THIRD AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT

 

TABLE OF CONTENTS

		Page
ARTICLE I                 DEFINITIONS AND ACCOUNTING TERMS		2
1.1	Defined Terms	2
1.2	Other Interpretive Provisions	64
1.3	Accounting Terms	65
1.4	Rounding	65
1.5	Times of Day	65
1.6	Letter of Credit Amounts	66
ARTICLE II                THE COMMITMENTS AND CREDIT EXTENSIONS		66
2.1	The Loans; The Pre-Funded L/C Deposit Account	66
2.2	Borrowings, Conversions and Continuations of Loans	69
2.3	Letters of Credit	71
2.4	Optional and Mandatory Prepayments	84
2.5	Termination or Reduction of Commitments; Reduction of Pre-Funded L/C Facility	90
2.6	Repayment of Loans	91
2.7	Interest	92
2.8	Fees	92
2.9	Computation of Interest and Fees	94
2.10	Evidence of Debt	94
2.11	Payments Generally; Administrative Agent’s Clawback	95
2.12	Sharing of Payments by Lenders	97
ARTICLE III              TAXES, YIELD PROTECTION AND ILLEGALITY		97
3.1	Taxes	97
3.2	Illegality	99
3.3	Inability to Determine Rates	100
3.4	Increased Costs; Capital Adequacy; Reserves on Eurodollar Rate Loans	100
3.5	Compensation for Losses	102
3.6	Mitigation Obligations; Replacement of Lenders	102
3.7	Survival	103
3.8	Application to Pre-Funded L/C Participation Fees	103

 

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		Page
ARTICLE IV              CONDITIONS PRECEDENT TO EFFECTIVENESS AND CREDIT EXTENSIONS		103
4.1	Conditions of Effectiveness and Initial Credit Extension	103
4.2	Conditions to All Credit Extensions	106
ARTICLE V                REPRESENTATIONS AND WARRANTIES		107
5.1	Existence, Qualification and Power; Compliance with Laws	107
5.2	Authorization; No Contravention	107
5.3	Governmental Authorization; Other Consents	108
5.4	Binding Effect	108
5.5	Financial Statements; No Material Adverse Effect	108
5.6	Litigation	109
5.7	No Default	109
5.8	Ownership of Property; Liens	109
5.9	Environmental Matters	109
5.10	Insurance	110
5.11	Taxes	111
5.12	ERISA Compliance	111
5.13	Subsidiaries; Equity Interests	112
5.14	Margin Regulations; Investment Company Act	112
5.15	Disclosure	112
5.16	Compliance with Laws	113
5.17	Intellectual Property; Licenses, Etc	113
5.18	Solvency	113
5.19	Perfection, Etc.	113
5.20	Information Technology Systems	114
5.21	Marks	114
5.22	IP/IT Agreements	114
ARTICLE VI              AFFIRMATIVE COVENANTS		114
6.1	Financial Statements	115
6.2	Certificates; Other Information	116

 

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		Page
6.3	Notices	117
6.4	Payment of Obligations	118
6.5	Preservation of Existence, Etc	118
6.6	Maintenance of Properties	118
6.7	Maintenance of Insurance	119
6.8	Compliance with Laws	119
6.9	Books and Records	119
6.10	Inspection Rights	119
6.11	Use of Proceeds	119
6.12	Additional Loan Parties; Security Interests	120
6.13	Further Assurances	121
6.14	Florida Mortgaged Properties	122
6.15	Sale Note, etc	122
6.16	Retail Group Distributions	123
ARTICLE VII             NEGATIVE COVENANTS		124
7.1	Liens	124
7.2	Investments	124
7.3	Indebtedness	124
7.4	Consolidation and Mergers	127
7.5	Asset Sales	128
7.6	Restricted Payments	129
7.7	Line of Business	130
7.8	Transactions with Affiliates	131
7.9	Restrictive Agreements	132
7.10	Use of Proceeds	132
7.11	Financial Covenants	133
7.12	Capital Expenditures	133
7.13	Modification of Certain Agreements	134
7.14	Fiscal Year	135
7.15	Commodity Hedging	135

 

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		Page
7.16	Suspension of Certain Covenants upon Release Date	135
7.17	Orion Subsidiaries	136
7.18	Designated Entities	136
7.19	Foreign Investments	138
7.20	Payment, Commitment Reduction Upon Retail Sale or Wholesale Sale	138
ARTICLE VIII            GUARANTY		138
8.1	Guaranty; Limitation of Liability	138
8.2	Guaranty Absolute	139
8.3	Waivers and Acknowledgments	140
8.4	Subrogation	141
8.5	Assumption and Joinder	142
8.6	Subordination	142
8.7	Continuing Guaranty; Assignments	142
ARTICLE IX              EVENTS OF DEFAULT AND REMEDIES		143
9.1	Events of Default	143
9.2	Remedies upon Event of Default	146
9.3	Application of Funds	146
ARTICLE X               THE AGENTS AND THE ISSUING BANKS		147
10.1	Appointment and Authority	147
10.2	Rights As a Lender	148
10.3	Exculpatory Provisions	148
10.4	Reliance by the Agents	149
10.5	Delegation of Duties	149
10.6	Resignation of Administrative Agents	150
10.7	Non-Reliance on Administrative Agent, the Pre-Funded L/C Facility Agent and Other Lenders	152
10.8	No Other Duties, Etc	152
10.9	Administrative Agent May File Proofs of Claim	152
10.10	Collateral and Guaranty Matters	153
ARTICLE XI          MISCELLANEOUS		156

 

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.

		Page
11.1	Amendments, Etc	156
11.2	Notices; Effectiveness; Electronic Communication	157
11.3	No Waiver; Cumulative Remedies	159
11.4	Expenses; Indemnity; Damage Waiver	159
11.5	Payments Set Aside	162
11.6	Successors and Assigns	162
11.7	Confidentiality	167
11.8	Right of Setoff	167
11.9	Interest Rate Limitation	168
11.10	Counterparts; Integration; Effectiveness	168
11.11	Survival of Representations and Warranties	168
11.12	Severability	169
11.13	Replacement of Lenders	169
11.14	Governing Law; Jurisdiction; Etc	170
11.15	Waiver of Jury Trial	171
11.16	USA PATRIOT Act Notice	171
11.17	No Oral Agreements	171
11.18	Citibank Intercreditor Agreement	171
11.19	Orion Bank Guarantors	171
11.20	Effect of Amendment and Restatement of the Existing Credit Agreement	171
11.21	Release of Guarantors, Collateral	172
11.22	No Advisory or Fiduciary Responsibility	172
SIGNATURE PAGE		S-1

 

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SCHEDULES
1.1(a)	Existing Letters of Credit
1.1(b)	Guarantors
1.1(c)	[Reserved]
1.1(d)	Subordination Terms
1.1(e)	Mortgages and Title Policies
1.1(f)	Secured Hedge Agreements
1.1(g)	Existing Indebtedness
2.1	Commitments and Pro Rata Shares
5.8(c)	Closing Date Mortgaged Properties
5.9(c)	Environmental Matters
5.13	Subsidiaries and Other Equity Investments
5.17	Intellectual Property Matters
7.3(k)	List of Agreements Prohibiting Subordination of Intercompany Indebtedness
10.10(e)	Certain Closing Actions
11.2	Administrative Agent’s Office; Facility Agents’ Offices; Certain Addresses for Notices
11.21	Guarantors and Collateral to be released on the Closing Date
EXHIBITS
	Form of
A	Borrowing Notice
B	L/C Certificate
C	Continuation/Conversion Notice
D-1	Revolving Credit Note
D-2	Term Note
E	Compliance Certificate
F	Assignment and Assumption
G	Assumption and Joinder
H	Sale Note

 

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THIRD AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT

This THIRD AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT (as further amended, restated, supplemented or otherwise modified from time to time, this “ Agreement ”) dated as of December 1, 2006, is among RELIANT ENERGY, INC., a Delaware corporation (the “ Borrower ”), the other LOAN PARTIES referred to herein, as Guarantors, each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”), BANK OF AMERICA, N.A., as Administrative Agent, Revolving Credit Facility Agent, Term Facility Agent, Collateral Agent and Revolving Credit Syndication Agent, DEUTSCHE BANK AG, NEW YORK BRANCH, as Pre-Funded L/C Facility Agent, Term Facility Syndication Agent and Pre-Funded L/C Facility Syndication Agent, GOLDMAN SACHS CREDIT PARTNERS L.P. and MERRILL LYNCH CAPITAL CORPORATION, as Documentation Agents and Joint Book Runners for the Revolving Credit Facility, THE BANK OF NOVA SCOTIA AND UBS LOAN FINANCE LLC, as Documentation Agents and Joint Book Runners for the Term Facility, and ABN AMRO N.V., as Documentation Agent and Joint Book Runner for the Pre-Funded L/C Facility.

PRELIMINARY STATEMENTS:

The Borrower and certain of its Subsidiaries (such terms and each other capitalized term used but not defined in the recitals having the meaning provided in Section 1.1 ) have entered into the Second Amended and Restated Credit and Guaranty Agreement, dated as of December 22, 2004 (such agreement, as further amended, restated, supplemented or otherwise modified prior to the date hereof, the “ Existing Credit Agreement ”) with Bank of America, N.A., as administrative agent, Barclays Bank PLC and Deutsche Bank Securities Inc., as syndication agents, Goldman Sachs Credit Partners L.P. and Merrill Lynch Capital Corporation, as documentation agents, and the other lenders party thereto.

The Borrower has requested that Section 11.13 of the Existing Credit Agreement (including such amended Section 11.13) be amended by the vote of the Required Lenders under (and as defined in) the Existing Credit Agreement to read in its entirety as Section 11.13 of this Agreement, and immediately following the effectiveness of such amendment, that the Existing Credit Agreement (including such amended Section 11.13) be amended and restated in its entirety to become effective and binding on the Borrower pursuant to the terms of this Agreement, and the Required Lenders (under and as defined in the Existing Credit Agreement) have agreed to amend Section 11.13 of the Existing Credit Agreement to read in its entirety as set forth in this Agreement, and immediately following the effectiveness of the amendment to Section 11.13, the Lenders (including those Persons who become Lenders hereunder pursuant to Section 11.13) have agreed to amend and restate the Existing Credit Agreement in its entirety to read as set forth in this Agreement.  It has also been agreed by the parties to the Existing Credit Agreement that the Existing Letters of Credit shall be governed by and deemed to be outstanding under the amended and restated terms and conditions contained in this Agreement, with the intent that the terms of this Agreement shall supersede the terms of the Existing Credit Agreement (each of which shall hereafter have no further effect upon the parties thereto, other than as referenced herein and other than for accrued fees and expenses, and indemnification provisions, accrued and owing under the terms of the Existing Credit Agreement on or prior to

 

the date hereof or arising (in the case of an indemnification) under the terms of the Existing Credit Agreement, in each case to the extent provided for in the Existing Credit Agreement).

The parties hereto agree that from and after the effectiveness of this Agreement, the obligations under the Existing Credit Agreement, including the terms of the extensions of credit outstanding thereunder, shall be continued as, and evidenced by, the Loans, Letters of Credit, Pre-Funded L/C Deposits and other Credit Agreement Obligations and Loan Documents.

The Lenders and the L/C Issuers have indicated their willingness to continue extensions of credit under the Existing Credit Agreement as Loans and Letters of Credit hereunder, and make additional Loans, fund Pre-Funded L/C Deposits and continue existing or issue additional Letters of Credit on the terms and subject to the conditions set forth herein.

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

1.1          Defined Terms.   As used in this Agreement, the following terms shall have the meanings set forth below:

“ Acquired Debt ” means with respect to any specified Person:

(a)           Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and

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

“ Acquisition ” means any transaction or any series of related transactions by which a Person (1) acquires any going business (including a power generation facility) or all or substantially all of the assets of any other Person, or division thereof, whether through purchase of assets, merger, or otherwise or (2) directly or indirectly acquires greater than 50% of the Voting Stock of any other Person.

“ Acquisition Consideration ” means the gross consideration (other than Equity Interests in the Borrower) paid (including Indebtedness assumed) in connection with any Acquisition.

“ Actionable Default ” means (1) the failure to pay any payment of principal of or interest on any Series of Secured Debt outstanding in the amount of $50,000,000 or more resulting in an event of default under the applicable Series of Secured Debt after payment is due, including payments that are due (or if any required offer had been timely made would be due) in respect of any mandatory offer to purchase Parity Secured Debt resulting in an event of default under the applicable Series of Secured Debt, (2) the failure to pay in full, when due and payable in full (whether at maturity, upon acceleration or otherwise), either the Secured Notes or the Loans or

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any other Series of Secured Debt outstanding in the amount of $50,000,000 or more, (3) the exercise by the Collateral Trustee or any of its co-trustees or agents (including the Administrative Agent) of any right or power that is exercisable by it only upon default to take sole and exclusive dominion or control over any deposits in a deposit account, commodity contract in a commodity account or financial asset in a securities account constituting any Shared Collateral or the delivery of any instructions to the Collateral Trustee directing it to foreclose or otherwise enforce, or to disburse the proceeds of enforcement of, any Lien upon any Collateral, or (4) the occurrence of any Event of Default under this Agreement or the Secured Note Agreements arising from the commencement of any bankruptcy case, receivership or other insolvency or liquidation proceeding by or against the Borrower or any of its Subsidiaries or any similar default provision at any time in effect under any indenture or agreement governing any Series of Secured Debt.

“ Additional Guarantor ” means each Person (other than the Guarantors party hereto on the Closing Date) that shall be required to execute and deliver an Instrument of Assumption and Joinder pursuant to Section 6.12 .

“ Administrative Agent ” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

“ Administrative Agent’s Office ” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 11.2 , or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.

“ Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“ Affiliate ” of any specified Person means any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such specified Person; provided , that a Person will be deemed to be an Affiliate of the Borrower if the Borrower has knowledge that such Person beneficially owns 10% or more of the Voting Stock of the Borrower; provided , further , that the Borrower shall only be deemed to have knowledge of any Person beneficially owning 10% or more of the Borrower’s Voting Stock if such Person has filed a statement of beneficial ownership pursuant to Sections 13(d) or 13(g) of the Exchange Act or has provided written notice thereof to the Borrower.  Notwithstanding the foregoing, no Person (other than the Borrower or any Restricted Subsidiary of the Borrower) in whom a Securitization Entity makes an Investment in connection with a Qualified Securitization Transaction shall be deemed to be an Affiliate of the Borrower solely by reason of such Investment.

“ Agent-Related Person ” means each of the Administrative Agent, the Collateral Agent, the Pre-Funded L/C Facility Agent, each Joint Lead Arranger and each Joint Bookrunner named on the cover page of this Agreement, together with their respective Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates.

“ Agents ” means, collectively, the Syndication Agents and the Documentation Agent (as of the Closing Date), the Facility Agents, the Administrative Agent and the Collateral Agent.

“ Aggregate Commitments ” means the Commitments of all the Lenders.

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“ Aggregate Revolving Credit Commitments ” means the Revolving Credit Commitments of all the Lenders.

“ Agreement ” has the meaning specified in the preamble .

“ Applicable Amount ” means the Non-PEDFA Amount minus the PEDFA Amount.

“ Applicable Fronting Commitment ” means (a) in respect of Bank of America and Deutsche Bank, $105,000,000, in each case, in its capacity as a Revolving L/C Issuer; and (b) in respect of each other Revolving L/C Issuers, $70,000,000.

“ Applicable Margin ” means a per annum rate equal to, with respect to Revolving Credit Loans, Term Loans and Pre-Funded L/C Deposits and commitment fee payable under Section 2.8(a) , the appropriate applicable percentage set forth below corresponding to the Consolidated Leverage Ratio as of the most recent Calculation Date with respect to Revolving Credit Loans, Term Loans and Pre-Funded L/C Deposits and the commitment fee; provided that on and after the 180 th  day following the consummation by the Borrower or any of its Subsidiaries of any acquisition of Permitted ERCOT Assets, each of the rates with respect to Revolving Credit Loans set forth below shall increase by 2.00% on the amount of outstanding Revolving Credit Loans which is equal to the lesser of (a) the aggregate amount of all Revolving Credit Loans outstanding as of such date and (b) the amount by which the Acquisition Consideration paid for all acquisitions of Permitted ERCOT Assets on or after the Closing Date through such date exceeds the Funded ERCOT Amount as of such date:

(i)            at any time the ratings in respect of the Borrower’s Corporate Credit/Family Corporate ratings are determined by S&P to be lower than B+ (Stable) or by Moody’s to be lower than B1 (Stable), the Applicable Margin will be the following:

Revolving Credit Loans, Term Loans, Pre-Funded L/C Deposits and Commitment Fees

Pricing Level		Consolidated Leverage Ratio		Applicable Percentage For Eurodollar Loans		Applicable Percentage For Base Rate Loans		Applicable Percentage For Commitment Fees
I		> 4.0:1		2.375	%	1.375	%	0.50	%
II		< 4.0:1		2.125	%	1.125	%	0.50	%

 

(ii)           at any time the ratings in respect of the Borrower’s Corporate Credit/Family Corporate ratings are determined by S&P to be B+ (Stable) or better and by Moody’s to be B1 (Stable) or better, the Applicable Margin will be the following:

Revolving Credit Loans, Term Loans, Pre-Funded L/C Deposits and Commitment Fees

Pricing Level		Consolidated Leverage Ratio		Applicable Percentage For Eurodollar Loans		Applicable Percentage For Base Rate Loans		Applicable Percentage For Commitment Fees
I		> 4.0:1		2.125	%	1.125	%	0.50	%
II		< 4.0:1		2.125	%	1.125	%	0.50	%

 

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Each Applicable Margin with respect to Revolving Credit Loans, Term Loans and Pre-Funded L/C Deposits and the commitment fee shall be determined and adjusted quarterly on the date (each a “ Calculation Date ”) one Business Day after the date by which the Borrower is required to provide the consolidated financial information required by Section 6.1(a) or (b) and the Compliance Certificate required by Section 6.2(a) for the fiscal quarter or year of the Borrower most recently ended prior to the Calculation Date; provided that (i) each such initial Applicable Margin shall be based on Pricing Level I (as shown above) and shall remain at Pricing Level I until the Calculation Date in respect of the fiscal quarter ending June 30, 2007 and, thereafter, each such Applicable Margin shall be based on the Pricing Level (as shown above) corresponding to the Consolidated Leverage Ratio as of the last day of the most recently ended fiscal quarter or year of the Borrower preceding the applicable Calculation Date; (ii) if the Borrower fails to provide the consolidated financial information required by Section 6.1(a) or (b) or the Compliance Certificate required by Section 6.2(a) for the most recently ended fiscal quarter or year of the Borrower preceding any applicable Calculation Date, each such Applicable Margin from such Calculation Date shall be based on Pricing Level I (as shown above) until such time as such consolidated financial information and an appropriate officer’s certificate is provided, whereupon such Applicable Margin shall be based on the Pricing Level (as shown above) corresponding to the Consolidated Leverage Ratio as of the last day of the most recently ended fiscal quarter or year of the Borrower preceding such Calculation Date; and (iii) if and for so long as any Event of Default shall have occurred and be continuing, each such Applicable Margin shall be based on Pricing Level I (as shown above).  Each Applicable Margin shall be effective from one Calculation Date until the next Calculation Date.  Any adjustment in such Applicable Margins shall be applicable to all Revolving Credit Loans, Term Loans and Pre-Funded L/C Deposits then existing or subsequently made.

“ Approved Fund ” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“ Asset Sale ” means:

(a)           the sale, lease, conveyance or other disposition of any assets; and

(b)           the issuance of Equity Interests in any of the Borrower’s Restricted Subsidiaries.

Notwithstanding the foregoing, none of the following items will be deemed to be an Asset Sale:

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(1)           any single transaction or series of related transactions that involves assets with gross cash proceeds of $3,000,000 or less;

(2)           a transfer of assets between or among the Borrower and Restricted Subsidiaries;

(3)           an issuance of Equity Interests by a Restricted Subsidiary to the Borrower or to a Restricted Subsidiary of the Borrower;

(4)           the sale or lease of products, services or accounts receivable in the ordinary course of business and any sale or other disposition of damaged, worn out or obsolete assets or assets no longer used or useful in the Borrower’s or any of its Restricted Subsidiaries’ business;

(5)           the sale or other disposition of cash or Cash Equivalents;

(6)           sales of accounts receivable, equipment and related assets (including contract rights) of the type specified in the definition of Qualified Securitization Transaction to a Securitization Entity;

(7)           a Restricted Payment that is permitted by the provisions of Section 7.6 hereof or a Permitted Investment;

(8)           a disposition resulting from any Condemnation; provided , that if such disposition involves assets with gross cash proceeds in excess of $3,000,000, that any cash proceeds received in connection therewith are treated as Net Asset Sale Proceeds;

(9)           the disposition by Reliant Energy Wholesale Generation, LLC of the substation at the Bighorn generating facility (and the related real property assets) to be conveyed to Nevada Power Company pursuant to the terms and provisions of that certain EPC Agreement dated December 18, 2002 between Reliant Energy Bighorn, LLC and Nevada Power Company; and

(10)         a disposition of assets (other than any assets securing Parity Secured Debt) in connection with a foreclosure, transfer or deed in lieu of foreclosure or other exercise of remedial action.

“ Assignee Group ” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.6(b) ), and accepted by the Administrative Agent, in substantially the form of Exhibit F or any other form approved by the Administrative Agent.

“ Assignment of Leases and Rents ” means any assignment of leases and rents or equivalent document now existing or hereafter entered into, that is executed and delivered by one or more of the Loan Parties to the Collateral Trustee (for the benefit of the Secured Parties), and

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in each case, as such document may be amended, restated, supplemented or otherwise modified from time to time.

“ Attributable Debt ” means, on any date, (a) in respect of a sale and leaseback transaction, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended (such present value to be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP; provided , that if such sale and leaseback transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capital Lease Obligation”) and (b) in respect of any Synthetic Lease Obligation or financing lease, the amount of the remaining lease payments under the relevant lease that would as of such date be required to be capitalized on a balance sheet in accordance with GAAP if such lease were accounted for as a Capital Lease Obligation.

“ Audited Financial Statements ” means the audited consolidated balance sheet of the Borrower and its consolidated Subsidiaries for the Fiscal Year ended December 31, 2005, and the related consolidated statements of income or operations, shareholders’ equity and comprehensive income (loss) and cash flows for such Fiscal Year of the Borrower and its consolidated Subsidiaries, including the notes thereto.

“ Auto-Renewal Letter of Credit ” means a Letter of Credit with an initial expiry date of one year or less after the date of its issuance that has automatic renewal provisions.

“ Availability Period ” means the period from and including the Effective Date to but not including the Revolving Credit Termination Date.

“ Bank of America ” means Bank of America, N.A. and its successors.

“ Bank Security Agreement ” means the Amended and Restated Security Agreement, dated as of July 1, 2003, among the Borrower, the other Loan Parties and Bank of America, as Collateral Agent, as such agreement may be amended, restated, supplemented or otherwise modified from time to time.

“ Bankruptcy Code ” means the Bankruptcy Reform Act of 1978, as heretofore and hereafter amended, as codified at 11 U.S.C. § 101 et seq.

“ Base Rate ” means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate.”  The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.  Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

“ Base Rate Loan ” means a Loan that bears interest based on the Base Rate.

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“ Base Return ” means, with respect to a Pre-Funded L/C Deposit for any Investment Period, an amount equal to the Eurodollar Rate for the applicable Investment Period.

“ Beneficial Owner ” has the meaning specified for such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act.  The terms “ Beneficially Owns ” and “ Beneficially Owned ” have a corresponding meaning.

“ Board of Directors ” means:

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

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

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

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

“ Board Resolution ” means a resolution passed by the Board of Directors of the Borrower.

“ Borrower ” has the meaning specified in the introductory paragraph hereto, and its successors.

“ Borrowing ” means a Revolving Credit Borrowing, a Term Borrowing or a Pre-Funded L/C Borrowing, as the context may require.

“ Borrowing Notice ” means a notice of (a) a Term Borrowing in substantially the form of Exhibit A , (b) a Revolving Credit Borrowing in substantially the form of Exhibit A , (c) a conversion (which shall not constitute a new Borrowing) of Loans from one Type to the other in substantially the form of Exhibit C , or (d) a continuation (which shall not constitute a new Borrowing) of Eurodollar Rate Loans, pursuant to Section 2.2(a) , substantially in the form of Exhibit C .

“ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, Houston, Texas or the state where the Administrative Agent’s Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

“ Capital Expenditure ” means, with respect to any Person for any period, the aggregate amount of all expenditures by such Person during that period which, in accordance with GAAP, are or should be included in “additions to property, plant and equipment”, “capital expenditures” or similar items reflected in the statement of cash flows of such Person for such period.  For purposes of this definition, the purchase price of equipment that is purchased simultaneously

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with the trade-in of existing equipment or with insurance or proceeds of any Condemnation shall be included in Capital Expenditures only to the extent of the gross amount of such purchase price, less the credit granted by the seller of such equipment for the equipment being traded in at such time or the amount of such insurance or proceeds of any Condemnation, as the case may be.

“ Capital Lease Obligation ” means, as applied to any Person, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet of such Person in accordance with GAAP in the reasonable judgment of such Person, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

“ Capital Stock ” means:

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

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

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

(d)           any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

“ Cash Collateralize ” means to pledge and deposit with or deliver to the Collateral Agent, for the benefit of any L/C Issuer and (a) the Revolving Credit Lenders, as collateral for the Revolving L/C Obligations and/or the Revolving Credit Commitments; and (b) the Pre-Funded L/C Lenders, as collateral for the Pre-Funded L/C Obligations and/or the Pre-Funded L/C Commitments, cash or deposit account balances pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent, the Pre-Funded L/C Facility Agent, the Borrower, the Collateral Agent and such L/C Issuer; provided , that such cash or deposit account balances shall not be subject to any Lien other than the Lien of the Lenders to secure the Obligations.  Derivatives of such term (including the term “ Cash Collateral ”) have corresponding meanings.

“ Cash Equivalents ” means:

(1)           United States dollars;

(2)           securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government ( provided , that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than one year from the date of acquisition;

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(3)           deposit accounts with any lender party to this Agreement, Mellon Bank N.A., Wells Fargo Bank, N.A., Wachovia Bank, National Association, or any other bank that has a long-term debt rating at the time of investment of A+ or better by S&P and A1 or better by Moody’s (an “ Approved Bank ”);

(4)           time deposits, certificates of deposit, acceptances or prime commercial paper issued by an Approved Bank at the time acquired or issued (as applicable and whichever is latest), in each case, having a maturity of not more than one year from the date of acquisition;

(5)           repurchase obligations for underlying securities of the types described in clause (2) entered into with an Approved Bank at the time acquired, issued or entered into (as applicable and whichever is latest), in each case, having a maturity of not more than one year from the date of acquisition and secured by securities of the type described in clause (2) , the market value of which (including accrued interest) is not less than the amount of the applicable repurchase agreement;

(6)           commercial paper with a rating at the time of investment of A-1 by S&P and P-1 by Moody’s and, in each case, maturing within one year after the date of acquisition; and

(7)           money market funds which invest primarily in Cash Equivalents of the kinds described in  clauses  (1) through (6) of this definition.

“ Cash Payment Amount ” has the meaning specified in the definition of “Consolidated EBITDAR”.

“ Casualty Event ” means the damage or destruction, as the case may be, of property of any Person; provided , that Casualty Event shall not include any disposition to which clause (8) of the definition of Asset Sale applies.

“ Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

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

(a)           the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Borrower and its Subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d) of the Exchange Act, but excluding any employee benefit plan of the Borrower or any of its Restricted Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan);

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(b)           the adoption of a plan relating to the liquidation or dissolution of the Borrower other than (i) the consolidation with, merger into or transfer of all or part of the properties and assets of any Restricted Subsidiary of the Borrower to the Borrower or any other Restricted Subsidiary of the Borrower and (ii) the merger of the Borrower with an Affiliate solely for the purpose of reincorporating the Borrower or reforming the Borrower in another jurisdiction;

(c)           the consummation of any transaction (including any merger or consolidation) the result of which is that any “person” (as defined above) becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Borrower, measured by voting power rather than number of shares;

(d)           the first day on which a majority of the members of the Board of Directors of the Borrower are not Continuing Directors; or

(e)           the Borrower consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Borrower, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Borrower or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Stock of the Borrower outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance).

“ Channelview ” means Reliant Energy Channelview, L.P., a Delaware limited partnership, and its successors.

“ Closing Date ” means December 22, 2004.

“ Closing Date Mortgaged Properties ” means collectively the properties indicated on Schedule 5.8(c) .

“ Code ” means the Internal Revenue Code of 1986 as amended from time to time.

“ Collateral ” means, collectively, (i) the “Collateral” as defined in the Collateral Trust Agreement, and (ii) the “Collateral” as defined in the Separate Security Agreement.

“ Collateral Agent ” means Bank of America in its capacity as collateral agent for the Credit Agreement Secured Parties, or such successor Collateral Agent as may be appointed pursuant to Article XI .

“ Collateral Trust Agreement ” means that certain collateral trust agreement, dated as of July 1, 2003, entered into among the Borrower, certain of its Subsidiaries and Wachovia Bank, National Association, as initial Collateral Trustee, and acknowledged and agreed to by the Administrative Agent (in its capacity as a collateral trustee agent) and Wilmington Trust Company, as trustee for the holders of the Secured Notes, as such agreement may be amended, restated, supplemented or otherwise modified from time to time.

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“ Collateral Trustee ” means any collateral trustee for the Secured Parties under the Collateral Trust Agreement.

“ Commitment ” means, as the context may require, a Term Commitment, a Revolving Credit Commitment or Pre-Funded L/C Commitment.

“ Commodity Hedging Obligations ” means, with respect to any specified Person, the net obligations of such Person under agreements or arrangements designed to protect such Person against fluctuations in commodity prices.

“ Compliance Certificate ” means a certificate substantially in the form of Exhibit E .

“ Condemnation ” means any condemnation or other taking, or temporary or permanent requisition of, any property, any interest therein or right appurtenant thereto, or any change of grade affecting any property, in each case as the result of the exercise of any right of condemnation or eminent domain.  A sale or other transfer to a Governmental Authority in lieu of, or in anticipation of, condemnation shall be deemed to be a Condemnation.

“ Consolidated EBITDAR ” means, for any period for the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP, an amount equal to, without any duplication, (a) net income (before giving effect to the cumulative effect of changes in accounting principles and discontinued operations and before income taxes and franchise taxes to the extent based on the income of such Person and its Subsidiaries) for such period, plus (b) Consolidated Interest Charges for such period, plus (c) depreciation, depletion, impairment, abandonment and amortization expense for such period, plus (d) the book accounting lease expense under the REMA Lease for such period, plus (e) interest and fees expensed under any receivables monetization or securitization during such period, plus (f) net unrealized losses related to trading or non-trading energy derivatives, plus , (g) cash dividends or distributions actually received during such period from an entity which is not a consolidated Subsidiary of such Person, and minus (h) net unrealized gains related to trading or non-trading energy derivatives; provided , however , for purposes of this definition, (i) gains and losses on the disposition of assets not in the ordinary course of business, (ii) any other noncash charge or gain, and (iii) any extraordinary or other non-recurring item or expense, including severance costs, shall be excluded to the extent incurred or realized during such period in accordance with GAAP from the calculation of Consolidated EBITDAR.

If during any period for which Consolidated EBITDAR is being determined, the Borrower or any Subsidiary shall have (a) made or consummated any Acquisition for gross consideration of $3,000,000 or more (including Indebtedness assumed), then Consolidated EBITDAR shall be determined on a pro forma basis for such period as if such Acquisition had been made or consummated as of the beginning of the first day of such period or (b) made or consummated any Asset Sale that is not fully included in discontinued operations, then Consolidated EBITDAR shall, to the extent such Asset Sale is not excluded from Consolidated EBITDAR pursuant to the foregoing proviso, be determined on a pro forma basis for such period as if such Asset Sale had been made or consummated as of the beginning of the first day of such period.  Furthermore, there shall be added back to Consolidated EBITDAR the amount of any cash charges incurred as a result of, or a condition to, the termination of a contract with non-Affiliates

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under which the Borrower or a Subsidiary is obligated, but only to the extent that the Borrower has Excluded Proceeds arising from Asset Sales after the Effective Date at least equal to the amount (the “ Cash Payment Amount ”) of any cash payment made in connection with such termination.

“ Consolidated Interest Charges ” means, without duplication, for any period for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP, (a) the total interest expense for such period (including the Monthly Sleeve Fee, as defined in the Reimbursement Agreement, or similar fee payable in connection with the Sleeve Transaction, however defined, whether or not included as interest expense in accordance with GAAP), plus (b) the interest expense during such period attributable to (i) the REMA Lease, (ii) the fees and yield paid in connection with, or interest expense attributable to, any account receivables securitization or monetization permitted hereunder, and (iii) any capitalized interest during such period, plus (c) all cash dividends and distributions paid on preferred or preference stock, plus (d) to the extent deducted in determining total interest expense, net unrealized gains under any agreement described in the definition of “Hedging Obligations” permitted hereunder and existing on or prior to the Closing Date (excluding any ongoing settlement payments in connection with permitted interest rate swap agreements), minus (e)(i) the total interest income of such Person and its Subsidiaries, including interest income from any escrow or trust account, (ii) in all cases whether expensed or amortized, any interest expense attributable to (A) any makewhole or premium paid in connection with the repayment of any Debt, (B) any upfront direct or indirect costs, expenses, or fees incurred in connection with, including those arising out of the preparation for the maturity of, (1) any Debt, (2) the incurrence of any Debt after the Closing Date, or (3) the amendment of any Debt, (C) to the extent added in determining total interest expense, the upfront cost and net unrealized losses under any agreement described in the definition of “Hedging Obligations” permitted hereunder and existing on or prior to the Closing Date (excluding ongoing settlement payments in connection with permitted interest rate swap agreements), and (D) any of the RRI Warrants; (iii) all non-recurring interest expense with respect to items not constituting Indebtedness, and (iv) interest expense attributable to Indebtedness repaid or required to be repaid under any Indebtedness for which the Borrower has notified the Administrative Agent in writing that it agrees it will not designate the Net Asset Sale Proceeds as Excluded Proceeds, in each case in connection with an Asset Sale.

“ Consolidated Interest Coverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated EBITDAR for the period of the four prior Fiscal Quarters ending on such date to (b) Consolidated Interest Charges for such period.

“ Consolidated Leverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated Total Debt as of such date to (b) Consolidated EBITDAR for the period of the four Fiscal Quarters most recently ended.

“ Consolidated Total Debt ” means, as of any date of determination, for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP, (i) all outstanding Debt of the Borrower and its Subsidiaries on such date, minus (ii) without duplication, all (a) cash and short-term investments, in an aggregate amount not to exceed $300,000,000 at any time, (b) restricted cash, in an amount not to exceed the aggregate amount of Indebtedness of the Borrower or any of its Subsidiaries, the terms of which Indebtedness cause such cash to appear as restricted cash on

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the consolidated balance sheet of the Borrower and its Subsidiaries, and (c) broker, counterparty, and customer margin/collateral assets and deposits advanced to or held on behalf of such broker, counterparty or customer, as each of the foregoing appears on the consolidated balance sheet of the Borrower and its Subsidiaries.

“ Continuing Directors ” means, as of any date of determination, any member of the Board of Directors of the Borrower who (a) was a member of such Board of Directors on the Effective Date; or (b) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election.

“ Contractual Obligation ” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“ Contribution Agreement ” means that certain Third Amended and Restated Contribution Agreement dated as of the Effective Date and executed by each of the Loan Parties, as such agreement may be amended, restated, supplemented or otherwise modified from time to time.

“ Contribution Date ” has the meaning specified in Section 7.18(b) .

“ Control ” means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; and the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

“ Control Agreement ” means a Deposit Account Control Agreement or a Securities Account Control Agreement.

“ Convertible Notes ” means the Borrower’s 5.00% Convertible Senior Subordinated Notes due 2010 in an aggregate principal amount of $275,000,000, issued pursuant to that certain Indenture, dated as of June 24, 2003, by and between the Borrower and Wilmington Trust Company, as trustee.

“ Core Asset Consent ” means, as of any date of determination, the consent of both (a) Lenders having more than 50% of the Revolving Credit Exposure; and (b) Lenders holding in the aggregate more than 50% of the sum of the aggregate Outstanding Amount of all Term Loans and all Pre-Funded L/C Deposits; provided , that the Commitment of, and the portion of the applicable Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination as to whether the required consent has been obtained under either clause (a) or (b) above.

“ Credit Agreement Obligations ” means all advances to, and debts, liabilities, Obligations, covenants and duties of, any Loan Party arising under or in connection with any Loan Document or otherwise with respect to any Loan, Pre-Funded L/C Deposit or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including Post-Petition Interest.

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“ Credit Agreement Secured Parties ” means, collectively, the Lenders, each L/C Issuer, the Administrative Agent, the Pre-Funded L/C Facility Agent, each counterparty to a Secured Hedge Agreement that is (or at the time such Secured Hedge Agreement was entered into, was) a Lender or an Affiliate thereof (a “ Hedge Bank ”) and (in each case) each of their respective successors, transferees and assigns.

“ Credit Extension ” means each of the following: (a) a Borrowing; (b) an L/C Credit Extension; and (c) the making of a Pre-Funded L/C Deposit.

“ DB Credit Agreement ” means the Credit and Guaranty Agreement, dated as of October 7, 2005, among the Borrower, certain of its Subsidiaries party thereto (as guarantors), certain banks, financial institutions and other Persons from time to time party thereto (as lenders) and Deutsche Bank AG, New York Branch, as administrative agent, as in effect on the Effective Date.

“ Debt ” means, as of any date of determination with respect to the Borrower and its Subsidiaries, without duplication, in accordance with GAAP the following: (a) the total amount of indebtedness, including any fair value adjustments, and other obligations of the Borrower and its Subsidiaries for borrowed money (whether by loan or the issuance of debt securities), including the unreimbursed amount of any drawings under letters of credit issued for the account of the Borrower or any of its Subsidiaries, but excluding the amount of indebtedness for borrowed money that is either (i) required to be repaid under this Agreement or otherwise or (ii) for which the Borrower has notified the Administrative Agent in writing that it agrees it will not designate the Net Asset Sale Proceeds as Excluded Proceeds, in each case in connection with an Asset Sale, (b) all Capital Lease Obligations and, except for the REMA Lease, Attributable Debt in respect of sale and leaseback transactions, Synthetic Lease Obligations or financing leases, (c) the unpaid balance owed to the certificate holders under the REMA Lease, (d) obligations under any accounts securitization or monetization arrangement permitted hereunder and not recorded on the Borrower balance sheet for that period and (e) all guaranties of payment or collection of any obligations described in clauses (a) through (d) of this definition of any other Person; provided , however , that Debt shall not include:  (i) any guaranties that may be incurred by endorsement of negotiable instruments for deposit or collection in the ordinary course of business or similar transactions, (ii) any Obligations or guaranties of performance of Obligations under performance bonds, (iii) trade accounts payable in the ordinary course of business, (iv) customer advance payments and customer deposits arising in the ordinary course of business, (v) the liability of any Person as a general partner of a partnership for Debt of such partnership, if the partnership is not a Subsidiary of such Person, and (vi) any completion or performance guarantees (or similar guarantees that a project or a Subsidiary perform as planned).

In determining the outstanding amount of any Debt:  (a) the amount of money borrowed shall be the outstanding principal amount thereof, (b) the amount of all unreimbursed letters of credit shall be the unreimbursed amount thereof, (c) the amount of any accounts monetization or securitization shall be the amount invested by the investor therein, and (d) the amount of guaranties shall be the amount of the guaranteed obligations determined as provided above in this sentence.

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“ Debtor Relief Laws ” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“ Default ” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

“ Default Rate ” means (a) when used with respect to Credit Agreement Obligations other than Loans, Pre-Funded L/C Deposits and L/C Obligations, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Margin, if any, applicable to Revolving Credit Loans maintained as Base Rate Loans plus (iii) 2% per annum, and (b) when used with respect to Loans, Pre-Funded L/C Deposits and L/C Obligations, a rate equal to (i) the rate of interest applicable thereto hereunder plus (ii) the Applicable Margin, if any, applicable thereto plus (iii) 2% per annum.

“ Defaulting Lender ” means any Lender that (a) has failed to fund any portion of the Term Loans, Revolving Credit Loans or participations in L/C Obligations required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to the Administrative Agent, the Pre-Funded L/C Facility Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.

“ Deposit Account ” shall have the meaning given to such term in the Security Agreement.

“ Deposit Account Control Agreement ” means, with respect to any Deposit Account, a written agreement or other authenticated record, in form and substance reasonably satisfactory to the Administrative Agent, pursuant to which the depositary bank in which such Deposit Account is maintained shall agree, among other things, to comply at any time with instructions from the Collateral Trustee (or its co-trustees, agents or sub-agents) to such depositary bank directing the disposition of funds from time to time credited to such Deposit Account, without further consent of any Loan Party or its nominee, as any such agreement or record may be amended, restated, supplemented or otherwise modified from time to time.

“ Deposit Bank ” means Deutsche Bank or any of its Affiliates.

“ Designated Credit Facilities ” has the meaning specified in the Collateral Trust Agreement; provided , that in no event will the Working Capital Agreement be a Designated Credit Facility.

“ Designated Entities ” means, collectively, OPH, REMA, Channelview, Retail Holdco, IP Trust, IT Trust and (in each case) their respective Subsidiaries.

“ Deutsche Bank ” means Deutsche Bank AG, New York Branch, and its successors.

“ Disqualified Stock ” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of

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the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the Term Loan Maturity Date.  Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Borrower to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Borrower may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the provisions of Section 7.6 .  The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Agreement shall be equal to the maximum amount that the Borrower and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

“ Documentation Agents ” means, collectively, Goldman Sachs Credit Partners L.P. and Merrill Lynch Capital Corporation, as Revolving Credit Facility Documentation Agents, The Bank of Nova Scotia and UBS AG, as Term Facility Documentation Agents and ABN AMRO N.V., as Pre-Funded L/C Facility Documentation Agent.

“ Dollar ” and “ $ ” mean lawful money of the United States.

“ Domestic Subsidiary ” means a Subsidiary that is organized or incorporated under the laws of the United States or a State thereof.

“ Draw Amount ” means, with respect to any Letter of Credit, the amount necessary to settle the obligations of any L/C Issuer under any draft or demand made under such Letter of Credit.

“ Effective Date ” means the first date all the conditions precedent in Section 4.1 are satisfied or waived in accordance with Section 11.1 .

“ Eligible Assignee ” means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent and, if applicable, the Pre-Funded L/C Facility Agent and (solely in the case of any assignment of a Revolving Credit Commitment) each L/C Issuer and (ii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided , that notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower or any of the Borrower’s Affiliates or Subsidiaries or any Person who in the ordinary course of its business owns and/or operates power generating facilities.

“ Environmental Laws ” means any and all Federal, state, local, regional and foreign statutes, laws, rules of common law, constitutional provisions, regulations, ordinances, rules judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or Hazardous Materials, including, without limitation, those relating to the use analysis, generation, manufacture, storage, discharge, emission, release, disposal, transportation treatment, investigation, removal, or remediation of Hazardous Materials.  Environmental Laws include,

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without limitation, those acts commonly referred to as the Comprehensive Environmental Response, Compensation and Liability Act of 1980; the Superfund Amendments and Reauthorization Act; the National Environmental Policy Act; the Hazardous Materials Transportation Act; the Resource Conservation and Recovery Act, the Solid Waste Disposal Act, the Clean Water Act, the Clean Air Act, the Toxic Substances Control Act, and the Occupational Safety and Health Act, and their state counterparts.

“ Environmental Liability ” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“ Equally and Ratably ” means, in reference to sharing of any Liens on Shared Collateral or proceeds thereof as among the holders of Parity Secured Obligations, after allowing for the payment priorities in the Order of Application, that such Liens or proceeds:

(1)           shall be allocated and distributed to the applicable Secured Debt Representative for account of the holders of Secured Notes, to the Administrative Agent for account of the Lenders and to the Secured Debt Representative for each other Series of Secured Debt for account of the holders of such Series of Secured Debt, ratably in proportion to the principal, interest, fees and premium (if any) outstanding, when the allocation or distribution is made, on (i) the Secured Notes, (ii) Credit Agreement Obligations, (iii) Hedging Obligations and amounts payable to a Lender in connection with a bank account or any other banking services, in each case, that are required by this Agreement to be secured on an equal and ratable basis with the Credit Agreement Obligations and (iv) all other Series of Secured Debt (allocated proportionately to the Secured Debt Representative for each other Series of Secured Debt if there is more than one), respectively; and thereafter

(2)           shall be allocated and distributed (if any remain after payment in full of all of the principal, interest, fees and premium (if any) outstanding on the Secured Notes, Credit Agreement Obligations, the Hedging Obligations and other amounts payable to a lender referred to in clause (1) , and each other Series of Secured Debt) to the applicable Secured Debt Representative for account of the holders of any remaining Secured Note Obligations, to the Administrative Agent for account of the Lenders holding any remaining Credit Agreement Obligations, Hedging Obligations or such other amounts and to the Secured Debt Representative for each other Series of Secured Debt for account of the holders of any remaining Parity Secured Obligations in respect of such Series of Secured Debt, ratably in proportion to the aggregate unpaid amount of such remaining Secured Note Obligations, Credit Agreement Obligations, Hedging Obligations or such other amounts and other remaining Parity Secured Obligations, respectively, that are due and demanded prior to the date such distribution is made.

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For this purpose:

(1)           unfunded commitments to extend credit shall not be counted as outstanding debt;

(2)           obligations of the Borrower or any Guarantor in respect of outstanding letters of credit, bank guarantees, bankers’ acceptances or other similar instruments shall be counted as outstanding debt (whether or not contingent), except that if any such instrument thereafter expires without being funded, an equitable adjustment shall be made in any future distribution so that the aggregate amount distributed is distributed Equally and Ratably as if such instrument had never been outstanding (but all distributions shall be final and non-refundable when made);

(3)           during the pendency of any Actionable Default, and subject to the Order of Application, if any payment or distribution is made in cash to the Lenders or any other holders of Parity Secured Obligations from or on account of Separate Collateral by reason of enforcement of Liens or realization in a bankruptcy case, receivership or other insolvency or liquidation proceeding, then any concurrent or subsequent payment or distribution that is to be made in cash to such holders from or on account of Shared Collateral by reason of any such enforcement or realization shall be reduced, and any concurrent or subsequent payment or distribution that is to be made in cash to the remaining holders of Parity Secured Obligations from or on account of Shared Collateral by reason of any such enforcement or realization shall be increased, to the extent necessary to cause the aggregate amount of all payments and distributions made in cash to all holders of Parity Secured Obligations (whether made from or on account of Separate Collateral or from or on account of Shared Collateral) by reason of any such enforcement or realization to be distributed Equally and Ratably as fully as if the Separate Collateral had been Shared Collateral; and

(4)           all amounts apportioned and distributed to the Administrative Agent or the Secured Debt Representative for any other Series of Secured Debt may be allocated, apportioned and distributed by it in accordance with the applicable provisions of the Credit Agreement or the indenture or agreement governing such other Series of Secured Debt, including to give effect to any payment priorities provided for therein as among the holders of obligations outstanding thereunder.

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

“ ERISA ” means the Employee Retirement Income Security Act of 1974.

“ ERISA Affiliate ” means any trade or business (whether or not incorporated) which is a member of the controlled group of the Borrower or under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

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“ ERISA Event ” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

“ Eurodollar Rate ” means, for any Interest Period with respect to a Eurodollar Rate Loan or for any Investment Period with respect to a Pre-Funded L/C Deposit, the rate per annum equal to the British Bankers Association LIBOR Rate (“ BBA LIBOR ”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period or Investment Period, as the case may be, for Dollar deposits (for delivery on the first day of such Interest Period or Investment Period, as the case may be) with a term equivalent to such Interest Period or Investment Period, as the case may be.  If such rate is not available at such time for any reason, then the “Eurodollar Rate” for such Interest Period or Investment Period, as the case may be, shall be the rate per annum determined by the Administrative Agent or the Pre-Funded L/C Facility Agent, as the case may be, to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period or Investment Period, as the case may be, in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by Bank of America or Deutsche Bank and with a term equivalent to such Interest Period or Investment Period, as the case may be, would be offered by Bank of America’s or Deutsche Bank’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period or Investment Period, as the case may be.

“ Eurodollar Rate Loan ” means a Loan that bears interest at a rate based on the Eurodollar Rate.

“ Event of Default ” has the meaning specified in Section 9.1 .

“ Excepted Debt ” means Indebtedness expressly permitted to be incurred or issued pursuant to Section 7.3(a) (solely with respect to the Credit Agreement Obligations in respect of the Revolving Credit Loans and Revolving L/C Obligations), (b) , (c) , (d) , (e) , (f) , (h) , (j) , (k) , (s) and (t) .

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

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“ Exchange Traded Contract ” means each exchange traded contract between Retail Holdco or any of its Subsidiaries and an exchange requiring daily mark-to-market settlement relating to the sale, purchase, delivery or receipt of any power product or natural gas, or any financial derivative in respect thereof.

“ Excluded Entities ” means: (a) Retail Holdco, Channelview, OPH, IP Trust and IT Trust; and (b) each of their respective Subsidiaries; provided , that Retail Holdco, Channelview, OPH, IP Trust, IT Trust, together with their respective Subsidiaries, shall no longer be an “Excluded Entity” in the event that (x) such entity is not prohibited under any agreement for borrowed money or any Sleeve Document from taking the actions set forth in Section 6.12 , and (y) such entity is no longer restricted or prohibited from paying dividends or other distributions to a Loan Party, repaying loans or advances owed to a Loan Party or transferring any of its properties or assets to a Loan Party, other than restrictions imposed by Law.

“ Excluded Proceeds ” means any Net Asset Sale Proceeds that are designated by the Borrower as Excluded Proceeds; provided , that (a) not more than $300,000,000 of such Net Asset Sale Proceeds may be designated as Excluded Proceeds during any single calendar year; (b) not more than $750,000,000 of such Net Asset Sale Proceeds may be designated as Excluded Proceeds on or after the Closing Date; (c) Net Asset Sale Proceeds from Asset Sales of generation assets or other businesses, in each case acquired by the Borrower or any Restricted Subsidiary after the Closing Date pursuant to an Acquisition, may not be designated as Excluded Proceeds; and (d) Retail Sale Proceeds or Wholesale Sale Proceeds may not be designated as Excluded Proceeds.

“ Excluded Taxes ” means, with respect to the Administrative Agent, the Pre-Funded L/C Facility Agent, any Lender, any L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 11.13 ), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 3.1(e) , except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 3.1(a) .

“ Existing Credit Agreement ” has the meaning specified in the first recital .

“ Existing Florida Mortgages ” means the mortgages listed in Item 1 of Schedule 1.1(e) .

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“ Existing Indebtedness ” means Indebtedness (other than intercompany Indebtedness) of the Borrower and its Restricted Subsidiaries in existence on the Closing Date and set forth on Schedule 1.1(g) .

“ Existing Letters of Credit ” means the letters of credit described on Schedule 1.1(a) hereto.

“ Existing Mortgages ” means the mortgages listed in Item 2 of Schedule 1.1(e) .

“ Existing Title Policies ” means the title policies listed in Item 3 of Schedule 1.1(e) .

“ Extraordinary Receipt ” means any cash received by or paid to or for the account of any Person from proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings).

“ Facility ” means the Term Facility, the Revolving Credit Facility or the Pre-Funded L/C Facility, as the context may require.

“ Facility Agent’s Office ” means, with respect to each Facility Agent, such Facility Agent’s address and, as appropriate, account as set forth on Schedule 11.2 or such other address or account as such Facility Agent may from time to time notify to the Borrower and the Lenders.

“ Facility Agents ” means, collectively, the Pre-Funded L/C Facility Agent, the Term Facility Agent and the Revolving Credit Facility Agent.

“ Fair Market Value ” means the value that would be paid by a willing buyer to a willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the chief financial officer of the Borrower or Board of Directors of the Borrower or the selling entity (unless otherwise provided in this Agreement).

“ Fair Value Certificate ” has the meaning specified in the definition of Permitted Sale.

“ Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided , that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

“ Fee Letter ” means any of (a) the letter agreement, dated as of November 28, 2006, among the Borrower and each Arranger, and (b) the letter agreement, dated as of November 28, 2006, between the Borrower and the Administrative Agent, as each may be amended, restated, supplemented or otherwise modified from time to time.

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“ Fiscal Quarter ” means a quarter ending on the last day of March, June, September or December.

“ Fiscal Year ” means any period of twelve consecutive calendar months ending on December 31; references to a Fiscal Year with a number corresponding to any calendar year ( e.g. , the “ 2006 Fiscal Year ”) refer to the Fiscal Year ending on December 31 of such calendar year.

“ Florida Mortgaged Properties ” means the Closing Date Mortgaged Properties described in the Existing Florida Mortgages.

“ Florida Mortgage Supplement ” means a Supplement to the Existing Florida Mortgages, in a form reasonably acceptable to the Agents and the Borrower, and completed to include the Credit Agreement Obligations as Secured Debt under each such Existing Florida Mortgage.

“ Foreign Lender ” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.  For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“ Foreign Person ” means any Person that is not organized or existing under the United States or a state thereof.

“ Foreign Subsidiary ” means any Subsidiary that is not a Domestic Subsidiary.

“ FRB ” means the Board of Governors of the Federal Reserve System of the United States.

“ Free Cash Flow ” means, for any period from January 1, 2005 through the date of its determination:

(a)           the Borrower’s aggregate operating cash flow from continuing operations;

plus

(b)           to the extent deducted in determining operating cash flow from continuing operations, any extraordinary or other non-recurring item or expense, including severance payments;

plus (if a reduction) or minus (if an increase)

(c)           the aggregate changes in margin deposits on energy trading and hedging activities, net;

plus (if a reduction) or minus (if an increase)

(d)           the aggregate changes in restricted cash, all during such period;

minus

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(e)           capital expenditures during such period;

all, except for clause (b) , as indicated on the Borrower’s consolidated statements of cash flows.

“ Fund ” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

“ Funded ERCOT Amount ” means, as of any date, the sum of the amount of Free Cash Flow, Net Financing Proceeds and Net Asset Sales Proceeds actually generated or received, as applicable, under clauses (a) , (b) , (c) , (d) or (f) of the definition of Permitted Acquisition Limit, on and after the Closing Date through such date.

“ GAAP ” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time.

“ Governmental Authority ” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of, or pertaining to, government.

“ Granting Lender ” has the meaning specified in Section 11.6(h) .

“ Guarantee ” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise).  The term “ Guarantee ” as a verb has a corresponding meaning.

“ Guaranteed Obligations ” has the meaning specified in Section 8.1(a) .

“ Guarantors ” means each of:

(a)           the entities listed on Schedule 1.1(b) hereto; and

(b)           any other Subsidiary of the Borrower that executes this Agreement in accordance with the provisions of this Agreement,

and their respective successors and assigns.

“ Guaranty ” means the guaranty of the Credit Agreement Obligations provided by each Guarantor pursuant to the terms of Article VIII of this Agreement.

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“ Hazardous Materials ” means all explosive, flammable, corrosive or radioactive substances or wastes and all hazardous, carcinogenic, mutagenic or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes, toxic mold and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

“ Hedge Bank ” has the meaning specified in the definition of “Secured Parties”.

“ Hedge Termination Value ” means, in respect of any one or more Hedging Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Hedging Agreements, (a) for any date on or after the date such Hedging Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) , the amount(s) determined as the mark-to-market value(s) for such Hedging Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedging Agreements (which may include a Lender or any Affiliate of a Lender).

“ Hedging Agreement ” has the meaning specified in the definition of “Hedging Obligation”.

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

(a)           interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;

(b)           other agreements or arrangements designed to manage interest rate risk; and

(c)           other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates (any agreement or arrangement referred to in this clause or any of the foregoing clauses (a) and (b) , a “ Hedging Agreement ”).

The amount of any net obligation under any Hedging Agreement on any date shall be deemed to be the Hedge Termination Value thereof as of such date.

“ Honor Date ” means the date of any payment by any L/C Issuer under a Letter of Credit.

“ Indebtedness ” means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses or trade payables), whether or not contingent (without duplication):

(a)           in respect of borrowed money;

(b)           evidenced by bonds, notes, debentures or similar instruments or letters of credit or reimbursement agreements in respect thereof;

(c)           in respect of banker’s acceptances;

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(d)           representing Capital Lease Obligations or Attributable Debt in respect of sale and leaseback transactions (including the REMA Lease), Synthetic Lease Obligations or financing leases;

(e)           representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed;

(f)            representing any Hedging Obligations; or

(g)           consisting of Disqualified Stock.

whether or not any of the preceding items appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP.  In addition, the term “ Indebtedness ” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person.  If obligations of a Securitization Entity are Indebtedness, for the purposes of calculating the amount of Indebtedness of a Securitization Entity outstanding as of any date, the face or notional amount of any interest in receivables or equipment that is outstanding as of such date shall be deemed to be Indebtedness but any such interests held by Affiliates of such Securitization Entity shall be excluded for purposes of such calculation.  The amount of any Indebtedness outstanding as of any date will be:

(i)            the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

(ii)           the principal amount of and premium (if any) on the Indebtedness, in the case of any other Indebtedness;

(iii)          in respect of Indebtedness of other Persons secured by a Lien on the assets of the specified Person, the lesser of:

(A)          the Fair Market Value of such asset at such date of determination, and

(B)           the amount of such Indebtedness of such other Persons; and

(iv)          in respect of any Guarantee, an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.

“ Indemnified Taxes ” means Taxes other than Excluded Taxes.

“ Indemnitee ” has the meaning specified in Section 11.4(b) .

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“ Information Technology Systems ” means all information technology systems used in the operation and support of the Wholesale Business including hardware, software, middleware, tools, databases, technical and business information, know-how or other data or information, related documents, registrations and franchises, licenses or leases for any of the foregoing and all license rights and all additions, improvements, enhancements and accessions thereto, and books and records describing or used in connection with any of the foregoing.

“ Initial Term Loans ” means a loan made by a Term Lender to the Borrower under Section 2.1(a) .

“ Instrument of Assumption and Joinder ” means an Assumption and Joinder Agreement substantially in the form of Exhibit G .

“ Intercreditor Confirmation ” means the agreement of any holder of Parity Secured Debt or other Parity Secured Obligations to the provisions described in the Order of Application and definition of the term “Equally and Ratably,” as set forth in any Secured Debt Document for the benefit of, and enforceable as a third party beneficiary by, each present and future holder of Parity Secured Obligations and each present and future Secured Debt Representative.

“ Interest Payment Date ” means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the applicable Maturity Date; provided , that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, each Quarterly Payment Date and the applicable Maturity Date.

“ Interest Period ” means as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three, six, nine, or, if available, twelve months thereafter, as selected by the Borrower in its Borrowing Notice, as the case may be; provided , that:

(i)            any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Rate Loan, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

(ii)           any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(iii)          no Interest Period shall extend beyond the applicable Maturity Date.

“ Investment ” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or similar obligations), advances or capital contributions (excluding payroll, commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities,

27

 

together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP.  “Investment” shall exclude extensions of trade credit by the Borrower and its Restricted Subsidiaries in the ordinary course of business and Permitted PEDFA Bond Indebtedness.  The acquisition by the Borrower or any Subsidiary of the Borrower of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Borrower or such Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person.  Except as otherwise provided in this Agreement, the amount of an Investment shall be its Fair Market Value at the time the Investment is made and without giving effect to subsequent changes in value.

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

“ Investment Grade Rating Date ” means the date on which (i) the rating assigned to the Secured Notes by each of S&P and Moody’s or, if no Secured Notes are outstanding, the corporate rating assigned to the Borrower, is an Investment Grade Rating and (ii) no Default shall have occurred and be continuing.

“ Investment Period ” means, relative to any Pre-Funded L/C Deposits earning a Pre-Funded L/C Participation Fee, the period beginning on (and including) the date on which such Pre-Funded L/C Deposit is deposited or the last day of the preceding Investment Period and ending on (but excluding) the day which numerically corresponds to such date one month thereafter; provided , however , that (a) if any such Investment Period would otherwise end on a day that is not a Business Day, such Investment Period shall end on the next following Business Day (unless such next following Business Day is the first Business Day of a calendar month, in which case such Investment Period shall end on the Business Day next preceding such numerically corresponding day); and (b) the first Investment Period after the Effective Date shall be comprised of the period beginning on (and including) the Effective Date and ending on January 1, 2007.

“ IP/IT Agreements ” means the IP License Agreement, the IP Servicing Agreement, the IP Trust Agreement, the IT Services Agreement, the IT Servicing Agreement, and the IT Trust Agreement.

“ IP License Agreement ” means the Trademark License Agreement, dated as of the Effective Date, between the Borrower and the IP Trust.

“ IP Rights ” has the meaning specified in Section 5.17 .

“ IP Servicing Agreement ” means the Trademark Administrative Servicing Agreement, dated as of the Effective Date, between the Borrower and the IP Trust.

“ IP/IT Trust Assets ” means the “ Trust Assets ”, as collectively defined in the IP Trust Agreement and the IT Trust Agreement.

“ IP Trust ” means Reliant Energy Trademark Trust, a Delaware statutory trust.

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“ IP Trust Agreement ” means the Amended and Restated Trademark Trust Agreement, dated as of the Effective Date, among the Borrower, Reliant Energy Retail Holdings, LLC, and Wilmington Trust Company, as Delaware Trustee.

“ IRS ” means the United States Internal Revenue Service.

“ ISP ” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).

“ IT Services Agreement ” means the Information Technology Services Agreement, dated as of the Effective Date, between the Borrower and the IT Trust.

“ IT Servicing Agreement ” means the IT Administrative Servicing Agreement, dated as of the Effective Date, among the IT Trust, the Borrower, and Reliant Energy Corporate Services, LLC.

“ IT Trust ” means Reliant Energy IT Trust, a Delaware statutory trust.

“ IT Trust Agreement ” means the Amended and Restated IT Trust Agreement, dated as of the Effective Date, among the Borrower, Reliant Energy Corporate Services, LLC, Reliant Retail Holdings, LLC, and Wilmington Trust Company, as Delaware Trustee.

“ Junior Securities ” mean the issuance by the Borrower, solely for cash proceeds (except for the conversion of any convertible security into ordinary common stock of the Borrower), of senior subordinated notes (where either (i) the subordination provisions of such notes shall be at least as favorable to the Lenders as the subordination provisions set forth in Schedule 1.1(d) or the Convertible Notes; or (ii) the subordination provisions shall be in all respects satisfactory to the Agents), or preferred or preference stock of any kind, common equity securities, or any warrants, options or similar instruments for the purchase of any equity interest, whether common or preferred; provided , that any convertible security constituting a “Junior Security” pursuant to the foregoing shall be convertible only into ordinary common stock of the Borrower.

“ Laws ” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority.

“ L/C Certificate ” means a certificate, substantially in the form of Exhibit B , to be delivered by the Borrower to the Administrative Agent, the Pre-Funded L/C Facility Agent and the applicable L/C Issuer in connection with the issuance of each Letter of Credit or the amendment of any outstanding Letter of Credit to increase the face amount thereof (as applicable).

“ L/C Credit Extension ” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

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“ L/C Exposure ” means, at any time, the amount expressed in Dollars of the aggregate or stated face amount of all drafts which may then or thereafter be presented by beneficiaries under all Letters of Credit then outstanding plus (without duplication), the face amount of all drafts which have been presented or accepted under all Letters of Credit but have not yet been paid or have been paid, but not reimbursed, whether directly or from the proceeds of a Revolving Credit Loan or a Pre-Funded L/C Deposit, as the case may be, hereunder.

“ L/C Final Expiration Date ” means the Revolving Credit L/C Final Expiration Date or the Pre-Funded L/C Commitment Termination Date, as the case may be.

“ L/C Issuer ” means each Revolving L/C Issuer and each Pre-Funded L/C Issuer.

“ L/C Obligations ” means the Revolving L/C Obligations and/or the Pre-Funded L/C Obligations, as the case may be.

“ Lender ” has the meaning specified in the introductory paragraph hereto and, as the context requires, includes any L/C Issuer and, any Pre-Funded L/C Lender.

“ Lending Office ” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.

“ Letter of Credit ” means each Revolving Letter of Credit and each Pre-Funded Letter of Credit.

“ Letter of Credit Collateral Account ” has the meaning specified in the Security Agreement.

“ Lien ” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement and any lease that constitutes a security interest.

“ Loan ” means an extension of credit by a Lender to the Borrower under Article II in the form of a Term Loan or a Revolving Credit Loan.

“ Loan Documents ” means (i) this Agreement, (ii) each Note, (iii) each L/C Certificate, (iv) each Security Document, (v) each Secured Hedge Agreement, (vi) the Contribution Agreement, (vii) each UCC financing statement, (viii) each of the Fee Letters, (ix) each Instrument of Assumption and Joinder, (x) each other document, agreement, certificate or instrument required to be or otherwise executed by any Loan Party in connection with this Agreement or any or any of the other documents listed above and (xi) solely for purposes of Section 6.13 , the Orion Note Documents.

“ Loan Party ” means the Borrower and each Guarantor.

“ Material Adverse Effect ” means a material adverse effect upon (a) the business, operations, property, financial condition or prospects of the Borrower and its Subsidiaries taken

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as a whole; or (b) the validity or enforceability against any Loan Party of any Loan Document to which it is a party or the material rights and remedies of the Administrative Agent and the Lenders thereunder.

“ Material Subsidiary ” means, as of any date, any Subsidiary of the Borrower where either (i) $25,000,000 or more of Consolidated EBITDAR during the four-Fiscal Quarter period most recently ended was attributable to such Subsidiary or (ii) as of such date, had assets with a book value of $50,000,000 or more.

“ Maturity Date ” means, as the context may require, the Revolving Credit Termination Date, the Term Loan Maturity Date or the Pre-Funded L/C Commitment Termination Date.

“ Merrill Lynch ” means Merrill Lynch Capital Corporation and its successors.

“ ML&Co. ” means Merrill Lynch & Co. Inc., a Delaware corporation.

“ MLCI ” means Merrill Lynch Commodities, Inc., a Delaware corporation.

“ Moody’s ” means Moody’s Investors Service, Inc. or if such company shall cease to issue ratings, another nationally recognized rating company selected in good faith by mutual agreement of the Administrative Agent and the Borrower.

“ Mortgage ” means any mortgage, deed of trust, deed to secure debt or such equivalent document now existing or hereafter entered into covering the Mortgaged Real Property Assets, that is executed and delivered by one or more of the Loan Parties to the Collateral Trustee (for the benefit of the Secured Parties), including the Existing Mortgages, as any such document may be amended, restated, supplemented or otherwise modified from time to time.

“ Mortgage Supplement ” means Supplements to the Existing Mortgages (except for the Existing Florida Mortgages), substantially in the form of the form of Supplement attached to each Existing Mortgage, and completed to include the Sharing Eligible Debt in existence on the Effective Date as an “Additional Series of Secured Debt” under each such Existing Mortgage.

“ Mortgaged Real Property Assets ” means those real property assets of the Loan Parties on which a Lien has been granted by the applicable Loan Party to the Collateral Trustee (for the benefit of the Secured Parties).

“ Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

“ Net Asset Sale Proceeds ” means the aggregate cash proceeds received by the Borrower or any of its Restricted Subsidiaries in respect of any Asset Sale (including any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale and payments made to retire Indebtedness (other than the Loans) required to be repaid in connection therewith, including legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result

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of the Asset Sale, taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, and amounts reserved for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP.

“ Net Casualty Proceeds ” means, with respect to any Casualty Event, the amount of any insurance proceeds or condemnation awards received by the Borrower, any Loan Party or OPH or any of its Subsidiaries in connection with such Casualty Event in excess of $10,000,000, individually or in the aggregate over the course of a Fiscal Year (net of all reasonable and customary collection expenses thereof), but excluding any proceeds or awards required to be paid to a creditor (other than the Lenders) which holds a first priority Lien permitted by Section 7.1 on the property which is the subject of such Casualty Event.

“ Net Financing Proceeds ” means with respect to the incurrence or issuance after the Closing Date by the Borrower to any Person of any Senior Debt or Junior Securities permitted under this Agreement, the excess of:

(a)           the gross cash proceeds received by the Borrower from such incurrence or issuance, over

(b)           all reasonable and customary underwriting commissions and legal, investment banking, brokerage and accounting and other professional fees, sales commissions and disbursements actually incurred in connection with such sale or issuance which have not been paid to Affiliates of the Borrower in connection therewith.

“ New Secured Notes ” means the Borrower’s 6.75% Secured Notes due 2014.

“ Non-PEDFA Amount ” means the amount of Net Asset Sale Proceeds resulting from a Retail Sale or from a Wholesale Sale that would be required under Section 2.4(b), (a) if no Event of Default is continuing at the time of such sale, to Cash Collateralize L/C Obligations; or (b) if an Event of Default is continuing at the time of such sale, to prepay Loans and Cash Collateralize L/C Obligations, in each case, calculated as if PEDFA Debt was not included in Parity Secured Debt.

“ Non-Recourse ” means, with respect to any specified Person and the Indebtedness of such Person:

(1)           neither the Borrower nor any of its Restricted Subsidiaries (A) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) for the Indebtedness of such Person other than a pledge of the Equity Interests of such Person or of the Subsidiaries of such Person, (B) is directly or indirectly liable as a guarantor or otherwise of the Indebtedness of such Person, or (C) constitutes the lender with respect to the Indebtedness of such Person; and

(2)           in the case of an Unrestricted Subsidiary, no default on the Indebtedness of such Unrestricted Subsidiary (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of Indebtedness of the Borrower or any of

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its Restricted Subsidiaries to declare a default on such Indebtedness of the Borrower or any of its Restricted Subsidiaries or cause the payment of such Indebtedness of the Borrower or any of its Restricted Subsidiaries to be accelerated or payable prior to its stated maturity.

“ Nonrenewal Notice Date ” means, for any Letter of Credit, a day (to be agreed upon at the time such Letter of Credit is issued) before which the relevant L/C Issuer may prevent the renewal of such Letter of Credit.

“ Note ” means a promissory note made by the Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit D-1 or Exhibit D-2 , as applicable.

“ Obligations ” means any principal, interest, premium, fees, indemnifications, reimbursements, expenses, damages and other liabilities payable under the documentation governing any Indebtedness.

“ OPC ” means Orion Power Capital, LLC, a Delaware limited liability company, and its successors.

“ OPH ” means Orion Power Holdings, Inc., a Delaware corporation, and its successors.

“ OPH Asset Sale Proceeds ” means any Net Asset Sale Proceeds received by the Borrower or any of its Subsidiaries from any Asset Sale by OPH or any of its Subsidiaries.

“ OPH Note Indenture ” means the Indenture, dated as of April 27, 2000, among OPH and Wilmington Trust Company, as trustee, pursuant to which the OPH Notes were issued, as amended, restated, supplemented or otherwise modified from time to time.

“ OPH Notes ” means OPH’s 12% Senior Notes due 2010.

“ OPMW ” means Orion Power MidWest, L.P., a Delaware limited partnership, and its successors.

“ OPMW Revolving Note ” means the revolving note, dated as of the date hereof, issued by OPMW to the Borrower in the maximum principal amount of $75,000,000 as amended, restated, supplemented or otherwise modified from time to time.

“ Order of Application ” has the meaning assigned to it in the Collateral Trust Agreement.

“ Organization Documents ” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or

33

 

organization and, if applicable, any certificate or articles of formation or organization of such entity.

“ Orion Guarantors ” means, collectively, OPC, OPMW, Orion Power Midwest GP, Inc. and Orion Power Midwest LP, LLC.

“ Orion Guaranty ” means the Amended and Restated Guaranty Agreement executed by the Orion Guarantors in favor of Reliant Energy, Inc., as secured party, as amended, restated, supplemented or otherwise modified from time to time.

“ Orion Note Document ” means each OPMW Revolving Note and each agreement or other document executed in connection therewith.

“ Orion Security Agreement ” means  the Amended and Restated Security Agreement executed by OPH and the Orion Guarantors in favor of Reliant Energy, Inc., as secured party, as amended, restated, supplemented or otherwise modified from time to time.

“ Other Taxes ” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

“ Outstanding Amount ” means (a) with respect to Term Loans, Revolving Credit Loans and Pre-Funded L/C Deposits on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments, repayments or refundings of Term Loans, Revolving Credit Loans and Pre-Funded L/C Deposits, as the case may be, occurring on such date; (b) with respect to any Revolving L/C Obligations on any date, the amount of such Revolving L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the Revolving L/C Obligations as of such date, including as a result of any reimbursements by the Borrower of applicable Unreimbursed Amounts; and (c) with respect to any Pre-Funded L/C Obligations on any date, the aggregate amount of such Pre-Funded L/C Obligations on such date after giving effect to any Pre-Funded L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the Pre-Funded L/C Obligations as of such date, including as a result of the aggregate amount of any reimbursements by the Borrower of applicable Unreimbursed Amounts.

“ Parent Services Agreement ” means the Master Services Agreement among the Borrower or other Loan Parties and Retail Holdco and its Subsidiaries entered into as a condition to the closing of the Reimbursement Agreement, as amended, supplemented, amended and restated or otherwise modified, renewed or replaced from time to time.

“ Parity Secured Debt ” means, collectively:

(1)           the Secured Notes;

(2)           the PEDFA Guaranties;

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(3)           the Credit Agreement Obligations; and

(4)           Sharing Eligible Debt that is designated by the Borrower, in a certificate of a Responsible Officer of the Borrower delivered to the Collateral Trustee on or before the date of incurrence of such Indebtedness, as entitled to share Equally and Ratably in the benefits and proceeds of all Liens held by the Collateral Trustee in Shared Collateral.

“ Parity Secured Obligations ” means, collectively, the Secured Note Obligations, the PEDFA Guaranty Obligations, the Credit Agreement Obligations and all Obligations in respect of each other Series of Secured Debt.

“ Participant ” has the meaning specified in Section 11.6(d) .

“ PBGC ” means the Pension Benefit Guaranty Corporation.

“ PEDFA Amount ” means the amount of Net Asset Sale Proceeds resulting from a Retail Sale or from a Wholesale Sale that would be required under Section 2.4(b) , (a) if no Event of Default is continuing at the time of such sale, to Cash Collateralize L/C Obligations; or (b) if an Event of Default is continuing at the time of such sale, to prepay Loans and Cash Collateralize L/C Obligations, in each case, calculated as if PEDFA Debt was included in Parity Secured Debt.

“ PEDFA Debt ” means the outstanding amount of Indebtedness permitted pursuant to clause (d) of Section 7.3 .

“ PEDFA Guaranties ” means collectively, the Borrower’s (i) five Guarantee Agreements, each dated as of December 22, 2004, among the Borrower, the Guarantors and J.P.Morgan Trust Company, as trustee, and (ii) other guaranties constituting Permitted PEDFA Bond Indebtedness made by the Borrower from time to time in accordance with Section 7.3 .

“ PEDFA Guaranty Obligations ” means:

(1)           the Obligations of the Borrower under the PEDFA Guaranties issued on the Closing Date; or

(2)           the Obligations of the Borrower under the PEDFA Guaranties issued after the Closing Date that constitute another Series of Secured Debt.

“ Pension Plan ” means any “employee pension benefit plan” (as such term has the meaning specified in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

“ Permitted Acquisition ” means any Acquisition by the Borrower or any of its Restricted Subsidiaries that satisfies all of the following conditions:  (1) the aggregate Acquisition Consideration paid or incurred by the Borrower and its Restricted Subsidiaries in connection with such Acquisition, together with the aggregate Acquisition Consideration paid by Borrower

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and its Restricted Subsidiaries in connection with all other Acquisitions since the Closing Date, does not exceed the Permitted Acquisition Limit, (2) no Default shall have occurred and be continuing or would result therefrom on the date of the closing of such Acquisition, (3) the Borrower shall have delivered to the Administrative Agent a certificate of an Authorized Officer certifying compliance with Section 7.11 on a pro forma basis after giving effect to the Acquisition (without supporting calculations), (4) the acquired Person is in (or the acquired assets are useful in) a Permitted Business, and (5) the assets, including any Capital Stock, acquired pursuant to such Acquisition shall be pledged as additional collateral for the Facilities, and any acquired entity shall become a Guarantor, in each case in accordance with Section 6.12 .

“ Permitted Acquisition Limit ” means, as of any date, an amount equal to the sum of (a) the lesser of (i) 50% of Free Cash Flow for the period from the Closing Date through such date and (ii) $1,000,000,000; (b) in the case of the acquisition of a Permitted ERCOT Asset, the amount of additional senior secured Indebtedness issued for such Acquisition, not to exceed $500,000,000; (c) the amount of additional senior secured Indebtedness issued since the Closing Date, not to exceed $300,000,000; (d) the amount of unsecured Indebtedness and Specified Junior Securities issued since the Closing Date, but only to the extent not required hereunder to be applied to the prepayment of Loans; (e) with respect to acquisitions of Permitted ERCOT Assets through December 22, 2006, an amount, not less than zero, equal to $500,000,000 less the amounts under clauses (a) , (b) , (c) , (d) , and (f) of this definition used for Acquisition Consideration of Permitted ERCOT Assets; and (f) the amount of Excluded Proceeds since the Closing Date (less the aggregate Cash Payment Amounts actually added back to Consolidated EBITDAR after the Effective Date), in each case to the extent such amounts are actually received by the Borrower and permitted to be retained by it under this Agreement.

“ Permitted Business ” means the business of providing services and products in the energy market and any businesses incidental or reasonably related thereto.

“ Permitted Debt ” has the meaning specified in Section 7.3 .

“ Permitted Encumbrances ” has the meaning specified in the Mortgages.

“ Permitted ERCOT Assets ” means (1) electric generating assets together with assets related thereto (including any assets related to the operation and fuel supply of such electric generating assets) which assets support the Borrower’s and/or its Restricted Subsidiaries’ retail business in the State of Texas and (2) all (but not less than all) of the Capital Stock of any Person that owns solely Permitted ERCOT Assets (whether directly or through one or more wholly owned Subsidiaries) described in clause (1) above.

“ Permitted Exceptions ” means secured Indebtedness of the Borrower or any of its Restricted Subsidiaries incurred pursuant to Section 7.3(b) , (c) , (d) , (h) (other than Secured Note Obligations), (s) (solely with respect to Indebtedness to which clause (6) or (7) of the definition of Permitted Liens applies), and (t) , and in each case Permitted Refinancing Indebtedness with respect to the foregoing.

“ Permitted Investments ” means:

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(1)           any Investment by the Borrower or any Restricted Subsidiary in the Borrower or in a Restricted Subsidiary and Investments existing on the Closing Date and on Schedule 5.13 ;

(2)           any Investment in Cash Equivalents and, in the case of any Person, cash equivalents or other liquid investments permitted under any credit facility constituting Permitted Debt to which such Person is a party;

(3)           any Investment by the Borrower or any Restricted Subsidiary constituting a Permitted Acquisition;

(4)           any Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with (i) all other Investments made pursuant to this clause that are at the time outstanding and (ii) the aggregate amount of Restricted Payments made pursuant to Section 7.6 , not to exceed $75,000,000 since the Closing Date;

(5)           any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the provisions of Section 7.5 ;

(6)           any acquisition of assets or Capital Stock solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Borrower;

(7)           any Investments received in compromise or resolution of (A) Obligations of trade creditors or customers that were incurred in the ordinary course of business of the Borrower or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (B) litigation, arbitration or other disputes with Persons who are not Affiliates;

(8)           Investments represented by Hedging Obligations;

(9)           loans or advances to employees made in the ordinary course of business up to an aggregate principal amount not to exceed $10,000,000 at any one time;

(10)         any Investment acquired by the Borrower or any of its Restricted Subsidiaries on account of any claim against, or interest in, any other Person (A) acquired in good faith in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of such other Person or (B) as a result of a bona fide foreclosure by the Borrower or any of its Restricted Subsidiaries with respect to any claim against any other Person;

(11)         repurchases of the Secured Notes or other Parity Secured Debt (not using proceeds of Revolving Credit Loans except as expressly permitted hereunder);

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(12)         any Investment by the Borrower or a Restricted Subsidiary of the Borrower in a Securitization Entity or any Investment by a Securitization Entity in any other Person in connection with a Qualified Securitization Transaction;

(13)         payment of consolidated taxes pursuant to the Tax Sharing Agreement, dated as of October 1, 2002, among the Borrower and its Subsidiaries named therein, as amended, supplemented or modified from time to time, the Parent Services Agreement or any other tax allocation agreements among the Borrower and its Subsidiaries;

(14)         receivables owing to the Borrower or a Restricted Subsidiary, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided , that such trade terms may include such concessionary trade terms as the Borrower or such Restricted Subsidiary deems reasonable under the circumstances; and

(15)         other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause that are at the time outstanding not to exceed $125,000,000.

“ Permitted Liens ” means:

(1)           Liens held by the Collateral Trustee Equally and Ratably securing all Indebtedness that is Parity Secured Debt and Equally and Ratably securing all other Parity Secured Obligations;

(2)           Liens that are granted or maintained by the Borrower and the Restricted Subsidiaries as security for Credit Agreement Obligations;

(3)           Liens on assets of REMA and its Subsidiaries securing Indebtedness of REMA and its Subsidiaries permitted to be incurred pursuant to clause (c) of Section 7.3 , including cash collateral for letters of credit issued thereunder and Liens encumbering assets of REMA and/or any of its Subsidiaries securing obligations under, or in connection with, or which constitute, Qualifying Credit Support (as defined in the participation agreements to which REMA is a party);

(4)           Liens on assets of the Seward Subsidiary securing Permitted PEDFA Bond Indebtedness incurred by the Seward Subsidiary and that is Non-Recourse to the Borrower and all of its other Restricted Subsidiaries (other than an unsecured Guarantee, if any, provided by the Borrower or any Guarantor);

(5)           Liens on assets of a Restricted Subsidiary in existence on the date on which such Person becomes a Restricted Subsidiary ( provided , that (i) such Liens existed at the time such Person became a Restricted Subsidiary and were not created in anticipation thereof, (ii) no such Lien shall attach to any asset acquired by such Person, after such Person became a Restricted Subsidiary, pursuant to an Investment in such Person by the Borrower or any Restricted Subsidiary, or in an Affiliate Transaction that

38

 

does not satisfy the requirements of Section 7.8(a) and (iii) the amount of Indebtedness secured thereby is not increased);

(6)           Liens securing Capital Lease Obligations and purchase money obligations, in each case permitted to be incurred pursuant to clause (s) or (t) of Section 7.3 , covering only the assets acquired with or financed by such Indebtedness;

(7)           Liens securing obligations under sale leaseback transactions and Synthetic Lease Obligations, in each case permitted to be incurred pursuant to clause (s) or (t) of Section 7.3 , covering only the assets acquired with or financed by such Indebtedness;

(8)           Liens in favor of the Borrower or the Guarantors;

(9)           Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided , that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;

(10)         Liens imposed by law, such as carriers’, warehousemen’s, landlord’s and mechanics’ Liens, in each case, incurred in the ordinary course of business;

(11)         survey exceptions, encumbrances, easements or reservations, including those for licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines, other utilities, mineral reservations and rights and leases, zoning restrictions and other restrictions as to the use of real property or other exceptions to title that were not incurred in connection with Indebtedness and that (A) exist on the Closing Date and are recorded on such date, (B) are permitted under the terms of the Security Documents or (C) do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

(12)         Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under this Agreement if such Permitted Refinancing Indebtedness is incurred by the same obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded (except as provided in clause (4) of the definition of Permitted Refinancing Indebtedness); provided , that:

(a)           the new Lien shall be limited to all or part of the same categories of property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof), except, if Permitted PEDFA Bond Indebtedness is Sharing Eligible Debt, it may be secured by Liens held by the Collateral Trustee on the Shared Collateral;

(b)           the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (i) the outstanding principal amount or, if greater, committed amount of the Permitted Refinancing Indebtedness and (ii) an amount necessary to pay any fees and expenses, including premiums, related to such refinancings, refunding, extension, renewal or replacement and (iii) any protective

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advances with respect to the property and assets that secure such Permitted Refinancing Indebtedness;

(13)         Liens on assets transferred to a Securitization Entity or on assets of a Securitization Entity, in either case incurred in connection with a Qualified Securitization Transaction;

(14)         financing statements (including precautionary statements) filed in connection with a Capital Lease Obligation, financing lease, Synthetic Lease Obligation or an operating lease, in each case, not prohibited hereunder; provided , that no such financing statement extends to, covers or refers to as collateral, any property or assets of the Borrower or a Restricted Subsidiary, other than the property or assets which are subject to such Capital Lease Obligation, financing lease, Synthetic Lease Obligation, or operating lease;

(15)         Liens arising out of or in connection with any judgment that does not constitute an Event of Default or in connection with any litigation or other legal proceeding as to which an appeal to contest or review is timely commenced in good faith by appropriate proceedings and as to which adequate reserves have been established in accordance with GAAP; provided , that any right to levy, seizure, attachment, sequestration, foreclosure or garnishment of any property and assets of the Borrower or a Restricted Subsidiary thereof arising out of or in connection with any such Lien has been and continues to be enjoined or effectively stayed;

(16)         inchoate statutory Liens arising under ERISA;

(17)         Liens (A) on cash and short-term investments (i) deposited by the Borrower or any of its Subsidiaries in margin accounts with or on behalf of futures contract brokers or paid over to other counterparties or (ii) pledged or deposited as collateral to a contract counterparty or issuer of surety bonds by the Borrower or any of its Subsidiaries, in the case of clause (i) or (ii) , to secure obligations with respect to (a) contracts for commercial and trading activities in the ordinary course of business and contracts (including physical delivery, option (whether cash or financial), exchange, swap and futures contracts) for the purchase, transmission, distribution, sale, lease or hedge of any energy-related commodity or service or (b) interest rate, commodity price, or currency rate management contracts or derivatives and (B) encumbering assets other than accounts or receivables arising out of contracts or agreements relating to the generation, distribution or transmission of energy; provided , that all such agreements or contracts are entered into in the ordinary course of business;

(18)         Liens arising by virtue of any statutory or common law provision relating to banker’s liens, rights of set off or similar rights, contractual rights of setoff or netting arrangements entered into in the ordinary course of business and similar rights with respect to deposit accounts, commodity accounts and/or securities accounts;

(19)         Liens arising under Section 9.343 of the Texas Uniform Commercial Code or similar statutes of states other than Texas;

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(20)          [RESERVED];

(21)          pledges and deposits to secure the payment of worker’s compensation, unemployment insurance, social security benefits or obligations under similar laws, or to secure the payment or performance of statutory or public obligations (including environmental, municipal and public utility commission obligations and requirements), reimbursement or indemnity obligations arising out of surety, performance, or other similar bonds, and other obligations of a like nature, in each case incurred in the ordinary course of business;

(22)          Liens granted by a Person in favor of a commercial trading counterparty pursuant to a netting agreement, which Liens encumber rights under agreements that are subject to such netting agreement and which Liens secure such Person’s obligations to such counterparty under such netting agreement; provided , that any such agreements and netting agreements are entered into in the ordinary course of business; and provided , further , that the Liens are incurred in the ordinary course of business and when granted, do not secure obligations which are past due;

(23)          Liens on proceeds from the issuance of Seward Tax-Exempt Bonds or Permitted PEDFA Bond Indebtedness and Liens on Indebtedness of the Borrower held by the Seward Subsidiary securing the Seward Tax-Exempt Bonds or Permitted PEDFA Bond Indebtedness;

(24)          Liens on assets of Reliant Energy Channelview L.P. and Liens on the Equity Interests in Reliant Energy Channelview (Delaware) LLC and Reliant Energy Channelview (Texas) LLC, to the extent such Liens are existing on the Closing Date;

(25)          Liens on assets of REMA and its Subsidiaries created in connection with the sale-leaseback of REMA’s interests in the Keystone, Conemaugh and Shawville generating facilities consummated in August, 2000;

(26)          Liens created in connection with the indemnity and contribution obligations in favor of underwriters or note purchasers in connection with the Seward Tax-Exempt Bonds;

(27)          Liens on assets of Reliant Energy Solutions, LLC created in connection with Delivery Order No. DABT39-97-C-4046 dated September 1997 and issued by the Directorate of Contracting, Contract Support Division, Ft. Sill, Oklahoma;

(28)          Liens incurred in the ordinary course of business of the Borrower or any Restricted Subsidiary of the Borrower securing obligations that do not exceed $25,000,000 in the aggregate at any one time outstanding;

(29)          Liens on certain of Reliant Energy Wholesale Generation LLC’s switchyard equipment at the Choctaw generating facility granted to Entergy in connection with an Operating and Maintenance Agreement;

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(30)          Separate Collateral (as defined in the Collateral Trust Agreement) which secures on a pari passu basis the Credit Agreement Obligations and any other Designated Credit Facilities; and

(31)          Liens on assets of the Retail Group securing obligations of the Retail Group under (a) the Working Capital Agreement in an aggregate principal amount not to exceed $300,000,000 plus all other obligations due under such Working Capital Agreement; and (b) any agreement for or in support of, the supply or sales of energy or products or services related or incidental to the supply or sales of energy or any activities related to the supply or sales of energy or products or services related or incidental to the supply or sales of energy of the Retail Group, including any agreement providing for the reimbursement of guarantees or collateral postings made on behalf of any member of the Retail Group.

“ Permitted Payment ” means, on any given date, any voluntary or mandatory repayment, prepayment, repurchase, retirement, redemption or defeasance of the principal of any Term Loans or other Parity Secured Debt (but specifically excluding (i) Revolving Credit Loans, (ii) PEDFA Debt and (iii) loans outstanding under other revolving-type credit facilities except, in the case of each of clauses (i) and (iii) , as a result of a Dollar-for-Dollar permanent reduction in the commitments thereunder); provided that no such repayment, prepayment, repurchase, retirement, redemption or defeasance of Indebtedness incurred at any time after the Closing Date under clause (s) of Section 7.3 shall be a Permitted Payment unless all of the Term Loans shall have previously been repaid in full.

“ Permitted PEDFA Bond Indebtedness ” means Indebtedness incurred or guaranteed by the Borrower and/or the Guarantors in tax-exempt Pennsylvania industrial development act financings that are not supported by Letters of Credit outstanding under this Agreement, the proceeds of which are used:

(a)            to build the Seward Facility;

(b)            to reimburse the Borrower, its Restricted Subsidiaries or the Seward Subsidiary for amounts advanced or incurred, or for Indebtedness incurred to fund such construction costs, prior to the date of incurrence of such Indebtedness; or

(c)            to refund or defease the Seward-Tax Exempt Bonds or refinance Indebtedness evidenced by or in support of the Seward-Tax Exempt Bonds.

“ Permitted Prior Liens ” means (1) Liens described in clauses (5) , (6) , (7) , (9) , (10) , (11) , (14) , (17) , (18) , (19) , (21) , (22) , (26) , (27) , (29) and (31) of the definition of “Permitted Liens,” (2) Liens refinancing or replacing any of the Liens contemplated in clause (1) of this definition, and (3) Liens that arise by operation of law and are not voluntarily granted, to the extent entitled by law to priority over the security interests created by the Security Documents.

“ Permitted Refinancing Indebtedness ” means any Indebtedness of the Borrower or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Borrower or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided , that:

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(1)            the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses, costs and fees and premiums incurred in connection therewith);

(2)            except for Permitted PEDFA Bond Indebtedness, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

(3)            if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Credit Agreement Obligations, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Credit Agreement Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded, as reasonably determined by the Borrower or such Restricted Subsidiary;

(4)            such Indebtedness is incurred either by the Borrower or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded, except that Permitted PEDFA Bond Indebtedness may be (A) incurred by the Borrower and/or guaranteed by the Borrower and/or the Guarantors if the assets of the Seward Subsidiary (other than Investments in the Borrower pledged to secure such Permitted PEDFA Bond Indebtedness and proceeds from the issuance of Permitted PEDFA Bond Indebtedness that secures Permitted PEDFA Bond Indebtedness) remain free of all Liens securing Indebtedness, except Liens held by the Collateral Trustee as security for Parity Secured Obligations or (B) guaranteed by the Borrower on an unsecured basis if such Indebtedness is otherwise Non-Recourse to the Borrower and its other Restricted Subsidiaries (other than the Seward Subsidiary) and is secured solely by Liens on the assets of the Seward Subsidiary and/or the Equity Interests of the Seward Subsidiary;

(5)            if incurred by the Borrower, such Indebtedness may be guaranteed by the Guarantors; and

(6)            such Indebtedness (other than (i) Indebtedness permitted pursuant to clause (d) or (e) of Section 7.3 , (ii) letter of credit facilities refinancing the Revolving Credit Facility and permanently reducing the Revolving Credit Commitments, Dollar for Dollar and (iii) Indebtedness incurred by Channelview and its equity holders and Subsidiaries, but only if such Indebtedness incurred by Channelview and its equity holders and Subsidiaries is Non-Recourse to the Borrower and the Guarantors) has a final maturity date that is at least six months after the Term Loan Maturity Date and provides for the amortization of not more than 10% of its original outstanding principal amount prior to the Term Loan Maturity Date.

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“ Permitted Sale ” means one or more sales of any Transferred Asset by the Borrower or any Restricted Subsidiary to the Purchaser Subsidiary, pursuant to which all of the following conditions shall be satisfied on or prior to the consummation of such sale (or, if a later date is specified with respect to any of the following conditions, such later date with respect to such condition):

(1) (a) the Borrower or the applicable selling Restricted Subsidiary shall have received from the Purchaser Subsidiary consideration in the form of cash or a Sale Note, or any combination thereof, in an aggregate amount equal to or greater than the fair value, or within or above the range of fair values, of such Transferred Asset as determined pursuant to the applicable Fair Value Certificates, and (b) such consideration for all Transferred Assets (singly or in the aggregate with all other consummated Permitted Sales) shall not exceed (x) if there is only one Transferred Asset, $350,000,000 and (y) if there is more than one Transferred Asset, $250,000,000;

(2)  the Administrative Agent on behalf of the Lenders shall have received a certificate or opinion addressed to the Administrative Agent of an engineer, appraiser, or other expert (in each case who is not an Affiliate or employee of the Borrower or any of its Subsidiaries) setting forth the fair value of the Transferred Assets (a “ Fair Value Certificate ”), which certificate or opinion also shall be in the form required to be delivered to the Secured Debt Representative for the Secured Notes pursuant to Section 314(d)(1) of the Trust Indenture Act of 1939 in respect of such Permitted Sale or in such other form as may be reasonably satisfactory to the Administrative Agent;

(3) the Purchaser Subsidiary shall have executed and delivered to the Borrower or the applicable selling Restricted Subsidiary such pledge agreements, security agreements, mortgages, deeds of trust, deeds to secure debt or other equivalent documents with respect to all such Transferred Assets to secure all the obligations of the Purchaser Subsidiary under the applicable Sale Note, which agreements, mortgages, deeds or other documents shall be in form and substance reasonably satisfactory to the Administrative Agent, and shall have executed, delivered and filed all other documents and instruments and taken all other actions as may be necessary in the reasonable opinion of the Administrative Agent and its counsel to perfect the security interests of the Borrower or the applicable selling Restricted Subsidiary pursuant to such agreements, mortgages, deeds or other documents;

(4) within 3 Business Days following the consummation of such Permitted Sale, the related Sale Note(s) shall have been duly and validly pledged under the Security Agreement as Separate Collateral to the Collateral Trustee accompanied by undated instruments of transfer endorsed in blank, and accompanied by any agreements, mortgages, deeds and other documents executed and delivered pursuant to clause (3) , and each shall be in the actual possession of the Collateral Agent;

(5)  the Administrative Agent shall have received a certificate, dated as of the date of consummation of such Permitted Sale and duly executed by a Responsible Officer of the Borrower, in which certificate the Borrower shall certify as to good standing, due authorization, corporate power and authority, due execution and delivery, valid and

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binding obligation, absence of conflicts with organizational documents, contracts, laws and governmental orders, and validity and perfection of security interests, in each case with respect to the applicable Sale Note(s) and the other documents contemplated by clause (3) , and, at the time such certificate is delivered, such certifications shall in fact be true and correct; and

(6) all material governmental and third party consents and approvals with respect to such Permitted Sale shall have been obtained and there shall be no litigation, governmental, administrative or judicial action that could reasonably be expected to restrain or prevent such Permitted Sale.

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

“ PJM ” means PJM Interconnection, L.L.C. or any successor thereto.

“ PJM Retail Business ” means the Retail Energy Business conducted by the Retail Group in the ordinary course of business in the PJM market area.

“ Plan ” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

“ Post-Petition Interest ” means interest accruing after the filing of any petition in bankruptcy, or the commencement of any case, proceeding or action relating to the bankruptcy, reorganization or insolvency of the Borrower or any other Loan Party (or interest that would accrue but for the operation of applicable bankruptcy, reorganization or insolvency laws), whether or not a claim for post-filing or post-petition interest is allowed or allowable as a claim in any such case, proceeding or action.

“ Power and Hedging Contracts ” means Retail Holdco’s and its Subsidiaries’ over-the-counter power purchase and related hedging contracts, providing for the sale, purchase, delivery or receipt of any power product or natural gas or financial derivative in respect thereof.

“ Pre-Funded L/C Commitment ” means, as to each Pre-Funded L/C Lender, its obligation to make Pre-Funded L/C Deposits to the Pre-Funded L/C Facility Agent for the benefit of the Pre-Funded L/C Issuer pursuant to Section 2.1(c)(ii) in an aggregate amount at any one time outstanding not to exceed the amount set forth opposite such Pre-Funded L/C Lender’s name on Schedule 2.1 under the caption “Pre-Funded L/C Commitment” or in an Assignment and Assumption pursuant to which such Pre-Funded L/C Lender becomes a party hereto, as applicable (in an aggregate amount for all Pre-Funded L/C Lenders on the Effective Date not to exceed $300,000,000).

“ Pre-Funded L/C Commitment Termination Date ” means the earliest to occur of (a) December 1, 2010; (b) the date on which the Pre-Funded L/C Commitments have been reduced to zero pursuant to Section 2.5(d) and all Pre-Funded L/C Deposits have been returned

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to the Pre-Funded L/C Lenders; and (c) the date of the termination of the Pre-Funded L/C Commitments pursuant to Section 9.2 .

“ Pre-Funded L/C Deposit ” means, with respect to each Lender, the cash deposit, if any, made by such Lender pursuant to clause (c)(ii) of Section 2.1 , as the same may be (a) reduced from time to time pursuant to Section 2.1 or Section 2.5(d) ; or (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 11.6 .

“ Pre-Funded L/C Deposit Account ” means one or more accounts established by the Pre-Funded L/C Facility Agent or an Affiliate thereof at Deutsche Bank with the title “Pre-Funded L/C Lenders (Reliant Energy, Inc.) Pre-Funded L/C Deposit Account” pursuant to clause (c)(i) of Section 2.1 .

“ Pre-Funded L/C Deposit Cost Amount ” means, at any time, the amount agreed to by the Borrower and the Deposit Bank.  The Pre-Funded L/C Deposit Cost Amount shall initially be equal to 0.1333%.

“ Pre-Funded L/C Deposit Return ” has the meaning specified in clause (c)(iv) of Section 2.1 .

“ Pre-Funded L/C Facility ” means, at any time, the aggregate amount of Pre-Funded L/C Deposits of all the Pre-Funded L/C Lenders at any time.

“ Pre-Funded L/C Facility Agent ” means Deutsche Bank AG, New York Branch, in its capacity as agent for the Pre-Funded L/C Facility under the Loan Documents, or any successor agent.

“ Pre-Funded L/C Final Expiration Date ” means the Pre-Funded L/C Commitment Termination Date.

“ Pre-Funded L/C Issuer ” means Deutsche Bank, in its capacity as issuer of the Pre-Funded Letters of Credit, together with its permitted successors and assigns in such capacity.

“ Pre-Funded L/C Lender ” means, as of any time, any Lender that has a Pre-Funded L/C Commitment, a Pre-Funded L/C Deposit or a Pre-Funded L/C Participation Obligation at such time.

“ Pre-Funded L/C Obligations ” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Pre-Funded Letters of Credit plus the aggregate of all Unreimbursed Amounts in connection with Pre-Funded Letters of Credit.  For purposes of computing the amount available to be drawn under any Pre-Funded Letter of Credit, the amount of such Pre-Funded Letter of Credit shall be determined in accordance with Section 1.6 .  For all purposes of this Agreement, if on any date of determination a Pre-Funded Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Pre-Funded Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

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“ Pre-Funded L/C Participation Fees ” has the meaning specified in clause (c) of Section 2.8 .

“ Pre-Funded L/C Participation Obligations ” has the meaning set forth in Section 2.3(b)(ii) .

“ Pre-Funded L/C Reimbursement Obligation ” has the meaning specified in clause (e) of Section 2.3 .

“ Pre-Funded L/C Term Loans ” has the meaning specified in clause (c)(i)(B) of Section 2.3 .

“ Pre-Funded Letter of Credit ” means any standby letter of credit issued under clause (a)(ii)(A) of Section 2.3 and shall include those of the Existing Letters of Credit identified on Schedule 1.1(a) as “Pre-Funded Letters of Credit”.

“ Prepayment Collateral Account ” has the meaning specified in the Security Agreement.

“ Pro Rata Percentage ” means, on any date of determination and with respect to Net Asset Sale Proceeds to be applied in accordance with Section 2.4(b)(i) , a percentage equal to (i) the Total Outstandings on such date, divided by (ii) the sum of (A) the Total Outstandings on such date, plus (B) the amount of the unused Aggregate Revolving Credit Commitments then in effect, plus (C) the aggregate outstanding principal amount of Parity Secured Debt described in clause (Y) of Section 2.4(b)(i)(A) , clause (Y) of Section 2.4(b)(i)(B) or Section 2.4(b)(i)(C) , as applicable, in each case with respect to which an offer to repurchase or prepay is required to be made, or which must be otherwise repurchased or prepaid (in part), with the Net Asset Sale Proceeds described in such clause (Y) of Section 2.4(b)(i)(A) , clause (Y) of Section 2.4(b)(i)(B ) or Section 2.4(b)(i)(C) .

“ Pro Rata Share ” means, with respect to each Lender and with respect to any Facility at any time, a fraction (expressed as a percentage, carried out to the ninth decimal place),

(a)            with respect to the Revolving Credit Facility, the numerator of which is the amount of the Revolving Credit Commitment of the relevant Revolving Credit Lender at such time and the denominator of which is the aggregate Revolving Credit Commitments at such time; provided , that if the commitment of each Revolving Credit Lender to make Revolving Credit Loans and the obligation of any L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 9.2 , then the Pro Rata Share of each Revolving Credit Lender shall be determined based on the Pro Rata Share of such Revolving Credit Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to the terms hereof;

(b)            with respect to the Term Facility, the numerator of which is the outstanding principal amount of the Term Loans of the relevant Term Lender at such time and the denominator of which is the aggregate outstanding principal amount of all of the Term Loans at such time; and

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(c)            with respect to the Pre-Funded L/C Facility, the numerator of which is the Outstanding Amount of the Pre-Funded L/C Deposit of the relevant Pre-Funded L/C Lender at such time and the denominator of which is the Outstanding Amount of all Pre-Funded L/C Deposits at such time; provided that if the Pre-Funded L/C Deposit shall have been reduced to zero, than the Pro Rata share of each Pre-Funded L/C Lender shall be determined based on the Pro Rata Share of such Pre-Funded L/C Lender immediately prior to such reduction to zero.

“ Purchase Money Note ” means a promissory note of a Securitization Entity evidencing amounts owed to the Borrower or any Restricted Subsidiary of the Borrower in connection with a Qualified Securitization Transaction to a Securitization Entity, which note shall be repaid from cash available to the Securitization Entity other than amounts required to be established as reserves pursuant to agreements, amounts paid to investors in respect of interest and principal and amounts paid in connection with the purchase of newly generated receivables or newly acquired equipment.

“ Purchaser Subsidiary ” means a wholly-owned Subsidiary of OPH which is a Restricted Subsidiary and also a Designated Entity.

“ Qualified Securitization Transaction ” means any transaction or series of transactions that may be entered into by the Borrower or any of its Restricted Subsidiaries pursuant to which the Borrower or any of its Restricted Subsidiaries may sell, convey or otherwise transfer to: (a) a Securitization Entity (in the case of a transfer by the Borrower or any of its Restricted Subsidiaries); and (b) any other Person (in the case of a transfer by a Securitization Entity), or may grant a security interest in any accounts receivable or equipment (whether now existing or arising or acquired in the future) of the Borrower or any of its Restricted Subsidiaries, and any assets related thereto, including all collateral securing such accounts receivable and equipment, all contracts and contract rights and all guarantees or other obligations in respect of such accounts receivable and equipment, proceeds of such accounts receivable and equipment and other assets (including contract rights) which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable and equipment.

“ Quarterly Payment Date ” means the first day of each April, July, October and January, or, if any such date is not a Business Day, the next succeeding Business Day.

“ Reduction Amount ” has the meaning specified in Section 2.4(b)(viii) .

“ Register ” has the meaning specified in Section 11.6(c) .

“ Reimbursement Agreement ” means the Credit Sleeve and Reimbursement Agreement, dated as of September 24, 2006, among the Retail Group, MLCI and ML&Co., as amended and restated in connection with the occurrence of the Effective Date and as the same may be further amended, amended and restated, supplemented or otherwise modified, renewed or replaced in whole or in part from time to time.

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“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, trustees, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

“ Release Date ”  means the date on which both (a) as of the last day of two consecutive Fiscal Quarters, both (i) the Consolidated Leverage Ratio for the applicable immediately preceding four Fiscal Quarters was 2:75:1 or less and (ii) the Consolidated Interest Coverage Ratio for the applicable immediately preceding four Fiscal Quarters was 3.25:1 or more; (b)  all Term Loans, including, for the avoidance of doubt, all Pre-Funded L/C Term Loans, and any “syndicated bank” style financings incurred pursuant to clause (s) of Section 7.3 , and all refinancings, replacements or renewals thereof, in each case which do not provide for a suspension of all of the covenants that are described in Section 7.16 , shall have been repaid in full and commitments in connection therewith shall have been terminated; and (c) all Pre-Funded L/C Obligations have been repaid in full, all Pre-Funded Letters of Credit have been terminated or expired and all Pre-Funded L/C Commitments have expired.

“ REMA ” means Reliant Energy Mid-Atlantic Power Holdings, LLC, a Delaware limited liability company, and its successors.

“ REMA Lease ” means, collectively, the obligations of REMA as facility lessee under the Facility Lease Agreements, each dated as of August 24, 2000 and each between REMA and, respectively, Conemaugh Lessor Genco, LLC, Keystone Lessor Genco, LLC, and Shawville Lessor Genco, LLC, and under the related participation agreements and other documents executed in connection therewith.

“ Remedial Action ” shall have the meaning ascribed to it in Section 101(24) of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et. seq. or any other Environmental Law.

“ Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

“ Request for Credit Extension ” means (a) with respect to a Borrowing, conversion or continuation of Term Loans or Revolving Credit Loans, a Borrowing Notice; and (b) with respect to an L/C Credit Extension, an L/C Certificate.

“ Required Lenders ” means, as of any date of determination, Lenders having more than 50% of the sum of (a) the Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations being deemed “held” by such Lender for purposes of this definition) and (b) the aggregate unused Revolving Credit Commitments; provided , that the unused Revolving Credit Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

“ RERH ” means Reliant Energy Retail Holdings, LLC, a Delaware limited liability company, and its successors.

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“ RESE ” means Reliant Energy Solutions East, LLC, a Delaware limited liability, and its successors.

“ Residual Amount ” means the aggregate amount of cash received pursuant to clauses (b) and (c) of Section 6.15 which remains after (i) the Borrower has prepaid or redeemed in full the outstanding principal amount of (and permanently cancelled Dollar-for-Dollar all commitments with respect to) all Term Loans and other Parity Secured Debt that the Borrower has the right to voluntarily prepay or redeem without premium and (ii) the earlier of (x) the date on which the Borrower has prepaid or redeemed in full, or has made offer(s) to prepay or redeem which have not been accepted with respect to, other Parity Secured Debt and (y) the expiration of the time periods set forth in such clauses (b) and (c) , as applicable.

“ Responsible Officer ” means the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of a Loan Party.  Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

“ Restricted Payment ” means any of the following:

(1)            any declaration or payment of any dividend or the making of any other payment or distribution on account of the Borrower’s or any of its Restricted Subsidiaries’ Equity Interests (including any payment in connection with any merger or consolidation involving the Borrower or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Borrower’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Borrower or to the Borrower or a Restricted Subsidiary of the Borrower);

(2)            any purchase, redemption or other acquisition or retirement for value (including in connection with any merger or consolidation involving the Borrower) of any Equity Interests of the Borrower;

(3)            any payment on or with respect to, or purchase, redemption, defeasance or other acquisition or retirement for value of any Indebtedness of the Borrower or of any Guarantor that is contractually subordinated to the Credit Agreement Obligations (excluding any intercompany Indebtedness, intercompany receivables or intercompany advances between or among any of the Borrower and its Restricted Subsidiaries and Permitted PEDFA Bond Indebtedness), except a payment of interest or principal at the Stated Maturity thereof.

“ Restricted Subsidiary ” means a Subsidiary organized or incorporated under the laws of the United States or a State thereof that is not an Unrestricted Subsidiary.

“ Retail Energy Business ” means the Borrower’s and its Subsidiaries’ business of providing services and products in the retail energy market and any businesses incidental or

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reasonably related thereto operated by the Retail Group and performing under the Sleeve Documents and any activities incidental or related thereto, including:

(a)            all related retail customer contracts;

(b)            all related commercial and industrial customer contracts;

(c)            all related Exchange Traded Contracts and Power and Hedging Contracts;
and

(d)            all related assets and employees necessary or appropriate to manage such business.

“ Retail Group ” means, collectively, Retail Holdco and all of its Subsidiaries.

“ Retail Holdco ” means RERH Holdings, LLC, a Delaware limited liability company.

“ Retail Sale ” means the sale of either (a) all or substantially all of the assets of the Retail Group; or (b) the Equity Interests of Retail Holdco.

“ Retail Sale Proceeds ” means any Net Asset Sale Proceeds received by the Borrower or any of its Subsidiaries from any Retail Sale.

“ Revolving Credit Borrowing ” means a borrowing consisting of simultaneous Revolving Credit Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Revolving Credit Lenders pursuant to Section 2.1(b) .

“ Revolving Credit Commitment ” means, as to each Revolving Credit Lender, its obligation to (a) make Revolving Credit Loans to the Borrower pursuant to Section 2.1(b) (in an aggregate amount for all Revolving Credit Lenders not to exceed $700,000,000 (as reduced, if necessary, by the Applicable Amount in accordance with Section 7.20 ), and (b) purchase participations in Revolving L/C Obligations, in an aggregate principal amount at any one time outstanding not to exceed, initially, the amount set forth opposite such Revolving Credit Lender’s name on Schedule 2.1 under the caption “Revolving Credit Commitment” or in the Assignment and Assumption pursuant to which such Revolving Credit Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

“ Revolving Credit Exposure ” means, as of any date of determination, (a) the aggregate Revolving Credit Commitments or (b) if the commitment of each Revolving Credit Lender to make Revolving Credit Loans and the obligation of the Revolving L/C Issuers to make Revolving L/C Credit Extensions have been terminated pursuant to Section 9.2 , the Total Revolving Credit Outstandings (with the aggregate amount of each Revolving Credit Lender’s risk participation and funded participation in Revolving L/C Obligations being deemed “held” by such Lender for purposes of this definition).

“ Revolving Credit Facility ” means, at any time, the Outstanding Amount of Revolving Credit Exposures of all Revolving Credit Lenders at such time.

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“ Revolving Credit Facility Agent ” means Bank of America in its capacity as administrative agent under the Revolving Credit Facility, or any successor administrative agent.

“ Revolving Credit L/C Final Expiration Date ” means the day that is five Business Days prior to the Revolving Credit Termination Date.

“ Revolving Credit Lender ” means, at any time, any Lender that has a Revolving Credit Commitment at such time.

“ Revolving Credit Loan ” means a loan by a Revolving Credit Lender to the Borrower under Section 2.1(b) .

“ Revolving Credit Note ” means a promissory note of the Borrower payable to the order of any Revolving Credit Lender, in substantially the form of Exhibit D-1 hereto, evidencing the aggregate indebtedness of the Borrower to such Revolving Credit Lender resulting from the Revolving Credit Loans made by such Revolving Credit Lender.

“ Revolving Credit Termination Date ” means the earlier of (a) December 22, 2009; or (b) the date of termination in whole of the Revolving Credit Commitments pursuant to Section 2.5 or 9.2 .

“ Revolving L/C Advance ” means, with respect to each Revolving Credit Lender, such Revolving Credit Lender’s funding of its participation in any Revolving L/C Borrowing in accordance with its Pro Rata Share.

“ Revolving L/C Borrowing ” means an extension of credit resulting from a drawing under any Revolving Letter of Credit which has not been reimbursed on the date when made or refinanced as a Revolving Credit Borrowing.

“ Revolving L/C Exposure ” means, at any time, the amount expressed in Dollars of the aggregate outstanding face amount of all drafts which may then or thereafter be presented by beneficiaries under all Revolving Letters of Credit then outstanding plus (without duplication), the face amount of all drafts which have been presented or accepted under all Revolving Letters of Credit but have not yet been paid or have been paid, but not reimbursed, whether directly or from the proceeds of a Revolving Credit Loan or Revolving L/C Borrowing hereunder.

“ Revolving L/C Issuer ” means each of ABN AMRO Bank N.V., Bank of America, Deutsche Bank, JPMorgan Chase Bank, N.A., The Bank of Nova Scotia, UBS AG, Stamford Branch and any other Lender with a Revolving Credit Commitment in excess of $70,000,000 which agrees (pursuant to a joinder in form and substance satisfactory to the Administrative Agent) to be a Revolving L/C Issuer after the Closing Date, each in its capacity as an issuer of Revolving Letters of Credit hereunder, and in each case, its successors in such capacity as provided in Section 11.6(b) hereof; provided , that each of such Revolving L/C Issuers shall be required to issue Revolving Letters of Credit only in accordance with the terms and subject to the conditions set forth herein, up to an aggregate amount, at any one time, not in excess of the amount opposite such entity’s name under the column entitled “Revolving L/C Issuer Amount for Revolving Letters of Credit” in Schedule 2.1 hereto (as such Schedule may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms

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hereof).  Each Revolving L/C Issuer may, in its discretion, arrange for any Revolving Letter of Credit to be issued by an Affiliate of such Revolving L/C Issuer as long as such Affiliate is reasonably acceptable to the beneficiary under such Letter of Credit, in which case, the term “ Revolving L/C Issuer ” shall include, with respect to Revolving Letters of Credit issued by such Affiliate, such Affiliate.

“ Revolving L/C Issuer Amount for Revolving Letters of Credit ” has the meaning specified in the definition of Revolving L/C Issuer.

“ Revolving L/C Obligations ” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Revolving Letters of Credit plus the aggregate of all Unreimbursed Amounts in connection with Revolving Letters of Credit, including all Revolving L/C Borrowings.  For purposes of computing the amount available to be drawn under any Revolving Letter of Credit, the amount of such Revolving Letter of Credit shall be determined in accordance with Section 1.6 .  For all purposes of this Agreement, if on any date of determination a Revolving Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Revolving Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

“ Revolving L/C Participation Obligations ” has the meaning specified in clause (b)(ii) of Section 2.3 .

“ Revolving Letter of Credit ” means any standby letter of credit issued under clause (a)(i)(A) of Section 2.3 and shall include those of the Existing Letters of Credit identified on Schedule 1.1(a) as “Revolving Letters of Credit”.

“ Revolving Letter of Credit Fee ” has the meaning specified in Section 2.3(i) .

“ Revolving Loan Payment Amount ” means, on any particular date, without duplication, the aggregate principal amount of repayments or prepayments of Revolving Credit Loans made with either (a) cash consideration received by the Borrower or the applicable Restricted Subsidiary pursuant to clause (i) of the definition of Permitted Sale or (b) the proceeds of any repayments or prepayments (that are not attributable to Transferred Asset Sale Proceeds) of principal on any Sale Note, in the case of each of clauses (a) and (b) , that have not been used for Permitted Payments.

“ RRI Warrants ” means the warrants issued by the Borrower pursuant to the Warrant Agreement.

“ S&P ” means Standard & Poor’s Ratings Group (presently a division of The McGraw-Hill Companies, Inc.), together with its successors, or, if such company shall cease to issue ratings, another nationally recognized rating company selected in good faith by mutual agreement of the Administrative Agent and the Borrower.

“ Sale Note ” means one or more secured promissory notes in substantially the form set forth in Exhibit H to this Agreement payable by the Purchaser Subsidiary to the Borrower in consideration of the sale of particular Transferred Assets, the maturity date of which note shall be no later than the Revolving Credit Termination Date.

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“ Scheduled Investment Termination Date ” means, when referring to the Pre-Funded L/C Deposits on deposit in the Pre-Funded L/C Deposit Account, the date agreed to by the Borrower and the Pre-Funded L/C Facility Agent and the Deposit Bank from time to time.

“ SEC ” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

“ Secured Debt Documents ” means, collectively, the Loan Documents, the Secured Note Agreements, the PEDFA Guaranties and the indenture, agreement and other documents governing each other Series of Secured Debt and all agreements binding on any obligor related thereto.

“ Secured Debt Representative ” means:

(1)            in the case of the Secured Notes, Wilmington Trust Company, as Trustee;

(2)            the Seward Bond Trustee;

(3)            in the case of Indebtedness under this Agreement, the Administrative Agent; or

(4)            in the case of any other Series of Secured Debt, the trustee, agent or representative of the holders of such Series of Secured Debt who maintains, or on whose behalf is maintained, the transfer register for or who acts as administrative agent for such Series of Secured Debt and is appointed as Secured Debt Representative (for purposes related to the administration of the Security Documents) pursuant to the indenture or agreement governing such Series of Secured Debt.

“ Secured Hedge Agreement ” means any Hedging Agreement permitted under Article VI or VII that is entered into by and between the Borrower and any Hedge Bank, including each of the Hedging Agreements listed on Schedule 1.1(f) .

“ Secured Note Agreements ” means, collectively (a) the Indenture, dated as of July 1, 2003, among the Borrower, the guarantors referred to therein, and Wilmington Trust Company, as trustee, pursuant to which the Borrower’s 9.25% Secured Notes due 2010 were issued, (b) the Indenture, dated as of July 1, 2003, among the Borrower, the guarantors referred to therein, and Wilmington Trust Company, as trustee, pursuant to which the Borrower’s 9.50% Secured Notes due 2013 were issued, (c) the Indenture, dated as of December 22, 2004 among the Borrower, the guarantors referred to therein, and Wilmington Trust Company, as trustee, pursuant to which the New Secured Notes were issued, and (d) each other indenture among the Borrower, the guarantors referred to therein (if applicable) and the indenture trustee thereunder, and each other loan or note purchase agreement among the Borrower, the guarantors referred to therein (if applicable), the Lenders or note purchasers thereunder and the administrative agent (if any) thereunder, in each case pursuant to which a series of Secured Notes was issued or a loan was made constituting a series of Secured Notes, as each such agreement or indenture may be amended, restated, supplemented or otherwise modified from time to time.

“ Secured Note Obligations ” means:

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(1)            the Secured Notes issued on the dates of the respective Secured Note Agreements; or

(2)            the Secured Notes issued by the Borrower after the dates of the respective Secured Note Agreements that constitute another Series of Secured Debt; or

(3)            all related exchange notes;

together with the Guarantees of the foregoing and all other Obligations (including all Obligations owing to the applicable Secured Debt Representatives) of any obligor under the Secured Note Agreements.

“ Secured Notes ” means, collectively, the Borrower’s (i) 9.25% Secured Notes due 2010, (ii) 9.50% Secured Notes due 2013, (iii) New Secured Notes and (iv) other senior secured notes issued from time to time in a private placement, registered offering, exchange offering, or loan transaction, in which notes have been issued in accordance with Section 7.3 .

“ Secured Parties ” means, collectively, the Lenders, each L/C Issuer, the Administrative Agent, the Pre-Funded L/C Facility Agent, each counterparty to a Secured Hedge Agreement that is (or at the time such Secured Hedge Agreement was entered into, was) a Lender or an Affiliate thereof (a “ Hedge Bank ”) and (in each case) each of their respective successors, transferees and assigns and each of the other “Secured Parties” as defined in the Collateral Trust Agreement.

“ Securities Account ” means any securities account as such term has the meaning specified in the UCC, now or hereafter held in the name of any Loan Party.

“ Securities Account Control Agreement ” means, with respect to any Pledged Securities or other Investment Property (as such terms are defined in the Security Agreement), a written agreement or other authenticated record, in form and substance reasonably satisfactory to the Administrative Agent, pursuant to which the securities intermediary which holds such Pledged Securities or such other Investment Property shall agree, among other things, to comply with entitlement orders or other instructions from the Collateral Trustee (or its co-trustees, agents or sub-agents) to such securities intermediary as to Pledged Securities or other Investment Property, without further consent of any Loan Party or its nominee, as any such agreement or record may be amended, amended, restated, supplemented or otherwise modified from time to time.

“ Securitization Entity ” means any Person in which the Borrower or any Restricted Subsidiary of the Borrower makes an Investment and to which the Borrower or any Restricted Subsidiary of the Borrower transfers accounts receivable or equipment (and related assets, including contract rights) which engages in no activities other than in connection with the financing, sale, or purchase of accounts receivable or equipment or related assets (including contract rights) and which is designated by the Borrower (as provided below) as a Securitization Entity:

(a)            no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which:

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(i)             is guaranteed by the Borrower or any Restricted Subsidiary of the Borrower (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness)) pursuant to Standard Securitization Undertakings;

(ii)            is recourse to or obligates the Borrower or any Restricted Subsidiary of the Borrower in any way other than pursuant to Standard Securitization Undertakings; or

(iii)           subjects any property or asset of the Borrower or any Restricted Subsidiary of the Borrower, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings;

(b)            with which neither the Borrower nor any Restricted Subsidiary of the Borrower has any material contract, agreement, arrangement or understanding (except in connection with a Purchase Money Note or Qualified Securitization Transaction) other than on terms no less favorable to the Borrower or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Borrower, as determined by the Borrower, other than amounts payable in the ordinary course of business in connection with servicing receivables and other assets of such entity; and

(c)            which neither the Borrower nor any Restricted Subsidiary of the Borrower has any obligation to maintain or preserve such Person’s financial condition or cause such Person to achieve certain levels of operating results.

The Borrower shall notify the Administrative Agent of any such designation, which notice shall include delivery to the Administrative Agent of a certificate of a Responsible Officer certifying that such designation complied with the foregoing conditions.

“ Security Agreement ” means the Amended and Restated Security Agreement, dated as of July 1, 2003, among the Borrower, the other Loan Parties and the Collateral Trustee (for the benefit of the Secured Parties), as such agreement may be amended, restated, supplemented or otherwise modified from time to time.

“ Security Documents ” means (i) the Collateral Trust Agreement, the Security Agreement and the Separate Security Agreement, (ii) each Control Agreement, (iii) each Mortgage, (iv) each Assignment of Leases and Rents, and (v) each other security agreement, pledge agreement, mortgage, deed of trust, assignment agreement and other instrument being executed concurrently herewith or from time to time hereafter pursuant to which a Lien has been granted by any of the Loan Parties in favor of the Collateral Agent (for the benefit of the Secured Parties) or the Collateral Trustee (for the benefit of the Secured Parties under the Collateral Trust Agreement) on any of its assets to secure any of the Obligations.

“ Senior Debt ” means Indebtedness that is not subordinated in right of payment to the Credit Agreement Obligations.

“ Separate Collateral ” has the meaning specified in the Collateral Trust Agreement.

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“ Separate Security Agreement ” means that certain Amended and Restated Security Agreement dated as of July 1, 2003, among the Borrower, the other Loan Parties and the Collateral Agent (for the benefit of the Secured Parties), as such agreement may be amended, restated, supplemented or otherwise modified from time to time.

“ Series of Secured Debt ” means, severally, the Secured Notes, the PEDFA Guaranties, the Indebtedness under this Agreement and each other issue or series of Parity Secured Debt.

“ Seward Bond Issuer ” has the meaning specified in the definition of “Seward Bond Trust Indentures” set forth in this Article.

“ Seward Bond Trust Indentures ” means (a) the Trust Indenture, dated as of December 1, 2001, between Pennsylvania Economic Development Financing Authority (the “ Seward Bond Issuer ”) and the Seward Bond Trustee pursuant to which the Seward Series 2001A Bonds were issued by the Seward Bond Issuer; (b) the Trust Indenture, dated as of April 1, 2002, between the Seward Bond Issuer and the Seward Bond Trustee pursuant to which the Seward Series 2002A Bonds were issued by the Seward Bond Issuer; (c) the Trust Indenture, dated as of April 1, 2002, between the Seward Bond Issuer and the Seward Bond Trustee pursuant to which the Seward Series 2002B Bonds were issued by the Seward Bond Issuer, as such Trust Indentures may be amended, restated, supplemented or otherwise modified from time to time; (d) the Trust Indenture, dated as of September 1, 2003, between the Seward Bond Issuer and the Seward Bond Trustee pursuant to which the Seward Series 2003A Bonds were issued by the Seward Bond Issuer; (e) the Trust Indenture, dated as of December 22, 2004, between the Seward Bond Issuer and the Seward Bond Trustee pursuant to which the Seward Series 2004A Bonds were issued by the Seward Bond Issuer; and (f) trust indentures entered into by the Seward Bond Issuer after the Closing Date as permitted hereunder in connection with any Seward Tax-Exempt Bonds issued after the Closing Date.

“ Seward Bond Trustee ” means J.P. Morgan Trust Company, National Association, as Trustee, and any successor or other trustee, under the Seward Bond Trust Indentures.

“ Seward Facility ” means the 521 MW coal facility and related assets owned by Reliant Energy Seward, LLC, or its successors, and located in New Florence, Indiana County, Pennsylvania.

“ Seward Series 2001A Bonds ” has the meaning specified in the definition of “Seward Tax-Exempt Bonds”.

“ Seward Series 2002A Bonds ” has the meaning specified in the definition of “Seward Tax-Exempt Bonds”.

“ Seward Series 2002B Bonds ” has the meaning specified in the definition of “Seward Tax-Exempt Bonds”.

“ Seward Series 2003A Bonds ” has the meaning specified in the definition of “Seward Tax Exempt Bonds.”

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“Seward Series 2004A Bonds ” has the meaning specified in the definition of “Seward Tax Exempt Bonds.”

“ Seward Subsidiary ” means Reliant Energy Seward, LLC, a Delaware limited liability company, and its successors.

“ Seward Tax-Exempt Bonds ” means (1) the Pennsylvania Economic Financing Authority Exempt Facilities Revenue Bonds (Reliant Energy Seward, LLC Project), Series 2001A, in the original aggregate principal amount of $150,000,000 (the “ Seward Series 2001A Bonds ”), (2) the Pennsylvania Economic Financing Authority Exempt Facilities Revenue Bonds (Reliant Energy Seward, LLC Project), Series 2002A, in the original aggregate principal amount of $75,000,000 (the “ Seward Series 2002A Bonds ”), (3) the Pennsylvania Economic Financing Authority Exempt Facilities Revenue Bonds (Reliant Energy Seward, LLC Project), Series 2002B, in the original aggregate principal amount of $75,000,000 (the “ Seward Series 2002B Bonds ”), (4) the Pennsylvania Economic Financing Authority Exempt Facilities Revenue Bonds (Reliant Energy Seward, LLC Project), Series 2003A, in the original aggregate principal amount of $100,000,000 (the “ Seward Series 2003A Bonds ”), and (5) any bonds issued by PEDFA on or after the Closing Date as permitted hereunder and supported by letters of credit outstanding hereunder.

“ Shared Collateral ” has the meaning specified in the Collateral Trust Agreement.

“ Sharing Eligible Debt ” means:

(1)            Indebtedness under clauses (a) , (e) and (f) of the definition of Permitted Debt;

(2)            Indebtedness under clause (s) of the definition of Permitted Debt;

(3)            the Secured Notes;

(4)            the PEDFA Guaranties;

(5)            Permitted Refinancing Indebtedness of the Borrower or, if it constitutes Permitted PEDFA Bond Indebtedness, Indebtedness of the Borrower and/or the Seward Subsidiary and/or guaranteed by the Borrower and/or the Guarantors, the net proceeds of which are used to refinance Indebtedness evidenced by or in support of the Seward Tax-Exempt Bonds; provided , that in the case of Permitted PEDFA Bond Indebtedness, the assets of the Seward Subsidiary (other than Investments in the Borrower pledged to secure such Permitted PEDFA Bond Indebtedness and proceeds from the issuance of Permitted PEDFA Bond Indebtedness that secures Permitted PEDFA Bond Indebtedness) shall remain free of all Liens securing Indebtedness, except Permitted Prior Liens and Liens held by the Collateral Trustee as security for the Parity Secured Debt; and

(6)            Permitted Refinancing Indebtedness, the net proceeds of which are used to refinance Parity Secured Debt;

provided , that each category of Indebtedness described above:

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(1)            must be guaranteed by any of the Restricted Subsidiaries that, on the date of incurrence of such Indebtedness, is obligated as a Guarantor under a Guarantee of the Credit Agreement Obligations;

(2)            must not be subordinated in right of payment or in respect of the application of the proceeds of the Collateral Trustee’s Liens on the Collateral to any other Indebtedness of the Borrower or any Guarantor (whether or not such other Indebtedness is part of the same series of Indebtedness), except in accordance with the Order of Application; and

(3)            is governed by an indenture or agreement that appoints a Secured Debt Representative and includes an Intercreditor Confirmation.

“ Sleeve Documents ” means, collectively, the Working Capital Agreement, the Reimbursement Agreement, the Parent Services Agreement and all other agreements (including the agreements entered into in respect of the PJM Retail Business) delivered in connection with the Reimbursement Agreement.

“ Sleeve Transaction ” means the provision of certain guarantees of ML&Co and the posting of required collateral, in each case, in connection with the supply and hedging and related activities of the Retail Group in the Retail Energy Business.

“ Solvent ” and “ Solvency ” mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital.  The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability; provided , that if the context in which “Solvent” or “Solvency” is used refers to a Person together with its Subsidiaries, Person as used above shall be deemed to be a reference to such Person together with its Subsidiaries.

“ SPC ” has the meaning specified in Section 11.6(h) .

“ Specified Junior Securities ” means subordinated debt securities issued by the Borrower that:

(1)            are subordinated to the Loans pursuant to subordination provisions (A) at least as favorable to the Lenders as either the subordination provisions set forth in Schedule 1.1(d) hereto or the subordination provisions applicable to the Borrower’s 5.00% Convertible Senior Subordinated Notes due 2010 issued pursuant to that certain indenture, dated as of June 24, 2003, by and between the Borrower and Wilmington Trust Company, as trustee, or (B) otherwise acceptable to the Agents;

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(2)            have a final maturity date occurring at least 91 days after the Term Loan Maturity Date and have a Weighted Average Life to Maturity at least 91 days longer than the Weighted Average Life to Maturity of the Term Loans;

(3)            are not guaranteed by any Subsidiary of the Borrower except for any guarantee by a Guarantor that is contractually subordinated in right of payment to the prior payment in full in cash to the Guaranty; and

(4)            are not convertible into any other securities except Equity Interests of the Borrower (other than Disqualified Stock).

“ Standard Securitization Undertakings ” means representations, warranties, covenants and indemnities entered into by the Borrower or any Subsidiary of the Borrower, which are substantially similar to those in existence on the Closing Date or are otherwise reasonably customary in an accounts receivable or equipment securitization transaction, in each case, as determined by the Borrower.

“ Stated Maturity ” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the Closing Date, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

“ Subordinated Indebtedness ” means any Indebtedness of a Person that is contractually subordinated to the Credit Agreement Obligations.

“ Subordinated Obligations ” has the meaning specified in Section 8.6 .

“ Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references herein to a “Subsidiary”, “Restricted Subsidiary”, “Restricted Subsidiaries” or “Subsidiaries” shall refer to a Subsidiary, Restricted Subsidiary, Restricted Subsidiaries or Subsidiaries of the Borrower.

“ Syndication Agents ” means, collectively, (a) Bank of America, N.A. as Revolving Credit Syndication Agent, and (b) Deutsche Bank AG, New York Branch, as Term Facility Syndication Agent and Pre-Funded L/C Facility Syndication Agent.

“ Synthetic Lease Obligation ” means the monetary obligation of a Person under a so-called synthetic, off-balance sheet or tax retention lease.

“ Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

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“ Term Borrowing ” means a borrowing consisting of simultaneous Term Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Term Lenders pursuant to Section 2.1(a) .

“ Term Commitment ” means, as to each Term Lender, its obligation to make Term Loans to the Borrower pursuant to Section 2.1(a) in an aggregate amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.1 under the caption “Term Commitment” or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable (in an aggregate amount for all Term Lenders as of the date hereof not to exceed $400,000,000).

“ Term Facility ” means, at any time, the outstanding amount of Term Loans of all Term Lenders at such time.

“ Term Facility Agent ” means Bank of America, N.A. in its capacity as administrative agent under the Term Facility, or any successor administrative agent thereunder.

“ Term Lender ” means, at any time, any Lender that has a Term Commitment or holds a Term Loan at such time.

“ Term Loan ” means, collectively, each Initial Term Loan and each Pre-Funded L/C Term Loan.

“ Term Loan Maturity Date ” means December 1, 2010.

“ Term Note ” means a promissory note of the Borrower payable to the order of any Term Lender, in substantially the form of Exhibit D-2 hereto, evidencing the aggregate indebtedness of the Borrower to such Term Lender resulting from the Term Loans made by such Term Lender.

“ Termination Date ” means the date on which (i) all of the Credit Agreement Obligations have been indefeasibly paid in full in cash, (ii) the Commitments have been permanently terminated in their entirety, (iii) all Letters of Credit shall have expired or been terminated or canceled or the Borrower shall have provided Cash Collateral for such unexpired or non-terminated Letters of Credit in accordance with the terms of this Agreement, (iv) each Pre-Funded L/C Lender shall have received the full amount of its Pre-Funded L/C Deposit, and (v) (A) each Secured Hedge Agreement shall have (1) expired, (2) been terminated or canceled or (3) been transferred by the applicable Hedge Bank in a manner (satisfactory in all respects to such Hedge Bank) so that such Hedge Bank no longer has any obligations whatsoever with respect to such Secured Hedge Agreement, or (B) the Credit Agreement Obligations under such Secured Hedge Agreement shall have been collateralized in a manner reasonably satisfactory to the applicable Hedge Bank(s).

“ Threshold Amount ” means, on any date of determination, except as otherwise set forth in Section 6.12 as to any Domestic Subsidiary or group of Domestic Subsidiaries which are not Loan Parties, that such Subsidiary or Subsidiaries had either (i) $25,000,000 or more of Consolidated EBITDAR during the four-Fiscal Quarter period most recently ended or (ii) had assets the aggregate book value of which was $50,000,000 or more.

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“ Title Company ” means a title insurance company of recognized national standing which is acceptable to the Administrative Agent in its sole discretion.

“ Title Policy ” means, with respect to any Mortgage, a mortgagee policy of title insurance (ALTA or the equivalent) or marked “commitment” of title insurance insuring the applicable Mortgage as a first priority Lien on such real property asset in favor of the Collateral Trustee (for the benefit of the holders of the Parity Secured Obligations, including the Secured Parties) to secure the Parity Secured Obligations, free of all Liens other than the Permitted Encumbrances, which policy of title insurance shall be issued by a Title Company in such policy amounts, with such endorsements and affirmative insurance, and in form and substance reasonably satisfactory to the Administrative Agent, and shall contain no exceptions to coverage other than matters satisfactory to the Administrative Agent in its judgment reasonably exercised and which policy of title insurance shall have been fully paid for by the Borrower.

“ Total Outstandings ” means (without duplication) the aggregate Outstanding Amount of all Loans, Pre-Funded L/C Deposits and all L/C Obligations.

“ Total Revolving Credit Outstandings ” means the aggregate Outstanding Amount of all Revolving Credit Loans and all Revolving L/C Obligations.

“ Transferred Asset Sale Proceeds ” means the aggregate cash proceeds received by OPH or the Purchaser Subsidiary in respect of any Asset Sale (including any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale) with respect to any Transferred Asset, net of the direct costs relating to such Asset Sale, including legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of the Asset Sale, taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, and amounts reserved for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP.

“ Transferred Assets ” means, collectively, a power generation facility and related properties which are sold in one or more Permitted Sales to the Purchaser Subsidiary.

“ Trigger Amount ” has the meaning specified in clause (b) of Section 6.15 .

“ Type ” means with respect to a Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

“ Unfunded Pension Liability ” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

“ United States ” and “ U.S. ” mean the United States of America.

“ Unreimbursed Amount ” has the meaning specified in Section 2.3(c)(i) .

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“ Unrestricted Subsidiary ” means any Subsidiary of the Borrower that is designated by the Board of Directors of the Borrower as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that:

(a)           such Subsidiary has no Indebtedness other than Indebtedness that is Non-Recourse to the Borrower and its Restricted Subsidiaries;

(b)           except as permitted pursuant to Section 7.8 , such Subsidiary is not party to any agreement, contract, arrangement or understanding with the Borrower or any Restricted Subsidiary unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Borrower or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Borrower;

(c)           such Subsidiary is a Person with respect to which neither the Borrower nor any of its Restricted Subsidiaries has any direct or indirect obligation (i) to subscribe for additional Equity Interests or (ii) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

(d)           the aggregate Fair Market Value of all outstanding Investments owned by the Borrower and its Restricted Subsidiaries in the Subsidiary properly designated and of all outstanding Investments owned by such Subsidiary properly designated would be Permitted Investments under Section 7.2 as of the time of the designation.

Any designation of a Subsidiary of the Borrower as an Unrestricted Subsidiary will be evidenced to the Administrative Agent by filing with the Administrative Agent a certified copy of the Board Resolution giving effect to such designation and a certificate of a Responsible Officer of the Borrower certifying that such designation complied with the preceding conditions and was permitted by Section 7.2 .  If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement and the other Loan Documents and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Borrower as of such date and, if such Indebtedness is not permitted to be incurred as of such date pursuant to Section 7.3 , the Borrower will be in default of such covenant. The Board of Directors of the Borrower may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided , that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Borrower of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (i) such Indebtedness is permitted pursuant to Section 7.3 ; and (ii) no Default would be in existence following such designation. Upon any such designation of an Unrestricted Subsidiary as a Restricted Subsidiary, the redesignated Subsidiary will become a Guarantor pursuant to and if required by Section 6.12 ; provided , that any redesignated Restricted Subsidiary that is not a Material Subsidiary need not become a Subsidiary Guarantor until such time as it becomes a Material Subsidiary.

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

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“ Warrant Agreement ” means the Common Stock Warrant Agreement dated as of March 28, 2003 made by the Borrower for the benefit of the holders from time to time of the stock warrants issued pursuant thereto.

“ Weighted Average Life to Maturity ” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(1)           the sum of the products obtained by multiplying (A) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (B) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

(2)           the then outstanding principal amount of such Indebtedness.

“ Wholesale Business ” has the meaning specified in Section 5.20 .

“ Wholesale Sale ” means the sale of all or substantially all of the assets of the Borrower and its Subsidiaries, other than a Retail Sale.

“ Wholesale Sale Proceeds ” means any Net Asset Sale Proceeds received by the Borrower or any of its Subsidiaries from any Wholesale Sale.

“ Working Capital Agreement ” means the Working Capital Facility, dated as of September 24, 2006, among Retail Holdco and its Subsidiaries and ML&Co., entered into as a condition to the closing of the Reimbursement Agreement, as amended and restated in connection with the occurrence of the Effective Date and as the same may be further amended, amended and restated, supplemented or otherwise modified, renewed or replaced in whole or in part from time to time.

1.2          Other Interpretive Provisions.   With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a)           The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “ include ,” “ includes ” and “ including ” shall be deemed to be followed by the phrase “without limitation.”  The word “ will ” shall be construed to have the same meaning and effect as the word “ shall .”  Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “ herein ,” “ hereof ” and “ hereunder ,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and

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Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “ asset ” and “ property ” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

(b)           In the computation of periods of time from a specified date to a later specified date, the word “