EX-2.1: ACQUISITION AGREEMENT

Exhibit 2.1

Execution Copy

ACQUISITION AGREEMENT

among

TEXAS GENCO LLC

NRG ENERGY, INC.

and

THE DIRECT AND INDIRECT OWNERS OF
TEXAS GENCO LLC PARTY HERETO

Dated as of September 30, 2005

Table of Contents

ii

iii

iv

INDEX OF TERMS

vi

vii

viii

ix

ACQUISITION AGREEMENT

     ACQUISITION AGREEMENT, dated as of September 30, 2005 (this “ Agreement ”), by and among Texas Genco LLC, a Delaware limited liability company (“ Genco ”), NRG Energy, Inc., a Delaware corporation (“ Buyer ”), the direct holders of Units listed on Annex A hereto (each a “ Genco Seller ”, and collectively the “ Genco Sellers ”) and those sellers executing this Agreement or a Joinder to this Agreement as a “Blocker Seller” (each a “ Blocker Seller ”, and collectively “ Blocker Sellers ” and along with the Genco Sellers, collectively, the “ Sellers ”), who are holders of equity of certain intermediate holding companies identified as “Blockers” on Schedule 2.3 hereto (each a “ Blocker ”, and collectively, the “ Blockers ”) directly or indirectly holding Units listed on Annex A hereto. Genco, Buyer and the Sellers are hereinafter collectively referred to as the “parties” and each individually as a “party.”

     WHEREAS, as of the date of this Agreement, the Genco Sellers own in the aggregate 100% of the Units (as defined in the LLC Agreement of Genco (as defined below)) (the “ Units ”); and

     WHEREAS, together the Blockers hold indirect interests in approximately 18.5% of the Units (indirectly through limited partnership interests in Genco Sellers); and

     WHEREAS, the holders of options to purchase Units (each, an “ Option ”) listed on Annex A hold Options to purchase 9,902,801 Units of Genco; and

     WHEREAS, as of the date hereof, the Genco Sellers and the Optionholders own 100% of the Units and 100% of the Options, respectively; and

     WHEREAS, Genco, through its direct and indirect subsidiaries identified in Section 4.3(a) of the Companies Disclosure Letter (as defined below) (Genco and such direct and indirect subsidiaries are collectively referred to herein as the “ Companies ”, and, individually, each as a “ Company ”), (a) owns 11 electric power generation facilities, all of which are located in Texas, and, through its wholly owned subsidiary, Texas Genco Holdings, Inc. (“ Holdings ”), an indirect 44% undivided interest in South Texas Project Nuclear Electric Generating Station (the “ South Texas Project ” or “ STP ”), and (b) sells wholesale electric generation capacity, energy and ancillary services in the Electric Reliability Council of Texas, Inc. market (the “ ERCOT Market ”) (such business referred to herein as the “ Business ”); and

     WHEREAS, Buyer desires to purchase from the Sellers, either directly or indirectly through the purchase of Blocker Interests (as defined below), 100% of the Units (together, the “ Acquisition ”); and

     WHEREAS, the Board of Directors of Buyer and the Board of Managers of Genco have approved, and deem it advisable and in the best interest of Buyer and Genco, respectively, to consummate the transactions contained in this Agreement;

     NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound, the parties agree as follows:

ARTICLE I

PURCHASE AND SALE OF THE EQUITY INTERESTS

                 Section 1.1 Time and Place of Closing . Unless this Agreement shall have been terminated and the transactions herein contemplated shall have been abandoned pursuant to Section 8.1 and subject to the satisfaction or waiver of the conditions set forth in Article VII, the closing of the Acquisition (the “ Closing ”) will take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New York, New York at 9:00 a.m. (local time) on the fifth business day following the date on which all of the conditions set forth in Article VII (other than those that by their nature are intended to be satisfied at the Closing (as defined below)) have been satisfied or waived, or at such other date, place or time as the Seller Representatives and the Buyer may agree, but in any event no earlier than February 2, 2006 (the “ Closing Date ”). The transactions contemplated by this Agreement shall be deemed to be effective at 12:01 a.m. (local time) on the Closing Date.

                 Section 1.2 Purchase and Sale of Units and Blocker Interests.

     (a) At the Closing, upon the terms and subject to the conditions of this Agreement, (x) each Genco Seller hereby agrees to sell to Buyer, and Buyer hereby agrees to purchase from such Genco Seller, all Units owned by such Genco Seller as of the Closing Date, and (y) each Blocker Seller hereby agrees to sell to Buyer, and Buyer hereby agrees to purchase from such Blocker Seller, all equity interests in the Blocker (“ Blocker Interests ”) owned by such Blocker Seller as of the Closing Date, in each case free and clear of any and all Liens, for aggregate consideration from the Buyer in respect of the Units, Blocker Interests and Options equal to the sum of the following (together, the “ Consideration ”):

               (i) cash equal to the Cash Consideration (subject to adjustment pursuant to Section 1.5); plus

               (ii) the Common Stock Consideration; plus

               (iii) if the number of shares of Buyer Common Stock that Buyer elects to issue in satisfaction of the Common Stock Consideration is less than 44,444,445 shares (subject to the definition of “Common Stock Consideration”), subject to Buyer’s right to pay Preferred Stock Substitute Cash in lieu of all or any portion of the Preferred Stock Consideration, the Preferred Stock Consideration.

     (b) At the Closing, the Buyer shall issue and pay the Consideration as follows and in the following order:

               (i) cash in an amount equal to $100,000,000 (the “ Escrow Amount ”), which amount shall be paid by wire transfer of immediately available funds to the account (the “ Escrow Account ”) designated by an escrow agent selected by the Seller Representatives and reasonably acceptable to Buyer (the “ Escrow Agent ”) pursuant to an escrow agreement substantially in the form of Exhibit A hereto, with such modifications, if any, as shall be requested by the Escrow Agent and mutually acceptable to the Seller Representatives and Buyer (the “ Escrow Agreement ”);

               (ii) immediately prior to the purchase and sale of Units, each holder of Options (each, an “ Optionholder ”, and collectively, the “ Optionholders ”) that are terminated in exchange for a cash payment immediately prior to the Closing pursuant to the second sentence of Section 1.4 (upon conversion of such Options pursuant to Section 1.4) shall receive from Buyer its Sharing Percentage of each of (A) the Cash Consideration less the Escrow Amount (the “ Adjusted Cash Consideration ”), (B) the Common Stock Consideration and (C) the Preferred Stock Consideration (if any); and

               (iii) each Seller shall receive from Buyer its Sharing Percentage of each of (A) the Adjusted Cash Consideration, (B) the Common Stock Consideration and (C) the Preferred Stock Consideration (if any).

The “ Sharing Percentage ” of each Seller and Optionholder shall be equal to the “Sharing Percentage” set forth opposite such Seller’s and/or Optionholder’s name on Annex A hereto. All deliveries and payments to be made by Buyer to the Sellers and Optionholders under this Agreement shall be made in accordance with the Sharing Percentages set forth on Annex A attached hereto, as amended pursuant to Section 9.2 and, if applicable, provided to Buyer pursuant to Section 1.7(a)(i), and Buyer shall not be liable for the allocation of particular deliveries and payments among the Sellers and Optionholders so long as such deliveries and payments are made in accordance with Annex A .

     (c) For the purposes of this Agreement, the following terms shall be defined as:

               (i) The “ Average Price ” shall mean the average closing sales price per share of the Buyer Common Stock for the twenty consecutive full trading days in which such shares are traded on the New York Stock Exchange (“ NYSE ”) ending on, and including, the third trading day prior to the Closing Date, as reported in Bloomberg Financial Markets, or, if not reported therein, Dow Jones. The Average Price shall be calculated to the nearest one-hundredth of one cent.

               (ii) The “ Cash Consideration ” shall mean cash in an amount equal to (i) $6,525,000,000 minus (ii) Estimated Closing Date Indebtedness plus (iii) Estimated Closing Date Cash less $5,000,000 plus (iv) the amount, if any, that the Estimated Net Working Capital is greater than “Target Net Working

Capital” shown on Schedule 1.2 (the “ Target Net Working Capital ”) minus (v) the amount, if any, that the Estimated Net Working Capital is less than the Target Net Working Capital plus (vi) if the number of shares of Buyer Common Stock that Buyer elects to issue in satisfaction of the Common Stock Consideration is less than 44,444,445 shares (but in no event less than the Minimum Common Amount) (subject to adjustment pursuant to the last sentence of the definition of “Common Stock Consideration”), any amount in cash that the Buyer elects to pay in lieu of issuing all or any portion of the Preferred Stock Consideration (such cash described in this clause (vi), the “ Preferred Stock Substitute Cash ”).

               (iii) “ Cash Equivalents ” shall mean the sum of cash, cash equivalents and liquid investments, plus all deposited but uncleared bank deposits and cash held by counterparties, and less all outstanding checks and cash posted by counterparties, in each case of any Company.

               (iv) The “ Common Stock Consideration ” shall mean, subject to the final sentence of this definition, 35,406,320 shares (or such greater number of shares which is equal to the sum of (x) the total number of shares of Buyer Common Stock held in treasury by Buyer plus (y) 19.9% of the total number of outstanding shares of Buyer Common Stock, in each case, as of immediately prior to the Closing) (the “ Minimum Common Amount ”), subject to increase by Buyer, at its sole election, up to a maximum of 44,444,445 validly issued, fully paid and non-assessable shares of common stock, par value $0.01 per share, of Buyer (the “ Buyer Common Stock ”). If during the period from the date of this Agreement through the Closing Date, any event or action inconsistent with Sections 6.2(b)(i), 6.2(c) or 6.2(d) and adverse to Sellers should occur, and the Closing should nevertheless be consummated, the Buyer and the Seller Representatives shall negotiate in good faith to agree on an adjustment to the number of shares set forth above so that the value to the Sellers and Optionholders is the same as if such event or action had occurred after the Closing.

               (v) “ Debt Obligations ” shall, as applied to any person, mean, without duplication, (a) all indebtedness for borrowed money, including all indebtedness evidenced by a note, bond, debenture or similar instrument, (b) that portion of obligations with respect to capital leases that is properly classified as a liability on a balance sheet in conformity with GAAP, applied on a consistent basis with the financial statements of such person and (c) any obligation owed for all or any part of the deferred purchase price for the purchase of a business that in accordance with GAAP would be included as liabilities on the balance sheet of such person. For clarification, it is understood that the following shall not constitute “Debt Obligations” hereunder: operating leases, letters of credit issued for the account of such person to the extent undrawn and similar credit support obligations, trade payables and accrued expenses, prepaid or deferred revenue arising in the ordinary course of business, out of the money coal and power contracts, Derivative Products and other commercial contractual obligations or liabilities secured by second-priority Liens and any breakage, make whole, premium, penalty or prepayment fee on any indebtedness for borrowed money.

               (vi) “ Net Working Capital ” shall mean the current assets specified on Schedule 1.2 of Genco and its subsidiaries less the current liabilities specified on Schedule 1.2 of Genco and its subsidiaries, all as determined pursuant to the methodology set forth in Schedule 1.2 and in accordance with GAAP as applied in the preparation of Genco’s historical financial statements; provided that, in determining Net Working Capital, (i) there shall not be any reevaluation of reserves or writedown of inventory from their respective levels at June 30, 2005, (ii) Cash Equivalents, Debt Obligations and any interest owing thereon shall be excluded, (iii) “accrued property tax” shall be calculated as $51.0 million multiplied by a fraction the numerator of which is the number of days from January 1, 2006 through the day prior to the Closing Date and the denominator of which is 365 days, (iv) “transfer taxes” shall be calculated as 50% of any Transfer Taxes, if any, resulting directly from the Acquisition, (v) “accrued Blocker taxes” shall be calculated as any current accrued income taxes payable of the Blockers, minus any income tax receivables of the Blockers and any deferred tax asset of the Blockers relating to net operating losses or similar tax attributes to the extent such net operating losses or tax attributes can be used in the current taxable year or a prior taxable year (assuming, in the case of a carryback, no election to forego the carryback), (vi) “accrued STP taxes” shall be calculated as any current accrued income taxes payable of Holdings, minus any income tax receivables of Holdings and any deferred tax asset of Holdings relating to net operating losses or similar tax attributes and (vii) no costs, expenses or liabilities related to obtaining or incurrence of the Financing shall be included as current liabilities.

               (vii) The “ Preferred Stock Consideration ” shall mean, in the event that the number of shares of Buyer Common Stock that Buyer elects to issue in satisfaction of the Common Stock Consideration is less than 44,444,445 shares (subject to the definition of “Common Stock Consideration”), shares of Cumulative Redeemable Preferred Stock, par value $0.01 per share, of Buyer, having terms and conditions set forth on Exhibit B hereto and as otherwise agreed to by Buyer and Sellers (the “ Buyer Preferred Stock ”) with aggregate liquidation preference equal to (I) (A) 44,444,445 less the total number of shares of Buyer Common Stock issued to the Sellers in satisfaction of the Common Stock Consideration multiplied by (B) the Average Price minus (II) the amount of Preferred Stock Substitute Cash, if any.

               (viii) The “ Unit Consideration ” is that portion of the Consideration received by the Genco Sellers and Optionholders.

                 Section 1.3 Cash in Lieu of Fractional Shares . No certificates or scrip representing fractional shares of Buyer Common Stock shall be issued to a Seller or Optionholder in connection with the Acquisition, and notwithstanding any other provision of this Agreement, each Seller or Optionholder who would otherwise have been entitled to receive a fraction of a share of Buyer Common Stock (after taking into account all shares of Buyer Common Stock deliverable to such Seller and/or Optionholder) shall receive, in lieu thereof, a cash payment (without interest) determined by multiplying the

fractional share interest to which such Seller or Optionholder would otherwise be entitled by the Average Price.

                 Section 1.4 Treatment of Options and other Unit-based Company Plans . The Board of Managers of Genco, or, where appropriate, its compensation committee, shall take all action necessary and appropriate to ensure that, at the Closing, each holder of an Option which is outstanding and unexercised (whether or not exercisable) immediately prior thereto shall, in cancellation and full settlement thereof, be entitled to receive the consideration due to such Optionholder pursuant to Section 1.2. Notwithstanding anything to the contrary in Section 6.1 hereof, Genco may elect to terminate any Option in exchange for a cash payment immediately prior to the Closing equal to the value allocated to such Option pursuant to Annex A (prior to amendment of Annex A to reflect termination of such Option); provided that Genco provides written notice to Buyer of such intention together with delivery of any required amendments to Annex A delivered pursuant to Section 1.7(a)(i) and the applicable cash payment amounts are reflected in the Preliminary Statement. Genco shall cause to be terminated a sufficient number of Options pursuant to the immediately preceding sentence such that no more than 35 Optionholders who are not “accredited investors” (as that term is defined in Regulation D under the Securities Act) will receive Buyer Common Stock or Buyer Preferred Stock in connection with the Acquisition and so that the holder of any Option who does not receive Buyer Common Stock or Buyer Preferred Stock receives cash in an amount and manner set forth in the second sentence of this Section 1.4.

                 Section 1.5 Purchase Price Adjustment.

     (a) Genco shall, at least two business days prior to the Closing Date, cause to be prepared and delivered to Buyer a statement (the “ Preliminary Statement ”), setting forth Genco’s good faith estimates of (i) the Net Working Capital as of the Closing (the “ Closing Date Net Working Capital ”), (ii) the Debt Obligations of Genco and its subsidiaries outstanding on the Closing Date but immediately prior to the Closing (other than indebtedness owed to Genco or its subsidiaries) (the “ Closing Date Indebtedness ”) and (iii) the amount of Cash Equivalents on hand at Genco and its subsidiaries on the Closing Date but immediately prior to the Closing (the “ Closing Date Cash ”). The estimates of Closing Date Net Working Capital, Closing Date Indebtedness and Closing Date Cash provided in the Preliminary Statement are referred to herein as the “ Estimated Net Working Capital , the “ Estimated Closing Date Indebtedness ” and the “ Estimated Closing Date Cash ”, respectively. Buyer and Seller Representatives shall have the opportunity to review and comment on the Preliminary Statement and Genco shall consider those comments in good faith.

     (b) Within 90 calendar days after the Closing Date, Buyer shall cause to be prepared and delivered to Seller Representatives a statement (the “ Statement ”) setting forth Buyer’s calculations of Closing Date Net Working Capital, Closing Date Indebtedness and Closing Date Cash, and the components and calculation of each of Closing Date Net Working Capital, Closing Date Indebtedness and Closing Date Cash. At the same time, Buyer shall also cause to be prepared and delivered to Seller

Representatives a statement (the “ Adjustment Statement ”) setting forth the calculations (in each case whether a positive or negative number) of (A) the amount of the Closing Date Net Working Capital as shown on the Statement minus the Estimated Net Working Capital and (B) the amount of the Estimated Closing Date Indebtedness minus the Closing Date Indebtedness as shown on the Statement and (C) the amount of the Closing Date Cash as shown on the Statement minus the Estimated Closing Date Cash. The sum of the amounts referred to in (A), (B) and (C) above, whether a positive or negative number, is referred to hereinafter as the “ Adjustment Amount ”. Buyer shall provide Seller Representatives and their accountants with access to the relevant books and records and employees of Genco and its subsidiaries to the extent required in connection with their review of and any dispute with respect to the Statement and the Adjustment Statement and shall furnish Seller Representatives with any other information that might be relevant to the calculation of Closing Date Net Working Capital, Closing Date Indebtedness and Closing Date Cash. If, at any time prior to the final resolution of all disputed items on the Statement or the Adjustment Statement, additional information shall become known to Buyer or Seller Representatives that would change the amount of the Closing Date Net Working Capital, Closing Date Indebtedness or Closing Date Cash shown on the Statement or the calculation thereof, then Buyer or Seller Representatives shall have the right to amend the Statement and Adjustment Statement to reflect such additional information. Buyer or Seller Representatives shall promptly notify Seller Representatives or Buyer, as applicable, upon becoming aware of any additional information prior to the end of the Resolutions Period.

     (c) After receipt of the Statement and the Adjustment Statement, Seller Representatives will have 30 calendar days from receipt to review the Statement and the Adjustment Statement together with the workpapers used in their preparation. Unless Seller Representatives deliver to Buyer written notice setting forth in reasonable detail the specific items disputed by Seller Representatives and a written statement setting forth Seller Representatives’ calculation of each line item shown on the Statement so disputed and the amount in dispute (the “ Seller Representatives’ Statement ”) on or prior to the thirtieth day after its receipt of the Statement and the Adjustment Statement, Seller Representatives will be deemed to have accepted and agreed to the Statement and the Adjustment Statement and such agreement will be final, binding and conclusive. Any items on the Statement or Adjustment Statement as to which Seller Representatives have not given notice of their objection and provided an alternative calculation on the Seller Representatives’ Statement will be deemed to have been agreed upon by the parties, subject to the penultimate sentence of Section 1.5(b). If Seller Representatives so notify Buyer of their objections to any of the Statement or the Adjustment Statement and provide Buyer with the Seller Representatives’ Statement in an timely manner, Buyer and Seller Representatives will, within 30 calendar days following such notice (the “ Resolution Period ”), attempt to resolve their differences. Any resolution by Buyer and Seller Representatives during the Resolution Period as to any disputed amounts will be final, binding and conclusive. If the amount claimed by Buyer on the Adjustment Statement to be owed by Sellers is less than $100,000,000, then, promptly after delivery of the Adjustment Statement, any amount on deposit in the Escrow Account that is in excess of the amount claimed by Buyer to be owed by Sellers under this Section shall be distributed from the Escrow Account to Sellers in accordance with the Escrow

Agreement, and Buyer agrees to reasonably cooperate with the Sellers in any necessary joint instruction to the Escrow Agent. Money released from the Escrow Account to Sellers shall be distributed to the Sellers in accordance with the Sharing Percentages set forth on Annex A .

     If Buyer and Seller Representatives do not resolve all disputed items by the end of the Resolution Period, then all items remaining in dispute will be submitted within 30 days after the expiration of the Resolution Period to Ernst & Young LLP or such other national independent accounting firm mutually acceptable to Buyer and Seller Representatives (the “ Neutral Accounting Arbitrator ”); it being understood that no member of the Neutral Accounting Arbitrator’s engagement team shall have an existing professional relationship with Buyer or any Sponsor Group (as defined in the LLC Agreement). The Neutral Accounting Arbitrator shall act as an arbitrator to determine only those items in dispute. All fees and expenses relating to the work, if any, to be performed by the Neutral Accounting Arbitrator will be allocated between Buyer, on the one hand, and Seller Representatives, on the other hand, in inverse proportion as they shall prevail on the amounts of such disputed items so submitted (as finally determined by the Neutral Accounting Arbitrator). The Neutral Accounting Arbitrator will deliver to Buyer and Seller Representatives a written determination (such determination to include a work sheet setting forth all material calculations used in arriving at such determination and to be based solely on information provided to the Neutral Accounting Arbitrator by Seller Representatives and Buyer) of the disputed items within 30 days of receipt of the disputed items (or as soon as practicable thereafter), which determination will be final, binding and conclusive. The final, binding and conclusive Statement and Adjustment Statement, which either are agreed upon by Buyer and Seller Representatives or are delivered by the Neutral Accounting Arbitrator in accordance with this Section 1.5, will be the “ Conclusive Statement ” and the “ Conclusive Adjustment Statement ,” respectively. In the event that either Buyer or Seller Representatives fails to submit its statement regarding any items remaining in dispute within the time determined by the Neutral Accounting Arbitrator, then the Neutral Accounting Arbitrator shall render a decision based solely on the evidence timely submitted to the Neutral Accounting Arbitrator by Buyer and Seller Representatives.

     (d) If the Adjustment Amount as shown on the Conclusive Adjustment Statement (the “ Conclusive Adjustment Amount ”) is a negative number, then the Cash Consideration will be reduced by the amount of the Conclusive Adjustment Amount, but not in excess of $100,000,000, and Buyer shall be entitled to payment of such amount from the Escrow Account by wire transfer of immediately available funds to an account or accounts designated by the party entitled to receive such funds (and Seller Representatives agree to cooperate reasonably in facilitating such payment, including by executing and delivering an appropriate joint instruction to the Escrow Agent). If the Conclusive Adjustment Amount is a positive number, then the Cash Consideration will be increased by the amount of the Conclusive Adjustment Amount, but not in excess of $100,000,000, and Buyer shall pay to Sellers cash equal to such amount, to be paid to an account or accounts designated in writing by the Seller Representatives prior to the date when such payment is due. All payments to be made pursuant to this Section 1.5(d) will be made on the second business day following the date on which Buyer and Seller

Representatives agree to, or the Neutral Accounting Arbitrator delivers, the Conclusive Statement and the Conclusive Adjustment Statement and, in the case of payment to Buyer, instruct the Escrow Agent by joint written instruction accordingly. If the Conclusive Adjustment Amount is a positive number, or is a negative amount that is less than the amount remaining on deposit in the Escrow Account, then, promptly after determination of the Conclusive Adjustment Amount, any amount remaining on deposit in the Escrow Account that is in excess of the lesser of the Conclusive Adjustment Amount and $100,000,000 shall be distributed from the Escrow Account to Sellers in accordance with the Escrow Agreement, and Buyer agrees to reasonably cooperate with the Sellers in any necessary joint instruction to the Escrow Agent. Money released from the Escrow Account to Sellers shall be distributed to the Sellers in accordance with the Sharing Percentages set forth on Annex A . Simultaneously with payment of the Conclusive Adjustment Amount, any remaining amounts on deposit in the Escrow Account shall be paid to the Sellers and Optionholders.

     (e) Buyer acknowledges and agrees that its sole and exclusive remedy for any amount due to it pursuant to this Section 1.5 shall be its right to payment from the Escrow Account in an amount not to exceed the Escrow Amount. Sellers acknowledge and agree that their sole and exclusive remedy for any amount due to it pursuant to this Section 1.5 shall be the right to payment from Buyer in an amount not to exceed $100,000,000.

                 Section 1.6 Purchase Price Allocations . The Genco Sellers and Buyer agree that the Unit Consideration shall be allocated for federal income tax purposes in accordance with Sections 755 and 1060 of the Internal Revenue Code of 1986, as amended (the “ Code ”). Buyer shall, within 60 days after the Closing Date, prepare and deliver to the Genco Sellers for their review a schedule allocating the Unit Consideration (and any other items that are required for federal income tax purposes to be treated as part of the purchase price of the Units) among the assets of Genco (such schedule, the “ Allocation ”). The Seller Representatives shall review such Allocation and provide any objections to Buyer within 30 days after the receipt thereof. If the Seller Representatives raise any objection to the Allocation, the parties will negotiate in good faith to resolve such objection(s). If the Seller Representatives and Buyer are unable to agree on the Allocation within 15 days after the Seller Representatives raise such objections, they shall request a nationally recognized accounting firm, mutually agreeable to both parties, to decide any disputed items. Buyer and the Seller Representatives shall cooperate in the filing of any forms (including Form 8594 under section 1060 of the Code) with respect to the Allocation as finally resolved (the “ Final Allocation ”). The Genco Sellers and Buyer shall file all federal, state and local tax returns and related tax documents consistent with the Final Allocation, unless otherwise required by applicable Law.

                 Section 1.7 Preliminary Information

     (a) At least two business days prior to the Closing Date, Genco, on behalf of the Sellers, shall deliver to Buyer:

               (i) if necessary, any amendments to Annex A permitted pursuant to Section 9.2;

               (ii) instructions designating the account or accounts to which the Adjusted Cash Consideration shall be deposited by federal funds wire transfer on the Closing Date; and

               (iii) the names of the Sellers and Optionholders to whom the Buyer Common Stock, or, if applicable, the Buyer Preferred Stock, shall be issued and registered in the Buyer’s transfer books by Buyer’s transfer agent, as well as the amounts and form of shares to be issued to each of the Sellers and Optionholders.

     (b) If the Consideration will include Buyer Preferred Stock or Preferred Stock Substitute Cash, then, at least two business days prior to the Closing Date, Buyer shall notify Genco, on behalf of the Sellers and Optionholders, of its calculation of the Average Price and copies of any relevant supporting materials. Sellers shall promptly review and comment on Buyer’s calculation of Average Price, and the final calculation of the Average Price shall be subject to the mutual agreement of Buyer and Seller Representatives.

                 Section 1.8 Sellers’ Closing Deliverables . At the Closing, Genco or the Sellers shall deliver to Buyer:

     (a) duly executed stock and unit powers of the Sellers, as applicable, transferring title of the Units and the Blocker Interests, free and clear of any Liens, to Buyer;

     (b) the Investor Rights Agreement in the form attached hereto as Exhibit C (the " Investor Rights Agreement ”), duly executed by the Sellers party thereto;

     (c) the Escrow Agreement, duly executed by the Sellers;

     (d) the officer’s certificate required by Section 7.2(c); and

     (e) written resignations (or removals) of the non-officer directors of Genco, effective as of the Closing.

                 Section 1.9 Buyer’s Closing Deliverables . At the Closing, the Buyer shall deliver to the Sellers and Optionholders:

     (a) the Adjusted Cash Consideration, to be paid by Buyer in accordance with the instructions pursuant to Section 1.7(a)(ii);

     (b) stock certificates representing the Common Stock Consideration, registered in accordance with the instructions provided pursuant to Section 1.7(a)(iii);

     (c) if the Consideration will include Buyer Preferred Stock,

               (i) a copy of the Certificate of Designations for the Buyer Preferred Stock, certified as filed with the Secretary of State of the State of Delaware; and

               (ii) stock certificates representing the Preferred Stock Consideration, registered in accordance with the instructions provided pursuant to Section 1.7(a)(iii);

     (d) copies (or other evidence) of all the approvals required by Section 7.1;

     (e) the Investor Rights Agreement, duly executed by Buyer;

     (f) the Escrow Agreement, duly executed by Buyer; and

     (g) the officer’s certificate required pursuant to Section 7.3(c).

                 Section 1.10 FIRPTA Certificates . At the Closing, each of the Sellers shall provide to Buyer a duly executed certificate complying with the requirements of Treas. Reg. 1.1445-2(b) or (c) to the effect that Buyer is not required to withhold from the Consideration under Section 1445 of the Code. In the event that such certificate is not delivered to Buyer by any Seller, Buyer shall be entitled to withhold from the applicable consideration to such Seller any taxes required to be withheld under applicable Law.

     Section 1.11 Withholding. Buyer shall be entitled to withhold from the Consideration payable to any Seller or Optionholder any amounts required by applicable Law to be remitted by Buyer to any Taxing authority. Any amounts so withheld and remitted shall be treated for all purposes under this Agreement as if paid to the Seller or Optionholder that otherwise would have been entitled to receive such amounts.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF EACH SELLER

     Each Seller, severally and not jointly, represents and warrants to Buyer as follows:

                 Section 2.1 Organization; Etc. Such Seller, if it is not an individual, (a) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (b) has all requisite trust, corporate, limited partnership or limited liability company power and authority, as applicable, to execute and deliver this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto, to perform its obligations hereunder and to consummate the transactions contemplated by this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto and (c) is duly qualified or

licensed to do business, and is in good standing in each jurisdiction in which the nature of its business or the ownership, operation or leasing of its properties makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not reasonably be expected to, individually or in the aggregate, prevent or materially impair or delay the ability of such Seller to perform its obligations hereunder.

                 Section 2.2 Authority Relative to this Agreement . The execution, delivery and performance of this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto by each such Seller who is not an individual, and the consummation of the transactions contemplated by this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto have been duly and validly authorized by all requisite trust, corporate, limited partnership or limited liability company action, as applicable, on the part of each such Seller who is not an individual and no other trust, corporate or similar actions or proceedings on the part of such Seller is necessary to authorize the execution, delivery and performance by such Seller of this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto by such Seller or for such Seller to consummate the transactions so contemplated. Each such Seller who is a natural person has the capacity and authority to execute, deliver and perform this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto by each such Seller, and to consummate the transactions contemplated by this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto, without the necessity of any act or consent of any other person. For each such Seller who is a trust, the trustee has the capacity and authority to execute, deliver and perform this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto by each such Seller, and to consummate the transactions contemplated by this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto, without the necessity of any act or consent of any other person. This Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto have been, or will be, duly and validly executed and delivered by such Seller and, with respect to this Agreement and any other such agreement, assuming it has been duly authorized, executed and delivered by any other party, constitutes, or will constitute when executed, a valid and binding agreement of such Seller, enforceable against such Seller in accordance with its terms, except that (a) enforcement may be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws, now or hereafter in effect, relating to or limiting creditors’ rights generally, and (b) enforcement of this Agreement, including, among other things, the remedy of specific performance and injunctive and other forms of equitable relief, may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

                 Section 2.3 Ownership of Equity Interests . As of the date hereof, such Seller owns beneficially and of record the Units and/or Options set forth opposite such Genco Seller’s name and/or the Blocker Interests set forth opposite such Blocker Seller’s name on Schedule 2.3 hereto.

                 Section 2.4 Consents and Approvals; No Violations . Except for the Required Approvals (as defined in Section 4.4), none of the execution, delivery and performance of this Agreement and any other agreements and instruments executed in connection herewith or delivered pursuant hereto by such Seller, nor the consummation by such Seller of the transactions contemplated by this Agreement or any other agreement or instrument executed in connection herewith or delivered pursuant hereto, will (a) conflict with, violate or result in any breach of any provision of the certificate of formation, certificate of incorporation, limited liability company agreement, limited partnership agreement, trust agreement, regulations, bylaws or similar documents, as applicable, of such Seller, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration or any right or obligation to purchase or sell securities or assets) under, or require any consent or result in a material loss of a material benefit to such Seller under, any contract (written or oral), obligation, plan, undertaking, arrangement, commitment, note, bond, mortgage, indenture, agreement, lease, other instrument or Approval (as defined below) (collectively, " Contracts ” and individually, a “ Contract ”) to which such Seller is a party or by which it or any of its businesses, properties or assets are bound, (c) violate any Order, Law or Permit that is currently in effect applicable to such Seller or its business, properties or assets, or (d) require any permit, license, authorization, certification, tariff, consent, approval, concession or franchise from, action by, filing with or notification to (collectively, “ Approvals ” and, individually, an “ Approval ”), any foreign, Federal, state, or local government or regulator or any court, arbitrator, administrative agency, regional transmission organization, the ERCOT Market independent system operator, or commission or other governmental, quasi-governmental, taxing or regulatory (including a stock exchange or other self-regulatory body) authority, official or agency (including a public utility commission, public services commission or similar regulatory body), domestic, foreign or supranational (a “ Governmental Authority ”), except in the case of clauses (b), (c) and (d) of this Section 2.4, those which would not reasonably be expected to, individually or in the aggregate, prevent or materially impair or delay the ability of such Seller to perform its obligations hereunder, or which become applicable solely as a result of the business or activities in which Buyer is engaged.

                 Section 2.5 Accredited Investors . Such Seller is an “accredited investor” as that term is defined in Regulation D under the Securities Act. Such Seller is receiving the Buyer Common Stock and Buyer Preferred Stock to be issued hereunder for its own account and not with a view to, or for resale in connection with, the distribution thereof in violation of the Securities Act.

                 Section 2.6 Brokers; Finders and Fees . Except as described in Section 4.21, neither such Seller nor its affiliates (other than the Companies) has employed, engaged or entered into a Contract with any investment banker, broker, finder, other intermediary or any other person or incurred any liability for any investment banking, financial advisory or brokerage fees, commissions, finders’ fees or any other fee in connection with this Agreement or the transactions contemplated by this Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF EACH BLOCKER VEHICLE

     Each Seller through which, as of the date hereof and as indicated on Schedule 2.3, a Blocker holds an indirect interest in Units (each such Seller, a “ Blocker Vehicle ” and the related Blocker indicated on Schedule 2.3, the “ Related Blocker ”), severally and not jointly, represents and warrants to the Buyer as follows:

                 Section 3.1 No Other Assets . As of the Closing Date, any such Blocker Vehicle’s Related Blocker shall not own directly or indirectly any material assets or liabilities, including any ownership interests in any person, other than Units and any liabilities or obligations with respect to such Units. Such Blocker Vehicle’s Related Blocker was formed solely for the purpose of holding an indirect interest in Units and has not engaged in any trade, business or similar activity.

                 Section 3.2 Tax Matters . (i) All material Tax Returns required to be filed with respect to such Blocker Vehicle’s Related Blocker have been or will be timely filed in accordance with any applicable Laws, and (ii) all material Taxes due have been or will be paid (whether or not such Taxes are shown as being due on any such Tax Returns).

                 Section 3.3 Percentage Outstanding . On the Closing Date, the percentage of outstanding Units owned by Blockers shall not exceed 18.5% of the outstanding Units.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF GENCO

     Genco represents and warrants to Buyer as follows.

                 Section 4.1 Organization; Etc . Each Company (a) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (b) has all requisite corporate, partnership or limited liability company power and authority, as applicable, to own, lease and operate all of its properties and assets and to carry on its business substantially as it is now being conducted, and (c) is duly qualified or licensed to do business, and is in good standing in each jurisdiction in which the nature of its business or the ownership, operation or leasing of its properties makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not reasonably be expected to, individually or in the aggregate, have a Companies Material Adverse Effect. Genco has all requisite limited liability company power and authority to execute and deliver this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto, to perform its obligations hereunder and to consummate the transactions contemplated by this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto. As used in this Agreement, the term

" Companies Material Adverse Effect ” means any state of facts, change, development, event, effect, condition or occurrence materially adverse to the business, assets, properties, liabilities or condition (financial or otherwise) of the Companies taken as a whole or that, directly or indirectly, prevents or materially impairs or delays the ability of Genco to perform its obligations hereunder; provided, however, that any adverse change or effect attributable to (a) any adoption, implementation, promulgation, repeal, modification, reinterpretation or proposal of any rule, regulation, ordinance, Order, protocol or any other Law of or by any Governmental Authority (including, for the avoidance of doubt, the ERCOT Market), (b) changes or developments in national, regional, state or local wholesale or retail markets for power or fuel, including, without limitation, changes in commodity prices, related products, or availability or costs of transportation, (c) changes or developments in national, regional, state or local wholesale or retail electric power prices, (d) system-wide changes or developments in national, regional or state electric transmission or distribution systems, other than changes or developments involving physical damage or destruction thereto, (e) the announcement, pendency or consummation of the transactions contemplated by this Agreement (including any decrease in customer demand, any reduction in revenues, any disruption in supplier, partner or similar relationships, or any loss of employees) and (f) changes or developments in financial or securities markets or the economy in general shall, in each case, be excluded from such determination to the extent, in the case of clauses (a) through (f), any such Laws, changes and developments do not have a disproportionate adverse effect on the Companies as compared to other entities engaged in the power generation business in any of the relevant geographic areas with respect to such Laws, changes or developments, as applicable. In interpreting the definition of “Companies Material Adverse Effect” with respect to plant outages, the parties agree that the effect of the unplanned plant outages at the Companies from August 31, 2002 to the date of this Agreement did not in and of themselves have a Companies Material Adverse Effect after taking into account all relevant facts and circumstances. Genco has made available to Buyer a true and complete copy of the certificate of formation and Amended and Restated Limited Liability Company Agreement of Genco, dated as of December 15, 2004, as supplemented or amended (the “ LLC Agreement ”), as currently in effect. Genco has made available to Buyer true and complete copies of the minutes of all meetings or written consents of the members and the boards of managers and any committee thereof of Genco since December 15, 2004.

                 Section 4.2 Authority Relative to this Agreement . The execution, delivery and performance of this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto, by the Companies and the consummation of the transactions contemplated by this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto have been duly and validly authorized by all requisite corporate, partnership or limited liability company action, as applicable, on the part of the applicable Company and no other actions or proceedings on the part of any Company are necessary to authorize the execution, delivery and performance of this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto by any Company. Other than approvals received on or prior to the date hereof, no vote of the holders of equity interests of Genco is necessary to approve this Agreement or

to consummate the transactions contemplated hereby. This Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto have been, or will be, duly and validly executed and delivered by the applicable Company and, with respect to this Agreement and any other such agreement, assuming it has been duly authorized, executed and delivered by any other party, constitutes, or will constitute when executed, a valid and binding agreement of such Company, enforceable against such Company in accordance with its terms, except that (a) enforcement may be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws, now or hereafter in effect, relating to or limiting creditors’ rights generally, and (b) enforcement of this Agreement, including, among other things, the remedy of specific performance and injunctive and other forms of equitable relief, may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

                 Section 4.3 Capitalization

     (a) As of the date hereof, the outstanding equity interests of Genco consist of 180,026,000 Units and options to purchase an aggregate of 9,902,801 Units. Section 4.3(a)(i) of the disclosure letter delivered by Genco to Buyer concurrently with the execution hereof (the “ Companies Disclosure Letter ”) sets forth the name, jurisdiction of incorporation or organization and capitalization of each Company. All outstanding shares of capital stock of or interests in each Company are validly issued, fully paid and nonassessable, and owned by a Company (except in the case of equity interests in Genco) free of preemptive (or similar) rights and free and clear of any security interests, liens, claims, pledges, limitations in voting, dividend or transfer rights, charges or other encumbrances of any nature whatsoever (“ Liens ”), except for Liens pursuant to the Existing Credit Facilities and as set forth in Section 4.3(a)(i) of the Companies Disclosure Letter. As of the date hereof, except as set forth in Section 4.3(a)(i) of the Companies Disclosure Letter and the first sentence of this Section 4.3(a), there are not (A) any capital stock or other equity interests or voting securities, in any Company issued or outstanding, (B) any securities convertible into or exchangeable or exercisable for shares of any capital stock or equity interests or voting securities in any Company, (C) any subscriptions, options, warrants, calls, rights, convertible securities or other Contracts or commitments of any character obligating any Company to issue, transfer or sell any of its capital stock or other equity interests or voting securities, or (D) any equity equivalents, interests in the ownership or earnings or similar rights, or any agreements, arrangements or understandings granting any person any rights in any Company similar to capital stock or other equity interests or voting securities (the items in clauses (A), (B), (C) or (D), collectively, “ Company Securities ”). Except as set forth in Section 4.3(a)(i) of the Companies Disclosure Letter, none of Genco and its respective affiliates (other than the Companies) owns any Company Securities. Except as set forth in Section 4.3(a)(ii) of the Companies Disclosure Letter, there are no (1) outstanding obligations of any Company to repurchase, redeem or otherwise acquire any Company Securities or (2) outstanding obligations of any Company to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other Company or any other person, including as a result of the transactions contemplated by this Agreement.

     (b) No Company has any direct or indirect equity interest in any person, other than another Company.

     (c) As of the date hereof, the Genco Sellers own of record all outstanding Units. At the Closing Date and prior to the Closing, all of the outstanding Units will be owned beneficially and of record by the Genco Sellers and all of the Blocker Interests of Blockers in respect of which Blocker Sellers are parties to this Agreement (by Joinder or otherwise) will be owned beneficially and of record by the Blocker Sellers.

     (d) Section 4.3(d) of the Companies Disclosure Letter sets forth a true and complete list of each Contract in effect on the date of this Agreement pursuant to which any Indebtedness (as defined below) of any Company in excess of $1,000,000 is outstanding or may be incurred, together with the amount outstanding thereunder as of the date of this Agreement. No Contract pursuant to which any Indebtedness of any Company is outstanding or may be incurred provides for the right to vote (or is convertible into, or exchangeable for, securities having the right to vote) on any matters on which the equityholders of any Company may vote. “ Indebtedness ” means (A) indebtedness for borrowed money or for the deferred purchase price of property or services (other than current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices), including indebtedness evidenced by a note, bond, debenture or similar instrument, (B) obligations required to be classified and accounted for as capital leases on a balance sheet under United States generally accepted accounting principles (“ GAAP ”), (C) obligations in respect of outstanding letters of credit, acceptances and similar obligations created for the account of such person, (D) obligations under interest rate cap agreements, interest rate swap agreements, foreign currency exchange agreements and other similar agreements (but for clarification, in all events excluding commodity swaps, caps and similar agreements), (E) to the extent not otherwise included in the foregoing, any financing of accounts receivable or inventory and (F) guarantees of any of the foregoing of another person. Excluding this Agreement and the transactions contemplated hereby, no event has occurred which either entitles, or could entitle (with or without notice or lapse of time or both) the holder of any Indebtedness described in Section 4.3(d) of the Companies Disclosure Letter to accelerate, or which does accelerate, the maturity of any such Indebtedness.

     (e) No Company has in effect any stockholder rights plan or similar device or arrangement, commonly or colloquially known as a “poison pill” or “anti-takeover” plan, or any similar plan, device or arrangement (a “ Rights Plan ”), and the board of managers of Genco has not adopted or authorized the adoption of such a plan, device or arrangement.

                 Section 4.4 Consents and Approvals; No Violations . Except for applicable requirements of the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the “ HSR Act ”), approval from the NRC of any indirect license transfer deemed to be created by the Acquisition (the “ NRC Approval ”), approval from the FERC under Section 203 of the Federal Power Act, approval of the Public Utility Commission of Texas (the “ PUC ”) (if required in the opinion of Buyer’s outside legal

counsel), or as set forth in Section 4.4 of the Companies Disclosure Letter (collectively, the “ Required Approvals ”), none of the execution, delivery and performance of this Agreement by Genco, nor the consummation by Genco of the transactions contemplated by this Agreement and any other agreements and instruments executed in connection herewith or delivered pursuant hereto, will (a) conflict with, violate or result in any breach of any provision of the certificate of formation, certificate of incorporation, limited liability company agreement, limited partnership agreement, regulations, bylaws or similar documents, as applicable, of any Company, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration or any right or obligation to purchase or sell securities or assets) under, or require any consent or result in a material loss of a material benefit to the Companies under, any Contract to which any Company is a party or by which any Company or its businesses, properties or assets are bound, (c) violate any order, judgment, writ, injunction, decree, settlement, stipulation or award of a Governmental Authority (each an “ Order ”) or statute, rule or regulation of a Governmental Authority (collectively, “ Laws ”, and individually, a “ Law ”) or Permit applicable to any Company or any of its businesses, properties or assets, or (d) require any Approvals from or by any Governmental Authority, except in the case of clauses (b), (c) and (d) of this Section 4.4 for those which would not reasonably be expected to, individually or in the aggregate, have a Companies Material Adverse Effect, or which become applicable solely as a result of the business or activities in which Buyer is engaged.

                 Section 4.5 Reports and Financial Statements

     (a) Since December 15, 2004 (or April 13, 2005 with respect to Holdings and its subsidiaries), Genco and, to the extent applicable, each of the other Companies, has timely filed with the NRC, the PUC and any other Governmental Authority with jurisdiction all material forms, reports, schedules, registrations, declarations and other filings required to be filed by it under all applicable Laws, including the Public Utility Holding Company Act of 1935 (“ PUHCA ”), the Atomic Energy Act of 1954 (“ AEA ”) and the Texas Public Utility Regulatory Act, and the respective rules and regulations thereunder (“ PURA ”), all of which, as amended if applicable, complied in all material respects with all applicable requirements of the appropriate act and the rules and regulations promulgated thereunder. To the Company’s knowledge, as of the date of its filing, Amendment No. 2 to the Registration Statement on Form S-1 of Texas Genco, Inc., filed September 1, 2005 (File No. 333-125524) (the “ Form S-1 ”), did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each of the audited consolidated financial statements as of and for the period from July 19, 2004 through December 31, 2004 and unaudited consolidated financial statements as of and for the six-month period ended June 30, 2005 (including the notes related thereto) of Genco included in the Form S-1 complied as to form in all material respects with the applicable accounting requirements of the Securities Act and the related published rules and regulations, was prepared from, and is in accordance with, the books and records of the Companies, which books and records have been maintained, and which financial

statements were prepared, in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented in all material respects the financial position of the Companies as of the dates thereof and the results of their operations, cash flows and changes in financial position for the periods reported (subject, in the case of unaudited quarterly statements, to normal year-end audit adjustments that are immaterial to the Companies as a whole). All of the Companies are consolidated for accounting purposes.

     (b) Section 4.5(b) of the Companies Disclosure Letter contains true and complete copies of the audited statements of owners’ assets and statements of owners’ liabilities for South Texas Project and South Texas Project Nuclear Operating Company as of December 31, 2004 and December 31, 2003 and the audited statements of expenses and miscellaneous income of South Texas Project and South Texas Project Nuclear Operating Company for the fiscal years ended December 31, 2004 and December 31, 2003 (collectively, the “STP Financial Statements" ). To the Company’s knowledge, each of the STP Financial Statements was prepared from, and is in accordance with, the books and records of South Texas Project, which books and records have been maintained, and which financial statements were prepared, in accordance with the owner’s agreements and FERC’s Uniform System of Accounts prescribed for Public Utilities and Licensees (except as may be indicated therein or in the notes thereto) and, as of their respective dates, fairly presented in all material respects the financial position of South Texas Project as of the dates thereof and the results of their operations, cash flows and changes in financial position for the periods reported.

     (c) Except as set forth in Section 4.5(c) of the Companies Disclosure Letter, the management of Genco (i) is in the process of implementing disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) intended to ensure that material information relating to the Companies is timely made known to the management of Genco by others within those entities, and (ii) has disclosed, based on its most recent evaluation, to Genco’s outside auditors and the audit committee of the board of managers of Genco any fraud, whether or not material, that involves management or other employees who have a significant role in Genco’s internal control over financial reporting. A summary of any such disclosure made by management to Genco’s auditors and audit committee has been made available to Buyer.

                 Section 4.6 Absence of Undisclosed Liabilities . Except (a) for liabilities and obligations incurred in the ordinary course of business and consistent with past practice since June 30, 2005, or (b) as otherwise disclosed in the audited financial statements of Genco for the period from July 19, 2004 through December 31, 2004 or reflected in the notes thereto, in the unaudited interim financial statements of Genco for the six-month period ended June 30, 2005 or reflected in the notes thereto, or in the Companies Disclosure Letter, or in the Form S-1, no Company has incurred any liabilities, debts or obligations of any nature (whether direct, indirect, accrued, asserted, unasserted, contingent, known or unknown, determined or determinable, matured or unmatured or otherwise) in excess of $10,000,000, individually or in the aggregate, that would be required to be reflected or reserved against in the consolidated balance sheet of

Genco prepared in accordance with GAAP as used in preparing the June 30, 2005 balance sheet.

                 Section 4.7 Absence of Certain Changes . Except as set forth in the Companies Disclosure Letter, since June 30, 2005 and until the date of this Agreement, the Companies have conducted their businesses only in the ordinary course and in a manner consistent with past practice. Except as set forth in the Companies Disclosure Letter, since June 30, 2005 there has not been any state of facts, change, development, event, effect, condition or occurrence that has or would reasonably be expected to, individually or in the aggregate, have a Companies Material Adverse Effect. Since June 30, 2005 and until the date of this Agreement, except as (i) specifically contemplated by this Agreement, (ii) disclosed in the Form S-1 or (iii) set forth in the Companies Disclosure Letter, there has not occurred any action, development, event or occurrence or failure to act that, if it had occurred after the date of this Agreement, would have required the consent of Buyer under Section 6.1.

                 Section 4.8 Litigation . Except as set forth in Section 4.8 of the Companies Disclosure Letter, or disclosed in the Form S-1, there is no litigation, suit, claim, action, administrative, arbitral or other proceeding, inquiry, audit, hearing petition, grievance, complaint or governmental or regulatory investigation (each an “ Action ”) pending or, to the knowledge of the Companies, threatened against any Company, nor are there any outstanding Orders that affect or bind any Company or its businesses, properties or assets that would reasonably be expected to, individually or in the aggregate, have a Companies Material Adverse Effect. To the Companies’ knowledge as of the date hereof, (i) there are no Actions pending or threatened by any Company against any of the Sellers, and (ii) no basis exists for any such Action.

                 Section 4.9 Compliance with Law

     (a) Each Company is, and since December 15, 2004 (or April 13, 2005 with respect to Holdings and its subsidiaries), each Company has been, in compliance with all applicable Laws and none of the Companies has received any notice (including through any Action), and there has been no Action filed, commenced or, to the knowledge of the Companies, threatened against any Company, alleging any violation of Law, except for any noncompliance or violation that would not reasonably be expected to, individually or in the aggregate, have a Companies Material Adverse Effect.

     (b) Except as would not reasonably be expected to, individually or in the aggregate, have a Companies Material Adverse Effect, (1) the Companies hold all Approvals, authorizations, certificates, licenses, consents and permits of Governmental Authorities (“ Permits ”) necessary for the Companies to own, lease and operate their respective properties and assets and to carry on their respective businesses as currently conducted, and (2) all such Permits are in full force and effect. Except as would not reasonably be expected to, individually or in the aggregate, have a Companies Material Adverse Effect, (1) since December 15, 2004 (or April 13, 2005 with respect to Holdings and its subsidiaries) there has occurred no breach of or default under (with or without notice or lapse of time or both) any such Permit, and none of the Companies has received

any notice (including through any Action) of any such breach or default, and (2) to the knowledge of any Company, there has been no Action filed, commenced or threatened against it, alleging any such breach or default or otherwise seeking to revoke, terminate, suspend or modify any Permit or impose any fine, penalty or other sanctions for violation of any Laws relating to any Permit.

                 Section 4.10 Employee Benefit Plans

     (a) Section 4.10(a)(i) of the Companies Disclosure Letter sets forth, a true and complete list of all “employee benefit plans” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”)), including multi-employer plans within the meaning of Section 3(37) of ERISA, and all stock purchase, stock option, employment, change-in-control, collective bargaining, incentive, employee loan, deferred compensation, pension, profit-sharing, retirement, bonus, retention bonus, severance and other employee benefit or fringe benefit plans, agreements, programs, policies or other arrangements, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the transaction contemplated by this Agreement or otherwise), whether formal or informal, oral or written, legally binding or not, under which (i) any current or former employee, director or consultant of any Company (the “ Company Employees ”) has any present or future right to benefits and which are maintained or sponsored by or with respect to which contributions are made by any Company in any such case, for the benefit of Company Employees, or (ii) any Company has had or has any present or future liability (collectively, the “ Company Plans ” and individually, the “ Company Plan ”). With respect to each Company Plan, Genco has made available to Buyer true and complete copies, to the extent applicable, of (i) the most recent Company Plan documents and any amendments thereto, (ii) the most recent summary plan description and all related summaries of material modifications, if any, (iii) for any Company Plan intended to be qualified under Section 401(a) of the Code, a copy of the most recent favorable determination letter received from the Internal Revenue Service (the “ IRS ”), or, if no such letter exists, a copy of the filing for a favorable determination letter, and (iv) for the most recent year (A) the annual report on Form 5500 filed with the IRS, (B) audited financial statements, and (C) actuarial valuation reports.

     (b) Since December 15, 2004, all Company Plans and their related trusts have been and are, in all material respects, maintained in accordance with, other than as set forth on Section 4.10(b) of the Companies Disclosure Schedule, each such Company’s Plan’s terms and in operation in compliance with applicable requirements of ERISA, the Code, and all other applicable Law. Each Company Plan intended to be “qualified” within the meaning of Section 401(a) of the Code either (i) has applied to the IRS for a favorable determination letter prior to the expiration of the requisite period under the applicable Treasury Regulations or IRS pronouncements in which to apply for such determination letter and to make any amendments necessary to obtain a favorable determination, or (ii) is so qualified and has been determined to be so qualified by the IRS and, to the knowledge of the Companies, there are no facts which would adversely affect the qualified status of any such Company Plan. Except as would not reasonably be expected, individually or in the aggregate, to have a Companies Material Adverse Effect,

no event has occurred and no condition exists that would subject any of the Companies or Buyer, either directly or by reason of the Companies’ affiliation with any ERISA Affiliate (as defined below), to any tax, fine, Lien, penalty or other liability imposed by ERISA, the Code or other applicable Law. Since December 15, 2004, no Form 5500 has been required to be filed with respect to a Company Plan as of the date hereof. Except as otherwise contemplated by this Agreement, there is no present intention that any Company Plan be materially amended, suspended or terminated, or otherwise modified to adversely change benefits (or the levels thereof) under any Company Plan at any time within the 12 months immediately following the date of this Agreement.

     (c) Except as set forth on Section 4.10(c) of the Companies Disclosure Letter, no Company Plan or employee pension plan within the meaning of Section 3(2) of ERISA maintained by any of the Companies, or any entity that is required to be treated as a single employer together with the Companies under Section 414 of the Code (“ ERISA Affiliate ”) that is subject to Section 412 of the Code (each, a “ Company Pension Benefit Plan ”) has had an “accumulated funding deficiency” (as such term is defined in Section 412 of the Code and in Section 303 of ERISA), that remains unsatisfied, whether or not waived, and no unsatisfied liability to the Pension Benefit Guaranty Corporation (“ PBGC ”) has been incurred with respect to any such plan by any Company.

     (d) Since December 15, 2004, none of the Companies nor any ERISA Affiliate contributes to or has or had any liability (including withdrawal liability as defined in Section 4201 of ERISA) under, or with respect to, any multiemployer plan within the meaning of Section 3(37) of ERISA that remains unsatisfied.

     (e) Since December 15, 2004, (i) the requirements of Part 6 of Subtitle B of Title I of ERISA and Code Section 4980B (“ COBRA ”) have been complied with in all material respects by each such Company Plan that is an employee welfare benefit plan, within the meaning set forth in Section 3(1) of ERISA (“ Employee Welfare Benefit Plan ”), subject to COBRA, and (ii) except as set forth in Section 4.10(e) of the Companies Disclosure Letter, none of the Companies has incurred any current or projected liability in respect of post-employment or post-retirement health, medical or life insurance benefits for current, former or retired employees of any of the Companies, except as required to avoid an excise tax under Section 4980B of the Code or otherwise except as may be required pursuant to any other applicable Law.

     (f) Except as set forth in Section 4.10(f) of the Companies Disclosure Letter, since December 15, 2004, (i) no such Company Plan that is a Company Pension Benefit Plan has been completely or partially terminated or been the subject of a “reportable event” within the meaning of Section 4043 of ERISA, (ii) no proceeding by the PBGC to terminate any such Company Pension Benefit Plan has been instituted or threatened and (iii) no administrative investigation, audit or other administrative proceeding by the Department of Labor, the PBGC, the IRS or other governmental agencies are pending, threatened or in progress (including any routine requests for information from the PBGC).

     (g) With respect to each Company Plan, since December 15, 2004, (i) there has been no prohibited transaction within the meaning of Section 406 of ERISA and Section 4975 of the Code, and no fiduciary within the meaning of Section 3(21) of ERISA has any material liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any such Company Plan, and (ii) except as set forth in Section 4.10(g) of the Companies Disclosure Letter, no Action involving any Company Plan (other than routine claims for benefits) is pending or threatened, and, to the knowledge of the Companies or employees of the Companies with responsibility for employee benefits matters, there is no basis for any such Action.

     (h) Except as set forth in Section 4.10(h) of the Companies Disclosure Letter, no Company Plan is a split-dollar life insurance program or provides for loans to executive officers of the Companies (within the meaning of the Sarbanes-Oxley Act of 2002).

     (i) Except as set forth in Section 4.10(i) of the Companies Disclosure Letter, no Company Plan exists that, as a result of the execution of this Agreement, shareholder approval of this Agreement or the transactions contemplated by this Agreement (whether alone or in connection with any subsequent event(s)), could (i) entitle any Company Employee to severance pay or any increase in severance pay upon any termination of employment after the date of this Agreement, (ii) accelerate the time of payment or vesting or result in any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or result in any other material obligation pursuant to, any of the Company Plans, (iii) limit or restrict the right of any Company to merge, amend or terminate any of the Company Plans, (iv) cause any Company to record additional compensation expense on its income statement with respect to any outstanding stock option or other equity-based award, or (v) result in payments under any of the Company Plans which would not be deductible under Section 280G of the Code.

                 Section 4.11 Labor and Employment Matters . Except as set forth in Section 4.11 of the Companies Disclosure Letter, as of the date of this Agreement there are no collective bargaining agreements or other labor Contracts relating to any Company or covering any Company Employee to which any Company is a party or by which it is bound, and, except as would not reasonably be expected, individually or in the aggregate, to have a Companies Material Adverse Effect, there are no (a) Actions or Orders pending or, to the knowledge of any Company, threatened, in each case relating to Company Employees or employment practices or asserting that any Company has committed an unfair labor practice or is seeking to compel any Company to bargain with any labor union or labor organization, (b) pending or, to the knowledge of any Company, threatened labor strikes or other labor troubles affecting any Company, (c) labor strikes, disputes, walk-outs, work stoppages, slow-downs, lockouts, arbitrations or grievances involving any Company (and there has been none with respect to any Company or the Business since December 15, 2004), (d) representation questions respecting any of the Company Employees (and there has been none with respect to any Company or the Business since December 15, 2004), (e) to the knowledge of any Company, campaigns

conducted to solicit cards from Company Employees to authorize representation by a labor organization or (f) unfair labor practices, charges or complaints or Orders seeking to compel any Company to bargain with any labor union or labor organization. Each Company is in compliance in all material respects with all collective bargaining agreements and all applicable Laws regarding employment and employment practices, terms and conditions of employment, wages and hours and occupational safety and health.

                 Section 4.12 Taxes . Since December 15, 2004 with respect to each of the Companies (other than Holdings and its subsidiaries), and since April 13, 2005 with respect to Holdings and its subsidiaries, and except as set forth in Section 4.12 of the Companies Disclosure Letter:

     (a) With respect to each Company, (i) all material Tax Returns required to be filed have been or will be timely filed in accordance with any applicable Laws, and (ii) all material Taxes due have been or will be paid (whether or not such Taxes are shown as being due on any Tax Returns).

     (b) With respect to each Company, (i) there is no material action, suit, proceeding, audit, written claim or assessment pending or proposed with respect to Taxes or with respect to any Tax Return, (ii) there are no waivers or extensions of any applicable statute of limitations for the assessment or collection of Taxes with respect to any Tax Returns which remain in effect, and (iii) there are no material Liens for Taxes upon the assets of any Company, except for Liens for Taxes not yet due and payable or Liens for Taxes being contested in good faith through appropriate proceedings and for which adequate reserves have been maintained in accordance with GAAP.

     (c) None of the Companies (i) is currently or has been a member of an affiliated group filing a consolidated federal income Tax Return or (ii) has any liability for the Taxes of any person under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign Laws), or as a transferee or successor, by contract or otherwise.

     (d) None of the Companies is a party to, bound by or has any obligation under, any Tax sharing, Tax indemnity or similar contract.

     (e) Each Company has withheld and paid over all material Taxes required to have been withheld and paid over, and complied in all material respects with all information reporting requirements, in connection with amounts paid or owing to any employee, creditor, independent contractor or other third party.

     (f) No property of any Company is property that any Company or any party to this transaction is or will be required to treat as being owned by another person pursuant to the provisions of Code Section 168(f)(8) (as in effect prior to its amendment by the Tax Reform Act of 1986).

     (g) None of the Companies has been a party to any distribution in which the parties to such distribution treated the distribution as one to which Section 355 of the Code is applicable.

     (h) None of the Companies has engaged in any “reportable transactions” within the meaning of Treas. Reg. §1.6011-4(b).

     (i) Each of the Companies which is formed as a partnership, limited partnership, limited liability company or limited liability partnership is treated as a partnership for all federal, state and local income Tax purposes and has not made an election to be treated as an association for federal income tax purposes, except for such Companies which are disregarded, for such purposes, as separate from the owner of all the outstanding equity interests in such Company.

     (j) For purposes of this Agreement, “ Taxes ” means all taxes, assessments, charges, duties, fees, levies and other governmental charges, including income, franchise, capital stock, real property, personal property, tangible, withholding, employment, payroll, social security, social contribution, unemployment compensation, disability, transfer, sales, use, excise, gross receipts, value-added and all other taxes of any kind, and any charges, interest, additions to tax, or penalties imposed by any Governmental Authority, and “ Tax Return ” shall mean any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

                 Section 4.13 Title, Ownership and Related Matters . Each Company has good title to, or rights by license, lease or other agreement to use, all properties and assets (or rights thereto) (other than cash, cash equivalents and securities and except as contemplated in this Agreement) necessary to permit each Company to conduct its business as currently conducted, except as set forth in Section 4.13 of the Companies Disclosure Letter or otherwise where the failure to have such title or rights would not reasonably be expected to, individually or in the aggregate, have a Companies Material Adverse Effect. Without limiting the generality of the foregoing:

     (a) Section 4.13(a)(i) of the Companies Disclosure Letter lists and identifies the owner of all material real property and material interests in real property owned by each Company (such real property and interests in real property, together with all the buildings, improvements, structures and fixtures now or subsequently located on the fee property owned by each Company (excluding those structures and fixtures for which title was retained by Reliant Resources, Inc. (“ RRI ”) in the vesting deeds (“ RRI Retained Structures ”), and such buildings, improvements, structures and fixtures now or subsequently located on the property a non-fee interest in which is owned by each Company that were either (i) conveyed to such Company by RRI in the vesting deed or easement or (ii) built by or for such Company or its predecessors (excluding RRI Retained Structures) (collectively, the “ Owned Real Property ”). For purposes of this Section 4.13(a) only, each Company’s “predecessors” shall include Genco Holdings, CenterPoint, Reliant Energy, Incorporated, Houston Lighting & Power Company and all other predecessors in title of each such entity with respect to the Real Property. Section

4.13(a)(ii) of the Companies Disclosure Letter lists all material agreements other than easements or rights of way (together with any amendments, modifications or supplements thereto, the “ Leases ”) pursuant to which any Company leases, subleases, licenses or otherwise occupies (whether as landlord, tenant, subtenant or other occupancy arrangement) any real property or interest in real property that is material to the Business taken as a whole (collectively, the “ Leased Real Property ”, together with the Owned Real Property, the “ Real Property ”) and identifies the Company party thereto. With respect to each of the Real Property, except as set forth in Section 4.13(a)(iii) of the Companies Disclosure Letter and except as would not reasonably be expected to, individually or in the aggregate, have a Companies Material Adverse Effect:

               (i) the identified owner of each parcel of Owned Real Property has good, valid and indefeasible fee simple title to the Owned Real Property that consists of fee property as contrasted with some lesser estate therein, and the identified owner of each parcel of Owned Real Property that does not consist of fee property has good title to such Owned Real Property, free and clear of all Liens other than (A) Liens for current taxes and assessments not yet due and payable, (B) inchoate mechanics’ and materialmen’s Liens for construction in progress, (C) workmen’s, repairmen’s, warehousemen’s and carriers’ Liens arising in the ordinary course of business of the Companies consistent with past practice, and (D) all Liens and other imperfections of title and encumbrances which would not reasonably be expected to materially interfere with the conduct of the Business, taken as a whole (collectively, “ Permitted Liens ”);

               (ii) each Leased Real Property is held subject to a Lease that is a valid and subsisting agreement in full force and effect and constitutes a valid and binding obligation of, and is legally enforceable against, each Company, as applicable, has good and valid title to the leasehold estate in the Leased Real Property, free and clear of any Liens other than Permitted Liens;

               (iii) there are no pending or, to the knowledge of the Companies, threatened condemnation, expropriation or taking proceedings against the Real Property; and

               (iv) there are no outstanding options or rights of first refusal to purchase or lease the Real Property, or any portion thereof or interest therein.

     (b) Section 4.13(b) of the Companies Disclosure Letter sets forth a true and complete list of all material real property or material interests in real property sold, leased, transferred or disposed of since December 15, 2004.

     (c) Except as set forth in Section 4.13(c) of the Companies Disclosure Letter or as would not reasonably be expected to, individually or in the aggregate, have a Companies Material Adverse Effect, (1) all of the Companies’ properties, rights and assets are in good operating condition and repair, subject to continued repair and replacement consistent with past practice, and (2) there are no structural defects in any such properties, rights and assets.

                 Section 4.14 Environmental . Except as set forth in Section 4.14 of the Companies Disclosure Letter, or as would not reasonably be expected to, individually or in the aggregate, have a Companies Material Adverse Effect:

     (a) The Companies are in compliance with all applicable Environmental Laws, and no Company has received any written communication from any Governmental Authority that alleges that any of the Companies is not in compliance with applicable Environmental Laws.

     (b) Each Company has obtained and possesses all environmental, health and safety Permits, including all air emissions allowances and water rights (collectively, the “ Environmental Permits ”) necessary for the construction and operation of its facilities or the conduct of its business, and all such Environmental Permits are in good standing or, where applicable, a renewal application has been timely filed and is pending approval by any Governmental Authority, and the Companies are in compliance with all terms and conditions of the Environmental Permits.

     (c) There is no Environmental Claim (as defined below) (i) pending or, to the knowledge of the Companies, threatened against any Company or (ii) to the knowledge of the Companies, pending or threatened against any real or personal property or operations that any Company owns, leases or uses, in whole or in part, including any off-site facility used by any Company for the treatment, storage and disposal of any Hazardous Substance.

     (d) To the knowledge of the Companies, there has been no Release (as defined below) of any Hazardous Substance (as defined below) that has formed or would reasonably be expected to form the basis of (i) any Environmental Claim against any Company or against any person whose liability for such claim the Companies has or may have retained or assumed, either by operation of Law or by Contract, or (ii) any requirement on the part of any Company to undertake Remedial Action.

     (e) To the knowledge of the Companies, each Company has disclosed to Buyer all facts which such Company reasonably believes form the basis of (i) any Environmental Claims with liability in excess of $25,000,000 in the aggregate against any such Company or (ii) any obligation of any such Company currently required, or known to be required in the future, to incur costs in excess of $25,000,000 in the aggregate for pollution control equipment or environmental remediation under, or otherwise to comply with, applicable Environmental Laws.

     For purposes of this Agreement:

   ” Environmental Claim ” means any and all Actions, demands, demand letters, directives, Liens or notices of noncompliance or violation by any person (including any Governmental Authority) alleging potential liability (including potential responsibility for or liability for enforcement costs, investigatory costs, cleanup costs, governmental response costs, removal costs, remedial costs, natural-resources damages, property damages, personal injuries, fines or

 penalties) arising out of, based on or resulting from (A) the presence, or Release or threatened Release into the environment, of any Hazardous Substances at any location, whether or not owned, operated, leased or managed by the Companies or joint ventures; (B) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law; or (C) any and all Actions by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the presence or Release of any Hazardous Substances;

   ” Environmental Law ” means all Laws relating to pollution, the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or protection of human health and safety as it relates to the environment, including Laws relating to Releases or threatened Releases of any Hazardous Substance, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of any Hazardous Substance including the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (33 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 7401 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.) and the regulations promulgated pursuant thereto, and any such applicable state or local statutes, and the regulations promulgated pursuant thereto, as such Laws have been and may be amended or supplemented to the date of this Agreement;

   ” Hazardous Substance ” means any substance listed, defined or classified as hazardous, toxic or radioactive pursuant to any applicable Environmental Law, including petroleum and any derivative or by-product thereof, and any other substance regulated pursuant to, or the presence or exposure to which may form the basis for liability under, any applicable Environmental Law;

   ” Release ” means any spilling, emitting, leaking, pumping, pouring, emptying, injecting, escaping, dumping, disposing, discharging, or leaching into the environment, or into or out of any property owned, operated or leased by the applicable party; and

   ” Remedial Action ” means all actions, including any capital expenditures, required by a governmental entity or required under any Environmental Law, or voluntarily undertaken to (a) clean up, remove, treat, or in any other way ameliorate or address any Hazardous Substance in the environment; (b) prevent the Release or threat of Release, or minimize the further Release of any Hazardous Substance so it does not endanger or threaten to endanger the public health or welfare of the indoor or outdoor environment; (c) perform pre-remedial studies and investigations or post-remedial monitoring and care pertaining or

relating to a Release; or (d) bring the applicable party into compliance with any Environmental Law.

                 Section 4.15 Intellectual Property . Except as set forth in Section 4.15 of the Companies Disclosure Letter, or as would not reasonably be expected to, individually or in the aggregate, have a Companies Material Adverse Effect: (i) the Companies own or have the valid right to use all the Intellectual Property necessary or desirable to conduct their businesses as currently conducted and consistent with past practice free and clear of all Liens; (ii) the Company IP is valid, enforceable and unexpired, has not been abandoned, and does not infringe, impair, misappropriate, dilute, make unauthorized use of, or otherwise violate (“ Infringe ”) the Intellectual Property of any third party and is not being Infringed by any third party; (iii) no Action or Order is outstanding or pending, or to the knowledge of the Companies, threatened that seeks to cancel, limit or challenge the ownership, use, value, validity or enforceability of any Company IP, and to the knowledge of the Companies, there is no valid basis for same; (iv) each Company has taken all necessary steps (including executing non-disclosure and intellectual property assignment agreements and filing for statutory protections) to protect, preserve, police, maintain and safeguard the value, validity and their ownership of its Company IP, including any material confidential Company IP; and (v) each Company has executed all appropriate agreements with current and past employees, contractors and agents to assign to the Companies all of their right, title and interest in any Company IP.

                 Section 4.16 Contracts . Section 4.16 of the Companies Disclosure Letter contains a true and complete list as of the date hereof of the following Contracts to which any Company is a party or by which any Company properties are bound or affected as of the date of this Agreement:

     (a) Contracts containing covenants restricting the payment of dividends or limiting the freedom in any material respect of any Company or any of their respective affiliates to engage in any line of business or compete with any person or operate at any location;

     (b) Joint venture agreements and limited liability company agreements, partnership agreements or similar agreements with third parties;

     (c) Contracts (other than Derivative Products) involving expenditures (capital or otherwise), liabilities or revenues to the Companies which are reasonably expected to be in excess of $10,000,000 per annum or $50,000,000 in the aggregate;

     (d) Contracts (other than Derivative Products) with terms of one year or longer, unless expenditures, liabilities or revenues to the Companies are not reasonably expected to be in excess of $5,000,000 per annum;

     (e) Derivative Products involving expenditures, liabilities or revenues to the Companies which are reasonably expected to be in excess of $50,000,000 in the aggregate, including any verbal confirmations of such Derivative Products not yet subject

to a written confirmation, including identification of any such counterparty granted a second priority lien in some or all of the Companies’ assets;

     (f) Each lease of personal property (i) requiring lease payments equal to or exceeding $1,000,000 per annum or (ii) the loss of which would reasonably be expected to, individually or in the aggregate with other such losses, have a Companies Material Adverse Effect;

     (g) The Second Amended and Restated Decommissioning Master Trust Agreement for the South Texas Project made August 31, 2002, by and between Holdings and Mellon Bank, N.A., and the Texas Genco, LP Decommissioning Master Trust Agreement No. 2 for the South Texas Project made May 19, 2005, by and among AEP Texas Central Company, Texas Genco, LP and Mellon Bank, N.A. (the “ Decommissioning Trust Agreements ”) and all Contracts related thereto;

     (h) Contracts for the purchase or sale of coal that either are for durations of more than one year from the date of this Agreement or contemplate aggregate volume in excess of 1,000,000 tons for each applicable generating facility and/or Contracts for the transportation of coal for which delivery is required on or after January 1, 2006;

     (i) Contracts for the purchase, sale and lease of railcars;

     (j) the Transaction Agreement, among CenterPoint Energy, Inc. and Genco (formerly known as GC Power Acquisition LLC), among others, dated as of July 21, 2004 (the “ Transaction Agreement ”); and

     (k) Contracts otherwise material to the Companies.

Notwithstanding anything herein to the contrary, the foregoing shall not include (x) Contracts entered into by STPNOC in its capacity as agent for the owners of STP, and (y) Contracts entered into prior to April 14, 2005 by both STPNOC and the owners of STP in their capacity as such, except to the extent the Company has knowledge of such Contracts. True and complete copies of the written Contracts required to be identified in Sections 4.3(d), 4.11, 4.16, 4.17, 4.19 and 4.20 of the Companies Disclosure Letter (all such Contracts, whether now or hereafter existing, collectively, the “ Company Contracts ”) (and true and complete written summaries of any such oral Contracts) have been made available to Buyer, except as set forth in Section 4.16 of the Companies Disclosure Letter. Section 4.16 of the Companies Disclosure Letter includes notations identifying Derivative Products under which the counterparty has a mark-to-market exposure to the Companies of $10 million or more as of September 26, 2005 and which have an adequate assurances or ratings trigger clause that could allow the counterparty to demand that Genco provide collateral under certain circumstances.

Except as would not reasonably be expected, individually or in the aggregate, to have a Companies Material Adverse Effect, no Company is and, to the knowledge of the Companies, no other party is in default under, or in breach or violation of, any Company Contract and, to the knowledge of the Companies, no event has occurred which would

result in any breach or violation of, constitute a default, require consent or result in the loss of a material benefit under, give rise to a right to permit or require the purchase or sale of assets or securities under, give rise to any right of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any of the properties or assets of any Company (in each case, with or without notice or lapse of time or both) connection with, any Company Contract, and each Company Contract is valid, binding and enforceable against the applicable Company in accordance with its terms and is in full force and effect.

As of the date of this Agreement, the Transaction Agreement is in full force and effect and constitutes a valid and binding obligation of, and is legally enforceable against Genco and, to the knowledge of Genco, each other party thereto. Except as set forth in Section 4.16-A of the Companies Disclosure Letter, as of the date hereof, there is not currently pending, nor to the knowledge of the Company threatened, any action, suit, claim or proceeding arising from or relating to the Transaction Agreement.

                 Section 4.17 Insurance . Section 4.17 of the Companies Disclosure Letter contains a true and complete list of the insurance policies and fidelity bonds of or for the benefit of any Company or its assets, businesses, operations, employees, officers or directors (the “ Company Insurance Policies ”). Each of the Company Insurance Policies is valid, enforceable, existing and binding, and the premiums due thereon have been timely paid. There are no outstanding unpaid claims under any of the Company Insurance Policies with respect to any Company, except in the ordinary course of business consistent with past practice. Since December 15, 2004 (or June 30, 2005 with respect to Holdings and its subsidiaries), no Company has received notice of cancellation, termination or non-renewal of any Company Insurance Policy or has been denied insurance coverage. The Company Insurance Policies are sufficient for compliance with applicable Law and all Contracts to which any of the Companies is a party or by which it or any of its assets are bound, and are in such amounts, against such risks and losses, and on such terms and conditions as are consistent with industry practice in the business of each Company.

                 Section 4.18 Regulatory Matters

     (a)  General . The Companies are subject to regulation (i) under the AEA as a licensee or the owner of a licensee, (ii) under Texas utility Law as a “power generation company” (as such term is defined under PURA), and (iii) under the ERCOT protocols as a “resource entity” (as such term is defined in the ERCOT protocols). Except as set forth in the immediately preceding sentences, the Companies are not subject to regulation as a public utility, public utility holding company or public service company (or similar designation) by any Governmental Authority.

     (b)  STP Compliance . Except as set forth in Section 4.18(b) of the Companies Disclosure Letter, the operation of the South Texas Project is and has since April 13, 2005 been conducted in compliance in all material respects with applicable health, safety, regulatory and other legal requirements. Such legal requirements include, but are not limited to, the NRC Facility Operating Licenses for the South Texas Project

issued pursuant to 10 C.F.R. Chapter I, and all regulations, requirements and Orders related in any way thereto; and all obligations of the owners of South Texas Project pursuant to contracts with the United States Department of Energy for the disposal of spent nuclear fuel and high-level radioactive waste, and any Laws of the State of Texas or any agency thereof. Except as set forth in Section 4.18(b) of the Companies Disclosure Letter, as of the date of this Agreement, to the knowledge of the Companies, the operations of the South Texas Project are not the subject of any outstanding notice of violation or material request for information from the NRC or any other agency with jurisdiction over such facility. The South Texas Project maintains, and is in compliance in all material respects with, emergency plans designed to protect the health and safety of the public in the event of an unplanned release of radioactive materials.

     (c)  Exempt Wholesale Generator Status . Each of Texas Genco, LP (“ Genco LP ”) and Texas Genco II, LP (“ Genco II LP ”) is, and has been determined by order of the Federal Energy Regulatory Commission (“ FERC ”) to be, an Exempt Wholesale Generator (“ EWG ”), and neither such order nor Genco LP’s or Genco II LP’s status as an EWG under PUHCA is the subject of any pending or, to the knowledge of the Companies, threatened judicial or administrative proceeding to revoke or modify such status. To the knowledge of the Companies, there are no facts that are reasonably likely to cause either Genco LP or Genco II LP to lose its status as an EWG under PUHCA.

     (d)  Qualified Decommissioning Fund . Except as set forth in Section 4.18(d) of the Companies Disclosure Letter and since April 13, 2005:

               (i) With respect to all periods prior to the Closing Date: (i) Genco’s Qualified Decommissioning Fund consists of one or more trusts that are validly existing and in good standing under the laws of its jurisdiction of formation with all requisite authority to conduct its affairs as it now does; (ii) Genco’s Qualified Decommissioning Fund satisfies the requirements necessary for such fund to be treated as a “Nuclear Decommissioning Reserve Fund” within the meaning of Code Section 468A(a) and as a “Nuclear Decommissioning Fund” and a “Qualified Nuclear Decommissioning Fund” within the meaning of Treas. Reg. Section l.468A-l(b)(3); (iii) Genco’s Qualified Decommissioning Fund is in compliance in all material respects with all applicable rules and regulations of any Governmental Authority having jurisdiction, including the NRC, the PUC and the IRS, (iv) Genco’s Qualified Decommissioning Fund has not engaged in any acts of “self-dealing” as defined in Treas. Reg. Section 1.468A-5(b)(2); (v) no “excess contribution”, as defined in Treas. Reg. Section 1.468A-5(c)(2)(ii), has been made to Genco’s Qualified Decommissioning Fund which has not been withdrawn within the period provided under Treas. Reg. Section 1.468A-5(c)(2)(i); and (vi) except as set forth in Section 4.18(d) of the Companies Disclosure Letter, Genco has made timely and valid elections to make annual contributions to Genco’s Qualified Decommissioning Fund since its inception and Genco has heretofore delivered copies of such elections to Buyer. As used in this Agreement, the term “ Qualified Decommissioning Fund ” means all amounts contributed to qualified funds for administrative costs and costs incurred in connection with the entombment, dismantlement, removal and disposal of the structures, systems and

components of a unit of common facilities, including all costs incurred in connection with the preparation for decommissioning, such as engineering and other planning expenses incurred with respect to the unit of common facilities after actual decommissioning occurs, such as physical security and radiation monitoring expenses, as part of Genco LP’s cost of service required by PURA or as approved by the PUC.

               (ii) Genco has heretofore delivered to Buyer a copy of Genco’s Decommissioning Trust Agreements as in effect on the date of this Agreement.

               (iii) With respect to all periods prior to the Closing Date, (i) Genco and/or Mellon Bank, N.A., the Trustee of Genco’s Qualified Decommissioning Fund (the “ Trustee ”) has/have filed or caused to be filed with the NRC, the IRS and any other Governmental Authority all material forms, statements, reports, documents (including all exhibits, amendments and supplements thereto) required to be filed by Genco and/or the Trustee of Genco’s Qualified Decommissioning Fund; and (ii) there are no interim rate orders that may be retroactively adjusted or retroactive adjustments to interim rate orders that may affect amounts that Buyer may contribute to Genco’s Qualified Decommissioning Fund or may require distributions to be made from Genco’s Qualified Decommissioning Fund. Genco has delivered to Buyer a copy of the schedule of ruling amounts most recently issued by the IRS for Genco’s Qualified Decommissioning Fund and a complete copy of the request that was filed with the IRS to obtain such schedule of ruling amounts and a copy of any pending request for revised ruling amounts, in each case together with all exhibits, amendments and supplements thereto.

               (iv) Genco has made available to Buyer a statement of assets and liabilities prepared by the Trustee for Genco’s Qualified Decommissioning Fund as of December 31, 2004 and as of June 30, 2005 and will make such a statement available as of the most recently available month end preceding the Closing, and they fairly presented and will fairly present as of such dates the financial position of each of Genco’s Qualified Decommissioning Funds. Genco has made available to Buyer information from which Buyer can determine the Tax basis of all assets in Genco’s Qualified Decommissioning Fund and will make such a statement available as of the most recently available month end preceding the Closing.

               (v) Genco has made available to Buyer all material contracts and agreements to which the Trustee, in its capacity as such, is a party.

     (e)  Nonqualified Decommissioning Funds . Except as set forth in Section 4.18(e) of the Companies Disclosure Letter:

               (i) With respect to all periods since April 13, 2005 and prior to the Closing Date, (A) Genco’s Nonqualified Decommissioning Funds are trusts validly existing and in good standing under the laws of its jurisdiction of

formation with all requisite authority to conduct its affairs as it now does, (B) Genco’s Nonqualified Decommissioning Funds are in full compliance in all material respects with all applicable rules and regulations of any Governmental Authority, including the NRC and the PUC and (C) Genco’s Nonqualified Decommissioning Funds are classified as grantor trusts owned by the Genco under Section 671 to 677 of the Code. As used in this Agreement, the term “ Nonqualified Decommissioning Funds ” means the nonqualified funds, as determined by the Trustee and Genco LP, established and maintained under the Decommissioning Trust Agreement for decommissioning South Texas Project Unit No. 1, South Texas Project Unit No. 2 and the common facilities to which monies are contributed, which nonqualified funds are not subject to the conditions and limitations of Section 468A of the Code.

               (ii) Genco and the Trustee of Genco’s Nonqualified Decommissioning Funds have filed or caused to be filed with the NRC and any other Governmental Authority all material forms, statements, reports, documents (including all exhibits, amendments and supplements thereto) required to be filed by either of them with respect to all periods since April 13, 2005.

               (iii) Genco has made available to Buyer a statement of assets and liabilities prepared by the Trustee for Genco’s Nonqualified Decommissioning Funds as of December 31, 2004 and as of June 30, 2005 and will make such a statement available as of the end of the most recently available month end preceding the Closing, and they fairly presented and will fairly present as of such dates the financial position of each of Genco’s Nonqualified Decommissioning Funds.

               (iv) Genco has made available to Buyer all material contracts and agreements to which the Trustee of Genco’s Nonqualified Decommissioning Funds, in its capacity as such, is a party.

     (f)  Foreign Ownership, Control or Influence. Each officer and manager of Genco is a U.S. citizen.

                 Section 4.19 Affiliate Transactions . Except as set forth in Section 4.19 of the Companies Disclosure Letter, there are no Contracts or transactions between any Company, on the one hand, and any (A) Company affiliates (other than the Companies), on the other hand, other than any Contract or transaction entered into in the ordinary course of business and on terms no less favorable than would have been reached on an arms-length basis that is not material to the Company, or (B) (i) officer, manager or director of any Company or its affiliates, or (ii) affiliate of any such officer, manager or director, on the other hand, in each case in this clause (B) except those of a type available to Company Employees generally and other than any Contract or transaction entered into in the ordinary course of business and on terms no less favorable than would have been reached on an arm’s-length basis or that is not material to the Company (all Contracts and transactions referred to in clauses (A) or (B), whether entered into before or after the date hereof, “ Company Affiliate Contracts ”).

                 Section 4.20 Derivative Products

     (a) Since December 15, 2004, no Company has engaged in any “round trip”, “sale/buyback” or “wash” trading or any similar transaction.

     (b) For purposes of this Agreement, “ Derivative Product ” means (i) any swap, cap, floor, collar, futures contract, forward contract, option and any other derivative financial instrument or Contract, based on any commodity, security, instrument, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible, including electricity (including capacity and ancillary services products related thereto), natural gas, crude oil, coal and other commodities, emissions allowances, renewable energy credits, currencies, interest rates and indices and (ii) forward contracts for delivery of electricity (including capacity and ancillary services products related thereto), natural gas, crude oil, petcoke, lignite, coal and other commodities and emissions and renewable energy credits.

                 Section 4.21 Brokers; Finders and Fees . Except for fees to the entities described in Section 4.21 of the Companies Disclosure Letter, which fees will be paid by Genco, none of the Companies and their respective controlled affiliates has employed, engaged or entered into a Contract with any investment banker, broker, finder, other intermediary or any other person or incurred any liability for any investment banking, financial advisory or brokerage fees, commissions, finders’ fees or any other fee in connection with this Agreement or the transactions contemplated by this Agreement.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer hereby represents and warrants to Sellers and Genco as follows:

                 Section 5.1 Organization; Etc . Buyer (a) is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, (b) has all requisite corporate power and authority to own, lease and operate all of its properties and assets and to carry on its business substantially as it is now being conducted, and to execute and deliver this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto, to perform its obligations hereunder and to consummate the transactions contemplated by this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto and (c) is duly qualified or licensed to do business, and is in good standing in each jurisdiction in which the nature of its business or the ownership, operation or leasing of its properties makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not reasonably be expected to, individually or in the aggregate, have a Buyer Material Adverse Effect. As used in this Agreement, the term “ Buyer Material Adverse Effect ” means any state of facts, change, development, event, effect, condition or occurrence materially adverse to the business, assets, properties, liabilities or condition (financial or otherwise) or results of operations of the Buyer and its subsidiaries taken as a whole or that, directly or indirectly,

prevents or materially impairs or delays the ability of Buyer to perform its obligations hereunder; provided, however, that any adverse change or effect attributable to (a) any adoption, implementation, promulgation, repeal, modification, reinterpretation or proposal of any rule, regulation, ordinance, Order, protocol or any other Law of or by any Governmental Authority, (b) changes or developments in national, regional, state or local wholesale or retail markets for power or fuel, including, without limitation, changes in commodity prices, related products, or availability or costs of transportation (c) changes or developments in national, regional, state or local wholesale or retail electric power prices, (d) system-wide changes or developments in national, regional or state electric transmission or distribution systems, other than changes or developments involving physical damage or destruction thereto, (e) the announcement, pendency or consummation of the transactions contemplated by this Agreement (including any decrease in customer demand, any reduction in revenues, any disruption in supplier, partner or similar relationships, or any loss of employees), and (f) changes or developments in financial or securities markets or the economy in general, shall, in each case, be excluded from such determination to the extent, in the case of clauses (a) through (f), any such Laws, changes and developments do not have a disproportionate adverse effect on the Buyer and its subsidiaries as compared to other entities engaged in the power generation business in any of the relevant geographic areas with respect to such Laws, changes or developments, as applicable.

                 Section 5.2 Authority Relative to this Agreement . The execution, delivery and performance of this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto, by Buyer and the consummation of the transactions contemplated by this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto have been duly and validly authorized by all requisite corporate and stockholder action on the part of Buyer and no other corporate actions or proceedings on the part of Buyer are necessary to authorize the execution, delivery and performance of this Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto by Buyer or to consummate the transactions so contemplated. This Agreement and all other agreements and instruments executed in connection herewith or delivered pursuant hereto have been, or will be, duly and validly executed and delivered by Buyer and, with respect to this Agreement and any other such agreement, assuming it has been duly authorized, executed and delivered by any other party (other than an affiliate of Buyer), constitutes, or will constitute when executed, a valid and binding agreement of Buyer, enforceable against Buyer in accordance with its terms, except that (a) enforcement may be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws, now or hereafter in effect, relating to or limiting creditors’ rights generally, and (b) enforcement of this Agreement, including, among other things, the remedy of specific performance and injunctive and other forms of equitable relief, may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. The shares of Buyer Common Stock issuable pursuant to Article I have been duly authorized for issuance and, if Buyer elects to satisfy a portion of the Consideration through the issuance of the Buyer Preferred Stock, the shares of Buyer Preferred Stock issuable pursuant to Article I will be, as of the Closing Date, duly authorized for issuance and, when issued and delivered in

accordance with the provisions of this Agreement, all such shares of Buyer Common Stock and Buyer Preferred Stock will be validly issued and fully paid and nonassessable, and the issuance of such shares will not be subject to preemptive or other similar rights.

                 Section 5.3 Capitalization

     (a) As of the date hereof, the authorized and outstanding equity interests of Buyer consist of the following: (1) 500,000,000 shares of Buyer Common Stock, of which (i) 80,701,198 shares are issued and outstanding, (ii) 19,346,788 are held by Buyer as treasury stock, (iii) 4,000,000 shares are reserved for future issuance to employees pursuant to outstanding stock options under Buyer’s Long-Term Incentive Plan, (iv) 8,670,000 shares are reserved for future issuance in connection with Buyer’s Accelerated Share Repurchase program with respect to Buyer’s 3.625% Convertible Perpetual Preferred Stock, and (v) 13,075,986 shares are reserved for future issuance upon conversion of Buyer’s 4.0% Convertible Perpetual Preferred Stock and (2) 10,000,000 shares of preferred stock, par value $0.01 per share, of which (i) 420,000 shares are designated as “4.0% Convertible Perpetual Preferred Stock”, 420,000 shares of which are issued and outstanding and (ii) 250,000 shares are designated as “3.625% Convertible Perpetual Preferred Stock”, 250,000 shares of which are issued and outstanding. All outstanding shares of capital stock of or interests in each of Buyer and its subsidiaries are validly issued, fully paid and nonassessable, and, other than shares of Buyer, owned by Buyer or its subsidiaries free of preemptive (or similar) rights and free and clear of any Liens, except as set forth in Section 5.3(a) of the disclosure letter delivered by Buyer to Genco concurrently with the execution hereof (the “Buyer Disclosure Letter ”). As of the date hereof, except as set forth in Section 5.3(a) of the Buyer Disclosure Letter or in this Section 5.3(a), there are not (A) any capital stock or other equity interests or voting securities, in Buyer or any subsidiary issued or outstanding, (B) any securities convertible into or exchangeable or exercisable for shares of any capital stock or equity interests or voting securities in Buyer or any subsidiary, (C) any subscriptions, options, warrants, calls, rights, convertible securities or other Contract or commitments of any character obligating Buyer or any subsidiary to issue, transfer or sell any of its capital stock or other equity interests or voting securities, or (D) any equity equivalents, interests in the ownership or earnings or similar rights, or any agreements, arrangements or understandings granting any person any rights in Buyer or any subsidiary similar to capital stock or other equity interests or voting securities (the items in clauses (A), (B), (C) or (D), collectively, “ Buyer Securities ”). There are no (1) outstanding obligations of Buyer to repurchase, redeem or otherwise acquire any Buyer Securities or (2) outstanding obligations of Buyer to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other company or any other person, including as a result of the transactions contemplated by this Agreement. At the Closing, Buyer will convey good and valid title to the shares of Buyer Common Stock and Buyer Preferred Stock constituting the Common Stock Consideration and Preferred Stock Consideration to the Sellers and Optionholders, free and clear of any Liens.

     (b) Except as set forth in Section 5.3(b) of the Buyer Disclosure Letter, Buyer has no direct or indirect equity interest in any person, other than its subsidiaries.

     (c) Section 5.3(c) of the Buyer Disclosure Letter sets forth a true and complete list of each Contract in effect on the date of this Agreement pursuant to which any Indebtedness of Buyer or any subsidiary in excess of $50,000,000 is outstanding or may be incurred, together with the amount outstanding thereunder as of the date of this Agreement. No Contract pursuant to which any Indebtedness of Buyer is outstanding or may be incurred provides for the right to vote (or is convertible into, or exchangeable for, securities having the right to vote) on any matters on which the shareholders of Buyer may vote. No event has occurred which either entitles, or could entitle (with or without notice or lapse of time or both) the holder of any Indebtedness described in Section 5.3(c) of the Buyer Disclosure Letter to accelerate, or which does accelerate, the maturity of any such Indebtedness.

     (d) Buyer does not have in effect any Rights Plan, and the board of directors of Buyer has not adopted or authorized the adoption of such a plan, device or arrangement.

                 Section 5.4 Consents and Approvals; No Violations . Except for the applicable requirements of the HSR Act, NRC Approval, approval from the FERC under Section 203 of the Federal Power Act, and approval of the PUC (if required in the opinion of Buyer’s outside counsel), none of the execution, delivery and performance of this Agreement by Buyer, nor the consummation by Buyer of the transactions contemplated by this Agreement or any other agreements and instruments executed in connection herewith or delivered pursuant hereto, will (a) conflict with, violate or result in any breach of any provision of the certificate of formation, certificate of incorporation, regulations, bylaws or similar documents, as applicable, of Buyer, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration or any right or obligation to purchase or sell securities or assets) under, or require any consent or result in a material loss of a material benefit to Buyer under, any Contract to which Buyer is a party or by which any of its businesses, properties or assets are bound, (c) violate any Law or Permit applicable to Buyer or its business, properties or assets, or (d) require any Approval from or by any Governmental Authority, except in the case of clauses (b), (c) and (d) of this Section 5.4 for those which would not reasonably be expected to, individually or in the aggregate, have a Buyer Material Adverse Effect.

                 Section 5.5 Reports and Financial Statements

     (a) Since December 5, 2003, Buyer has timely filed (i) with the Securities and Exchange Commission (the “ SEC ”) all forms, reports, schedules, statements, registration rights and definitive proxy statements (the “ Buyer Reports ”) required to be filed by Buyer under each of the Securities Act of 1933, as amended, and the respective rules and regulations thereunder (the " Securities Act ”) and the Securities Exchange Act of 1934, as amended, and the respective rules and regulations thereunder

(the “ Exchange Act ”) and (ii) with the SEC, and any other Governmental Authority with jurisdiction all material forms, reports, schedules, registrations, declarations and other filings required to be filed by it under all applicable Laws, including the PUHCA, all of which, as amended if applicable, complied, and with respect to Buyer Reports filed after the date hereof, will comply, in all material respects with all applicable requirements of the appropriate act and the rules and regulations promulgated thereunder. As of their respective dates the Buyer Reports (including exhibits and all other information incorporated by reference thereto) did not, and with respect to Buyer Reports filed after the date hereof, will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated or incorporated by reference therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each of the audited and unaudited consolidated financial statements (including the notes thereto) of Buyer included in the Buyer Reports, when issued, complied, or with respect to Buyer Reports filed after the date hereof, will comply, in all material respects with all applicable accounting requirements, was, or with respect to Buyer Reports filed after the date hereof, will be, prepared from, and is in accordance with, the books and records of Buyer and its subsidiaries, which books and records have been maintained, and which financial statements were prepared, in accordance with GAAP (except, in the case of unaudited quarterly statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis throughout the periods involved (except as may be indicated therein or in the notes thereto) and fairly presented, or with respect to Buyer Reports filed after the date hereof, will fairly present, in all material respects the financial position of Buyer and its subsidiaries as of the dates thereof and the results of their operations, cash flows and changes in financial position for the periods reported (subject, in the case of unaudited quarterly statements, to normal year-end audit adjustments that are immaterial to Buyer and its subsidiaries as a whole).

     (b) The management of Buyer has (i) implemented disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) intended to ensure that material information relating to the Buyer is timely made known to the management of Buyer by others within those entities, and (ii) has disclosed, based on its most recent required evaluation, to Buyer’s outside auditors and the audit committee of board of directors of Buyer (A) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which could adversely affect Buyer’s ability to record, process, summarize and report financial information on a timely basis and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in Buyer’s internal control over financial reporting. A summary of any such disclosure made by management to Buyer’s auditors and audit committee has been made available to Genco.

                 Section 5.6 Absence of Undisclosed Liabilities . Except (a) for liabilities and obligations incurred in the ordinary course of business and consistent with past practice since June 30, 2005, or (b) as otherwise disclosed in the audited financial statements or reflected in the notes thereto, in the unaudited interim financial statements for the six-months period ended June 30, 2005 or reflected in the notes thereto, in the Buyer Disclosure Letter, or in the Buyer Reports filed and publicly available prior to the

date of this Agreement, neither Buyer nor any subsidiary has incurred any liabilities, debts or obligations of any nature (whether direct, indirect, accrued, asserted, unasserted, contingent, known or unknown, determined or determinable, matured or unmatured or otherwise) in excess of $10,000,000, individually or in the aggregate, that would be required to be reflected or reserved against in the consolidated balance sheet of Buyer prepared in accordance with GAAP as used in preparing the June 30, 2005 balance sheet.

                 Section 5.7 Absence of Certain Changes . Except as set forth in the Buyer Disclosure Letter, since June 30, 2005 and until the date of this Agreement, Buyer and its subsidiaries have conducted their businesses only in the ordinary course and in a manner consistent with past practice. Except as set forth in the Buyer Disclosure Letter, since June 30, 2005 there has not been any state of facts, change, development, event, effect, condition or occurrence that has or would reasonably be expected to, individually or in the aggregate, have a Buyer Material Adverse Effect. Since June 30, 2005 and until the date of this Agreement, except as (i) specifically contemplated by this Agreement, (ii) disclosed in the Buyer Reports filed and publicly available prior to the date of this Agreement or (iii) set forth in the Buyer Disclosure Letter, there has not occurred any action, development, event or occurrence or failure to act that, if it had occurred after the date of this Agreement, would have required the consent of Genco under Section 6.2.

                 Section 5.8 Financing . Set forth in Section 5.8 of the Buyer Disclosure Letter is a true and complete copy of an executed commitment letter (the “ Debt Commitment Letter ”) from Morgan Stanley Senior Funding, Inc. and Citigroup Global Markets, Inc. to provide Buyer with (A) $4,800,000,000 in senior secured debt financing (the “ Senior Secured Financing ”), and (B) $5,100,000,000 in bridge financing to fund all necessary amounts not provided for under the Senior Secured Financing (the " Bridge Financing ”, and together with the Senior Secured Financing and any high yield debt financing used to fund the transactions contemplated hereby in lieu of all or a portion of the Bridge Financing (the “ High Yield Financing ”) being collectively referred to as the “ Debt Financing ”, and together with the equity financing used to fund the acquisition in lieu of a portion of the Bridge Financing being collectively referred to as the “ Financing ”). Subject to its terms and conditions, the Financing, when funded in accordance with the Debt Commitment Letter, will provide Buyer with financing sufficient to pay the Cash Consideration, refinance all existing indebtedness of Genco and Buyer that is required to be refinanced in connection with the transactions contemplated hereby, pay any related breakage, make whole, premium or penalty, and pay all other amounts called for to be paid or repaid pursuant to or in connection with this Agreement and the transactions contemplated hereby (whether payable on or after the Closing) and all of Buyer’s fees and expenses associated with the transactions contemplated in this Agreement and refinancing of all existing indebtedness of Genco and Buyer that is required to be refinanced in connection with the transactions contemplated hereby. The Debt Commitment Letter has not been amended or modified, and the respective commitments contained in the Debt Commitment Letter have not been withdrawn or rescinded in any respect. The Debt Commitment Letter, in the form so delivered, is valid and in full force and effect, is the legal and binding obligation of Buyer and, to the knowledge of Buyer, the other parties thereto, and no event has occurred

which, with or without notice, lapse of time or both, would constitute a default or breach on the part of Buyer under any term or condition of the Debt Commitment Letter. There are no conditions precedent or other contingencies related to the funding of the fu