (regardless of whether that party delivered the Escalation
Notice) may deliver a notice demanding arbitration of that dispute, controversy
or claim (a "Arbitration Demand Notice"). In the event that any party shall
deliver an Arbitration Demand Notice to another party, that other party may
itself deliver an Arbitration Demand Notice to the first party with respect to
any related dispute, controversy or claim with respect to which the Applicable
Deadline (as defined below) has not passed without the requirement of delivering
an Escalation Notice. No party may assert that the failure to resolve any matter
during any discussions or negotiations, the course of conduct during the
discussions or negotiations or the failure to agree on a mutually acceptable
time, agenda, location or procedures for the meeting, in each case, as
contemplated by Section 7.2, is a prerequisite to a demand for arbitration under
Section 7.3. In the event that any party delivers an Arbitration Demand Notice
with respect to any dispute, controversy or claim that is the subject of any
then pending arbitration proceeding or of a previously delivered Arbitration
Demand Notice, all such disputes, controversies and claims shall be resolved in
the arbitration proceeding for which an Arbitration Demand Notice was first
delivered unless the arbitrator in his or her sole discretion determines that it
is impracticable or otherwise inadvisable to do so.

                  (b)      Except as may be expressly provided in any Ancillary
Agreement, any Arbitration Demand Notice may be given until one year and 45 days
after the later of the occurrence of the act or event giving rise to the
underlying claim or the date on which such act or event was, or should have
been, in the exercise of reasonable due diligence, discovered by the party
asserting the claim (as applicable and as it may in a particular case be
specifically extended by the parties in writing, the "Applicable Deadline"). Any
discussions, negotiations or mediations between the parties pursuant to this
Agreement or otherwise will not toll the Applicable Deadline unless expressly
agreed in writing by the parties. Each of the parties agrees on behalf of itself
and each member of its Group that if an Arbitration Demand Notice with respect
to a dispute, controversy or claim is not given prior to the expiration of the
Applicable Deadline, as between or among the parties and the members of their
Groups, such dispute, controversy or claim will be barred. Subject to Section
7.7(d), upon delivery of an Arbitration Demand Notice pursuant to Section 7.3(a)
prior to the Applicable Deadline, the dispute, controversy or claim shall be
decided by a sole arbitrator in accordance with the rules set forth in this
Article VI.

         7.4      ARBITRATORS. (a) Within 15 days after a valid Arbitration
Demand Notice is given, the parties involved in the dispute, controversy or
claim referred to therein shall attempt to select a sole arbitrator satisfactory
to all such parties.

                  (b)      In the event that the parties are not able jointly to
select a sole arbitrator within that 15-day period, the parties shall each
appoint an arbitrator (who need not be disinterested as to the parties or the
matter) within 30 days after delivery of the Arbitration

                                       22

<PAGE>

Demand Notice. If one party appoints an arbitrator within such time period and
the other party or parties fail to appoint an arbitrator within such time
period, the arbitrator appointed by the one party shall be the sole arbitrator
of the matter.

                  (c)      In the event that a sole arbitrator is not selected
pursuant to paragraph (a) or (b) above, the two arbitrators will, within 30 days
after the appointment of the later of them to be appointed, select an additional
arbitrator who shall act as the sole arbitrator of the dispute. After selection
of such sole arbitrator, the initial arbitrators shall have no further role with
respect to the dispute. In the event that the arbitrators so appointed do not,
within 30 days after the appointment of the later of them to be appointed, agree
on the selection of the sole arbitrator, any party involved in such dispute may
apply to the Senior Judge of the U.S. District Court for the Southern District
of Texas to select the sole arbitrator, which selection shall be made by such
Person within 30 days after such application. Any arbitrator selected pursuant
to this paragraph (c) shall be disinterested with respect to each of the parties
and shall be reasonably competent in the applicable subject matter.

                  (d)      The sole arbitrator selected pursuant to paragraph
(a), (b) or (c) above will set a time for the hearing of the matter, which will
commence no later than 90 days after the date of appointment of the sole
arbitrator pursuant to paragraph (a), (b) or (c) above and which will be no
longer than 30 days (unless in the judgment of the arbitrator the matter is
unusually complex and sophisticated and thereby requires a longer time, in which
event the hearing shall be no longer than 90 days). The final decision of the
arbitrator will be rendered in writing to the parties not later than 60 days
after the last hearing date, unless otherwise agreed by the parties in writing.

                  (e)      The place of any arbitration hereunder will be
Houston, Texas, unless otherwise agreed by the parties.

         7.5      HEARINGS. Within the time period specified in Section 7.4(d),
the matter shall be presented to the arbitrator at a hearing by means of written
submissions of memoranda and verified witness statements, filed simultaneously,
and responses, if necessary in the judgment of the arbitrator or both the
parties. If the arbitrator deems it to be essential to a fair resolution of the
dispute, live cross-examination or direct examination may be permitted but is
not generally contemplated to be necessary. The arbitrator shall actively manage
the arbitration with a view to achieving a just, speedy and cost-effective
resolution of the dispute, claim or controversy. The arbitrator may, in his or
her discretion, set time and other limits on the presentation of each party's
case, its memoranda or other submissions, and refuse to receive any proffered
evidence, which the arbitrator, in his or her discretion, finds to be
cumulative, unnecessary, irrelevant or of low probative value. Except as
otherwise set forth herein, any arbitration hereunder will be conducted in
accordance with the procedures of the Center for Public Resources of New York
("CPR"). The decision of the arbitrator will be final and binding on the
parties, and judgment thereon may be had and will be enforceable in any court
having jurisdiction over the parties. Arbitration awards will bear interest at
an annual rate of the Prime Rate plus 2% per annum, or, if lower, the maximum
amount permitted by applicable law. To the extent that the provisions of this
Agreement and the prevailing rules of the CPR conflict, the provisions of this
Agreement shall govern.

                                       23

<PAGE>

         7.6      DISCOVERY AND CERTAIN OTHER MATTERS. (a) Any party involved in
a dispute subject to this Article VII may request limited document production
from the other party or parties of specific and expressly relevant documents,
with the reasonable expenses of the producing party incurred in such production
paid by the requesting party. The right to documents permitted herein shall be
substantially less than document discovery rights prevailing under the Federal
Rules of Civil Procedure. Any such discovery shall be conducted expeditiously
and shall not cause the hearing provided for in Section 7.5 to be adjourned
except upon consent of all parties involved in the applicable dispute or upon an
extraordinary showing of cause demonstrating that such adjournment is necessary
to permit discovery essential to a party to the proceeding. Depositions,
interrogatories or other forms of discovery (other than the document production
set forth above) shall not occur except by consent of the parties involved in
the applicable dispute. Disputes concerning the scope of document production and
enforcement of the document production requests will be determined by written
agreement of the parties involved in the applicable dispute or, failing such
agreement, will be referred to the arbitrator for resolution. All discovery
requests will be subject to the parties' rights to claim any applicable
privilege. The arbitrator will adopt procedures to protect the proprietary
rights of the parties and to maintain the confidential treatment of the
arbitration proceedings (except as may be required by law). Subject to the
foregoing, the arbitrator shall have the power to issue subpoenas to compel the
production of documents relevant to the dispute, controversy or claim.

                  (b)      The arbitrator shall have full power and authority to
determine issues of arbitrability but shall otherwise be limited to interpreting
or construing the applicable provisions of this Agreement or any Ancillary
Agreement, and will have no authority or power to limit, expand, alter, amend,
modify, revoke or suspend any condition or provision of this Agreement or any
Ancillary Agreement; it being understood, however, that the arbitrator will have
full authority to implement the provisions of this Agreement or any Ancillary
Agreement and to fashion appropriate remedies for breaches of this Agreement
(including interim or permanent injunctive relief); provided that the arbitrator
shall not have (i) any authority in excess of the authority a court having
jurisdiction over the parties and the controversy or dispute would have absent
these arbitration provisions or (ii) any right or power to award punitive or
double or treble damages. It is the intention of the parties that in rendering a
decision the arbitrator give effect to the applicable provisions of this
Agreement and the Ancillary Agreements and follow applicable law (it being
understood and agreed that this sentence shall not give rise to a right of
judicial review of the arbitrator's award).

                  (c)      If a party fails or refuses to appear at and
participate in an arbitration hearing after due notice, the arbitrator may hear
and determine the controversy upon evidence produced by the appearing party.

                  (d)      Arbitration costs will be borne equally by each party
involved in the matter, except that each party will be responsible for its own
attorney's fees and other costs and expenses (except as set forth in Section
7.6(a)), including the costs of witnesses selected by such party.

         7.7      CERTAIN ADDITIONAL MATTERS. (a) Any arbitration award shall be
a bare award limited to a holding for or against a party and shall be without
findings as to facts, issues or conclusions of law (including with respect to
any matters relating to the validity or infringement

                                       24

<PAGE>

of patents or patent applications) and shall be without a statement of the
reasoning on which the award rests, but must be in adequate form so that a
judgment of a court may be entered thereupon. Judgment upon any arbitration
award hereunder may be entered in any court having jurisdiction thereof.

                  (b)      Prior to the time at which an arbitrator is appointed
pursuant to Section 7.4, any party may seek one or more temporary restraining
orders in a court of competent jurisdiction if necessary in order to preserve
and protect the status quo. Neither the request for, or grant or denial of, any
such temporary restraining order shall be deemed a waiver of the obligation to
arbitrate as set forth herein and the arbitrator may dissolve, continue or
modify any such order. Any such temporary restraining order shall remain in
effect until the first to occur of the expiration of the order in accordance
with its terms or the dissolution thereof by the arbitrator.

                  (c)      Except as required by law, the parties shall hold,
and shall cause their respective officers, directors, employees, agents and
other representatives to hold, the existence, content and result of mediation or
arbitration in confidence in accordance with the provisions of Article VII and
except as may be required in order to enforce any award. Each of the parties
shall request that any mediator or arbitrator comply with such confidentiality
requirement.

                  (d)      In the event that at any time the sole arbitrator
shall fail to serve as an arbitrator for any reason, the parties shall select a
new arbitrator who shall be disinterested as to the parties and the matter in
accordance with the procedures set forth herein for the selection of the initial
arbitrator. The extent, if any, to which testimony previously given shall be
repeated or as to which the replacement arbitrator elects to rely on the
stenographic record (if there is one) of such testimony shall be determined by
the replacement arbitrator.

         7.8      CONTINUITY OF SERVICE AND PERFORMANCE. Unless otherwise agreed
in writing, the parties will continue to provide service and honor all other
commitments under this Agreement and each Ancillary Agreement during the course
of dispute resolution pursuant to the provisions of this Article VII with
respect to all matters not subject to such dispute, controversy or claim.

         7.9      LAW GOVERNING ARBITRATION PROCEDURES. The interpretation of
the provisions of this Article VII, only insofar as they relate to the agreement
to arbitrate and any procedures pursuant thereto, shall be governed by the
Federal Arbitration Act and other applicable federal law. In all other respects,
the interpretation of this Agreement shall be governed as set forth in Section
7.3.

                                  ARTICLE VIII

                           COVENANTS AND OTHER MATTERS

         8.1      OTHER AGREEMENTS. In addition to the specific agreements,
documents and instruments annexed to this Agreement, CenterPoint and Genco agree
to execute or cause to be executed by the appropriate parties and deliver, as
appropriate, such other agreements,

                                       25

<PAGE>

instruments and other documents as may be necessary or desirable in order to
effect the purposes of this Agreement and the Ancillary Agreements.

         8.2      AGREEMENT FOR EXCHANGE OF INFORMATION. Each of CenterPoint and
Genco agrees to provide, or cause to be provided, to each other as soon as
reasonably practicable after written request therefor, any Information in the
possession or under the control of such party that the requesting party
reasonably needs (i) to comply with reporting, disclosure, filing or other
requirements imposed on the requesting party (including under applicable
securities laws) by a Governmental Authority having jurisdiction over the
requesting party, (ii) for use in any Regulatory Proceeding, judicial proceeding
or other proceeding or in order to satisfy audit, accounting, claims,
regulatory, litigation or other similar requirements, (iii) to comply with its
obligations under this Agreement or any Ancillary Agreement or (iv) in
connection with the ongoing businesses of CenterPoint or Genco as it relates to
the conduct of such businesses, as the case may be; provided, however, that in
the event that any party determines that any such provision of Information could
be commercially detrimental, violate any law or agreement, or waive any
attorney-client privilege, the parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that avoids any such
harm or consequence.

                  (a)      After the Genco Distribution Date, (i) each party
shall maintain in effect at its own cost and expense adequate systems and
controls for its business to the extent necessary to enable the other party to
satisfy its reporting, accounting, audit and other obligations, and (ii) each
party shall provide, or cause to be provided, to the other party and its
Subsidiaries in such form as such requesting party shall request, at no charge
to the requesting party, all financial and other data and information as the
requesting party determines necessary or advisable in order to prepare its
financial statements and reports or filings with any Governmental Authority.

                  (b)      Any Information owned by a party that is provided to
a requesting party pursuant to this Section 8.2 shall be deemed to remain the
property of the providing party. Unless specifically set forth herein, nothing
contained in this Agreement shall be construed as granting or conferring rights
of license or otherwise in any such Information.

                  (c)      To facilitate the exchange of Information pursuant to
this Section 8.2 and other provisions of this Agreement after the Genco
Distribution Date, each party agrees to use its reasonable commercial efforts to
retain all Information in its respective possession or control on the Genco
Distribution Date substantially in accordance with its policies as in effect on
the date hereof. Genco shall not amend its or its Subsidiaries' record retention
policies prior to the Genco Distribution Date without the consent of
CenterPoint. However, except as set forth in the Genco Tax Allocation Agreement,
at any time after the Genco Distribution Date, each party may amend its
respective record retention policies at its discretion; provided, however, that
if a party desires to effect the amendment within three years after the Genco
Distribution Date, the amending party must give 30 days' prior written notice of
such change in the policy to the other party to this Agreement. No party will
destroy, or permit any of its Subsidiaries to destroy, any Information that
existed on the Genco Separation Date (other than Information that is permitted
to be destroyed under the current record retention policy of such party) without
first using its reasonable commercial efforts to notify the other party of the
proposed destruction and giving the other party the opportunity to take
possession of such Information prior to such destruction.

                                       26

<PAGE>

                  (d)      No party shall have any liability to any other party
in the event that any Information exchanged or provided pursuant to this Section
8.2 is found to be inaccurate, in the absence of willful misconduct by the party
providing such Information. No party shall have any liability to any other party
if any Information is destroyed or lost after reasonable commercial efforts by
such party to comply with the provisions of Section 8.2(c).

                  (e)      The rights and obligations granted under this Section
8.2 are subject to any specific limitations, qualifications or additional
provisions on the sharing, exchange or confidential treatment of Information set
forth in this Agreement and any Ancillary Agreement.

                  (f)      Each party hereto shall, except in the case of a
dispute subject to this Article VIII brought by one party against another party
(which shall be governed by the discovery rules that may be applicable under
Article VII or otherwise), use its reasonable commercial efforts to make
available to each other party, upon written request, the former, current and
future directors, officers, employees, other personnel and agents of such party
as witnesses and any books, records or other documents within its control or
which it otherwise has the ability to make available, to the extent that any
such person (giving consideration to business demands of such directors,
officers, employees, other personnel and agents) or books, records or other
documents may reasonably be required in connection with any Regulatory
Proceeding, judicial proceeding or other proceeding in which the requesting
party may from time to time be involved, regardless of whether such Regulatory
Proceeding, judicial proceeding or other proceeding is a matter with respect to
which indemnification may be sought hereunder. The requesting party shall bear
all costs and expenses in connection therewith.

                  (g)      To the extent Genco or a member of the Genco Group is
deemed or determined by the PUCT by final order no longer subject to rehearing
by the PUCT to be an "affiliate" or a "competitive affiliate" of CenterPoint,
Genco and CenterPoint shall observe any applicable requirements of the Utilities
Code, PUCT rules and the CenterPoint code of conduct and shall require their
respective personnel and contractor personnel to observe that code of conduct.
No member of the CenterPoint Group or the Genco Group shall directly or
indirectly make application or request to the PUCT to make such a finding or
determination, nor will any member of the CenterPoint Group or the Genco Group
directly or indirectly take a position in support of such a finding or
determination.

         8.3      AUDITORS AND AUDITS; ANNUAL AND QUARTERLY STATEMENTS AND
ACCOUNTING. Each party agrees that, for so long as Genco remains a Subsidiary of
CenterPoint, and with respect to any financial reporting period during which
Genco was a Subsidiary of CenterPoint:

                  (a)      Genco shall not select a different accounting firm
than the firm selected by CenterPoint to audit its financial statements to serve
as the Genco Auditors for purposes of providing an opinion on its consolidated
financial statements without CenterPoint's prior written consent (which shall
not be unreasonably withheld).

                  (b)      Genco shall use its reasonable commercial efforts to
enable the Genco Auditors to complete their audit such that they will date their
opinion on Genco's audited annual financial statements on the same date that
CenterPoint's Auditors date their opinion on CenterPoint's audited annual
financial statements, and to enable CenterPoint to meet its

                                       27

<PAGE>

timetable for the printing, filing and public dissemination of CenterPoint's
annual financial statements. Genco shall use its reasonable commercial efforts
to enable the Genco Auditors to complete their quarterly review procedures such
that they will provide clearance on Genco's quarterly financial statements on
the same date that CenterPoint's Auditors provide clearance on CenterPoint's
quarterly financial statements.

                  (c)      Genco shall provide to CenterPoint on a timely basis
all Information that CenterPoint reasonably requires to meet its schedule for
the preparation, printing, filing, and public dissemination of CenterPoint's
annual and quarterly financial statements. Without limiting the generality of
the foregoing, Genco will provide all required financial information with
respect to Genco and its Subsidiaries to the Genco Auditors in a sufficient and
reasonable time and in sufficient detail to permit the Genco Auditors to take
all steps and perform all reviews necessary to provide sufficient assistance to
CenterPoint's Auditors with respect to Information to be included or contained
in CenterPoint's annual and quarterly financial statements. Similarly,
CenterPoint shall provide to Genco on a timely basis all Information that Genco
reasonably requires to meet its schedule for the preparation, printing, filing,
and public dissemination of Genco's annual and quarterly financial statements.
Without limiting the generality of the foregoing, CenterPoint will provide all
required financial Information with respect to CenterPoint and its Subsidiaries
to CenterPoint's Auditors in a sufficient and reasonable time and in sufficient
detail to permit CenterPoint's Auditors to take all steps and perform all
reviews necessary to provide sufficient assistance to the Genco Auditors with
respect to Information to be included or contained in Genco's annual and
quarterly financial statements.

                  (d)      Genco shall authorize the Genco Auditors to make
available to CenterPoint's Auditors both the personnel who performed or are
performing the annual audits and quarterly reviews of Genco and work papers
related to the annual audits and quarterly reviews of Genco, in all cases within
a reasonable time prior to the Genco Auditors' opinion date, so that
CenterPoint's Auditors are able to perform the procedures they consider
necessary to take responsibility for the work of the Genco Auditors as it
relates to CenterPoint's Auditors' report on CenterPoint's financial statements,
all within sufficient time to enable CenterPoint to meet its timetable for the
printing, filing and public dissemination of CenterPoint's annual and quarterly
statements. Similarly, CenterPoint shall authorize CenterPoint's Auditors to
make available to the Genco Auditors both the personnel who performed or are
performing the annual audits and quarterly reviews of CenterPoint and work
papers related to the annual audits and quarterly reviews of CenterPoint, in all
cases within a reasonable time prior to CenterPoint's Auditors' opinion date, so
that the Genco Auditors are able to perform the procedures they consider
necessary to take responsibility for the work of CenterPoint's Auditors as it
relates to the Genco Auditors' report on Genco's financial statements, all
within sufficient time to enable Genco to meet its timetable for the printing,
filing and public dissemination of Genco's annual and quarterly financial
statements.

                  (e)      Genco may not change its accounting principles or
practices if a change in such accounting principle or practice would be required
to be disclosed in Genco's financial statements as filed with the SEC or
otherwise publicly disclosed therein without the prior written consent of
CenterPoint, except for changes which are required by GAAP and as to which there
is no discretion on the part of Genco, as concurred in by Genco Auditors prior
to its implementation. Genco shall give CenterPoint as much prior notice as
reasonably practical of

                                       28

<PAGE>

any proposed determination of, or any significant changes in, its accounting
estimates or, subject as aforesaid, accounting principles from those in effect
on the Genco Separation Date. Genco will consult with CenterPoint and, if
requested by CenterPoint, Genco will consult with CenterPoint's Auditors with
respect thereto. CenterPoint shall give Genco as much prior notice as reasonably
practical of any proposed determination of, or any significant changes in, its
accounting estimates or accounting principles from those in effect on the Genco
Separation Date.

                  (f)      Nothing in Sections 8.2 and 8.3 shall require Genco
to violate any agreement with any third parties regarding the confidentiality of
confidential and proprietary information relating to that third party or its
business; provided, however, that in the event that Genco is required under
Section 8.2 or Section 8.3 to disclose any such information, Genco shall use all
commercially reasonable efforts to seek to obtain such third party's consent to
the disclosure of such information. Similarly, nothing in Sections 8.2 and 8.3
shall require CenterPoint to violate any agreement with any third parties
regarding the confidentiality of confidential and proprietary information
relating to that third party or its business; provided, however, that in the
event that CenterPoint is required under Section 8.2 or Section 8.3 to disclose
any such information, CenterPoint shall use all commercially reasonable efforts
to seek to obtain such third party's consent to the disclosure of such
information.

         8.4      AUDIT RIGHTS. To the extent any member of the CenterPoint
Group provides goods or services to any member of the Genco Group or any member
of the Genco Group provides goods or services to a member of the CenterPoint
Group under this Agreement or under any Ancillary Agreement, the company
providing such goods or services (the "Providing Company") shall maintain
complete and accurate books and records relating to costs and charges made to
the company receiving such goods and services (the "Receiving Company"). Books
and accounts shall be maintained in accordance with generally accepted
accounting principles, consistently applied, and to the extent such books and
records relate to regulated business activities, shall conform to any applicable
regulatory code of accounts which the Receiving Company is required to comply
with, to the extent such conformity is reasonably feasible. If conformity to a
regulatory code of accounts is infeasible, the Providing Company shall maintain
its books and records related to the provision of goods and services in such a
manner that the Receiving Company may readily reconcile such books and records
to the applicable code of accounts. Annually, the Receiving Company shall be
entitled to audit the Providing Company's books and records related to the goods
and services provided, using its own personnel or personnel from its independent
auditing firm. Discrepancies identified as a result of any audit shall be
promptly reconciled between the parties in accordance with any provisions of the
Ancillary Agreement or, if no such provision is applicable, in accordance with
the dispute resolution provisions of this Agreement. Any charge which is not
questioned by the Receiving Company within the calendar year after the charge
was rendered shall be deemed incontestable.

         8.5      PRESERVATION OF LEGAL PRIVILEGES. CenterPoint and Genco
recognize that the members of their respective Businesses possess and will
possess information and advice that has been previously developed but is legally
protected from disclosure under legal privileges, such as the attorney-client
privilege or work product exemption and other concepts of legal protection
("Privilege"). Each party recognizes that they shall be jointly entitled to the
Privilege with respect to such privileged information and that each shall be
entitled to maintain and use for its own benefit all such information and
advice, but both parties shall ensure that such information

                                       29

<PAGE>

is maintained so as to protect the Privileges with respect to the other party's
interest. To that end neither party will knowingly waive or compromise any
Privilege associated with such information and advice without the consent of the
other party. In the event that privileged information is required to be
disclosed to any arbitrator or mediator in connection with a dispute between the
parties, such disclosure shall not be deemed a waiver of Privilege with respect
to such information, and any party receiving it in connection with a proceeding
shall be informed of its nature and shall be required to safeguard and protect
it.

         8.6      PAYMENT OF EXPENSES. Except as otherwise provided in this
Agreement, the Ancillary Agreements or any other agreement between the parties,
all out-of-pocket costs and expenses of the parties hereto incurred in
connection with the preparation of this Agreement, the Ancillary Agreements, the
registration statement on Form 10 and related information statement and the
completion of the Genco Distribution shall be paid by CenterPoint.

         8.7      GOVERNMENTAL APPROVALS. The parties acknowledge that certain
of the transactions contemplated by this Agreement and the Ancillary Agreements
are subject to certain conditions established by applicable government
regulations, orders, and approvals ("Existing Authority"). The parties intend to
implement this Agreement, the Ancillary Agreements and the transactions
contemplated thereby consistent with and to the extent permitted by Existing
Authority and to cooperate toward obtaining and maintaining in effect such
Governmental Approvals as may be required in order to implement this Agreement
and each of the Ancillary Agreements as fully as possible in accordance with
their respective terms. To the extent that any of the transactions contemplated
by this Agreement or any Ancillary Agreement require any Governmental Approvals,
the parties will use their reasonable commercial efforts to obtain any such
Governmental Approvals.

         8.8      REGULATORY PROCEEDINGS. It is recognized and understood that
high levels of cooperation and assistance will be required between members of
the CenterPoint Group and the Genco Group in connection with Regulatory
Proceedings necessary to implement the Genco Distribution and the Business
Separation Plan approved by the PUCT and all matters relating to the Genco
Option. During the period from the Genco Separation Date until an order issued
by the PUCT in connection with the stranded cost determination regarding the
Genco Assets becomes final and nonappealable, the parties agree as follows:

                  (a)      Upon reasonable request, members of the CenterPoint
Group and of the Genco Group will provide personnel, information and other
assistance to members of the other Business in order to prepare, file and
prosecute to completion Regulatory Proceedings which are either (i) required to
be filed under the Utilities Code or under the Business Separation Plan or (ii)
deemed by the requesting party to be desirable to implement or preserve some
aspect of the Separation contemplated herein.

                  (b)      Assistance provided may, without limitation, relate
to information that has been transferred to or retained by the assisting party
in the separation or which the assisting party is uniquely qualified to provide
in connection with Regulatory Proceedings that relate to the Separation and its
implementation under the Utilities Code. Assistance may take the form of
developing, filing and giving testimony and reports to the PUCT or other
regulatory authority.

                                       30

<PAGE>

                  (c)      The appropriate members of the CenterPoint Group or
the Genco Group shall timely file with the PUCT or other regulatory authority or
court and shall prosecute to completion all Regulatory Proceedings required to
implement the Business Separation Plan approved by the PUCT, the Genco Option
and the other provisions of this Agreement.

                  (d)      A member of the CenterPoint Group shall make all
regulatory filings contemplated above in this Section 8.8 except where a member
of the Genco Group is required by the Utilities Code to file separately or join
in such filings. A member of the CenterPoint Group will be responsible for the
direction and prosecution of all Regulatory Proceedings in which CenterPoint
Group filings are made.

                  (e)      Except as provided below, the party supplying
assistance shall be reimbursed for costs incurred in providing assistance. For
time expended by its personnel, the assisting party shall be reimbursed for
actual salary costs, plus payroll burdens and overhead allocations in accordance
with its standard procedures for reimbursing other members of its Business.
Services provided for information technology or other internal services shall be
charged in the same manner they would be charged among the members of the
providing company's Business, and out of pocket costs paid to third parties
shall be reimbursed at actual cost.

The party requesting assistance shall endeavor to minimize the impacts of such
assistance on the other business needs of the assisting party.

         8.9      CONTINUANCE OF CENTERPOINT CREDIT SUPPORT; BORROWINGS.
Notwithstanding any other provision of this Agreement or the provisions of any
Ancillary Agreement to the contrary, the parties hereby agree that CenterPoint
and each Subsidiary of CenterPoint shall maintain in full force and effect each
guarantee, letter of credit, keepwell or support agreement or other credit
support document, instrument or other similar arrangement issued for the benefit
of any Person in the Genco Group by or on behalf of CenterPoint or a Subsidiary
of CenterPoint (the "Credit Support Arrangements") which is outstanding as of
the Genco Distribution Date, until the earlier of (a) such time as such Credit
Support Arrangement terminates in accordance with its terms or is otherwise
released at the request of Genco or (b) the date Genco ceases to be a Subsidiary
of CenterPoint; provided, that Genco shall use commercially reasonable efforts,
at the request of CenterPoint, to attempt to release or replace any Credit
Support Arrangement for which such replacement or release is reasonably
available. All such obligations shall be deemed Genco Liabilities. For so long
as CenterPoint or any Subsidiary of CenterPoint remains liable with respect to
any such Credit Support Arrangement, (1) Genco shall pay, or cause the Person in
the Genco Group for whose benefit the Credit Support Arrangement is provided to
pay, the underlying obligation as and when the same shall become due and
payable, to the end that neither CenterPoint nor such Subsidiary of CenterPoint
shall be required to make any payment under or by reason of its obligation under
such Credit Support Arrangement and (2) CenterPoint or such Subsidiary shall
retain all rights of reimbursement and subrogation it may have, whether arising
by law, by contract or otherwise, with respect to such Credit Support
Arrangement and such rights shall be enforceable against Genco as well as the
Subsidiary of Genco for whose benefit the Credit Support Arrangement was made.
Members of the CenterPoint Group may advance funds to or borrow funds from
members of the Genco Group from time to time at

                                       31

<PAGE>

market-based rates; provided, however, that except as provided in the Genco
Option Agreement, no member of the CenterPoint Group or the Genco Group shall
have any obligation to do so.

         To the extent covenants and agreements contained in any loan or credit
agreement or other financing document in effect on the date of this Agreement to
which any member of the CenterPoint Group is a party requires, or requires such
party to cause, any member of the Genco Group to take or refrain from taking any
action, or provides for a default or event of default if any member of the Genco
Group takes or refrains from taking any action, such member of the Genco Group
shall at all times prior to the Genco Distribution Date take or refrain from
taking any such action as would result in a breach or violation of, or a default
under, such agreement.

         8.10     [RESERVED SECTION]. [Reserved.]

         8.11     CONFIDENTIALITY.

                  (a)      CenterPoint and Genco shall hold and shall cause the
members of the CenterPoint Group and the Genco Group, respectively, to hold, and
shall each cause their respective officers, employees, agents, consultants and
advisors to hold, in strict confidence and not to disclose or release without
the prior written consent of the other party, any and all Confidential
Information (as defined herein); provided, that the parties may disclose, or may
permit disclosure of, Confidential Information (i) to their respective auditors,
attorneys, financial advisors, bankers and other appropriate consultants and
advisors who have a need to know such information and are informed of their
obligation to hold such information confidential to the same extent as is
applicable to the parties hereto and in respect of whose failure to comply with
such obligations, CenterPoint or Genco, as the case may be, will be responsible
or (ii) to the extent any member of the CenterPoint Group or the Genco Group is
compelled to disclose any such Confidential Information by judicial or
administrative process or, in the opinion of legal counsel, by other
requirements of law. Notwithstanding the foregoing, in the event that any demand
or request for disclosure of Confidential Information is made pursuant to clause
(ii) above, CenterPoint or Genco, as the case may be, shall promptly notify the
other of the existence of such request or demand and shall provide the other a
reasonable opportunity to seek an appropriate protective order or other remedy,
which both parties will cooperate in seeking to obtain. In the event that such
appropriate protective order or other remedy is not obtained, the party whose
Confidential Information is required to be disclosed shall or shall cause the
other party to furnish, or cause to be furnished, only that portion of the
Confidential Information that is legally required to be disclosed. As used in
this Section 8.11, "Confidential Information" shall mean all proprietary,
technical or operational information, data or material of one party which, prior
to or following the Genco Distribution Date, has been disclosed by CenterPoint
or members of the CenterPoint Group, on the one hand, or Genco or members of the
Genco Group, on the other hand, in written, oral (including by recording),
electronic, or visual form to, or otherwise has come into the possession of, the
other, including pursuant to the access provisions of Section 8.2 hereof or any
other provision of this Agreement (except to the extent that such Information
can be shown to have been (a) in the public domain through no fault of such
party (or, in the case of CenterPoint, any other member of the CenterPoint Group
or, in the case of Genco, any other member of the Genco Group) or (b) later
lawfully acquired from other sources by the party (or, in the case of
CenterPoint, such member of the CenterPoint Group or, in the case of Genco, such

                                       32

<PAGE>

member of the Genco Group) to which it was furnished; provided, however, in the
case of (b) that such sources did not provide such Information in breach of any
confidentiality obligations).

                  (b)      Notwithstanding anything to the contrary set forth
herein, (i) CenterPoint and the other members of the CenterPoint Group, on the
one hand, and Genco and the other members of the Genco Group, on the other hand,
shall be deemed to have satisfied their obligations hereunder with respect to
Confidential Information if they exercise the same degree of care (but no less
than a reasonable degree of care) as they take to preserve confidentiality for
their own similar Information and (ii) confidentiality obligations provided for
in any agreement between CenterPoint or any other member of the CenterPoint
Group, or Genco or any other members of the Genco Group, on the one hand, and
any employee of CenterPoint or any other member of the CenterPoint Group, or
Genco or any other members of the Genco Group, on the other hand, shall remain
in full force and effect. Confidential Information of CenterPoint or any other
member of the CenterPoint Group, on the one hand, or Genco or any other member
of the Genco Group, on the other hand, in the possession of and used by the
other as of the Genco Distribution Date may continue to be used by such Person
in possession of the Confidential Information in and only in the operation of
the CenterPoint Group or the Genco Group, as the case may be, and may be used
only so long as the Confidential Information is maintained in confidence and not
disclosed in violation of Section 8.11(a). Such continued right to use may not
be transferred to any third party unless the third party purchases all or
substantially all of the business and assets in which the relevant Confidential
Information is used or employed in one transaction or in a series or related
transactions. In the event that such right to use is transferred in accordance
with the preceding sentence, the transferring party shall not disclose the
source of the relevant Confidential Information.

         8.12     CAPACITY AUCTIONS. Genco shall cause Genco LP to auction its
capacity in accordance with the terms of Section 10.14 of the Master Separation
Agreement.

         8.13     NUCLEAR DECOMMISSIONING TRUST AND INVESTMENT. Genco shall
comply with the applicable terms of Section 10.13 of the Master Separation
Agreement.

                                   ARTICLE IX

                                  MISCELLANEOUS

         9.1      LIMITATION OF LIABILITY. EXCEPT TO THE EXTENT SPECIFICALLY
PROVIDED IN ANY ANCILLARY AGREEMENT, IN NO EVENT SHALL ANY MEMBER OF THE
CENTERPOINT GROUP OR THE GENCO GROUP OR THEIR RESPECTIVE DIRECTORS, OFFICERS OR
EMPLOYEES BE LIABLE TO ANY OTHER MEMBER OF THE CENTERPOINT GROUP OR THE GENCO
GROUP FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES
OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING
NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE
FOREGOING LIMITATIONS SHALL NOT LIMIT EACH PARTY'S INDEMNIFICATION OBLIGATIONS
FOR LIABILITIES TO THIRD PARTIES AS SET FORTH IN THIS AGREEMENT OR ANY ANCILLARY
AGREEMENT.

                                       33

<PAGE>

         9.2      ENTIRE AGREEMENT. This Agreement, the other Ancillary
Agreements and the Exhibits and Schedules referred to or attached hereto and
thereto, constitute the entire agreement between the parties with respect to the
subject matter hereof and shall supersede all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof.

         9.3      GOVERNING LAW. This Agreement shall be governed and construed
and enforced in accordance with the laws of the State of Texas as to all matters
regardless of the laws that might otherwise govern under the principles of
conflicts of laws applicable thereto.

         9.4      TERMINATION. This Agreement and all Ancillary Agreements may
be terminated at any time prior to the Genco Distribution Date by and in the
sole discretion of CenterPoint without the approval of Genco. This Agreement may
be terminated at any time after the Genco Distribution Date by mutual consent of
CenterPoint and Genco. In the event of termination pursuant to this Section 9.4,
neither party shall have any liability of any kind to the other party.

         9.5      NOTICES. Unless expressly provided herein, all notices,
claims, certificates, requests, demands and other communications hereunder shall
be in writing and shall be deemed to be duly given (i) when personally delivered
or (ii) if mailed registered or certified mail, postage prepaid, return receipt
requested, on the date the return receipt is executed or the letter refused by
the addressee or its agent or (iii) if sent by overnight courier which delivers
only upon the signed receipt of the addressee, on the date the receipt
acknowledgment is executed or refused by the addressee or its agent or (iv) if
sent by facsimile or other generally accepted means of electronic transmission,
on the date confirmation of transmission is received (provided that a copy of
any notice delivered pursuant to this clause (iv) shall also be sent pursuant to
clause (ii) or (iii)), addressed to the attention of the addressee's General
Counsel at the address of its principal executive office or to such other
address or facsimile number for a party as it shall have specified by like
notice.

         9.6      COUNTERPARTS. This Agreement, including the Schedules and
Exhibits hereto and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.

         9.7      BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives and successors, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement. This Agreement may
not be assigned by any party hereto without the prior written consent of the
other party hereto.

         9.8      SEVERABILITY. If any term or other provision of this Agreement
or the Schedules or Exhibits attached hereto is determined by a nonappealable
decision by a court, administrative agency or arbitrator to be invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to either
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties

                                       34

<PAGE>

hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
fullest extent possible.

         9.9      FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of either party hereto in the exercise of any right
hereunder shall impair that right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement or the Schedules or Exhibits attached hereto are cumulative
to, and not exclusive of, any rights or remedies otherwise available.

         9.10     AMENDMENT. No change or amendment will be made to this
Agreement except by an instrument in writing signed on behalf of each of the
parties to this Agreement.

         9.11     AUTHORITY. Each of the parties hereto represents to the other
that (a) it has the corporate or other requisite power and authority to execute,
deliver and perform this Agreement and the Ancillary Agreements, (b) the
execution, delivery and performance of this Agreement and the Ancillary
Agreements by it have been duly authorized by all necessary corporate or other
actions, (c) it has duly and validly executed and delivered this Agreement and
the Ancillary Agreements and (d) this Agreement and the Ancillary Agreements are
legal, valid and binding obligations, enforceable against it in accordance with
their respective terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and general equity principles.

         9.12     INTERPRETATION. The headings contained in this Agreement, in
any Exhibit or Schedule hereto and in the table of contents to this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Schedule or
Exhibit but not otherwise defined therein shall have the meaning assigned to
that term in this Agreement. When a reference is made in this Agreement to an
Article or a Section, Exhibit or Schedule, that reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.

         9.13     CONFLICTING AGREEMENTS. In the event of conflict between this
Agreement and any Ancillary Agreement or other agreement executed in connection
herewith, the provisions of that other agreement shall prevail.

                                       35

<PAGE>

         WHEREFORE, the parties have signed this Separation Agreement effective
as of the date first set forth above.

                                     CENTERPOINT ENERGY, INC.

                                     By:  /s/ DAVID M. MCCLANAHAN
                                          -------------------------------------
                                          David M. McClanahan
                                          President and Chief Executive Officer

                                     TEXAS GENCO HOLDINGS, INC.

                                     By:  /s/ DAVID G. TEES
                                          -------------------------------------
                                          David G. Tees
                                          President and Chief Executive Officer

                                       36

<PAGE>

                                                                   SCHEDULE 1.27

                            Genco Group Subsidiaries

<TABLE>
<CAPTION>
       Name                 Form of Entity           Jurisdiction of Formation
       ----                 --------------           -------------------------
<S>                    <C>                           <C>
Texas Genco GP, LLC    Limited Liability Company              Texas

Texas Genco LP, LLC    Limited Liability Company              Delaware

Texas Genco, LP        Limited Partnership                    Texas
</TABLE>

<PAGE>

                                                                 SCHEDULE 4.1(a)

                 Amended and Restated Articles of Incorporation

<PAGE>

                                                                 SCHEDULE 4.1(b)

                           Amended and Restated Bylaws<PAGE>

                                                                    EXHIBIT 10.5

                            TAX ALLOCATION AGREEMENT

                                  BY AND AMONG

                            CENTERPOINT ENERGY, INC.

                          AND ITS AFFILIATED COMPANIES

                                       AND

                           TEXAS GENCO HOLDINGS, INC.

                          AND ITS AFFILIATED COMPANIES

<PAGE>

                            TAX ALLOCATION AGREEMENT

                  THIS TAX ALLOCATION AGREEMENT (this "Agreement"), entered into
effective as of August 31, 2002, by and among CenterPoint Energy, Inc., a Texas
corporation ("CP"), each CP Affiliated Company, Texas Genco Holdings, Inc., a
Texas corporation ("Texas Genco"), and each Texas Genco Affiliated Company is
entered into in connection with the Distribution (as defined below).

                                    RECITALS

                  WHEREAS, CP is the common parent of an affiliated group of
corporations within the meaning of Section 1504(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), which currently files a consolidated federal
income tax return, and which, together with other affiliated corporations, is
party to the Tax Sharing Agreement (as defined below);

                  WHEREAS, as set forth in the Master Separation Agreement,
dated December 31, 2000, and subject to the terms and conditions thereof,
Reliant Energy, Incorporated, the predecessor to CP, transferred all of its
Texas electric generating assets to a limited partnership subsidiary of Texas
Genco, and the limited partnership subsidiary of Texas Genco assumed all of the
liabilities associated with such electric generating assets; and

                  WHEREAS, in accordance with the Texas statute that mandates
the deregulation of the Texas electric business and in order to establish the
"stranded costs" attributable to the electric power generation facilities owned
by Texas Genco and pursuant to that certain Separation Agreement between
CenterPoint Energy, Inc. and Texas Genco Holdings, Inc., dated as of August 31,
2002, CP will distribute approximately 19% of its shares of Texas Genco common
stock, on a pro rata basis, to the holders of the common stock of CP (the
"Distribution");

                  NOW THEREFORE, in consideration of the mutual covenants and
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

SECTION 1.        DEFINITIONS

                  1.1      In General. As used in this Agreement, the following
capitalized terms shall have the following meanings:

                  "Affiliated Company" means, for income tax purposes, any
entity in which a common parent holds 80% or more of the voting power and value
of such corporation.

                  "Audit" includes any audit, assessment of Taxes, other
examination by any Tax Authority, proceeding, or appeal of such a proceeding
relating to Taxes, whether administrative or judicial, including proceedings
relating to competent authority determinations.

<PAGE>

                  "Code" means the Internal Revenue Code of 1986, as amended.

                  "Consolidated Group" means a group of one or more corporations
connected through stock ownership with a common parent in which the common
parent owns at least 80% of the total voting power and value of such corporation
and that files a Consolidated Return.

                  "Consolidated Return" means any Tax Return with respect to
Federal Income Taxes filed on a consolidated basis.

                  "Consolidated Return Regulations" shall mean the Treasury
Regulations promulgated under Chapter 6 of Subtitle A of the Code, including, as
applicable, any predecessors or successors thereto.

                  "Consolidated State Tax" means any Tax incurred by a Legal
Entity that is not a Federal Income Tax and that is filed on a combined,
unitary, or consolidated basis.

                  "Consolidated State Tax Return" means a Tax Return filed with
respect to a Consolidated State Tax liability.

                  "CP" has the meaning set forth in the Recitals to this
Agreement.

                  "CP Consolidated State Tax" means a Consolidated State Tax for
a particular Tax period for which CP or a member of the CP Group has the legal
obligation to file a Tax Return with respect to such Consolidated State Tax.

                  "CP Consolidated State Tax Return" means a Tax Return filed
with respect to a CP Consolidated State Tax.

                  "CP Group" means CP, any CP Affiliated Company or other entity
of which CP is the common parent corporation or other entity which may be, or
may become a member of such group from time to time.

                  "CP Consolidated Group" means with respect to a particular Tax
period a Consolidated Group in which CP is the common parent for all or a
portion of such Tax period.

                  "DIT" shall mean any "deferred intercompany transaction" or
"intercompany transaction" within the meaning of the Treasury Regulations (or
predecessors thereto).

                  "Distribution" has the meaning set forth in the Recitals to
this Agreement.

                  "Distribution Date" means the date on which the Distribution
is effective.

                  "Federal Income Tax" means any Tax imposed under Subtitle A of
the Code (including the Taxes imposed by Sections 11, 55, and 1201(a) of the
Code), and any interest, additions to Tax or penalties applicable or related
thereto, and any other income-based U.S. federal Tax which is hereinafter
imposed upon corporations.

                                       -2-

<PAGE>

                  "Filing Party" has the meaning set forth in Section 2.3 of
this Agreement.

                  "Final Determination" means with respect to any issue (i) a
decision, judgment, decree or other order by any court of competent
jurisdiction, which decision, judgment, decree or other order has become final
and not subject to further appeal, (ii) a closing agreement (whether or not
entered into under Section 7121 of the Code) or any other binding settlement
agreement (whether or not with the Service) entered into in connection with or
in contemplation of an administrative or judicial proceeding, or (iii) the
completion of the highest level of administrative proceedings if a judicial
contest is not or is no longer available.

                  "Income Taxes" means (1) any tax based upon, measured by, or
calculated with respect to (A) net income or profits (including any capital
gains tax, minimum tax and any tax on items of Tax preference, but not including
sales, use, real or personal property, gross or net receipts, transfer or
similar taxes) or (B) multiple bases if one or more of the bases upon which such
tax may be based, measured by, or calculated with respect to, is described in
clause (A) above, or (2) any U.S., state or local franchise tax.

                  "Indemnifying Party" means a person who has an obligation to
indemnify another person under Section 5.2.

                  "Indemnitee" means a person who is owed an indemnification
obligation by another person under Section 5.2.

                  "Joint Return" shall mean any Tax Return that includes at
least two Legal Entities, of which one Legal Entity is a member of the Texas
Genco Group and the other Legal Entity is a member of the CP Group.

                  "Legal Entity" shall mean a corporation, partnership, limited
liability company or other legal entity under the corporation, partnership,
limited liability company or other organizational laws of a state or other
jurisdiction.

                  "Non-Filing Party" has the meaning set forth in Section 2.3 of
this Agreement.

                  "Redetermination" shall mean any redetermination as the result
of an Audit by the Service (or the relevant state, local or foreign governmental
authority), a claim for refund, an amended Tax Return or otherwise and that is
resolved by a Final Determination.

                  "Separate Tax" means any Tax incurred by a Legal Entity that
is not a Federal Income Tax and that is filed on a separate company basis.

                  "Separate Return" means any Tax Return filed with respect to a
Separate Tax liability.

                  "Service" means the Internal Revenue Service.

                                       -3-

<PAGE>

                  "Tax" includes any charges, fees, levies, imposts, duties, or
other assessments of a similar nature, including income, alternative or add-on
minimum, gross receipts, profits, lease, service, service use, wage, wage
withholding, employment, workers compensation, business occupation, occupation,
premiums, environmental, estimated, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
withholding, social security, unemployment, disability, ad valorem, estimated,
highway use, commercial rent, capital stock, paid up capital, recording,
registration, property, real property gains, value added, business license,
custom duties, or other tax or governmental fee of any kind whatsoever, imposed
or required to be withheld by any Tax Authority including any interest,
additions to tax, or penalties applicable or related thereto.

                  "Tax Authority" means any governmental authority or any
subdivision, agency, commission or authority thereof or any quasi-governmental
or private body having jurisdiction over the assessment, determination,
collection or imposition of any Tax (including the Service).

                  "Tax Benefit" means a reduction in the Tax liability of a
taxpayer (or of the affiliated group of which it is a member) for any taxable
period. Except as otherwise provided in this Agreement, a Tax Benefit shall be
deemed to have been realized or received from a Tax Item in a taxable period
only if and to the extent that the Tax liability of the taxpayer (or of the
affiliated group of which it is a member) for such period, after taking into
account the effect of the Tax Item on the Tax liability of such taxpayer in the
current period and all prior periods, is less than it would have been if such
Tax liability were determined without regard to such Tax Item.

                  "Tax Detriment" means an increase in the Tax liability of a
taxpayer (or of the affiliated group of which it is a member) for any taxable
period. Except as otherwise provided in this Agreement, a Tax Detriment shall be
deemed to have been realized or received from a Tax Item in a taxable period
only if and to the extent that the Tax liability of the taxpayer (or of the
affiliated group of which it is a member) for such period, after taking into
account the effect of the Tax Item on the Tax liability of such taxpayer in the
current period and all prior periods, is more than it would have been if such
Tax liability were determined without regard to such Tax Item.

                  "Tax Item" means any item of income, gain, loss, deduction or
credit, or other attribute that may have the effect of increasing or decreasing
any Tax.

                  "Tax Sharing Agreement" means the Tax Sharing Agreement, dated
August 6, 1997, entered into by and among Houston Industries, Incorporated
(predecessor to CP), NorAm Energy Corp., and Houston Industries Energy, Inc.

                  "Tax Return" means any return, report, certificate, form or
similar statement or document (including, any related or supporting information
or schedule attached thereto and any information return, amended Tax return,
claim for refund or declaration of estimated Tax) required to be supplied to, or
filed with, a Tax Authority in connection with the determination,

                                       -4-

<PAGE>

assessment or collection of any Tax or the administration of any laws,
regulations or administrative requirements relating to any Tax.

                  "Texas Genco" has the meaning set forth in the Recitals to
this Agreement.

                  "Texas Genco Group" means Texas Genco and any Texas Genco
Affiliated Company of which Texas Genco would be the common parent corporation
if Texas Genco were not a member of the CP Group.

                  "Treasury Regulations" means the final, temporary and proposed
income Tax regulations promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).

                  1.2      Construction Principles. As used in this Agreement,
the singular shall be deemed to include the plural and vice versa, and the
captions and section headings are inserted for convenience of reference only and
are not intended to have any significance for the interpretation of, or
construction of, the provisions of this Agreement. IT IS INTENDED THAT THIS
AGREEMENT SHALL COMPLY WITH THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, RULE
45(c), TO THE EXTENT RELEVANT, AND ALL AMBIGUITIES SHALL BE INTERPRETED AND
RESOLVED ACCORDINGLY.

SECTION 2.        PREPARATION AND FILING OF TAX RETURNS.

                  2.1      In General. CP shall timely file or cause to be filed
all Tax Returns that are filed on a consolidated, combined or unitary basis and
shall include Texas Genco and the Texas Genco Affiliates as members of the CP
Group with respect to the Tax Items of Texas Genco and the Texas Genco
Affiliates. If Texas Genco is required to file a Separate Return, CP shall
timely file or cause to be filed all such Separate Returns.

                  2.2      Information and Cooperation.

                  (a)      CP and Texas Genco shall provide each other all
documents and information, and make available employees and officers of CP and
Texas Genco, as reasonably requested by the other party, on a mutually
convenient basis during normal business hours, to aid the other party in
preparing any Tax Return described in Section 2.1 of this Agreement or to
contest any Audit of any such Tax Return.

                  (b)      In the case of any Tax Return described in
Section 2.1 of this Agreement, CP will provide Texas Genco with a copy of that
portion of each such Tax Return to the extent it relates to Texas Genco or any
Texas Genco Affiliated Company, together with all related tax accounting work
papers, not later than five (5) days after the receipt of a written request
therefor.

                  2.3      Manner of Filing Tax Returns. Except as
otherwise provided in this Section 2.3 of this Agreement, the party that is
required to file a return under Section 2.1 of this Agreement (the "Filing
Party") shall have the exclusive right to determine (1) the manner in which such
Tax Return shall be prepared and filed, including the elections, methods of
accounting, positions, conventions and principles of taxation to be used and the
manner in which

                                       -5-

<PAGE>

any Tax Item shall be reported, (2) whether any extensions may be requested, (3)
the elections that will be made in such Tax Return, (4) whether any amended Tax
Returns shall be filed, (5) whether any claims for refund shall be made, (6)
whether any refunds shall be paid by way of refund or credited against any
liability for the related Tax, and (7) whether to retain outside specialists to
prepare such Tax Return, whom to retain for such purpose and the scope of any
such retainer. (The party who is not the Filing Party is referred to herein as
the "Non-Filing Party".)

                  2.4      Agent. Texas Genco hereby irrevocably designates, and
agrees to cause each Texas Genco Affiliated Company to so designate, CP as its
sole and exclusive agent and attorney-in-fact to take such action (including
execution of documents) as CP, in its sole discretion, may deem appropriate in
any and all matters (including Audits) relating to any Consolidated Return and
any other Tax Return described in Section 2.1 of this Agreement.

SECTION 3.        TAX SHARING AND PAYMENTS.

                  3.1      In General.

                  (a)      Sharing Agreement. Except to the extent specifically
modified or supplemented herein, the Tax Sharing Agreement shall continue in
full force and effect. The provisions of the Tax Sharing Agreement shall fix the
rights and obligations of the parties as to the matters covered thereby.

                  (b)      Federal Income Tax Payments. With respect to CP
Consolidated Group federal income Taxes, no later than five (5) days prior to
the due date (including extensions) of any consolidated federal income Tax
Return of the CP Consolidated Group:

                           (i)      Texas Genco shall pay to CP no later than
                  five (5) days prior to the due date (including extensions) of
                  such Tax Return, the excess, if any, of (A) the sum of (I) the
                  aggregate amount of any Tax that would not have been incurred
                  by the CP Consolidated Group but for the inclusion of any
                  Legal Entity that is a member of the Texas Genco Group in the
                  CP Consolidated Group and (II) the aggregate amount of any Tax
                  refund, credit or other Tax Benefit that would have been
                  realized or received with respect to such Tax Return (or any
                  other Tax Return that has been or could have been filed) by
                  the CP Consolidated Group but for the inclusion of any Legal
                  Entity that is a member of the Texas Genco Group in the CP
                  Consolidated Group over (B) the aggregate amount previously
                  paid by Texas Genco pursuant to this clause (i); and

                           (ii)     CP shall pay to Texas Genco no later than
                  five (5) days prior to the due date (including extensions of
                  such Tax Return) the excess, if any, of (A) the sum of (I) the
                  aggregate amount of any Tax that would have been incurred by
                  the CP Consolidated Group but for the inclusion of any Legal
                  Entity that is a member of the Texas Genco Group in the CP
                  Consolidated Group and (II) the aggregate amount of any Tax
                  refund, credit or other Tax Benefit realized or received with

                                       -6-

<PAGE>

                  respect to such Tax Return that would not have been realized
                  or received by the CP Consolidated Group but for the inclusion
                  of any Legal Entity that is a member of the Texas Genco Group
                  in the CP Consolidated Group over (B) the aggregate amount
                  previously paid by CP pursuant to this clause (ii).

                  (c)      Consolidated, Combined, Unitary or Joint Return State
Tax Payments. With respect to consolidated, combined, unitary or other Joint
Return Taxes, other than consolidated federal income Taxes, no later than five
(5) days prior to the due date (including extensions) of any Joint Return of the
CP Consolidated Group:

                           (i)      Texas Genco shall pay to CP the excess, if
                  any, of (A) the sum of (I) the aggregate amount of any Tax
                  that would not have been incurred by the CP Consolidated Group
                  but for the inclusion of any Legal Entity that is a member of
                  the Texas Genco Group in the CP Consolidated Group and (II)
                  the aggregate amount of any Tax refund, credit or other Tax
                  Benefit that would have been realized or received with respect
                  to such Tax Return (or any other Tax Return that has been or
                  could have been filed) by the CP Consolidated Group but for
                  the inclusion of any Legal Entity that is a member of the
                  Texas Genco Group in the CP Consolidated Group over (B) the
                  aggregate amount previously paid by Texas Genco pursuant to
                  this clause (i); and

                           (ii)     CP shall pay Texas Genco the excess, if any,
                  of (A) the sum of (I) the aggregate amount of any Tax that
                  would have been incurred by the CP Consolidated Group but for
                  the inclusion of any Legal Entity that is a member of the
                  Texas Genco Group in the CP Consolidated Group and (II) the
                  aggregate amount of any Tax refund, credit or other Tax
                  Benefit realized or received with respect to such Tax Return
                  that would not have been realized or received by the CP
                  Consolidated Group but for the inclusion of any Legal Entity
                  that is a member of the Texas Genco Group in the CP
                  Consolidated Group over (B) the aggregate amount previously
                  paid by CP pursuant to this clause (ii).

                  (d)      DITS. The Consolidated Return Regulations and the
consolidated federal income Tax Returns filed by the CP Consolidated Group
pursuant to this Agreement or the Tax Sharing Agreement, respectively, shall
determine the timing of the recognition of Tax Items with respect to DITS and
the determination of whether the CP Consolidated Group or the Texas Genco Group
(and which member thereof) shall bear the Tax Benefit or burden of such Tax
Items, and each group shall be responsible for the Tax Items recognized by its
respective members with respect to any DITS.

                  (e)      Estimated Federal Tax Payments.

                           (i)      In the case of any Federal Income Taxes for
                  the CP Consolidated Group, Texas Genco (on behalf of itself
                  and each Affiliated Company of Texas Genco) shall provide to
                  CP no later than 8 days prior to the due date for each payment
                  of an installment of estimated Federal Income Taxes (as
                  determined

                                       -7-

<PAGE>

                  under Section 6655 of the Code or successor provision then in
                  effect) of the CP Consolidated Group ("Estimated Federal
                  Installment Payment") such information pertaining to Texas
                  Genco or an Affiliated Company of Texas Genco as is necessary
                  for CP to compute the amount of such Estimated Federal
                  Installment Payment.

                           (ii)     On or before the due date of such Estimated
                  Federal Installment Payment, CP shall inform Texas Genco of
                  either (A) the amount ("Texas Genco Estimated Federal
                  Installment Payment") that Texas Genco (on behalf of itself
                  and each Affiliated Company of Texas Genco) must pay CP with
                  respect to such Estimated Federal Installment Payment, or (B)
                  the amount ("Texas Genco Estimated Federal Installment
                  Refund") CP must pay Texas Genco with respect to such
                  Estimated Federal Installment Payment. CP shall compute the
                  amount of each Texas Genco Estimated Federal Installment
                  Payment or the Texas Genco Estimated Federal Installment
                  Refund, as the case may be, so as to equal the portion of the
                  Estimated Federal Installment Payment that is allocable to
                  Texas Genco and the Affiliated Companies of Texas Genco taking
                  into account previous Texas Genco Estimated Federal
                  Installment Payments and Texas Genco Estimated Federal
                  Installment Refunds that have been made for the same period.
                  CP shall calculate the portion of each Estimated Federal
                  Installment Payment of the Texas Genco Group that is allocable
                  to Texas Genco and the Affiliated Companies of Texas Genco by
                  (C) computing the sum of the estimated Federal Income Tax
                  payments that Texas Genco and each Affiliated Company of Texas
                  Genco would have been required to pay if each of Texas Genco
                  and each Affiliated Company of Texas Genco had filed a Federal
                  Income Tax Return on a separate company basis for such
                  estimated Federal Income Tax period and (D) taking into
                  account adjustments, if any, that are applicable on a
                  Consolidated Return basis to the CP Consolidated Group
                  Consolidated Return for such period. Texas Genco shall pay CP
                  the Texas Genco Estimated Federal Installment Payment within
                  24 hours after the due date of the Estimated Federal
                  Installment Payment to which it relates, and CP shall pay
                  Texas Genco the Texas Genco Estimated Federal Installment
                  Refund within 24 hours after the due date of the Estimated
                  Federal Installment Payment to which it relates.

                           (iii)    If (A) the portion of the actual Federal
                  Income Tax Liability of the CP Consolidated Group that is
                  allocable, as determined by CP in accordance with the Tax
                  Sharing Agreement and consistent with the past practices
                  utilized by the CP Tax Department in completing previous CP
                  Consolidated Group Consolidated Returns, to Texas Genco and
                  the Affiliated Companies of Texas Genco exceeds (B)(I) the sum
                  of the Texas Genco Estimated Federal Installment Payments for
                  such period less (II) the sum of the Texas Genco Estimated
                  Federal Installment Refunds for such period, then CP shall
                  inform Texas Genco of the amount of such excess on or before
                  the due date of the CP Consolidated Group Consolidated Return
                  for such period. Texas Genco (on behalf of itself and each
                  Affiliated

                                       -8-

<PAGE>

                  Company of Texas Genco) shall pay the amount of such excess to
                  CP within 24 hours after the due date of the CP Consolidated
                  Group Consolidated Return.

                           (iv)     If (A) (I) the sum of the Texas Genco
                  Estimated Federal Installment Payments for a period less (II)
                  the sum of the Texas Genco Estimated Federal Installment
                  Refunds for such period exceeds (B) the portion of the actual
                  Federal Income Tax Liability of the CP Consolidated Group for
                  such period that is allocable, as determined by CP in
                  accordance with the Tax Sharing Agreement and consistent with
                  past practices utilized by the CP Tax Department in
                  implementing previous CP Consolidated Group Returns, to Texas
                  Genco and the Affiliated Companies of Texas Genco, then CP
                  shall pay the amount of such excess to Texas Genco within 24
                  hours after the due date of the CP Consolidated Group
                  Consolidated Return for such period.

                           (v)      CP shall calculate the portion of the actual
                  Federal Income Tax Liability of the CP Consolidated Group that
                  is allocable to Texas Genco and the Affiliated Companies of
                  Texas Genco for Sections 3.1(e)(iii) and (iv) consistent with
                  the principles set forth in the penultimate sentence of
                  Section 3.1(e)(ii).

                  (f)      Estimated Payments of CP Consolidated State Taxes and
Texas Genco Separate State Taxes.

                           (i)      In the case of any CP Consolidated State Tax
                  for any period that includes a member of the Texas Genco Group
                  or in the case of any Separate Tax of the Texas Genco Group,
                  Texas Genco (on behalf of itself and each Affiliated Company
                  of Texas Genco) shall provide to CP no later than 8 days prior
                  to the due date for each payment of an installment of CP
                  Consolidated State Tax ("Estimated Consolidated State
                  Installment Payment") or Separate Tax of Texas Genco
                  ("Estimated Separate State Installment Payment") such
                  information pertaining to Texas Genco or an Affiliated Company
                  of Texas Genco as is necessary for CP to compute the amount of
                  such Estimated Consolidated State Installment Payment or such
                  Estimated Separate State Installment Payment.

                           (ii)     On or before the due date of such Estimated
                  Consolidated State Installment Payment, CP shall inform Texas
                  Genco of either (A) the amount ("Texas Genco Estimated
                  Consolidated State Installment Payment") that Texas Genco (on
                  behalf of itself and each Affiliated Company of Texas Genco)
                  must pay CP with respect to such Estimated Consolidated State
                  Installment Payment, or (B) the amount ("Texas Genco
                  Consolidated Estimated State Installment Refund") CP must pay
                  Texas Genco with respect to such Estimated Consolidated State
                  Installment Payment. CP shall compute the amount of each Texas
                  Genco Estimated Consolidated State Installment Payment or
                  Texas Genco Estimated Consolidated State Installment Refund,
                  as the case may be, so as to equal the portion of the
                  Estimated Consolidated State Installment Payment that is
                  allocable to Texas Genco and the Affiliated Companies of Texas
                  Genco taking into account

                                       -9-

<PAGE>

                  previous Texas Genco Estimated Consolidated State Installment
                  Payments and Texas Genco Estimated Consolidated State
                  Installment Refunds that have been made for the same period.
                  CP shall calculate the portion of each Estimated Consolidated
                  State Installment Payment that is allocable to Texas Genco and
                  the Affiliated Companies of Texas Genco by (C) computing the
                  sum of the estimated CP Consolidated State Tax payments that
                  Texas Genco and each Affiliated Company of Texas Genco would
                  have been required to pay if each of Texas Genco and each
                  Affiliated Company of Texas Genco had filed a CP Consolidated
                  State Tax Return on a separate company basis for such
                  estimated CP Consolidated State Tax period and (D) taking into
                  account adjustments, if any, that are applicable on a
                  Consolidated State Tax basis to the CP Consolidated State Tax
                  Return for such period. Texas Genco shall pay CP the Texas
                  Genco Estimated Consolidated State Installment Payment within
                  24 hours after the due date of the Estimated Consolidated
                  State Installment Payment to which it relates, and CP shall
                  pay Texas Genco the Texas Genco Estimated Consolidated State
                  Installment Refund within 24 hours after the due date of the
                  Estimated Consolidated State Installment Payment to which it
                  relates to the extent that CP has cash available from tax
                  installment payments from other members of the CP Consolidated
                  Group and shall pay Texas Genco the balance, if any, of the
                  Texas Genco Estimated Consolidated State Installment Refund
                  within 5 business days after the date that CP receives the
                  refund from the taxing authority.

                           (iii)    On or before the due date of each Estimated
                  Separate State Installment Payment, CP shall inform Texas
                  Genco of either (A) the amount ("Texas Genco Estimated
                  Separate State Installment Payment") that Texas Genco (on
                  behalf of itself and each Affiliated Company of Texas Genco)
                  must pay CP with respect to such Estimated Separate State
                  Installment Payment, or (B) the amount ("Texas Genco Estimated
                  Separate State Installment Refund") CP must pay Texas Genco
                  with respect to such Estimated Separate State Installment
                  Payment. CP shall compute the amount of each Texas Genco
                  Estimated Separate State Installment Payment or Texas Genco
                  Estimated Separate State Installment Refund, as the case may
                  be, so as to equal the Estimated Separate State Installment
                  Payment of Texas Genco and the Affiliated Companies of Texas
                  Genco taking into account previous Texas Genco Estimated
                  Separate State Installment Payments and Texas Genco Estimated
                  Separate State Installment Refunds that have been made for the
                  same period. Texas Genco shall pay CP the Texas Genco
                  Estimated Separate State Installment Payment within 24 hours
                  after the due date of the Estimated Separate State Installment
                  Payment to which it relates, and CP shall pay Texas Genco the
                  Texas Genco Estimated Separate State Installment Refund within
                  5 business days after the date that CP receives the refund
                  from the taxing authority.

                           (iv)     If (A) the portion of the actual CP
                  Consolidated State Tax Liability for a period that is
                  allocable, as determined by CP in accordance with the Tax
                  Sharing Agreement and determined as if each of Texas Genco and
                  each Affiliated

                                      -10-

<PAGE>

                  Company of Texas Genco had filed a CP Consolidated State Tax
                  Return on a separate company basis for such estimated CP
                  Consolidated State Tax period, to Texas Genco and the
                  Affiliated Companies of Texas Genco exceeds (B)(I) the sum of
                  the Texas Genco Estimated Consolidated State Installment
                  Payments for such period less (II) the sum of the Texas Genco
                  Estimated Consolidated State Installment Refunds for such
                  period, then Texas Genco (on behalf of itself and each
                  Affiliated Company of Texas Genco) shall pay the amount of
                  such excess to CP within 24 hours after the due date of the CP
                  Consolidated State Tax Return for such period.

                           (v)      If (A) (I) the sum of the Texas Genco
                  Estimated Consolidated State Installment Payments for a period
                  less (II) the sum of the Texas Genco Estimated Consolidated
                  State Installment Refunds for such period exceeds (B) the
                  portion of the actual CP Consolidated State Tax Liability for
                  such period that is allocable, as determined by CP in
                  accordance with the Tax Sharing Agreement and if each of Texas
                  Genco and each Affiliated Company of Texas Genco had filed a
                  CP Consolidated State Tax Return on a separate company basis
                  for such estimated CP Consolidated State Tax period, to Texas
                  Genco and the Affiliated Companies of Texas Genco, then CP
                  shall pay the amount of such excess to Texas Genco within 24
                  hours after the due date of the CP Consolidated State Tax
                  Return for such period to the extent that CP has cash
                  available from tax installment payments from other members of
                  the CP Consolidated Group and shall pay Texas Genco the
                  balance, if any, of the Texas Genco Estimated Consolidated
                  State Installment Refund within 5 business days after the date
                  that CP receives the refund from the taxing authority.

                           (vi)     If (A) the sum of the Separate Tax of Texas
                  Genco for a period exceeds (B)(I) the sum of the Texas Genco
                  Estimated Separate State Installment Payments for such period
                  less (II) the sum of the Texas Genco Estimated Separate State
                  Installment Refunds for such period, then Texas Genco (on
                  behalf of itself and each Affiliated Company of Texas Genco)
                  shall pay the amount of such excess to CP within 24 hours
                  after the due date of the CP Consolidated State Tax Return for
                  such period.

                           (vii)    If (A) (I) the sum of the Texas Genco
                  Estimated Separate State Installment Payments for a period
                  less (II) the sum of the Texas Genco Estimated Separate State
                  Installment Refunds for such period exceeds (B) the sum of the
                  Separate Tax of Texas Genco for such period, then CP shall pay
                  the amount of such excess to Texas Genco within 5 business
                  days after the date that CP receives the refund from the
                  taxing authority.

                  (g)      State Allocation Rules. For purposes of CP's
determination under Section 3.1(c) and Section 3.1(f) of the portion of the
actual CP Consolidated State Tax liability that is allocable to Texas Genco and
the Affiliated Companies of Texas Genco, CP shall allocate the amount by which
the net aggregate CP Consolidated State Tax liability for a particular period

                                      -11-

<PAGE>

is increased or decreased because a Legal Entity included in the CP Consolidated
State Tax Return created a nexus in a jurisdiction resulting in the imposition
of a CP Consolidated State Tax by such jurisdiction that would not otherwise had
been imposed but for such nexus either (A) completely to Texas Genco and the
Affiliated Companies of Texas Genco if such Legal Entity is a member of the
Texas Genco Group or (B) completely to the members of the CP Group if the Legal
Entity is not a member of the Texas Genco Group.

                  3.2      Payments. CP shall pay (or cause to be paid) to the
Service all Federal Income Taxes, if any, of the CP Consolidated Group that are
attributable to Texas Genco and shall pay (or cause to be paid) to the
appropriate Tax Authorities all Consolidated State Tax, if any, and all Separate
Taxes, if any, that relate to the Texas Genco Group.

SECTION 4.        ALLOCATION OF CERTAIN TAX ITEMS.

                  4.1      Net Operating Losses. Net operating loss carryovers,
current losses and other Tax attributes available to the CP Consolidated Group
may be used by any member of the CP Consolidated Group without compensation to
other members of the Consolidated Group generating such attributes.

                  4.2      Adjustments.

                  (a)      In the event of any Redetermination of any Joint
Return for any taxable period, the amounts required to be paid pursuant to
Section 3 or 4 of this Agreement shall be recomputed for such taxable period to
take into account such Redetermination, and payments pursuant to Section 3 or 4
of this Agreement hereof shall be appropriately adjusted. Each party shall pay
each other party an amount equal to the difference between the payment or
payments previously made between the parties in respect of such redetermined Tax
Return and the amount that would have been paid pursuant to this Agreement in
respect of such redetermined Tax Return if such redetermined Tax Return had been
filed on the basis of the Redetermination, plus interest at the statutory rate
and applicable penalties.

                  (b)      Any refund of Taxes received will be allocated in a
manner consistent with the existing Tax Sharing Agreement in effect for such
period and Section 3.1 of this Agreement.

                                      -12-

<PAGE>

SECTION 5.        INDEMNIFICATION AND CONTEST PROVISIONS.

                  5.1      General Indemnification.

                  (a)      CP and each CP Affiliated Company shall jointly and
severally indemnify Texas Genco, each Texas Genco Affiliated Company, and their
respective directors, officers and employees, and hold them harmless from and
against any and all Taxes for which CP or any CP Affiliated Company is liable
under this Agreement and any loss, cost, damage or expense, including reasonable
attorneys' fees and costs, that is attributable to, or results from the failure
of CP, any CP Affiliated Company, or any director, officer or employee to make
any payment required to be made under this Agreement.

                  (b)      Texas Genco and each Texas Genco Affiliated Company
shall jointly and severally indemnify CP, each CP Affiliated Company, and their
respective directors, officers and employees, and hold them harmless from and
against any and all Taxes for which Texas Genco or any Texas Genco Affiliated
Company is liable under this Agreement and any loss, cost, damage or expense,
including reasonable attorneys' fees and costs, that is attributable to, or
results from the failure of Texas Genco, any Texas Genco Affiliated Company, or
any director, officer or employee to make any payment required to be made under
this Agreement.

                  5.2      Payments.

                  (a)      In General. Except as otherwise provided under this
Agreement, to the extent that the Indemnifying Party has an indemnification or
payment obligation to the Indemnitee pursuant to this Agreement, the Indemnitee
shall provide the Indemnifying Party with its calculation of the amount of such
indemnification payment. Such calculation shall provide sufficient detail to
permit the Indemnifying Party to reasonably understand the calculations. All
indemnification payments shall be made to the Indemnitee or to the appropriate
Tax Authority as specified by the Indemnitee within the time prescribed for
payment in this Agreement, or if no period is prescribed, within thirty (30)
days after delivery by the Indemnitee to the Indemnifying Party of written
notice of a payment or if such liability is contested pursuant to Section 6.3 of
this Agreement, within thirty (30) days of the incurrence of such an amount
based on a Final Determination, together with a computation of the amounts due.

                  (b)      Electronic Payments. Any payment required under this
Agreement shall be made by electronic funds transfer of immediately available
funds.

                  5.3      Prompt Performance. All actions required to be taken
by any party under this Agreement shall be performed within the time prescribed
for performance in this Agreement, or if no period is prescribed, such actions
shall be performed promptly.

                  5.4      Interest. Payments pursuant to this Agreement that
are not made within the period prescribed in this Section 5.4 shall bear
interest for the period from and including the date immediately following the
last date of the period through and including the date of payment at a per annum
rate equal to the prime rate as published in The Wall Street Journal on the date
of determination, plus two percent (2%). Such interest will be payable at the
same time as the

                                      -13-

<PAGE>

payment to which it relates and shall be calculated on the basis of a year of
365 days and the actual number of days for which due.

                  5.5      Tax Records. The parties to this Agreement hereby
agree to retain and provide on proper demand by any Taxing Authority (subject to
any applicable privileges) the books, records, documentation and other
information relating to any Tax Return until the later of (a) the expiration of
the applicable statute of limitations (giving effect to any extension, waiver or
mitigation thereof) and (b) in the event any claim is made under this Agreement
for which such information is relevant, until a Final Determination with respect
to such claim.

SECTION 6.        AUDITS AND CONTEST RIGHTS.

                  6.1      In General.

                  (a)      The members of the Texas Genco Group shall cooperate
and provide reasonable access to books, records and other information needed in
connection with Audits, administrative proceedings, litigation and other similar
matters related to periods in which such member of the Texas Genco Group was a
member of the CP Consolidated Group.

                  (b)      Except as otherwise provided in this Agreement, the
respective Filing Party shall have the right to control, contest, and represent
the interests of CP, any CP Affiliated Company, Texas Genco or any Texas Genco
Affiliated Company in any Audit relating to any Tax Return that the Filing Party
is responsible for filing under Section 2.1 of this Agreement and to resolve,
settle or agree to any deficiency, claim or adjustment proposed, asserted or
assessed in connection with or as a result of any such Audit. The Filing Party's
rights shall extend to any matter pertaining to the management and control of an
Audit, including execution of waivers, choice of forum, scheduling of
conferences and the resolution of any Tax Item.

                  6.2      Notice. If, after the date of this Agreement, CP (or
any CP Affiliated Company) or Texas Genco (or any Texas Genco Affiliated
Company) receives written notice of, or relating to, an Audit from a Tax
Authority that asserts, proposes or recommends a deficiency, claim or adjustment
that, if sustained, could result in Taxes for which the other party is
responsible under this Agreement, then the party receiving such notice shall
provide a copy of such notice to such other party within ten (10) days of
receipt thereof.

                  6.3      Contests.

                  (a)      If any Tax Authority asserts, proposes or recommends
a deficiency, claim or adjustment that, if sustained, could result in Taxes for
which the Non-Filing Party is responsible under this Agreement, then upon
request by the Non-Filing Party, the Filing Party shall contest, or continue to
contest, any deficiency, claim or adjustment and the Filing Party shall keep the
Non-Filing Party informed in a timely manner reasonably in advance of all
actions taken or proposed to be taken by the Filing Party in connection with
such deficiency, claim or adjustment.

                                      -14-

<PAGE>

                  (b)      In the case of an Audit with respect to any Tax Item,
the Filing Party shall:

                                    (1)      in the case of any material
                  correspondence or filing submitted to the Tax Authority or any
                  judicial authority that relates to the merits of such
                  deficiency, claim or adjustment (i) reasonably in advance of
                  such submission, but subject to applicable time constraints
                  imposed by such Tax Authority or judicial authority, provide
                  the Non-Filing Party with a draft copy of the portion of such
                  correspondence or filing that relates to such deficiency,
                  claim or adjustment, (ii) incorporate, subject to applicable
                  time constraints imposed by such Tax Authority or judicial
                  authority, the Non-Filing Party's comments and changes on such
                  draft copy of such correspondence or filing, and (iii) provide
                  the Non-Filing Party with a final copy of the portion of such
                  correspondence or filing that relates to such deficiency,
                  claim or adjustment;

                                    (2)      provide the Non-Filing Party with
                  notice reasonably in advance of, and the Non-Filing Party
                  shall have the right to attend, any meetings with the Tax
                  Authority (including meetings with examiners) or hearings or
                  proceedings before any judicial authority to the extent they
                  relate to such deficiency, claim or adjustment; and

                                    (3)      at the Filing Party's reasonable
                  request (or upon the Filing Party's consent to a request by
                  the Non-Filing Party, which consent shall not be unreasonably
                  withheld), the Non-Filing Party shall assume responsibility
                  for (i) contesting and presenting the merits with respect to
                  any deficiency, claim or adjustment that, if sustained, would
                  result in Taxes for which the Non-Filing Party is responsible
                  under this Agreement, or (ii) resolving, settling or agreeing
                  to any such deficiency, claim or adjustment. Any such request
                  (or consent) by the Filing Party shall be subject to the
                  Non-Filing Party's continued compliance with the conditions of
                  Section 6.4 of this Agreement and to such other conditions as
                  the Filing Party and Non-Filing Party reasonably agree.

                  6.4      Limitations.

                  (a)      In General. The Filing Party shall have no obligation
to contest, or to continue to contest, any deficiency, claim or adjustment in
accordance with Section 6.3, and the Non-Filing Party shall have no right to
control or participate under Section 6.3 of this Agreement unless:

                                    (1)      within thirty (30) days of a
                  reasonable request by the Filing Party, the Non-Filing Party
                  shall deliver to the Filing Party a written opinion of a
                  nationally recognized tax attorney, to the effect that the
                  Non-Filing Party's position with respect to such deficiency,
                  claim or adjustment is supported by a reasonable basis (within
                  the meaning of Treasury Regulations Section 1.6662-3(b)(3));

                                      -15-

<PAGE>

                                    (2)      the Non-Filing Party shall have
                  agreed to be bound by a Final Determination of such
                  deficiency, claim or adjustment;

                                    (3)      the Non-Filing Party shall have
                  agreed to pay, and shall be currently paying, all reasonable
                  out of pocket costs and expenses incurred by the Filing Party
                  to contest such deficiency, claim or assessment including
                  reasonable outside attorneys', accountants' and investigatory
                  fees and disbursements;

                                    (4)      the Non-Filing Party shall have
                  advanced to the Filing Party, on an interest-free basis (and
                  with no additional net after-tax cost to the Filing Party),
                  the amount of Tax in controversy (but not in excess of the
                  lesser of (A) the amount of Tax for which the Non-Filing Party
                  could be liable under this Agreement or (B) the amounts
                  actually expended by the Filing Party for this item) to the
                  extent necessary for the contest to proceed in the forum
                  selected by the Filing Party;

                                    (5)      the Non-Filing Party shall have
                  provided to the Filing Party all documents and information,
                  and shall have made available employees and officers of the
                  Non-Filing Party, as may be necessary, useful or reasonably
                  required by the Filing Party in contesting such deficiency,
                  claim or adjustment; and

                                    (6)      the contest of such deficiency,
                  claim or adjustment shall involve no material danger of the
                  sale, forfeiture or loss of, or the creation of any lien on,
                  any asset of the Filing Party (except if the Non-Filing Party
                  shall have adequately bonded such lien or otherwise made
                  provision to protect the interests of the Filing Party in a
                  manner reasonably satisfactory to the Filing Party).

                  (b)      Settlement. Notwithstanding Section 6.4(a), the
Filing Party may resolve, settle or agree to any deficiency, claim or adjustment
proposed, asserted or assessed in connection with any Audit of any Tax Return
that it is responsible for filing under Section 2.1 of this Agreement if the
Filing Party has provided the Non-Filing Party with a reasonable opportunity to
review a copy of that portion of the settlement or compromise proposal which
relates to the claim for which the Filing Party is seeking indemnification
hereunder; provided, that if (a) the Filing Party fails to provide the
Non-Filing Party such a reasonable opportunity to review such portion of such
proposal, or (b) after such reasonable opportunity to review such proposal the
Non-Filing Party in writing reasonably withholds its consent to all or part of
such settlement or compromise proposal, then, unless the Filing Party was not
required to continue the applicable contest under the terms of Section 6.4(a),
the Non-Filing Party shall not be obligated to indemnify the Filing Party
hereunder to the extent of the amount attributable to the loss to which such
settlement or compromise relates as to which the Non-Filing Party has reasonably
withheld its consent, or with respect to any other loss for which a successful
contest is foreclosed because of such settlement or compromise as to which the
Non-Filing Party has reasonably withheld its consent. If the Filing Party
effects a settlement or compromise of such contest, notwithstanding that the
Non-Filing Party has reasonably withheld its consent thereto, the Filing

                                      -16-

<PAGE>

Party shall repay to the Non-Filing Party such amounts that the Non-Filing Party
advanced pursuant to clause (a)(4) of this Section 6.4 hereof as relate to such
claim, to the extent that the Non-Filing Party has reasonably withheld its
consent to the settlement or compromise thereof (together with interest at the
prime rate as published in the Wall Street Journal on any such amount paid by
the Non-Filing Party from the date paid by Lessee to the date repaid by the
Filing Party).

                  (c)      Waiver. Notwithstanding any other provision of this
Section 6.4, the Filing Party may resolve, settle, or agree to any deficiency,
claim or adjustment for any taxable period if the Filing Party waives it right
to indemnity with respect to such Tax Item. In such event, the Filing Party
shall promptly reimburse the Non-Filing Party for all amounts previously
advanced by the Non-Filing Party to the Filing Party in connection with such
deficiency, claim or adjustment under Section 6.4(a)(4) of this Agreement. In
addition, the Filing Party shall reimburse the Non-Filing Party for any Tax
Detriment that directly results from the settlement of such deficiency, claim or
adjustment. No waiver by the Filing Party under this Section 6.4(c) with respect
to any deficiency, claim or adjustment relating to any single Tax Item,
position, issue or transaction or relating to any single Tax for any one taxable
period shall operate as a waiver with respect to any other deficiency, claim or
adjustment.

                  6.5      Failure to Notify, Etc. The failure of the Filing
Party promptly to notify the Non-Filing Party of any matter relating to a
particular Tax for a taxable period or to take any action specified in Section
6.3 of this Agreement shall not relieve the Non-Filing Party of any liability
and/or obligation which it may have to the Filing Party under this Agreement
with respect to such Tax for such taxable period except to the extent that the
Non-Filing Party's rights hereunder are materially prejudiced by such failure
and in no event shall such failure relieve the Non-Filing Party of any other
liability and/or obligation which it may have to the Filing Party.

                  6.6      Remedies. Except as otherwise provided in this
Agreement, the parties hereby agree that the sole and exclusive remedy for a
breach by the Filing Party of the Filing Party's obligations to the Non-Filing
Party with respect to a deficiency, claim or adjustment relating to the
redetermination of a Tax Item of the Non-Filing Party for a taxable period shall
first be a reduction in the amount that would otherwise be payable by the
Non-Filing Party for such taxable period and then an increase in amount that
would otherwise be payable by the Filing Party for such taxable period, in
either case because of the breach. The parties further agree that no claim
against the Filing Party and no defense to the Non-Filing Party's liabilities to
the Filing Party under this Agreement shall arise from the resolution by the
Filing Party of any deficiency, claim or adjustment relating to the
redetermination of any Tax Item of the Filing Party.

SECTION 7.        MISCELLANEOUS.

                  7.1      Effectiveness. This Agreement shall become effective
upon execution by the parties hereto.

                  7.2      Notices. Unless expressly provided herein, all
notices, claims, certificates, requests, demands and other communications
hereunder shall be in writing and shall be deemed

                                      -17-

<PAGE>

to be duly given (i) when personally delivered or (ii) if mailed registered or
certified mail, postage prepaid, return receipt requested, on the date the
return receipt is executed or the letter refused by the addressee or its agent
or (iii) if sent by overnight courier which delivers only upon the signed
receipt of the addressee, on the date the receipt acknowledgment is executed or
refused by the addressee or its agent or (iv) if sent by facsimile or other
generally accepted means of electronic transmission, on the date confirmation of
transmission is received (provided that a copy of any notice delivered pursuant
to this clause (iv) shall also be sent pursuant to clause (ii) or (iii)),
addressed to the attention of the addressee's General Counsel at the address of
its principal executive office or to such other address or facsimile number for
a party as it shall have specified by like notice.

                  7.3      Changes in Law.

                  (a)      Any reference to a provision of the Code or a law of
another jurisdiction shall include a reference to any applicable successor
provision or law.

                  (b)      If, due to any change in applicable law or
regulations or their interpretation by any court of law or other governing body
having jurisdiction subsequent to the date of this Agreement, performance of any
provision of this Agreement or any transaction contemplated thereby shall become
impracticable or impossible, the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such provision.

                  7.4      Confidentiality. For a period of three years,
commencing on the date of this Agreement, each party shall hold and cause its
directors, officers, employees, advisors and consultants to hold in strict
confidence, unless compelled to disclose by judicial or administrative process
or, in the opinion of its counsel, by other requirements of law, all information
(other than any such information relating solely to the business or affairs of
such party) concerning the other parties hereto furnished it by such other party
or its representatives pursuant to this Agreement (except to the extent that
such information can be shown to have been (a) in the public domain through no
fault of such party or (b) later lawfully acquired from other sources not under
a duty of confidentiality by the party to which it was furnished), and each
party shall not release or disclose such information to any other person, except
its directors, officers, employees, auditors, attorneys, financial advisors,
bankers and other consultants who shall be advised of and agree to be bound by
the provisions of this Section 7.4. Each party shall be deemed to have satisfied
its obligation to hold confidential information concerning or supplied by the
other party if it exercises the same care as it takes to preserve
confidentiality for its own similar information.

                  7.5      Successors. This Agreement shall be binding on and
inure to the benefit and detriment of any successor, by merger, acquisition of
assets or otherwise, to any of the parties hereto, to the same extent as if such
successor had been an original party.

                  7.6      Affiliated Companies. CP shall cause to be performed,
and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by CP or any CP Affiliated Company.
Texas Genco shall cause to be performed, and

                                      -18-

<PAGE>

hereby guarantees the performance of, all actions, agreements and obligations
set forth herein to be performed by any Texas Genco Affiliated Company.

                  7.7      Authorization, Etc. Each of the parties hereto hereby
represents and warrants that it has the power and authority to execute, deliver
and perform this Agreement, that this Agreement has been duly authorized by all
necessary corporate action on the part of such party, that this Agreement
constitutes a legal, valid and binding obligation of each such party and that
the execution, delivery and performance of this Agreement by such party does not
contravene or conflict with any provision of law or of its charter or bylaws or
any agreement, instrument or order binding on such party.

                  7.8      Entire Agreement. This Agreement contains the entire
agreement among the parties hereto with respect to the subject matter hereof.

                  7.9      Governing Law; Jurisdiction. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Texas as to all matters regardless of the law that might otherwise govern
under the principles of conflicts of law applicable thereto.

                  7.10     Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same Agreement.

                  7.11     Severability. If any term, provision, covenant, or
restriction of this Agreement is held by a court of competent jurisdiction (or
an arbitrator or arbitration panel) to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants, and restrictions set forth herein
shall remain in full force and effect, and shall in no way be affected,
impaired, or invalidated. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants, and restrictions without including any of such which may
be hereafter declared invalid, void, or unenforceable. In the event that any
such term, provision, covenant or restriction is held to be invalid, void or
unenforceable, the parties hereto shall use their best efforts to find and
employ an alternate means to achieve the same or substantially the same result
as that contemplated by such terms, provisions, covenant, or restriction.

                  7.12     No Third Party Beneficiaries. This Agreement is
solely for the benefit of CP, the CP Affiliated Companies, Texas Genco and the
Texas Genco Affiliated Companies. This Agreement should not be deemed to confer
upon third parties any remedy, claim, liability, reimbursement, cause of action
or other rights in excess of those existing without this Agreement.

                  7.13     Waivers, Etc. No failure or delay on the part of the
parties in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No modification or waiver of any provision of this Agreement nor
consent to any

                                      -19-

<PAGE>

departure by the parties therefrom shall in any event be effective unless the
same shall be in writing.

                  7.14     Setoff. All payments to be made by any party under
this Agreement may be netted against payments due to such party under this
Agreement, but otherwise shall be made without setoff, counterclaim or
withholding, all of which are hereby expressly waived.

                                      -20-

<PAGE>

                  IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by a duly authorized officer as of the date first above
written.

                                CENTERPOINT ENERGY, INC.
                                On behalf of Itself and Its Affiliated Companies

                                By: /s/ DAVID M. MCCLANAHAN
                                    --------------------------------------------
                                Name:   David M. McClanahan
                                Title:  President and Chief Executive Officer

                                TEXAS GENCO HOLDINGS, INC.
                                On behalf of Itself and Its Affiliated Companies

                                By: /s/ DAVID G. TEES
                                    --------------------------------------------
                                Name:   David G. Tees
                                Title:  President and Chief Executive Officer

                                      -21-

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