Document:

First Supplemental Indenture relating to the Bonds dated as of February 12, 2008

 Exhibit 4.2 
 CENTERPOINT ENERGY TRANSITION BOND COMPANY III, LLC 
 Issuer 
 and 
 DEUTSCHE BANK TRUST COMPANY AMERICAS

 Trustee 
 FIRST SUPPLEMENTAL
INDENTURE 
 Dated as of February 12, 2008 
  
  
 2008 Senior Secured Transition
Bonds 

 This FIRST SUPPLEMENTAL INDENTURE dated as of February 12, 2008 (this “Supplement”), by and among
CenterPoint Energy Transition Bond Company III, LLC, a Delaware limited liability company (the “Issuer”), and Deutsche Bank Trust Company Americas, a New York banking corporation, in its capacity as trustee (the
“Trustee”), is entered into pursuant to the Indenture dated as of even date herewith between the Issuer and the Trustee (the “Indenture”). 
 PRELIMINARY STATEMENT; GRANTING CLAUSE 
 The Issuer has duly authorized the
execution and delivery of this Supplement and the creation of Transition Bonds with an initial aggregate principal amount of $488,472,000 to be known as the Issuer’s 2008 Senior Secured Transition Bonds (the “2008 Senior Secured
Transition Bonds”). All acts and all things necessary to make the 2008 Senior Secured Transition Bonds, when duly executed by the Issuer and authenticated by or on behalf of the Trustee as provided in the Indenture and this Supplement and
issued by the Issuer, the valid, binding and legal obligations of the Issuer and to make this Supplement a valid and enforceable supplement to the Indenture have been done, performed and fulfilled and the execution and delivery hereof have been in
all respects duly and lawfully authorized. The Issuer and the Trustee are executing and delivering this Supplement in order to provide for the 2008 Senior Secured Transition Bonds. In connection with the execution and delivery of this Supplement,
the Issuer undertakes and confirms that it will not issue any Transition Bonds other than the 2008 Senior Secured Transition Bonds provided for hereby. 
 The “Trust Estate” shall consist of, and the Issuer hereby absolutely and irrevocably Grants to the Trustee, as trustee for the benefit of the Holders of the 2008 Senior Secured Transition Bonds
issued and outstanding, all of the Issuer’s right, title and interest whether now owned or hereafter acquired (and whether now existing or hereafter arising), in, to and under (a) the Transition Property relating to the 2008 Senior Secured
Transition Bonds purchased by the Issuer pursuant to the Sale Agreement relating to the 2008 Senior Secured Transition Bonds and all proceeds thereof, (b) the Sale Agreement relating to the 2008 Senior Secured Transition Bonds, (c) the
Bill of Sale delivered by the Seller pursuant to the Sale Agreement relating to the 2008 Senior Secured Transition Bonds, (d) the Servicing Agreement relating to the 2008 Senior Secured Transition Bonds and the Intercreditor Agreement executed
in connection therewith, (e) the Administration Agreement, (f) the Collection Account relating to the 2008 Senior Secured Transition Bonds and all subaccounts thereof (including, without limitation, the General Subaccount, the Capital
Subaccount and the Excess Funds Subaccount relating to the 2008 Senior Secured Transition Bonds) and all cash, securities, instruments, investment property or other assets credited to or deposited in that Collection Account or any subaccount thereof
from time to time or purchased with funds therefrom, and all financial assets and securities entitlements carried therein or credited thereto, (g) the REP Deposit Account relating to the 2008 Senior Secured Transition Bonds, (h) all other
property of whatever kind owned from time to time by the Issuer other than any cash released to the Issuer by the Trustee pursuant to Section 8.02 of the Indenture, (i) all present and future claims, demands, causes and choses in action in
respect of any or all of the foregoing and (j) all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of the conversion, voluntary or involuntary, into
cash or other liquid property of any or all of the foregoing, all cash proceeds, accounts, accounts receivable, general intangibles, 

 
notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, condemnation awards, payment intangibles, letter-of-credit rights,
investment property, commercial tort claims, documents, rights to payment of any and every kind, and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing. 
 Such Grant is made to the Trustee to have and to hold in trust to secure the payment of principal of and
premium, if any, and interest on, and any other amounts (including all fees, expenses, counsel fees and other amounts due and owing to the Trustee) owing in respect of, the 2008 Senior Secured Transition Bonds equally and ratably without prejudice,
preference, priority or distinction, except as expressly provided in the Indenture and this Supplement and to secure performance by the Issuer of all of the Issuer’s obligations under the Indenture and this Supplement with respect to the 2008
Senior Secured Transition Bonds, all as provided in the Indenture and this Supplement; provided, however, that in no event shall the proceeds of the issuance of the 2008 Senior Secured Transition Bonds constitute a portion of the Trust
Estate. 
 The Trustee, as trustee on behalf of the Holders of the Transition Bonds, acknowledges such Grant, accepts the trusts hereunder in
accordance with the provisions hereof and agrees to perform its duties as set forth in the Indenture and this Supplement. 
 ARTICLE I 

 DEFINITIONS 
 All terms
used in this Supplement that are defined in the Indenture, either directly or by reference therein, have the meanings assigned to such terms in the Indenture, except to the extent such terms are defined or modified in this Supplement or the context
clearly requires otherwise. 
 ARTICLE II 
 OTHER DEFINITIONAL PROVISIONS 
 SECTION 2.01. “Authorized Denominations” means
$1,000 and integral multiples thereof, except for one Transition Bond of each Tranche which may be of a smaller denomination. 
 SECTION
2.02. “Expected Amortization Schedule” means Schedule A to this Supplement. 
 SECTION 2.03. “Expected Final
Payment Date” means, with respect to any Tranche of the 2008 Senior Secured Transition Bonds, the expected final payment date therefor, as specified in Article IV of this Supplement. 
 SECTION 2.04. “Final Maturity Date” means, with respect to any Tranche of the 2008 Senior Secured Transition Bonds, the final maturity
date thereof, as specified in Article IV of this Supplement. 
  

 2 

 SECTION 2.05. “Interest Rate” has the meaning set forth in Article IV of this
Supplement. 
 SECTION 2.06. “Issuance Date” has the meaning set forth in Section 3.02 of this Supplement. 

SECTION 2.07. “Payment Date” has the meaning set forth in Section 5.01 of this Supplement. 
 SECTION 2.08. “Record Date” shall mean, with respect to any Payment Date, the close of business on the Business Day immediately prior
to such Payment Date. 
 SECTION 2.09. “Required Capital Amount” has the meaning set forth in Section 5.04 of this
Supplement. 
 ARTICLE III 
 DESIGNATION; ISSUANCE DATE; SOLE SERIES 
 SECTION 3.01. DESIGNATION. The 2008 Senior Secured Transition Bonds shall be
designated generally as the Issuer’s 2008 Senior Secured Transition Bonds and further denominated as Tranche A-1 or Tranche A-2, as applicable. 
 SECTION 3.02. ISSUANCE DATE. The 2008 Senior Secured Transition Bonds that are authenticated and delivered by the Trustee to or upon the written order of the Issuer on February 12, 2008 (the “Issuance
Date”) shall have as their date of authentication February 12, 2008. 
 SECTION 3.03. BOOK-ENTRY. Upon original issuance, the
2008 Senior Secured Transition Bonds will be issued in the form of a typewritten Transition Bond or Transition Bonds representing the Book-Entry Transition Bonds, to be delivered to DTC, as the initial Clearing Agency, by, or on behalf of, the
Issuer, pursuant to Section 2.11 of the Indenture. 
 SECTION 3.04. NO ADDITIONAL SERIES. The Issuer commits that the 2008 Senior
Secured Transition Bonds are the only Transition Bonds that the Issuer will issue and that no additional series of Transition Bonds will be issued by the Issuer. 
 ARTICLE IV 
 INITIAL PRINCIPAL BALANCE; INTEREST RATE; EXPECTED 
 FINAL PAYMENT DATE; FINAL MATURITY DATE 
 (a) The Transition Bonds of each Tranche of the 2008 Senior Secured Transition Bonds shall have the initial principal balance, Expected Final Payment Date and Final Maturity Date and bear interest at the interest rate
(the “Interest Rate”) as set forth below: 
  

 3 

											
	 Tranche
	  	Initial Principal
Balance	  	Expected Final
Payment Date	  	Final
Maturity Date	  	Interest Rate	 
	 A-1
	  	$	301,427,000	  	02/1/2017	  	02/1/2020	  	4.192	%
	 A-2
	  	$	187,045,000	  	02/1/2020	  	02/1/2023	  	5.234	%

 (b) The Expected Final Payment Date for each Tranche of the 2008 Senior Secured
Transition Bonds will be the date when the outstanding principal balance of that Tranche will be reduced to zero if payments are made according to the Expected Amortization Schedule for that Tranche. The Final Maturity Date for each Tranche of the
2008 Senior Secured Transition Bonds will be the date when the Issuer is required to pay the entire remaining unpaid principal balance, if any, of all outstanding 2008 Senior Secured Transition Bonds of that Tranche. 
 (c) Interest on the 2008 Senior Secured Transition Bonds will be paid before Principal of the 2008 Senior Secured Transition Bonds. If
there is a shortfall in the amounts available in the Collection Account to make interest payments, the Trustee will distribute Interest Pro Rata to each Outstanding Tranche of 2008 Senior Secured Transition Bonds based on the amount of Interest
payable on each Outstanding Tranche. Interest on the 2008 Senior Secured Transition Bonds will be calculated on the basis of a 360-day year of twelve 30-day months. 
 ARTICLE V 
 PAYMENT DATES; EXPECTED AMORTIZATION SCHEDULE 
 FOR PRINCIPAL; INTEREST; REQUIRED CAPITAL AMOUNT; WATERFALL CAPS 
 SECTION 5.01. PAYMENT DATES. The “Payment Dates” for the 2008 Senior Secured Transition Bonds are February 1 and August 1 of each year or, if any such date is not a Business Day, the next
succeeding Business Day, commencing on February 1, 2009, and continuing until the earlier of repayment of such Tranche in full and the applicable Final Maturity Date. 
 SECTION 5.02. EXPECTED AMORTIZATION SCHEDULE FOR PRINCIPAL. Unless an Event of Default has occurred and is continuing and the unpaid principal amount of
all Tranches of 2008 Senior Secured Transition Bonds has been declared to be due and payable together with accrued and unpaid interest thereon, on each Payment Date the Trustee shall distribute to the Holders of record of the 2008 Senior Secured
Transition Bonds as of the related Record Date amounts payable in respect of the 2008 Senior Secured Transition Bonds pursuant to Section 8.02(d) of the Indenture as Principal, so that the outstanding Principal balance as of such Payment Date
(after giving effect to all payments of Principal, if any, made on such Payment Date) has been reduced to the extent possible to the Principal balance specified in the Expected Amortization Schedule but not less than such Principal balance. Unless
an Event of Default has occurred and is continuing and the unpaid principal amount of all Tranches of 2008 Senior Secured Transition Bonds has been declared to be due and payable together with accrued and unpaid interest thereon, payments of
Principal on any Tranche A-2 2008 Senior Secured Transition Bonds shall not be made on any Payment Date until the Principal balance of the Tranche A-1 2008 Senior Secured Transition Bonds has been reduced to zero; provided, 

  

 4 

 
however, that payments of Principal on the Tranche A-2 2008 Senior Secured Transition Bonds may be made on the Payment Date that the Principal balance
of the Tranche A-1 2008 Senior Secured Transition Bonds has been reduced to zero. 
 SECTION 5.03. INTEREST. Interest will be payable on
each Tranche of the 2008 Senior Secured Transition Bonds on each Payment Date as follows: 
 (a) if there has been a payment
default, any Interest payable but unpaid on any prior Payment Date, together with Interest on such unpaid Interest, if any, and 
 (b) accrued Interest on the principal balance of each Tranche of the 2008 Senior Secured Transition Bonds as of the close of business on the preceding Payment Date, or the date of the original issuance of the Tranche of the 2008 Senior
Secured Transition Bonds, as applicable, after giving effect to all payments of Principal made on the preceding Payment Date; 
 provided,
however, that, with respect to the initial Payment Date or if no payment has yet been made, Interest on the outstanding principal balance shall accrue from and including the Issuance Date to, but excluding, the following Payment Date,
and thereafter from and including the previous Payment Date to, but excluding, the applicable Payment Date until the Transition Bonds have been paid in full, at the interest rate indicated in Article IV. 
 SECTION 5.04. REQUIRED CAPITAL AMOUNT. The “Required Capital Amount” for the 2008 Senior Secured Transition Bonds shall be $2,442,360,
which is equal to 0.5% of the initial outstanding principal balance of the 2008 Senior Secured Transition Bonds. 
 SECTION 5.05. PREMIUM.
There will be no early redemption of the 2008 Senior Secured Transition Bonds, and therefore no Premium will be payable in connection with the early redemption of the 2008 Senior Secured Transition Bonds. 
 SECTION 5.06. WATERFALL CAPS. The amount payable with respect to the 2008 Senior Secured Transition Bonds pursuant to Section 8.02(d)(i) shall not
exceed $800,000 during any calendar year. 
 ARTICLE VI 
 AUTHORIZED DENOMINATIONS 
 The 2008 Senior Secured Transition Bonds shall be issuable in the
Authorized Denominations. 
 ARTICLE VII 
 REDEMPTION 
 The 2008 Senior Secured Transition Bonds shall not be subject to mandatory or optional
redemption. 
  

 5 

 ARTICLE VIII 
 CREDIT ENHANCEMENT 
 No credit enhancement (other than the Excess Funds Subaccount, the Required
Capital Amount and any adjustments to the Transition Charges approved by the PUCT as provided in the Texas Electric Choice Plan) is provided for the 2008 Senior Secured Transition Bonds. 
 ARTICLE IX 
 DELIVERY AND PAYMENT FOR THE 2008 SENIOR SECURED TRANSITION 

 BONDS; FORM OF THE 2008 SENIOR SECURED TRANSITION BONDS 
 The Trustee shall deliver or cause to be delivered the 2008 Senior Secured Transition Bonds to the Issuer when authenticated in accordance with
Section 2.02 of the Indenture. Each 2008 Senior Secured Transition Bond shall be in the form of Exhibit A hereto, which is incorporated herein by reference. 
 ARTICLE X 
 MISCELLANEOUS 
 SECTION 10.01. CONFIRMATION OF INDENTURE. As supplemented by this Supplement, the Indenture is in all respects ratified and confirmed and the Indenture,
as so supplemented by this Supplement, shall be read, taken, and construed as one and the same instrument. 
 SECTION 10.02. EFFECTS OF
HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. 
 SECTION 10.03.
COUNTERPARTS. This Supplement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. 
 SECTION 10.04. GOVERNING LAW. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. 
 SECTION 10.05. RIGHTS OF TRUSTEE AND OTHERS. The
Trustee, the authenticating agent, the Transition Bond Registrar and the Paying Agent shall be entitled to the same rights, protections, immunities, and indemnities set forth in the Indenture as if specifically set forth herein. 
  

 6 

 IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Supplement to be duly executed by their respective
officers thereunto duly authorized as of the day and year first above written. 
  

			
	 CENTERPOINT ENERGY TRANSITION BOND
 COMPANY III, LLC,
 as Issuer

		
	By:	 	 /s/ Marc Kilbride

	Name:	 	Marc Kilbride
	Title:	 	Manager
	
	 DEUTSCHE BANK TRUST COMPANY
 AMERICAS,
 not in its individual capacity but solely as
 Trustee on behalf of the Transition Bondholders

		
	By:	 	 /s/ Irene Siegel

	Name:	 	Irene Siegel
	Title:	 	Vice President
		
	By:	 	 /s/ Aranka R. Paul

	Name:	 	Aranka R. Paul
	Title:	 	Assistant Vice President

  

 7 

 SCHEDULE A 
 Expected Amortization Schedule 
 Outstanding Principal Balance 
  

							
	 Payment
 Date
	  	Tranche
A-1
Balance	  	Tranche
A-2
Balance
	 Initial Principal Balance
	  	$	301,427,000.00	  	$	187,045,000.00
	 2/1/2009
	  	$	280,924,655.86	  	$	187,045,000.00
	 8/1/2009
	  	$	268,256,701.26	  	$	187,045,000.00
	 2/1/2010
	  	$	251,782,047.87	  	$	187,045,000.00
	 8/1/2010
	  	$	237,859,223.94	  	$	187,045,000.00
	 2/1/2011
	  	$	219,982,953.57	  	$	187,045,000.00
	 8/1/2011
	  	$	204,690,874.81	  	$	187,045,000.00
	 2/1/2012
	  	$	185,303,088.46	  	$	187,045,000.00
	 8/1/2012
	  	$	168,762,944.01	  	$	187,045,000.00
	 2/1/2013
	  	$	148,092,709.38	  	$	187,045,000.00
	 8/1/2013
	  	$	130,422,319.43	  	$	187,045,000.00
	 2/1/2014
	  	$	108,584,646.43	  	$	187,045,000.00
	 8/1/2014
	  	$	89,707,258.19	  	$	187,045,000.00
	 2/1/2015
	  	$	66,561,475.01	  	$	187,045,000.00
	 8/1/2015
	  	$	46,371,220.91	  	$	187,045,000.00
	 2/1/2016
	  	$	21,811,316.82	  	$	187,045,000.00
	 8/1/2016
	  	$	211,722.31	  	$	187,045,000.00
	 2/1/2017
	  	 	—  	  	$	161,178,512.97
	 8/1/2017
	  	 	—  	  	$	138,058,931.25
	 2/1/2018
	  	 	—  	  	$	110,286,031.47
	 8/1/2018
	  	 	—  	  	$	85,435,383.41
	 2/1/2019
	  	 	—  	  	$	55,813,564.65
	 8/1/2019
	  	 	—  	  	$	29,133,712.71
	 2/1/2020
	  	 	—  	  	 	—  

 Exhibit A to First Supplemental Indenture 
  

			
	REGISTERED	 	$

 No.              
 SEE REVERSE FOR CERTAIN DEFINITIONS 
 CUSIP NO. 
 THE PRINCIPAL OF THIS TRANCHE [    ] 2008 SENIOR SECURED TRANSITION BOND WILL BE PAID IN INSTALLMENTS AS
SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS TRANCHE [    ] 2008 SENIOR SECURED TRANSITION BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THE HOLDER OF THIS TRANCHE
[    ] 2008 SENIOR SECURED TRANSITION BOND HEREBY COVENANTS AND AGREES THAT PRIOR TO THE DATE THAT IS ONE YEAR AND ONE DAY AFTER THE PAYMENT IN FULL OF THE TRANCHE [    ] 2008 SENIOR SECURED TRANSITION BONDS,
IT WILL NOT INSTITUTE AGAINST OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST THE ISSUER ANY BANKRUPTCY, REORGANIZATION, ARRANGEMENT, INSOLVENCY OR LIQUIDATION PROCEEDINGS OR OTHER SIMILAR PROCEEDINGS UNDER THE LAWS OF THE UNITED STATES OR ANY STATE
OF THE UNITED STATES. 
 CENTERPOINT ENERGY TRANSITION BOND COMPANY III, LLC 
 2008 SENIOR SECURED TRANSITION BONDS, Tranche [    ]. 
  

							
	 Bond Rate
	  	Initial
Principal Amount	  	Expected Final
Payment Date	  	Final
Maturity Date
	     %
	  	$                	  	                 	  	                 

 CenterPoint Energy Transition Bond Company III, LLC, a limited liability company organized and
existing under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to the registered holder under Section 2.05 of the Indenture (“Registered Holder”), or
registered assigns, the Initial Principal Amount shown above in semiannual installments on the Payment Dates (as defined below) and in the amounts specified on the reverse hereof or, if less, the amounts determined pursuant to Section 8.02(d)
of the Indenture referred to on the reverse hereof, in each year, commencing on the date determined as provided on the reverse hereof and ending on or before the Final Maturity Date of this Tranche [    ] 2008 Senior Secured
Transition Bond, to pay the entire unpaid principal hereof on such Final Maturity Date and to pay Interest, at the Bond Rate shown above, on each February 1 and August 1, or if any such day is not a Business Day, the next succeeding
Business Day, commencing on February 1, 2009 and continuing until the earlier of the payment of the Principal hereof and the Final Maturity Date of this Tranche [    ] 2008 Senior Secured Transition 

  

 A-1 

 
Bond (each a “Payment Date”), on the Principal amount of this Tranche [    ] 2008 Senior Secured Transition Bond
outstanding from time to time. Interest on this Tranche [    ] 2008 Senior Secured Transition Bond will accrue for each Payment Date from the most recent Payment Date on which Interest has been paid to but excluding such
Payment Date or, if no Interest has yet been paid, from February 12, 2008. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Such Principal of and Interest on this Tranche [    ] 2008
Senior Secured Transition Bond shall be paid in the manner specified on the reverse hereof. 
 The Principal of and Interest on this
Tranche [    ] 2008 Senior Secured Transition Bond are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by
the Issuer with respect to this Tranche [    ] 2008 Senior Secured Transition Bond shall be applied first to Interest due and payable on this Tranche [    ] 2008 Senior Secured Transition Bond as
provided above and then to the unpaid Principal of and premium, if any, on this Tranche [    ] 2008 Senior Secured Transition Bond, all in the manner set forth in Section 8.02(d) of the Indenture. 
 This Tranche [    ] 2008 Senior Secured Transition Bond is a “transition bond” as such term is defined in the Texas
Electric Choice Plan. Principal and Interest on this Tranche [    ] 2008 Senior Secured Transition Bond are payable from and secured primarily by the transition property authorized by the Financing Order. The Texas Electric
Choice Plan provides that the State of Texas pledges “for the benefit and protection of financing parties and the electric utility, that it will not take or permit any action that would impair the value of the transition property, or except as
permitted . . . [through the Transition Charge Adjustment Process] . . . reduce, alter, or impair the transition charges to be imposed, collected, and remitted to financing parties, until the principal, interest, and premium, and any other charges
incurred and contracts to be performed in connection with the related transition bonds have been paid and performed in full.” 
 Reference is made to the further provisions of this Tranche [    ] 2008 Senior Secured Transition Bond set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this
Tranche [    ] 2008 Senior Secured Transition Bond. 
 Unless the certificate of authentication hereon has been
executed by the Trustee whose name appears below by manual signature, this Tranche [    ] 2008 Senior Secured Transition Bond shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any
purpose. 
  

 A-2 

 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a
New York corporation (“DTC”), to Issuer or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest herein. 
  

 A-3 

 IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by an
Authorized Officer of the Issuer. 
 Date:                     
  

			
	 CENTERPOINT ENERGY TRANSITION BOND
 COMPANY III, LLC

		
	By:	 	  

	Name:	 	  

	Title:	 	  

  

 A-4 

 TRUSTEE’S CERTIFICATE OF AUTHENTICATION 
 Dated:             , 200     
 This is one of the Tranche [    ] 2008 Senior Secured Transition Bonds designated above and referred to in the within-mentioned
Indenture. 
  

			
	 DEUTSCHE BANK TRUST COMPANY
 AMERICAS,
 not in its individual capacity but solely as Trustee on behalf of the Transition Bondholders

		
	[By:	 	[     ],
		 	as Authenticating Agent]
		
	By:	 	  

	Name:	 	
	Title:	 	

  

 A-5 

 REVERSE OF TRANSITION BOND 
 This Tranche [    ] 2008 Senior Secured Transition Bond is one of a duly authorized issue of Transition Bonds of the Issuer
(herein called the “2008 Senior Secured Transition Bonds”), which are issuable in one or more Tranches, in which this Tranche [    ] 2008 Senior Secured Transition Bond represents an interest, including the
Tranche [    ] 2008 Senior Secured Transition Bonds (herein called the “Tranche [    ] 2008 Senior Secured Transition Bonds”), all issued and to be issued under an indenture dated as of
February 12, 2008, and a supplemental indenture thereto dated as of even date therewith (such supplemental indenture, as supplemented or amended, the “Supplement” and, collectively with such indenture, as supplemented or amended, the
“Indenture”), each between the Issuer and Deutsche Bank Trust Company Americas as Trustee (the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the Trust Estate pledged, the nature and extent of the security and the respective rights, obligations and immunities thereunder of the Issuer, the Trustee and the Transition Bondholders. All terms used in
this Tranche [    ] 2008 Senior Secured Transition Bond that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in the Indenture. 
 The Tranche [    ] 2008 Senior Secured Transition Bonds and the other Tranche of 2008 Senior Secured Transition Bonds issued by
the Issuer are and will be equally and ratably secured by the Trust Estate pledged as security therefor as provided in the Indenture or the Supplement. 
 The Principal of this Tranche [    ] 2008 Senior Secured Transition Bond shall be payable on each Payment Date only to the extent that amounts in the Collection Account are available therefor,
and only until the outstanding Principal balance thereof on such Payment Date (after giving effect to all payments of Principal, if any, made on such Payment Date) has been reduced to the Principal balance specified in the Expected Amortization
Schedule which is attached to the Supplement as Schedule A, unless payable earlier because an Event of Default shall have occurred and be continuing and the Trustee or the Transition Bondholders representing not less than a majority of the
Outstanding Amount of the 2008 Senior Secured Transition Bonds have declared the 2008 Senior Secured Transition Bonds to be immediately due and payable in accordance with Section 5.02 of the Indenture. However, actual Principal payments may be
made in less than expected amounts and at later than expected times as determined pursuant to Section 8.02(d) of the Indenture and Section 5.02 of the Supplement. The entire unpaid Principal amount of this
Tranche [    ] 2008 Senior Secured Transition Bond shall be due and payable on the Final Maturity Date of this Tranche [    ] 2008 Senior Secured Transition Bond. Notwithstanding the foregoing, the entire
unpaid Principal amount of the 2008 Senior Secured Transition Bonds shall be due and payable, if not then previously paid, on the date on which an Event of Default shall have occurred and be continuing and the Trustee or the Transition Bondholders
representing a majority of the Outstanding Amount of the 2008 Senior Secured Transition Bonds have declared the 2008 Senior Secured Transition Bonds to be immediately due and payable in the manner provided in Section 5.02 of the Indenture. All
Principal payments on the Tranche [    ] 2008 Senior Secured Transition Bonds shall be made pro rata to the Tranche [    ] 2008 Senior Secured Transition Bondholders entitled thereto based on the
respective Principal amounts of the 2008 Senior Secured Transition Bonds held by them. 
  

 A-6 

 Payments of Interest on this Tranche [    ] 2008 Senior Secured Transition Bond
due and payable on each Payment Date, together with the installment of Principal or premium, if any, due on this Tranche [    ] 2008 Senior Secured Transition Bond on such Payment Date shall be made by check mailed
first-class, postage prepaid, to the Person whose name appears as the Holder of this Tranche [    ] 2008 Senior Secured Transition Bond in the 2008 Senior Secured Transition Bond Register as of the close of business on the
Record Date or in such other manner as may be provided in the Supplement, except that with respect to Tranche [    ] 2008 Senior Secured Transition Bonds registered on the Record Date in the name of a Clearing Agency,
payments will be made by wire transfer in immediately available funds to the account designated by such Clearing Agency and except for the final installment of Principal and premium, if any, payable with respect to this
Tranche [    ] 2008 Senior Secured Transition Bond on a Payment Date which shall be payable as provided below. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears in the
2008 Senior Secured Transition Bond Register as of the applicable Record Date without requiring that this Tranche [    ] 2008 Senior Secured Transition Bond be submitted for notation of payment. Any reduction in the
Principal amount of this Tranche [    ] 2008 Senior Secured Transition Bond (or any one or more predecessors to such 2008 Senior Secured Transition Bond) effected by any payments made on any Payment Date shall be binding
upon all future Transition Bondholders of this Tranche [    ] 2008 Senior Secured Transition Bond and of any Tranche [    ] 2008 Senior Secured Transition Bond issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid Principal amount of this
Tranche [    ] 2008 Senior Secured Transition Bond on a Payment Date, then the Trustee, in the name of and on behalf of the Issuer, will notify the Person who was the Holder hereof as of the second preceding Record Date to
such Payment Date by notice mailed no later than five days prior to such final Payment Date and shall specify that such final installment will be payable to the Holder hereof as of the Record Date immediately preceding such final Payment Date and
only upon presentation and surrender of this Tranche [    ] 2008 Senior Secured Transition Bond and shall specify the place where this Tranche [    ] 2008 Senior Secured Transition Bond may be
presented and surrendered for payment of such installment. 
 The Issuer shall pay Interest on overdue installments of Interest on this
Tranche [    ] 2008 Senior Secured Transition Bond at the Bond Rate for Tranche [    ] to the extent lawful. 
 As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Tranche [    ] 2008 Senior Secured Transition Bond may be registered in the Transition
Bond Register upon surrender of this Tranche [    ] 2008 Senior Secured Transition Bond for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by the Holder hereof or his attorney duly authorized in writing, with such signature guaranteed by an Eligible Guarantor Institution, and thereupon one
or more new Tranche [    ] 2008 Senior Secured Transition Bonds of any Authorized Denominations and in the same aggregate unpaid Principal amount will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of 

  

 A-7 

 
transfer or exchange of this Tranche [    ] 2008 Senior Secured Transition Bond, but the transferor may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange. 
 Prior to the due presentment for registration of transfer of this Tranche [    ] 2008 Senior Secured Transition Bond, the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Person in whose
name this Tranche [    ] 2008 Senior Secured Transition Bond is registered (as of the day of determination) as the owner hereof for the purpose of receiving payments of Principal of and premium, if any, and Interest on this
Tranche [    ] 2008 Senior Secured Transition Bond and for all other purposes whatsoever, whether or not this Tranche [    ] 2008 Senior Secured Transition Bond be overdue, and neither the Issuer,
the Trustee nor any such agent shall be affected by notice to the contrary. 
 The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Transition Bondholders under the Indenture at any time by the Issuer with the consent of the Transition Bondholders representing a
majority of the Outstanding Amount of all 2008 Senior Secured Transition Bonds at the time Outstanding of each Tranche to be affected. The Indenture also contains provisions permitting the Transition Bondholders representing specified percentages of
the Outstanding Amount of the 2008 Senior Secured Transition Bonds, on behalf of all Transition Bondholders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Transition Bondholders of this Tranche [    ] 2008 Senior Secured Transition Bond (or any one or more predecessors of such 2008 Senior Secured Transition Bonds) shall be
conclusive and binding upon such Transition Bondholder and upon all future Transition Bondholders of this Tranche [    ] 2008 Senior Secured Transition Bond and of any Tranche [    ] 2008 Senior
Secured Transition Bond issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Tranche [    ] 2008 Senior Secured
Transition Bond. The Indenture also permits the Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of the Transition Bondholders. 
 The term “Issuer” as used in this Tranche [    ] 2008 Senior Secured Transition Bond includes any successor to the
Issuer under the Indenture. 
 The Issuer is permitted by the Indenture, under certain circumstances, to merge or consolidate. 
 The Tranche [    ] 2008 Senior Secured Transition Bonds are issuable only in registered form in Authorized Denominations as
provided in the Indenture and the Supplement, subject to certain limitations therein set forth. 
 THIS
TRANCHE [    ] 2008 SENIOR SECURED TRANSITION BOND, THE INDENTURE AND THE SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. 
  

 A-8 

 No reference herein to the Indenture and no provision of this Tranche [    ] 2008
Senior Secured Transition Bond or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the Principal of and Interest on this Tranche [    ] 2008 Senior Secured
Transition Bond at the times, place, and rate, and in the coin or currency herein prescribed. 
 ASSIGNMENT 
 Social Security or taxpayer I.D. or other identifying number of assignee
                    . 
 FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto                      
 (name and address of assignee) 
 the Tranche
[    ] 2008 Senior Secured Transition Bond and all rights thereunder, and hereby irrevocably constitutes and appoints 
 (name and address of appointee) 
 attorney, to transfer said Tranche [    ] 2008 Senior Secured Transition Bond on the books
kept for registration thereof, with full power of substitution in the premises. 
  

							
	Dated:	 		 		 	
				
	                      
	 		 	  
	 	*
		 		 	Signature Guaranteed:	 	
				
	  
	 		 	  
	 	

  

	*	NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the Tranche [    ] 2008 Senior Secured
Transition Bond in every particular, without alteration, enlargement or any change whatsoever. 

  

 A-9Transition Property Sale Agreement dated as of February 12, 2008

 Exhibit 10.1 
 TRANSITION PROPERTY SALE AGREEMENT 
 between 
 CENTERPOINT ENERGY TRANSITION BOND COMPANY III, LLC 
 Issuer 
 and 
 CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC

 Seller 
 Dated as of
February 12, 2008 

 TABLE OF CONTENTS 
  

					
	ARTICLE I DEFINITIONS	  	1
	 Section 1.01
	 	Definitions	  	1
	 Section 1.02
	 	Other Definitional Provisions	  	1
		
	ARTICLE II CONVEYANCE OF THE TRANSITION PROPERTY	  	2
	 Section 2.01
	 	Conveyance of the Transition Property	  	2
	 Section 2.02
	 	Conditions to Conveyance of the Transition Property	  	3
		
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER	  	4
	 Section 3.01
	 	Organization and Good Standing	  	4
	 Section 3.02
	 	Due Qualification	  	4
	 Section 3.03
	 	Power and Authority	  	4
	 Section 3.04
	 	Binding Obligation	  	5
	 Section 3.05
	 	No Violation	  	5
	 Section 3.06
	 	No Proceedings	  	5
	 Section 3.07
	 	Approvals	  	6
	 Section 3.08
	 	The Transition Property	  	6
	 Section 3.09
	 	Solvency	  	7
	 Section 3.10
	 	The Financing Order	  	7
	 Section 3.11
	 	State Action	  	8
	 Section 3.12
	 	No Court Order	  	8
	 Section 3.13
	 	Approvals Concerning the Transition Property	  	8
	 Section 3.14
	 	Assumptions	  	8
	 Section 3.15
	 	Creation of the Transition Property	  	9
	 Section 3.16
	 	Prospectus	  	9
	 Section 3.17
	 	Nature of Representations and Warranties	  	9
		
	ARTICLE IV COVENANTS OF THE SELLER	  	10
	 Section 4.01
	 	Seller’s Existence	  	10
	 Section 4.02
	 	No Liens or Conveyances	  	10
	 Section 4.03
	 	Delivery of Collections	  	10
	 Section 4.04
	 	Notice of Liens	  	11
	 Section 4.05
	 	Compliance With Law	  	11
	 Section 4.06
	 	Covenants Related to the Transition Property	  	11
	 Section 4.07
	 	Protection of Title	  	11
	 Section 4.08
	 	Taxes	  	12
	 Section 4.09
	 	Filings Pursuant to Financing Order	  	12
		
	ARTICLE V ADDITIONAL UNDERTAKINGS OF SELLER	  	12
	 SECTION 5.01 LIABILITY OF THE SELLER;
INDEMNITIES
	  	12
	 Section 5.02
	 	Merger or Consolidation of, or Assumption of the Obligations of, the Seller	  	14
	 Section 5.03
	 	Limitation on Liability of the Seller and Others	  	16
		
	ARTICLE VI MISCELLANEOUS PROVISIONS	  	16
	 Section 6.01
	 	Amendment	  	16

  

 i 

					
	 Section 6.02
	 	Notices	  	17
	 Section 6.03
	 	Assignment by the Seller	  	18
	 Section 6.04
	 	Assignment to the Indenture Trustee	  	18
	 Section 6.05
	 	Limitations on Rights of Others	  	18
	 Section 6.06
	 	Severability	  	18
	 Section 6.07
	 	Separate Counterparts	  	18
	 Section 6.08
	 	Headings	  	18
	 Section 6.09
	 	Governing Law	  	19
	 Section 6.10
	 	Nonpetition Covenants	  	19
			
	APPENDIX A	 	DEFINITIONS	  	
			
	SCHEDULE 1	 		  	

  

 ii 

 TRANSITION PROPERTY SALE AGREEMENT (this “Agreement”) dated as of February 12, 2008,
between CENTERPOINT ENERGY TRANSITION BOND COMPANY III, LLC, a Delaware limited liability company (the “Issuer”), and CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC, a Texas limited liability company, as seller (the “Seller”).

 WHEREAS, the Issuer desires to purchase the Transition Property created pursuant to the Texas Electric Choice Plan and the Financing
Order; 
 WHEREAS, the Seller is willing to sell its rights and interests under the Financing Order to the Issuer whereupon such rights and
interests will become the Transition Property; 
 WHEREAS, the Issuer, in order to finance the purchase of the Transition Property, will
issue the Transition Bonds under the Indenture; and 
 WHEREAS, the Issuer, to secure its obligations under the Transition Bonds and the
Indenture, will pledge its right, title and interest in the Transition Property and this Agreement to the Indenture Trustee for the benefit of the Transition Bondholders. 
 NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and intending to be legally bound hereby, the parties hereto agree as follows: 
 ARTICLE I 
 DEFINITIONS

 Section 1.01 Definitions. Capitalized terms used herein and not otherwise defined herein have the meanings assigned to
them in Appendix A to this Agreement. 
 Section 1.02 Other Definitional Provisions. 
 (a) “Agreement” means this Transition Property Sale Agreement, as the same may be amended and supplemented from time to time.

 (b) Non-capitalized terms used herein which are defined in the Texas Electric Choice Plan, as the context requires, have
the meanings assigned to such terms in the Texas Electric Choice Plan, but without giving effect to amendments to the Texas Electric Choice Plan after the date hereof which have a material adverse effect on the Issuer or the Transition Bondholders.

 (c) All terms defined in this Agreement shall have such defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein. 
 (d) The words “hereof,” “herein,”
“hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section, Schedule and Exhibit references contained in this Agreement are
references to Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term “including” shall mean “including without limitation.” 
  

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 (e) The definitions contained in this Agreement are applicable to the singular as well as
the plural forms of such terms. 
 ARTICLE II 
 CONVEYANCE OF THE TRANSITION PROPERTY 
 Section 2.01 Conveyance of the Transition
Property. 
 (a) In consideration of the Issuer’s payment to or upon the order of the Seller of $482,630,539 (the
“Purchase Price”), subject to the satisfaction or waiver of the conditions specified in Section 2.02, the Seller does hereby irrevocably sell, transfer, assign, set over and otherwise convey to the Issuer, without recourse (subject to
the obligations of the Seller herein) or warranty, except as set forth herein, all right, title and interest of the Seller in, to and under the Financing Order as identified in the Bill of Sale delivered pursuant to Section 2.02(i) on or prior
to the Transfer Date whereupon such rights and interests under the Financing Order shall become the Transition Property (such sale, transfer, assignment, setting over and conveyance of the Transition Property to include, to the fullest extent
permitted by the Texas Electric Choice Plan, the right to impose, collect and receive the Transition Charges, as the same may be adjusted from time to time). Such sale, transfer, assignment, setting over and conveyance of the Transition Property is
hereby expressly stated to be a sale or other absolute transfer and, pursuant to Section 39.308 of the Texas Electric Choice Plan and other applicable law, is a true sale and is not a secured transaction and title, legal and equitable, has
passed to the Issuer. The preceding sentence is the statement referred to in Section 39.308 of the Texas Electric Choice Plan. The Seller agrees and confirms that upon payment of the Purchase Price and the execution and delivery of this
Agreement and the Bill of Sale, the sale, transfer and assignment hereunder shall be effective and the Seller shall have no right, title or interest in, to or under the Transition Property. 
 (b) Subject to the satisfaction or waiver of conditions specified in Section 2.02, the Issuer does hereby purchase the Transition
Property from the Seller for the consideration set forth in Section 2.01(a). 
 (c) The Seller and the Issuer each
acknowledge and agree that the purchase price for the Transition Property sold pursuant to this Agreement is equal to its fair market value at the time of sale. 
 (d) Notwithstanding the foregoing, in the event that the sale, transfer, assignment, setting over and conveyance of the Transition
Property is determined by any court of competent jurisdiction not to be a true sale as contemplated by the parties and as provided in Section 39.308 of the Texas Electric Choice Plan, then such sale, transfer, assignment, setting over and
conveyance shall be treated as a pledge of and grant of a security interest in the Transition Property under Section 39.309 of the Texas Electric 

  

 -2- 

 
Choice Plan and under the Uniform Commercial Code as enacted in the State of Texas and each other applicable jurisdiction (the “UCC”), and the
Seller shall be deemed to have granted, and does hereby grant, as of the date hereof, a security interest to the Issuer on behalf of itself and the Indenture Trustee in the Transition Property to secure a payment obligation incurred by the Seller in
the amount paid by the Issuer for the Transition Property. 
 Section 2.02 Conditions to Conveyance of the Transition Property.
The obligation of the Seller to sell, and the obligation of the Issuer to purchase the Transition Property on the Transfer Date shall be subject to and conditioned upon the satisfaction or waiver of each of the following conditions: 
 (i) on or prior to the Transfer Date, the Seller shall deliver to the Issuer a duly executed Bill of Sale identifying the Transition
Property, substantially in the form of Exhibit A hereto; 
 (ii) as of the Transfer Date, the representations and warranties
of the Seller in this Agreement shall be true and correct in all material respects and no material breach by the Seller of its covenants in this Agreement shall exist and the Seller shall have delivered to the Issuer and the Indenture Trustee an
Officer’s Certificate to such effect and no Servicer Default shall have occurred and be continuing; 
 (iii) as of the
Transfer Date: 
 (A) the Issuer shall have sufficient funds available to pay the Purchase Price, and 
 (B) all conditions set forth in the Indenture to the issuance of the Transition Bonds intended to provide such funds shall have been
satisfied or waived; 
 (iv) on or prior to the Transfer Date, the Seller shall have taken all actions required under the
Texas Electric Choice Plan, the Financing Order and other applicable law for the Issuer to have ownership of the Transition Property, free and clear of all Liens other than Liens created by the Issuer pursuant to the Indenture; and the Issuer, or
the Servicer on behalf of the Issuer, shall have taken any action required for the Issuer to grant the Indenture Trustee a first priority perfected security interest in the Trust Estate and maintain such security interest as of such date (including
all actions required under the Texas Electric Choice Plan, the Financing Order and the UCC); 
 (v) the Seller shall have
delivered to each Rating Agency and to the Issuer any Opinions of Counsel requested by the Rating Agencies; 
 (vi) the Seller
shall have delivered to the Indenture Trustee and the Issuer an Officer’s Certificate confirming the satisfaction of each relevant condition precedent specified in this Section 2.02; and 
  

 -3- 

 (vii) the Seller shall have received the Purchase Price in funds immediately available on
the Transfer Date. 
 ARTICLE III 
 REPRESENTATIONS AND WARRANTIES OF SELLER 
 As of the Transfer Date, the Seller makes the following representations and
warranties on which the Issuer has relied and will rely in acquiring the Transition Property. The following representations and warranties are made under existing law as in effect as of the Transfer Date. The Seller shall not be in breach of any
representation or warranty herein as a result of a change in law occurring after the Transfer Date, including by means of legislative enactment, constitutional amendment or voter initiative. The representations and warranties shall survive the sale
of the Transition Property to the Issuer and the pledge thereof on the Transfer Date to the Indenture Trustee pursuant to the Indenture. 
 Section 3.01 Organization and Good Standing. The Seller is a limited liability company duly organized and in good standing under the laws of the State of Texas, with limited liability company power and authority to own its
properties and to conduct its business as currently owned or conducted. 
 Section 3.02 Due Qualification. The Seller is duly
qualified to do business as a foreign limited liability company in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such
qualifications, licenses or approvals (except where the failure to so qualify or obtain such licenses and approvals would not be reasonably likely to have a material adverse effect on the Seller’s business, operations, assets, revenues or
properties). 
 Section 3.03 Power and Authority. The Seller has the limited liability company power and authority to obtain the
Financing Order and to execute and deliver this Agreement and to carry out its terms; the Seller has the limited liability company power and authority to own the rights and interests under the Financing Order, and to sell and assign the rights and
interests under the Financing Order to the Issuer, whereupon (subject to the effectiveness of the Issuance Advice Letter) such rights and interests will become the Transition Property; and the execution, delivery and performance of this Agreement
have been duly authorized by the Seller by all necessary limited liability company action. 
 Section 3.04 Binding Obligation.
This Agreement constitutes a legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, subject to bankruptcy, receivership, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors’ or secured parties’ rights generally from time to time in effect and to general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in
a proceeding in equity or at law. 
 Section 3.05 No Violation. The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not: (i) conflict with or result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a 

  

 -4- 

 
default under, the articles of organization or limited liability company regulations of the Seller, or any indenture, mortgage, credit agreement or other
agreement or instrument to which the Seller is a party or by which it or its properties is bound; (ii) result in the creation or imposition of any Lien upon any of the Seller’s properties pursuant to the terms of any such indenture,
agreement or other instrument (except for any Lien created in favor of the Transition Bondholders pursuant to Section 39.309 of the Texas Electric Choice Plan or any Lien created by the Issuer under the Basic Documents); or (iii) violate
any existing law or any existing order, rule or regulation applicable to the Seller of any Governmental Authority having jurisdiction over the Seller or its properties. 
 Section 3.06 No Proceedings. Except as disclosed in the Issuer’s prospectus dated January 28, 2008 and the related prospectus supplement dated January 29, 2008 relating to the Transition
Bonds (together, the “Prospectus”), there are no proceedings pending and, to the Seller’s knowledge, (x) there are no proceedings threatened and (y) there are no investigations pending or threatened before any Governmental
Authority having jurisdiction over the Seller or its properties involving or relating to the Seller or the Issuer or, to the Seller’s knowledge, any other Person: 
 (i) asserting the invalidity of this Agreement, any of the other Basic Documents, the Transition Bonds, the Texas Electric Choice Plan or
the Financing Order; 
 (ii) seeking to prevent the issuance of the Transition Bonds or the consummation of any of the
transactions contemplated by this Agreement or any of the other Basic Documents; 
 (iii) seeking any determination or ruling
that could reasonably be expected to materially and adversely affect the performance by the Seller of its obligations under, or the validity or enforceability of, this Agreement, any of the other Basic Documents or the Transition Bonds; or

 (iv) challenging the Seller’s treatment of the Transition Bonds as debt of CenterPoint Energy, Inc. for federal or
state income, gross receipts or franchise tax purposes. 
 Section 3.07 Approvals. Except for filings under the UCC and the Texas
Electric Choice Plan, no approval, authorization, consent, order or other action of, or filing with, any Governmental Authority is required under an applicable law, rule or regulation in connection with the execution and delivery by the Seller of
this Agreement, the performance by the Seller of the transactions contemplated hereby or the fulfillment by the Seller of the terms hereof, except those that have been obtained or made and those that the Seller, in its capacity as Servicer under the
Servicing Agreement, is required to make in the future pursuant to the Servicing Agreement. 
 Section 3.08 The Transition
Property. 
 (a) Information. Subject to Section 3.14, all written information, as amended or supplemented from time
to time prior to the date this representation is made, provided by the Seller to the Issuer with respect to the Transition Property (including the Financing Order and the Issuance Advice Letter) is correct in all material respects. 
  

 -5- 

 (b) Effect of Transfer. It is the intention of the parties hereto that (other than for
United States federal income tax purposes and, to the extent consistent with applicable state tax laws, state income and franchise tax purposes) the sale, transfer, assignment, setting over and conveyance herein contemplated constitutes a sale or
other absolute transfer of all right, title and interest of the Seller in, to and under the Financing Order from the Seller to the Issuer whereupon (subject to the effectiveness of the Issuance Advice Letter) such rights and interests shall become
the Transition Property; upon execution and delivery of this Agreement and the Bill of Sale and payment of the Purchase Price, the Seller will have no right, title or interest in, to or under the Transition Property; and that such Transition
Property would not be a part of the estate of the Seller as debtor in the event of the filing of a bankruptcy petition by or against the Seller under any bankruptcy law. 
 (c) Transfer Filings. 
 (i) The Seller is the sole owner of the rights and interests under the Financing Order to be sold to the Issuer on the Transfer Date. 
 (ii) On the Transfer Date, immediately upon the sale hereunder, the Transition Property will have been validly sold, assigned, transferred, set over and conveyed to the Issuer free and clear of all Liens (except for
any Lien created in favor of the Transition Bondholders pursuant to Section 39.309 of the Texas Electric Choice Plan or any Lien created by the Issuer under the Basic Documents). 
 (iii) All actions or filings (including filings with the Texas Secretary of State in accordance with the rules prescribed under the Texas
Electric Choice Plan and the UCC) necessary in any jurisdiction to give the Issuer a perfected ownership interest (subject to any Lien created in favor of the Transition Bondholders pursuant to Section 39.309 of the Texas Electric Choice Plan
or any Lien created by the Issuer under the Basic Documents) in the Transition Property and to grant to the Indenture Trustee a first priority perfected security interest in the Transition Property, free and clear of all Liens of the Seller or
anyone else (except for any Lien created in favor of the Transition Bondholders pursuant to Section 39.309 of the Texas Electric Choice Plan or any Lien created by the Issuer under the Basic Documents), have been taken or made. 
 Section 3.09 Solvency. After giving effect to the sale of the Transition Property hereunder, the Seller: 
 (i) is solvent and expects to remain solvent, 
 (ii) is adequately capitalized to conduct its business and affairs considering its size and the nature of its business and intended
purposes, 
 (iii) is not engaged and does not expect to engage in a business for which its remaining property represents an
unreasonably small portion of its capital, 
  

 -6- 

 (iv) reasonably believes that it will be able to pay its debts as they come due, and

 (v) is able to pay its debts as they come due and does not intend to incur, or believes that it will incur, indebtedness
that it will not be able to repay at its maturity. 
 Section 3.10 The Financing Order. 
 (a) The Financing Order was issued by the Texas Commission on September 18, 2007 in accordance with the Texas Electric Choice Plan;
the Financing Order and the process by which it was issued comply with all applicable laws, rules and regulations of the State of Texas and the federal laws of the United States, and the Financing Order is final, non-appealable and in full force and
effect. 
 (b) As of the date of issuance of the Transition Bonds, the Transition Bonds will be entitled to the protections
provided by the Texas Electric Choice Plan and the Financing Order, and the Financing Order and the Transition Charges authorized therein will have become irrevocable and not subject to reduction, impairment or adjustment by further action of the
Texas Commission, except as permitted by Section 39.307 of the Texas Electric Choice Plan, and the Issuance Advice Letter has been filed in accordance with the Financing Order. The Texas Commission has not issued any order prior to noon on the
fourth business day after submission of the Issuance Advice Letter that the Transition Bonds do not comply with Ordering Paragraph Five of the Financing Order and the initial Transition Charges and the final terms of the Transition Bonds set forth
in the Issuance Advice Letter have become effective. 
 Section 3.11 State Action. 
 (a) Under the Texas Electric Choice Plan, the State of Texas has pledged that it will not take or permit any action that would impair the
value of the Transition Property or, except as permitted in Section 39.307 of the Texas Electric Choice Plan, reduce, alter or impair the Transition Charges until the principal, interest and premium, if any, and any other charges incurred and
contracts to be performed in connection with the Transition Bonds, have been paid and performed in full. 
 (b) Under the laws
of the State of Texas and the federal laws of the United States, the State of Texas could not constitutionally take any action of a legislative character, including the repeal or amendment of the Texas Electric Choice Plan, which would substantially
limit, alter or impair the Transition Property or other rights vested in the Transition Bondholders pursuant to the Financing Order, or substantially limit, alter, impair or reduce the value or amount of the Transition Property, unless such action
is a reasonable exercise of the State of Texas’ sovereign powers and of a character reasonable and appropriate to the important public purpose justifying such action, and, under the takings clauses of the State of Texas and United States
Constitutions, the State of Texas could not repeal or amend the Texas Electric Choice Plan or take any other action in contravention of its pledge quoted above without paying just compensation to the Transition Bondholders, as determined by a court
of competent jurisdiction, if doing so 

  

 -7- 

 
would constitute a permanent appropriation of a substantial property interest of the Transition Bondholders in the Transition Property and deprive the
Transition Bondholders of their reasonable expectations arising from their investments in the Transition Bonds; however, there is no assurance that, even if a court were to award just compensation, it would be sufficient to pay the full amount of
principal of and interest on the Transition Bonds. 
 Section 3.12 No Court Order. There is no order by any court providing for
the revocation, alteration, limitation or other impairment of the Texas Electric Choice Plan, the Financing Order, the Issuance Advice Letter, the Transition Property or the Transition Charges or any rights arising under any of them or that seeks to
enjoin the performance of any obligations under the Financing Order. 
 Section 3.13 Approvals Concerning the Transition
Property. Under the laws of the State of Texas and the federal laws of the United States, no other approval, authorization, consent, order or other action of, or filing with any Governmental Authority is required in connection with the creation
or transfer of the Seller’s rights and interests under the Financing Order and the Issuer’s purchase of the Transition Property from the Seller, except those that have been obtained or made. 
 Section 3.14 Assumptions. Based on information available to the Seller on the date hereof, the assumptions used in calculating the Transition
Charges in the Issuance Advice Letter are reasonable and made in good faith; however, notwithstanding the foregoing, THE SELLER MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, THAT AMOUNTS ACTUALLY COLLECTED ARISING FROM THE
TRANSITION CHARGES WILL IN FACT BE SUFFICIENT TO MEET THE PAYMENT
OBLIGATIONS ON THE TRANSITION BONDS OR THAT THE ASSUMPTIONS USED IN
CALCULATING SUCH TRANSITION CHARGES WILL IN FACT BE REALIZED. 
 Section 3.15 Creation of the Transition Property. 
 (a) Upon the effectiveness of the Issuance Advice Letter, the transfer of the Seller’s rights and interests under the Financing Order
related to the Transition Bonds and the Issuer’s purchase of the Transition Property from the Seller pursuant to this Agreement, the Transition Property will constitute a present property right. 
 (b) Upon the effectiveness of the Issuance Advice Letter, the transfer of the Seller’s rights and interests under the Financing Order
and the Issuer’s purchase of the Transition Property from the Seller pursuant to this Agreement, the Transition Property includes: 
  

	 	(1)	the right to impose, collect and receive the Transition Charges, including the right to receive Transition Charges in amounts and at times sufficient to pay principal and interest
on the Transition Bonds, 

  

	 	(2)	all rights and interest of the Seller under the Financing Order, 

  

 -8- 

	 	(3)	the rights to file for periodic adjustments of the Transition Charges as provided in the Financing Order, and 

  

	 	(4)	all revenues and collections resulting from the Transition Charges. 

 (c) Upon the effectiveness of the Issuance Advice Letter, the transfer of the Seller’s rights and interests under the Financing Order and the Issuer’s purchase of the Transition Property from the Seller on
such Transfer Date pursuant to this Agreement, the Transition Property will not be subject to any Lien created by a previous indenture. 
 Section 3.16 Prospectus. As of the date hereof, the information describing the Seller under the caption “The Seller, Initial Servicer and Sponsor of the Transition Property” in the Prospectus is true and correct in all
material respects. 
 Section 3.17 Nature of Representations and Warranties. The representations and warranties set forth in
Section 3.08 and Section 3.10 through Section 3.16, insofar as they involve conclusions of law, are made not on the basis that the Seller purports to be a legal expert or to be rendering legal advice, but rather to reflect the
parties’ good faith understanding of the legal basis on which the parties are entering into this Agreement and the other Basic Documents and the basis on which the Transition Bondholders are purchasing the Transition Bonds, and to reflect the
parties’ agreement that, if such understanding turns out to be incorrect or inaccurate, the Seller will be obligated to indemnify the Issuer and its permitted assigns (to the extent required by and in accordance with Section 5.01), and
that the Issuer and its permitted assigns will be entitled to enforce any rights and remedies under the Basic Documents on account of such inaccuracy to the same extent as if the Seller had breached any other representations or warranties hereunder.

 ARTICLE IV 
 COVENANTS OF THE SELLER 
 Section 4.01 Seller’s Existence. Subject to Section 5.02, so long as any of
the Transition Bonds are outstanding, the Seller (i) shall keep in full force and effect its existence and remain in good standing under the laws of the state of its organization, and shall obtain and preserve its qualification to do business
in each jurisdiction in which such qualification is or will be necessary to protect the validity and enforceability of this Agreement and each other instrument or agreement to which the Seller is a party necessary to the proper administration of
this Agreement and the transactions contemplated hereby and (ii) hereby agrees to continue to operate its transmission and distribution system in order to provide electric services to retail electric customers in the Seller’s certificated
service area, provided that this clause (ii) shall not prohibit Seller from selling, assigning or otherwise divesting its transmission and distribution system or any part thereof in accordance with this Agreement and the Financing Order.

 Section 4.02 No Liens or Conveyances. Except for the conveyances hereunder or any Lien under Section 39.309 of the Texas
Electric Choice Plan for the benefit of the Issuer, the Indenture Trustee and the Transition Bondholders, the Seller shall not sell, pledge, assign or transfer to any other Person, or grant, create, incur, assume or suffer to exist any Lien on, any
of 

  

 -9- 

 
the Transition Property, whether now existing or hereafter created, or any interest therein. The Seller shall not at any time assert any Lien against or with
respect to the Transition Property, and shall defend the right, title and interest of the Issuer and the Indenture Trustee, as assignee of the Issuer, in, to and under the Transition Property against all claims of third parties claiming through or
under the Seller. 
 Section 4.03 Delivery of Collections. In the event that the Seller receives any payment under the terms and
provisions of the Intercreditor Agreement in respect of the Transition Charges or the proceeds thereof other than in its capacity as the Servicer, the Seller shall pay the Servicer all payments received by the Seller in respect thereof, in
accordance with the Intercreditor Agreement, as soon as practicable after receipt thereof by the Seller. 
 Section 4.04 Notice of
Liens. The Seller shall notify the Issuer and the Indenture Trustee promptly after becoming aware of any Lien on the Transition Property, other than the conveyance hereunder, any Lien created in favor of the Transition Bondholders pursuant to
Section 39.309 of the Texas Electric Choice Plan or any Lien created by the Issuer under the Indenture. 
 Section 4.05
Compliance With Law. The Seller shall comply with its organizational or governing documents and all laws, treaties, rules, regulations and determinations of any Governmental Authority applicable to the Seller, except to the extent that
failure to so comply would not materially adversely affect the Issuer’s or the Indenture Trustee’s interests in the Transition Property or under any of the Basic Documents or the Seller’s performance of its obligations hereunder.

 Section 4.06 Covenants Related to the Transition Property. 
 (a) So long as any of the Transition Bonds are outstanding, the Seller shall: 
 (i) treat the Transition Bonds as debt of the Issuer and not of the Seller, except for financial reporting or tax purposes, 
 (ii) disclose in its financial statements that it is not the owner of the Transition Property and that the assets of the Issuer are not
available to pay creditors of the Seller or any of its Affiliates (other than the Issuer), 
 (iii) disclose the effects of
all transactions between the Seller and the Issuer in accordance with generally accepted accounting principles, and 
 (iv)
not own or purchase any Transition Bonds. 
 (b) So long as any of the Transition Bonds is outstanding, 
 (i) in all proceedings relating directly or indirectly to the Transition Property, the Seller shall: (A) affirmatively certify and
confirm that it has sold all of its rights and interests under the Financing Order to the Issuer (other than for financial reporting or tax purposes), and (B) not make any statement or reference in respect of the Transition Property that is
inconsistent with the ownership thereof by the Issuer (other than for financial reporting or tax purposes); and 
  

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 (ii) the Seller shall not take any action in respect of the Transition Property except
solely in its capacity as the Servicer thereof pursuant to the Servicing Agreement or as contemplated by the Basic Documents, including the Intercreditor Agreement. 
 (c) The Seller agrees that upon the sale by the Seller of all of its rights and interests under the Financing Order to the Issuer pursuant
to this Agreement, any payment to the Servicer by any Person responsible for remitting Transition Charges to the Servicer under the terms of the Financing Order or the Texas Electric Choice Plan or applicable tariff shall discharge such
Person’s obligations in respect of the Transition Property to the extent of such payment, notwithstanding any objection or direction to the contrary by the Seller. 
 Section 4.07 Protection of Title. The Seller shall execute and file such filings, and cause to be executed and filed such filings, in such manner and in such places as may be required by law fully to
preserve, maintain and protect the interests of the Issuer and the Indenture Trustee in the Transition Property, including all filings required under the Texas Electric Choice Plan and the UCC relating to the transfer of the ownership of the rights
and interests under the Financing Order by the Seller to the Issuer and the pledge of the Transition Property by the Issuer to the Indenture Trustee. The Seller shall deliver (or cause to be delivered) to the Issuer and the Indenture Trustee
file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. The Seller shall institute any action or proceeding reasonably necessary to compel performance by the Texas Commission
or the State of Texas of any of their obligations or duties under the Texas Electric Choice Plan, the Financing Order or the Issuance Advice Letter relating to the transfer of the rights and interests under the Financing Order by the Seller to the
Issuer, and the Seller agrees to take such legal or administrative actions, including defending against or instituting and pursuing legal actions and appearing or testifying at hearings or similar proceedings, in each case as may be reasonably
necessary: 
 (a) to protect the Issuer and the Transition Bondholders from claims, state actions or other actions or
proceedings of third parties which, if successfully pursued, would result in a breach of any representation set forth in Article III; or 
 (b) so long as the Seller is also the Servicer, to block or overturn any attempts to cause a repeal of, modification of or supplement to the Texas Electric Choice Plan, the Financing Order, the Issuance Advice Letter
or the rights of Transition Bondholders by legislative enactment or constitutional amendment that would be materially adverse to the Issuer, the Indenture Trustee or the Transition Bondholders. 
 The costs of any such actions or proceedings shall be reimbursed by the Issuer to the Seller from amounts on deposit in the Collection Account as an Operating Expense
(as such terms are defined in the Indenture) in accordance with the terms of the Indenture. The Seller’s obligations pursuant to this Section 4.07 shall survive and continue notwithstanding that the payment of 

  

 -11- 

 
Operating Expenses pursuant to the Indenture may be delayed (it being understood that the Seller may be required to advance its own funds to satisfy its
obligation hereunder). The Seller designates the Issuer as its agent and attorney-in-fact to execute any filings of financing statements, continuation statements or other instruments required of the Seller pursuant to this Section 4.07, it
being understood that the Issuer shall have no obligation to execute any such instruments. 
 Section 4.08 Taxes. So long as any
of the Transition Bonds is outstanding, the Seller shall pay all material taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, businesses, income or property before
any penalty accrues thereon if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a Lien on the Transition Property; provided that no
such tax need be paid if the Seller or any of its Affiliates is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if the Seller or such Affiliate has established appropriate reserves as
shall be required in conformity with generally accepted accounting principles. 
 Section 4.09 Filings Pursuant to Financing
Order. The Seller shall comply with all filing requirements imposed upon the Seller in its capacity as such by the Financing Order, including making any such post-closing filings. 
 ARTICLE V 
 ADDITIONAL UNDERTAKINGS OF SELLER 
 The Seller hereby undertakes the obligations contained in this Article V and acknowledges that the Issuer shall have the right to assign its rights with
respect to such obligations to the Indenture Trustee for the benefit of the Transition Bondholders. 
 SECTION 5.01
LIABILITY OF THE SELLER; INDEMNITIES. 
 (a)
THE SELLER SHALL BE LIABLE IN ACCORDANCE HEREWITH ONLY TO THE
EXTENT OF THE OBLIGATIONS SPECIFICALLY UNDERTAKEN BY THE SELLER UNDER THIS
AGREEMENT. 
 (b) THE SELLER SHALL INDEMNIFY
THE ISSUER AND THE INDENTURE TRUSTEE, FOR ITSELF AND ON BEHALF OF
THE TRANSITION BONDHOLDERS, AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
MANAGERS, EMPLOYEES AND AGENTS FOR, AND DEFEND AND HOLD HARMLESS EACH
SUCH PERSON FROM AND AGAINST, ANY AND ALL TAXES (OTHER THAN ANY
TAXES IMPOSED ON TRANSITION BONDHOLDERS SOLELY AS A RESULT OF THEIR
OWNERSHIP OF TRANSITION BONDS) THAT MAY AT ANY TIME BE IMPOSED ON
OR ASSERTED AGAINST ANY SUCH PERSON UNDER EXISTING LAW AS OF THE
TRANSFER DATE AS A RESULT OF THE SALE AND ASSIGNMENT OF THE
SELLER’S RIGHTS AND INTERESTS UNDER THE FINANCING ORDER BY THE
SELLER TO THE ISSUER, THE ACQUISITION OR HOLDING OF THE TRANSITION
PROPERTY BY THE ISSUER OR THE ISSUANCE AND SALE BY THE ISSUER
OF THE TRANSITION BONDS, INCLUDING ANY SALES, GROSS RECEIPTS, TANGIBLE PERSONAL
PROPERTY, PRIVILEGE, 

  

 -12- 

 
FRANCHISE OR LICENSE TAXES, BUT EXCLUDING ANY
TAXES IMPOSED AS A RESULT OF A FAILURE OF SUCH PERSON TO
PROPERLY WITHHOLD OR REMIT TAXES IMPOSED WITH RESPECT TO PAYMENTS ON
ANY TRANSITION BOND, IN THE EVENT AND TO THE EXTENT SUCH TAXES
ARE NOT RECOVERABLE AS QUALIFIED COSTS, IT BEING UNDERSTOOD THAT THE
TRANSITION BONDHOLDERS SHALL BE ENTITLED TO ENFORCE THEIR RIGHTS AGAINST THE
SELLER UNDER THIS SECTION 5.01(B) SOLELY THROUGH A CAUSE OF ACTION
BROUGHT FOR THEIR BENEFIT BY THE INDENTURE TRUSTEE IN ACCORDANCE WITH
THE TERMS OF THE INDENTURE. 
 (c)
THE SELLER SHALL INDEMNIFY THE ISSUER AND THE INDENTURE TRUSTEE, FOR
ITSELF AND ON BEHALF OF THE TRANSITION BONDHOLDERS, AND EACH OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, MANAGERS, EMPLOYEES AND AGENTS FOR, AND DEFEND AND
HOLD HARMLESS EACH SUCH PERSON FROM AND AGAINST, ANY AND ALL AMOUNTS
OF PRINCIPAL OF AND INTEREST ON THE TRANSITION BONDS NOT PAID WHEN
DUE OR WHEN SCHEDULED TO BE PAID IN ACCORDANCE WITH THEIR TERMS
AND THE AMOUNT OF ANY DEPOSITS TO THE ISSUER REQUIRED TO HAVE
BEEN MADE IN ACCORDANCE WITH THE TERMS OF THE BASIC DOCUMENTS WHICH
ARE NOT MADE WHEN SO REQUIRED, IN EACH CASE AS A RESULT
OF THE SELLER’S BREACH OF ANY OF ITS REPRESENTATIONS, WARRANTIES
OR COVENANTS CONTAINED IN THIS AGREEMENT. 
 (d) THE SELLER SHALL INDEMNIFY THE ISSUER AND THE INDENTURE
TRUSTEE, FOR ITSELF AND ON BEHALF OF THE TRANSITION BONDHOLDERS, AND
EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, MANAGERS, EMPLOYEES AND AGENTS FOR,
AND DEFEND AND HOLD HARMLESS EACH SUCH PERSON FROM AND AGAINST, ANY
AND ALL LIABILITIES, OBLIGATIONS, CLAIMS, ACTIONS, SUITS OR PAYMENTS OF ANY
KIND WHATSOEVER THAT MAY BE IMPOSED ON OR ASSERTED AGAINST ANY SUCH
PERSON (OTHER THAN ANY LIABILITIES, OBLIGATIONS OR CLAIMS FOR OR PAYMENTS
OF PRINCIPAL OF OR INTEREST ON THE TRANSITION BONDS) TOGETHER WITH
ANY REASONABLE COSTS AND EXPENSES INCURRED BY SUCH PERSON, IN EACH
CASE AS A RESULT OF THE SELLER’S BREACH OF ANY OF
ITS REPRESENTATIONS, WARRANTIES OR COVENANTS CONTAINED IN THIS AGREEMENT. 
 (e) THE INDEMNIFICATION OBLIGATIONS OF THE
SELLER UNDER THIS SECTION 5.01 SHALL RANK PARI PASSU WITH ALL
OTHER GENERAL UNSECURED OBLIGATIONS OF THE SELLER. 
 (f) INDEMNIFICATION UNDER THIS SECTION 5.01
SHALL SURVIVE THE RESIGNATION OR REMOVAL OF THE INDENTURE TRUSTEE AND
THE TERMINATION OF THIS AGREEMENT AND SHALL INCLUDE REASONABLE FEES AND
EXPENSES OF INVESTIGATION AND LITIGATION (INCLUDING REASONABLE ATTORNEYS’ FEES AND
EXPENSES). THE SELLER SHALL NOT INDEMNIFY ANY PARTY UNDER THIS SECTION 5.01
FOR ANY CHANGES IN LAW AFTER THE TRANSFER DATE, INCLUDING BY MEANS
OF LEGISLATIVE ENACTMENT, CONSTITUTIONAL AMENDMENT OR VOTER INITIATIVE, OR FOR ANY
LIABILITY RESULTING SOLELY FROM A DOWNGRADE IN ANY RATING OF THE
TRANSITION BONDS BY ANY RATING AGENCY. THE SELLER SHALL NOT INDEMNIFY
THE INDENTURE TRUSTEE OR ITS OFFICERS, DIRECTORS, MANAGERS, EMPLOYEES OR AGENTS
UNDER THIS SECTION 5.01 AGAINST ANY LIABILITY, OBLIGATION, CLAIM, ACTION, SUIT
OR PAYMENT OF ANY KIND ARISING OUT OF THE WILLFUL MISCONDUCT,
NEGLIGENCE OR BAD FAITH OF ANY SUCH PERSON. 
  

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 NOTWITHSTANDING THE FOREGOING, IN NO
EVENT SHALL ANY SUCH FOREGOING INDEMNITY EXTEND TO THE COLLECTIBILITY OF
THE TRANSITION CHARGES FROM ANY PERSON RESPONSIBLE FOR REMITTING TRANSITION CHARGES
TO THE SERVICER UNDER THE TERMS OF THE FINANCING ORDER, THE TEXAS
ELECTRIC CHOICE PLAN OR AN APPLICABLE TARIFF, OR THE CREDITWORTHINESS OF
ANY SUCH PERSON. THE REMEDIES PROVIDED IN THIS AGREEMENT ARE THE SOLE
AND EXCLUSIVE REMEDIES AGAINST THE SELLER FOR BREACH OF ITS REPRESENTATIONS,
WARRANTIES OR COVENANTS IN THIS AGREEMENT. 
 Section 5.02 Merger or Consolidation of, or Assumption of the Obligations of, the Seller. 
 Any Person: 
 (a) into which the Seller may be merged, converted or consolidated and which succeeds to all or substantially all of the electric
transmission and distribution business of the Seller (or, if the transmission and distribution business is split, which provides distribution service directly to a majority of the retail electric customers in the Seller’s certificated service
area as it existed on May 1, 1999), 
 (b) which results from the division of the Seller into two or more Persons and
which succeeds to all or substantially all of the electric transmission and distribution business of the Seller (or, if the transmission and distribution business is split, which provides distribution service directly to a majority of the retail
electric customers in the Seller’s certificated service area as it existed on May 1, 1999), 
 (c) which may result
from any merger, conversion or consolidation to which the Seller shall be a party and which succeeds to all or substantially all of the electric transmission and distribution business of the Seller (or, if the transmission and distribution business
is split, which provides distribution service directly to a majority of the retail electric customers in the Seller’s certificated service area as it existed on May 1, 1999), 
 (d) which may purchase or otherwise succeed to the properties and assets of the Seller substantially as a whole and which purchases or
otherwise succeeds to all or substantially all of the electric transmission and distribution business of the Seller (or, if the transmission and distribution business is split, which provides distribution service directly to a majority of the retail
electric customers in the Seller’s certificated service area as it existed on May 1, 1999), or 
 (e) which may
otherwise purchase or succeed to all or substantially all of the electric transmission and distribution business of the Seller (or, if the transmission and distribution business is split, which provides distribution service directly to a majority of
the retail electric customers in the Seller’s certificated service area as it existed on May 1, 1999), 
  

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 which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Seller
under this Agreement, shall be the successor to the Seller hereunder without the execution or filing of any document or any further act by any of the parties to this Agreement; provided, however, that 
 (i) immediately after giving effect to such transaction, no representation or warranty made pursuant to Article III shall have been
breached in any material respect and no Servicer Default, and no event that, after notice or lapse of time, or both, would become a Servicer Default, shall have occurred and be continuing, 
 (ii) the Rating Agencies shall have received prior written notice of such transaction, 
 (iii) the Seller shall have delivered to the Issuer and the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel each
stating that such consolidation, conversion, merger, division or succession and such agreement of assumption comply with this Section 5.02 and that all conditions precedent, if any, provided for in this Agreement relating to such transaction
have been complied with, 
 (iv) the Seller shall have delivered to the Issuer and the Indenture Trustee an Opinion of Counsel
either 
 (A) stating that, in the opinion of such counsel, all filings to be made by the Seller, including filings with the
Texas Commission pursuant to the Texas Electric Choice Plan and the UCC, that are necessary fully to preserve and protect the respective interests of the Issuer and the Indenture Trustee in the Transition Property have been executed and filed, and
reciting the details of such filings, or 
 (B) stating that, in the opinion of such counsel, no such action is necessary to
preserve and protect such interests, and 
 (v) the Seller shall have delivered to the Issuer, the Indenture Trustee and the
Rating Agencies an opinion of independent tax counsel (as selected by, and in form and substance satisfactory to the Seller, and which may be based on a ruling from the Internal Revenue Service) to the effect that, for federal income tax purposes,
such transaction will not result in a material adverse federal income tax consequence to the Issuer, the Indenture Trustee or the Transition Bondholders. 
 The Seller shall not consummate any transaction referred to in clauses (a), (b), (c), (d) or (e) above except upon execution of the above described agreement of assumption and compliance with clauses (i), (ii), (iii),
(iv) and (v) above. When any Person acquires the properties and assets of the Seller substantially as a whole and succeeds to all or substantially all of the electric transmission and distribution business of the Seller (or, if the
transmission and distribution business is split, which provides distribution service directly to a majority of the retail electric customers in the Seller’s certificated service area as it existed on May 1, 1999), or otherwise becomes the
successor to the Seller in accordance with the terms of this Section 5.02, then upon the satisfaction of all of the other conditions of this Section 5.02, the Seller shall automatically and without further notice be released from its
obligations hereunder. 
  

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 Section 5.03 Limitation on Liability of the Seller and Others. The Seller and any manager,
officer, employee or agent of the Seller may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person, respecting any matters arising hereunder. Subject to
Section 4.07, the Seller shall not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its obligations under this Agreement, and that in its opinion may involve it in any expense or liability.

 ARTICLE VI 
 MISCELLANEOUS PROVISIONS 
 Section 6.01 Amendment. 
 (a) This Agreement may be amended in writing by the Seller and the Issuer, provided that (i) the Rating Agency Condition has been
satisfied in connection therewith, (ii) the Indenture Trustee has consented thereto and (iii) in the case of any amendment that increases ongoing qualified costs as defined in the Financing Order, the Texas Commission has consented thereto
or shall be conclusively deemed to have consented thereto. Promptly after the execution of any such amendment or consent, the Issuer shall furnish written notification of the substance of such amendment or consent to each of the Rating Agencies.
With respect to the Texas Commission’s consent to any amendment to this Agreement, 
 (i) the Seller may request the
consent of the Texas Commission by delivering to the Texas Commission’s executive director and general counsel a written request for such consent, which request shall contain: 
 (A) a reference to Docket No. 34448 and a statement as to the possible effect of the amendment on ongoing qualified costs;

 (B) an Officer’s Certificate stating that the proposed amendment has been approved by all relevant parties; and

 (C) a statement identifying the person to whom the Texas Commission or its staff is to address its consent to the proposed
amendment or request additional time; 
 (ii) The Texas Commission shall, within 30 days of receiving the request for consent
complying with Section 6.01(a)(i) above, either 
 (A) provide notice of its consent or lack of consent to the person
specified in Section 6.01(a)(i)(C) above, or 
 (B) be conclusively deemed to have consented to the proposed amendment,

  

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 unless, within 30 days of receiving the request for consent complying with Section 6.01(a)(i) above,
the Texas Commission or its staff delivers to the office of the person specified in Section 6.01(a)(i)(C) above a written statement requesting an additional amount of time not to exceed 30 days in which to consider whether to consent to the
proposed amendment. If the Texas Commission or its staff requests an extension of time in the manner set forth in the preceding sentence, then the Texas Commission shall either provide notice of its consent or lack of consent to the person specified
in 6.01(a)(i)(C) above no later than the last day of such extension of time or be conclusively deemed to have consented to the proposed amendment as of the last day of such extension of time. 
 Any amendment requiring the consent of the Texas Commission as provided in this Section 6.01(a) shall become effective on the later of (i) the
date proposed by the parties to such amendment and (ii) the first day after the expiration of the 30 day period provided for in Section 6.01(a)(ii), or, if such period has been extended pursuant thereto, the first day after the expiration
of such period as so extended. 
 (b) Prior to the execution of any amendment to this Agreement, the Issuer and the Indenture
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement. The Issuer and the Indenture Trustee may, but shall not be obligated to, enter into
any such amendment that affects their own rights, duties or immunities under this Agreement or otherwise. Following delivery of a notice to the Texas Commission by the Seller under Section 6.01(a) above, the Seller and Issuer may at any time
withdraw from the Texas Commission further consideration of any notification of a proposed amendment. 
 Section 6.02 Notices.
Unless otherwise specifically provided herein, all demands, notices and communications upon or to the Seller, the Issuer, the Indenture Trustee, the Texas Commission or the Rating Agencies under this Agreement shall be in writing, delivered
personally, via facsimile, reputable overnight courier or by certified mail, return-receipt requested, and shall be deemed to have been duly given upon receipt 
 (a) in the case of the Seller, to CenterPoint Energy Houston Electric, LLC, 1111 Louisiana Street, Houston, Texas 77002, Attention:
Treasurer, 
 (b) in the case of the Issuer, to CenterPoint Energy Transition Bond Company III, LLC, 1111 Louisiana Street,
Suite 4689A, Houston, Texas 77002, Attention: Manager, 
 (c) in the case of Moody’s, to Moody’s Investors Service,
Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007, 
 (d) in the case of Standard &
Poor’s, to Standard & Poor’s, a Division of the McGraw-Hill Companies, 55 Water Street, New York, New York 10041, Attention: Asset Backed Surveillance Department, 
  

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 (e) in the case of Fitch, to Fitch Ratings, 1 State Street Plaza, New York, New York
10004, Attention: ABS Surveillance, 
 (f) in the case the Indenture Trustee, at the address provided for notices or
communications to the Indenture Trustee in the Indenture, and 
 (g) in the case of the Texas Commission, to 1701 N. Congress
Avenue, Austin, Texas 78711-3326, Attention: Executive Director and General Counsel; 
 or, as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties. 
 Section 6.03 Assignment by the Seller. Notwithstanding anything to the
contrary contained herein, except as provided in Section 5.02, this Agreement may not be assigned by the Seller. 
 Section 6.04
Assignment to the Indenture Trustee. The Seller hereby acknowledges and consents to any pledge, assignment and grant of a security interest by the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of the Transition
Bondholders of all right, title and interest of the Issuer in, to and under the Transition Property and the proceeds thereof and the assignment of any or all of the Issuer’s rights hereunder to the Indenture Trustee. Notwithstanding such
assignment, in no event shall the Indenture Trustee have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer hereunder or in any of the certificates, notices or agreements delivered pursuant
hereto, as to all of which recourse shall be had solely to the assets of the Issuer. 
 Section 6.05 Limitations on Rights of
Others. The provisions of this Agreement are solely for the benefit of the Seller, the Issuer and the Indenture Trustee, on behalf of itself and the Transition Bondholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or claim in the Trust Estate or under or in respect of this Agreement or any covenants, conditions or provisions contained herein. 
 Section 6.06 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction. 
 Section 6.07 Separate Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 
 Section 6.08 Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof. 
  

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 Section 6.09 Governing Law. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS. 
 Section 6.10
Nonpetition Covenants. (a) Notwithstanding any prior termination of this Agreement or the Indenture, the Seller shall not, prior to the date which is one year and one day after the termination of the Indenture, petition or otherwise
invoke or cause the Issuer to invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against the Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of the property of the Issuer, or ordering the winding-up or liquidation of the affairs of the Issuer. 
 (b) Notwithstanding any prior termination of this Agreement or the Indenture, the Issuer shall not, prior to the date which is one year and one day after
the termination of the Indenture, petition or otherwise invoke or cause the Seller to invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against the Seller under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Seller or any substantial part of the property of the Seller, or ordering the winding-up or liquidation of
the affairs of the Seller. 
 [Rest of page intentionally left blank] 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of
the day and year first above written. 
  

			
	 CENTERPOINT ENERGY TRANSITION BOND COMPANY III, LLC,
 as Issuer,

		
	By:	 	 /s/ Marc Kilbride

	Name:	 	Marc Kilbride
	Title:	 	Manager
	
	 CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC,
 as Seller,

		
	By:	 	 /s/ Marc Kilbride

	Name:	 	Marc Kilbride
	Title:	 	Vice President and Treasurer

  

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 APPENDIX A - DEFINITIONS 
 The definitions contained in this Appendix A are applicable to the singular as well as the plural forms of such terms. 
 “Administration Agreement” means the Administration Agreement, dated as of February 12, 2008, between the Issuer and the Seller, as the same may be amended and supplemented from time to time.

 “Affiliate” means, with respect to any specified Person, any other Person controlling or controlled by or under common control
with such specified Person. For the purposes of this definition, control, when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms controlling and controlled have meanings correlative to the foregoing. 
 “Agreement” or this “Sale Agreement” means this Transition Property Sale Agreement, as the same may be amended and supplemented from time to time. 
 “Basic Documents” means the Certificate of Formation of the Issuer which was filed with the Secretary of State of the State of Delaware on
August 30, 2007, as amended and restated on February 11, 2008, the Amended and Restated Limited Liability Company Agreement of the Issuer dated as of February 12, 2008, this Sale Agreement, the Bill of Sale, the Servicing Agreement,
the Intercreditor Agreement, the Administration Agreement, the Indenture and the Series Supplement. 
 “Bill of Sale” means the
Bill of Sale, dated as of February 12, 2008, issued by the Seller to the Issuer pursuant to the Sale Agreement evidencing the sale of the Transition Property by the Seller to the Issuer. 
 “Business Day” means any day other than a Saturday or Sunday or a day on which banking institutions in the City of Houston, Texas, or in the
City of New York, New York, are required or authorized by law or executive order to remain closed. 
 “CenterPoint Houston” means
CenterPoint Energy Houston Electric, LLC, a Texas limited liability company, or its successor. 
 “Financing Order” means the
Financing Order issued by the Texas Commission on September 18, 2007 in Docket No. 34448 pursuant to the Texas Electric Choice Plan. 
 “Fitch” means Fitch Ratings, or its successor. 
 “Governmental Authority” means any court or any federal or
state regulatory body, administrative agency or governmental instrumentality. 
 “Indenture” means the Indenture, dated as of
February 12, 2008, among the Issuer and the Indenture Trustee, and the Series Supplement (including the forms and terms of the Transition Bonds), as the same may be amended and supplemented with respect to the Transition Bonds from time to
time. 
  

 A-1 

 “Indenture Trustee” means Deutsche Bank Trust Company Americas, or its successor or any
successor Indenture Trustee under the Indenture. 
 “Intercreditor Agreement” means the Intercreditor Agreement dated as of
February 12, 2008, among the Indenture Trustee, the Issuer, the Seller, CenterPoint Energy Transition Bond Company, LLC, CenterPoint Energy Transition Bond Company II, LLC and the other parties thereto, each in the capacities stated therein, as
the same may be amended and supplemented from time to time. 
 “Issuance Advice Letter” means the issuance advice letter submitted
to the Texas Commission on January 30, 2008 by the Seller pursuant to the Financing Order in connection with the issuance of the Transition Bonds. 
 “Issuer” means CenterPoint Energy Transition Bond Company III, LLC, a Delaware limited liability company, or its successor under the Indenture. 
 “Lien” means a security interest, lien, charge, pledge, equity or encumbrance of any kind. 
 “Moody’s” means Moody’s Investors Service, Inc., or any successor thereto. 
 “Officer’s Certificate” means a certificate signed, in the case of the Seller, by any manager, the chairman of the board, the chief
executive officer, the president, any vice chairman, any executive vice president, senior vice president or vice president, the treasurer, assistant treasurer, the secretary or any assistant secretary of the Seller. 
 “Opinion of Counsel” means one or more written opinions of counsel who may be an employee of or counsel to the Issuer or the Seller, which
counsel shall be reasonably acceptable to the Indenture Trustee, the Issuer or the Rating Agencies, as applicable, and which shall be in form reasonably satisfactory to the Indenture Trustee, if applicable. 
 “Person” means any individual, corporation, estate, partnership, joint venture, association, joint stock company, trust (including any
beneficiary thereof), business trust, limited liability company, unincorporated organization or government or any agency or political subdivision thereof. 
 “proceeding” means any suit in equity, action at law or other judicial or administrative proceeding. 
 “Prospectus” has the meaning specified in Section 3.06 hereof. 
 “Purchase Price” has the meaning
specified in Section 2.01(a) hereof. 
 “Qualified Costs” has the meaning assigned to that term in the Texas Electric Choice
Plan and the Financing Order. 
  

 A-2 

 “Rating Agency” means any rating agency rating the Transition Bonds at the time of issuance
thereof at the request of the Issuer, which initially shall be Moody’s, Fitch and S&P. If no such organization or successor is any longer in existence, “Rating Agency” shall be a nationally recognized statistical rating
organization or other comparable Person designated by the Issuer, written notice of which designation shall be given to the Indenture Trustee, the Texas Commission and the Servicer. 
 “Rating Agency Condition” means, with respect to any action, the notification in writing to each Rating Agency of such action, and confirmation
from S&P to the Indenture Trustee and the Issuer that such action will not result in a reduction or withdrawal of the then current rating by such Rating Agency of any outstanding class or tranche of Transition Bonds. 
 “Seller” means CenterPoint Houston, or its successor, in its capacity as seller of the Transition Property to the Issuer pursuant to the Sale
Agreement. 
 “Series Supplement” means the First Supplemental Indenture, dated as of February 12, 2008, among the Issuer and
the Indenture Trustee, which specifies the terms of the Transition Bonds. 
 “Servicer” means CenterPoint Houston, in its capacity
as the servicer under the Servicing Agreement, and each successor to or assignee of CenterPoint Houston (in the same capacity) pursuant to the relevant sections of the Servicing Agreement. 
 “Servicer Default” means the occurrence and continuation of one of the events specified in Section 7.01 of the Servicing Agreement.

 “Servicing Agreement” means the Transition Property Servicing Agreement, dated as of February 12, 2008, between the Issuer
and the Servicer and acknowledged by the Indenture Trustee, as the same may be amended and supplemented from time to time. 
 “Standard & Poor’s” or “S&P,” means Standard & Poor’s, a division of The McGraw-Hill Companies, or its successor. 
 “Texas Commission” means the Public Utility Commission of Texas or any successor. 
 “Texas Electric Choice Plan” means the Act of May 21, 1999, 76th Leg. R.S. ch. 405, 1999 (codified at Texas Utilities Code
Section 39.001 et seq.), as amended by Act of May 29, 2007, H.B. 624 §§ 2-4, 80th Leg., R.S. (to be codified as an amendment to Texas Utilities Code Sections 39.301-39.303). 
 “Transfer Date” means the date on which the Transition Bonds are to be originally issued in accordance with Section 2.10 of the Indenture.

 “Transition Bond” means any of the 2008 Senior Secured Transition Bonds issued by the Issuer pursuant to the Indenture and the
Series Supplement. 
 “Transition Bondholder” means a Person in whose name a Transition Bond is registered on the Transition Bond
Register. 
  

 A-3 

 “Transition Bond Register” has the meaning specified in Section 2.05 of the Indenture.

 “Transition Charges” means the nonbypassable amounts to be charged for the use or availability of electric services, approved by
the Texas Commission in the Financing Order to recover Qualified Costs that may be collected by the Seller, its successors, assignees or other collection agents as provided for in the Financing Order. 
 “Transition Property” means the rights and interests of the Seller or its successor under the Financing Order, once those rights are first
transferred to the Issuer or pledged in connection with the issuance of the Transition Bonds, including the right to impose, collect and receive through Transition Charges payable by retail electric customers within Seller’s certificated
service area as it existed on May 1, 1999, an amount sufficient to cover the Qualified Costs of the Seller authorized in the Financing Order, the right to receive Transition Charges in amounts and at times sufficient to pay principal and
interest and make other deposits in connection with the Transition Bonds and all revenues and collections resulting from Transition Charges. 
 “Trust Estate” has the meaning specified in the Series Supplement. 
 “UCC” means, unless the context otherwise
requires, the Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended from time to time. 
  

 A-4 

 EXHIBIT A 
 BILL OF SALE 
 1. This Bill of Sale is being delivered pursuant to the Transition Property Sale Agreement,
dated as of February 12, 2008 (the “Sale Agreement”), between CenterPoint Energy Houston Electric, LLC (the “Seller”) and CenterPoint Energy Transition Bond Company III, LLC (the “Issuer”). All capitalized terms
used but not defined herein have the respective meanings ascribed thereto in the Sale Agreement. 
 2. In consideration of the Issuer’s
payment to the Seller of $482,630,539, receipt of which is hereby acknowledged, the Seller does hereby irrevocably sell, transfer, assign, set over and otherwise convey to the Issuer, without recourse or warranty, except as set forth in the Sale
Agreement, all right, title and interest of the Seller in, to and under the Transition Property identified on Schedule 1 hereto (such sale, transfer, assignment, setting over and conveyance of the Transition Property includes, to the fullest
extent permitted by the Texas Electric Choice Plan, the right to impose, collect and receive the Transition Charges related to the Transition Property, as the same may be adjusted from time to time). Such sale, transfer, assignment, setting over and
conveyance is hereby expressly stated to be a sale or other absolute transfer and, pursuant to Section 39.308 of the Texas Electric Choice Plan and other applicable law, is a true sale and is not a secured transaction and title, legal and
equitable, has passed to the Issuer. The preceding sentence is the statement referred to in Section 39.308 of the Texas Electric Choice Plan. The Seller agrees and confirms that, after giving effect to the sale evidenced by this Bill of Sale,
the Seller has no right, title or interest in, to or under the Transition Property. 
 3. The Issuer does hereby purchase the Transition
Property identified on Schedule 1 hereto from the Seller for the consideration set forth in paragraph 2 above. 
 4. The Seller and
the Issuer each acknowledge and agree that the purchase price for the Transition Property sold pursuant to this Bill of Sale and the Sale Agreement is equal to its fair market value on the date hereof. 
 5. The Seller confirms that each of the representations and warranties on the part of the Seller contained in the Sale Agreement are true and correct in
all respects on the date hereof as if made on the date hereof. 
 6. This Bill of Sale may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 
 7. THIS BILL OF SALE SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

  

 Exhibit A-1 

 IN WITNESS WHEREOF, the Seller and the Issuer have duly executed this Bill of Sale as of the 12th day of
February 2008. 
  

			
	CENTERPOINT ENERGY TRANSITION BOND
COMPANY III, LLC,
    as Issuer,
		
	By:	 	 /s/ Marc Kilbride

	Name:	 	Marc Kilbride
	Title:	 	Manager
	
	CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC,
    as Seller,
		
	By:	 	 /s/ Marc Kilbride

	Name:	 	Marc Kilbride
	Title:	 	Vice President and Treasurer

  

 Exhibit A-2 

 SCHEDULE 1 
 to 
 BILL OF SALE 
 Transition Property 
 All of the Seller’s rights, title and interest in, to and under the Financing Order issued by the
Texas Commission on September 18, 2007 (PUC Docket No. 34448), pursuant to the Texas Electric Choice Plan, including rights to impose, collect and receive the “transition charges” (as defined in the Texas Electric Choice Plan)
approved in such Financing Order.

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