TRANSITION PROPERTY SERVICING AGREEMENT

Transition Agreement

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Title: TRANSITION PROPERTY SERVICING AGREEMENT
Governing Law: Texas Date: 12/16/2005

TRANSITION PROPERTY SERVICING AGREEMENT, Parties: centerpoint energy transition bond company ii llc , centerpoint energy houston electric llc

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EXHIBIT 10.2

TRANSITION PROPERTY SERVICING AGREEMENT

between

CENTERPOINT ENERGY TRANSITION BOND COMPANY II, LLC

Issuer

and

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC

Servicer

Dated as of December 16, 2005

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TABLE OF CONTENTS

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

SECTION 1.01. DEFINITIONS.................................................... 2

SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.................................. 2

ARTICLE II APPOINTMENT AND AUTHORIZATION OF SERVICER............................ 2

SECTION 2.01. APPOINTMENT OF THE SERVICER;

ACCEPTANCE OF APPOINTMENT.................................. 2

SECTION 2.02. AUTHORIZATION.................................................. 2

SECTION 2.03. DOMINION AND CONTROL OVER TRANSITION PROPERTY.................. 3

ARTICLE III BILLING AND OTHER SERVICES.......................................... 3

SECTION 3.01. DUTIES OF THE SERVICER......................................... 3

SECTION 3.02. COLLECTION AND ALLOCATION OF TRANSITION CHARGES................ 5

SECTION 3.03. PAYMENT OF TC COLLECTIONS...................................... 6

SECTION 3.04. SERVICING AND MAINTENANCE STANDARDS............................ 6

SECTION 3.05. SERVICER'S CERTIFICATES........................................ 7

SECTION 3.06. ANNUAL STATEMENT AS TO COMPLIANCE;

NOTICE OF DEFAULT.......................................... 7

SECTION 3.07. ANNUAL REGISTERED INDEPENDENT PUBLIC

ACCOUNTING FIRM REPORT..................................... 7

SECTION 3.08. TRANSITION PROPERTY DOCUMENTATION.............................. 8

SECTION 3.09. COMPUTER RECORDS; AUDITS OF DOCUMENTATION...................... 8

SECTION 3.10. DEFENDING TRANSITION PROPERTY AGAINST CLAIMS................... 9

SECTION 3.11. OPINIONS OF COUNSEL............................................ 9

ARTICLE IV SERVICES RELATED TO TRANSITION CHARGE

ADJUSTMENTS AND PBRAF ADJUSTMENTS.......................... 10

SECTION 4.01. TRANSITION CHARGE ADJUSTMENTS

AND PBRAF ADJUSTMENTS...................................... 10

ARTICLE V THE SERVICER.......................................................... 10

SECTION 5.01. REPRESENTATIONS AND WARRANTIES OF THE SERVICER................. 10

SECTION 5.02. INDEMNITIES OF THE SERVICER; RELEASE OF CLAIMS................. 12

SECTION 5.03. MERGER OR CONSOLIDATION OF,

OR ASSUMPTION OF THE OBLIGATIONS OF, THE SERVICER.......... 15

SECTION 5.04. ASSIGNMENT OF THE SERVICER'S OBLIGATIONS....................... 17

SECTION 5.05. LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS............. 17

SECTION 5.06. CENTERPOINT HOUSTON NOT TO RESIGN AS SERVICER.................. 17

SECTION 5.07. SERVICING FEE.................................................. 18

SECTION 5.08. SERVICER EXPENSES.............................................. 19

SECTION 5.09. APPOINTMENTS................................................... 19

SECTION 5.10. NO SERVICER ADVANCES........................................... 19

SECTION 5.11. REMITTANCES.................................................... 19

SECTION 5.12. PROTECTION OF TITLE............................................ 19

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ARTICLE VI SERVICER DEFAULT..................................................... 19

SECTION 6.01. SERVICER DEFAULT............................................... 19

SECTION 6.02. NOTICE OF SERVICER DEFAULT..................................... 21

SECTION 6.03. WAIVER OF PAST DEFAULTS........................................ 21

SECTION 6.04. APPOINTMENT OF SUCCESSOR....................................... 21

SECTION 6.05. COOPERATION WITH SUCCESSOR..................................... 22

ARTICLE VII MISCELLANEOUS PROVISIONS............................................ 23

SECTION 7.01. AMENDMENT...................................................... 23

SECTION 7.02. NOTICES........................................................ 23

SECTION 7.03. ASSIGNMENT..................................................... 23

SECTION 7.04. LIMITATIONS ON RIGHTS OF OTHERS................................ 24

SECTION 7.05. SEVERABILITY................................................... 24

SECTION 7.06. SEPARATE COUNTERPARTS.......................................... 24

SECTION 7.07. HEADINGS....................................................... 24

SECTION 7.08. GOVERNING LAW.................................................. 24

SECTION 7.09. ASSIGNMENT TO THE TRUSTEE...................................... 24

SECTION 7.10. NONPETITION COVENANTS.......................................... 25

SECTION 7.11. TERMINATION.................................................... 25

SECTION 7.12. PUCT CONSENT................................................... 25

SECTION 7.13. EFFECT OF SUBSEQUENT PUCT REGULATIONS.......................... 26

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SCHEDULE A TO SERVICING AGREEMENT

ANNEX 1 TO SERVICING AGREEMENT

APPENDIX A - MASTER DEFINITIONS

EXHIBIT A - SERVICER PROCEDURES

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TRANSITION PROPERTY SERVICING AGREEMENT dated as of December 16, 2005 (this

"Agreement") between CENTERPOINT ENERGY TRANSITION BOND COMPANY II, LLC, a

Delaware limited liability company (the "Issuer"), and CENTERPOINT ENERGY

HOUSTON ELECTRIC, LLC, a Texas limited liability company ("CenterPoint

Houston"), as the servicer of the Transition Property hereunder (together with

each successor to CenterPoint Houston in such capacity pursuant to Section 5.03

or 6.04, the "Servicer").

WHEREAS, pursuant to the Texas Electric Choice Plan and the Financing

Order, the Seller and the Issuer are concurrently entering into the Sale

Agreement dated as of the date hereof pursuant to which the Seller is selling

and the Issuer is purchasing the Transition Property created pursuant to the

Texas Electric Choice Plan and the Financing Order;

WHEREAS the Servicer is willing to service the Transition Property

purchased from the Seller by the Issuer;

WHEREAS the Issuer, in connection with ownership of the Transition

Property, desires to engage the Servicer to carry out the functions described

herein;

WHEREAS, the Transition Charges may not be itemized on Customers' bills

and the TC Collections initially will be commingled with other funds collected

from Customers and REPs (as applicable);

WHEREAS, the Financing Order calls for the Servicer to execute a servicing

agreement with the Issuer pursuant to which the Servicer will be required, among

other things, to impose and collect applicable Transition Charges for the

benefit and account of the Issuer, to make periodic Transition Charge

Adjustments required or allowed by the Financing Order, and to account for and

remit the applicable Transition Charges to or for the account of the Issuer in

accordance with the remittance procedures contained in the Servicing Agreement

without any charge, deduction or surcharge of any kind (other than the Servicing

Fee specified in the Servicing Agreement);

WHEREAS, a number of parties may have an interest in such commingled

collections, and such parties have entered into an Intercreditor Agreement as of

the date hereof that allows the party acting as the Utility (as defined therein)

to allocate the collected, commingled funds according to each interested party's

interest; and

WHEREAS, the Financing Order provides that the PUCT, acting through its

authorized legal representative and for the benefit of Texas ratepayers, will

enforce the Servicer's obligations imposed under this Agreement pursuant to the

Financing Order to the extent permitted by law.

NOW, THEREFORE, in consideration of the premises and the mutual covenants

herein contained and intending to be legally bound hereby, the parties hereto

agree as follows:

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ARTICLE I

DEFINITIONS

SECTION 1.01. DEFINITIONS. Capitalized terms used but not otherwise

defined in this Agreement have the respective meanings set forth in Appendix A

hereto.

SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.

(a) The words "hereof," "herein," "hereunder" and words of similar

import when used in this Agreement shall refer to this Agreement as a whole and

not to any particular provision of this Agreement; Section, Appendix, Annex,

Exhibit and Schedule references contained in this Agreement are references to

Sections, Appendices, Annexes, Exhibits and Schedules in or to this Agreement

unless otherwise specified; and the term "including" shall mean "including

without limitation."

(b) The definitions contained in this Agreement are applicable to

the singular as well as the plural forms of such terms.

meanings when used in any certificate or other document made or delivered

pursuant to this Agreement unless otherwise defined therein.

ARTICLE II

APPOINTMENT AND AUTHORIZATION OF SERVICER

SECTION 2.01. APPOINTMENT OF THE SERVICER; ACCEPTANCE OF APPOINTMENT. The

Issuer hereby appoints the Servicer, and the Servicer hereby accepts such

appointment, to perform the Servicer's obligations pursuant to this Agreement on

behalf of and for the benefit of the Issuer or any assignee thereof in

accordance with the terms of this Agreement and applicable law. This appointment

and the Servicer's acceptance thereof may not be revoked except in accordance

with the express terms of this Agreement.

SECTION 2.02. AUTHORIZATION. With respect to all or any portion of the

Transition Property, the Servicer shall be, and hereby is, authorized and

empowered by the Issuer to:

(a) execute and deliver, on behalf of itself or the Issuer, as the

case may be, any and all instruments, documents or notices, and

(b) on behalf of itself or the Issuer, as the case may be, make any

filing and participate in Proceedings related to the duties of the Servicer

hereunder with any governmental authorities, including with the PUCT.

The Issuer shall furnish the Servicer with all executed documents as have

been prepared by the Servicer for execution by the Issuer, and with such other

documents as may be in the Issuer's possession, as necessary or appropriate to

enable the Servicer to carry out its servicing

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and administrative duties hereunder. Upon the written request of the Servicer,

the Issuer shall furnish the Servicer with any powers of attorney or other

documents necessary or appropriate to enable the Servicer to carry out its

duties hereunder.

SECTION 2.03. DOMINION AND CONTROL OVER TRANSITION PROPERTY.

Notwithstanding any other provision contained herein, the Servicer and the

Issuer agree that the Issuer shall have dominion and control over the Transition

Property, and the Servicer, in accordance with the terms hereof, is acting

solely as the servicing agent of and custodian for the Issuer with respect to

the Transition Property. The Servicer hereby agrees that it shall not take any

action that is not authorized by this Agreement, the Texas Electric Choice Plan

or the Financing Order, that is not consistent with its customary procedures and

practices, or that shall impair the rights of the Issuer with respect to the

Transition Property, in each case unless such action is required by law or court

or regulatory order.

ARTICLE III

BILLING AND OTHER SERVICES

SECTION 3.01. DUTIES OF THE SERVICER. The Servicer, as agent for the

Issuer (to the extent provided herein), shall have the following duties:

(a) Duties of Servicer Generally. The Servicer shall manage,

service, administer and make collections in respect of the Transition Property.

The Servicer's duties will include:

(i) calculating and billing the Transition Charges;

(ii) obtaining meter reads and providing such metering information

to the REPs, as necessary (unless another entity assumes metering

responsibilities in accordance with the Financing Order, applicable

tariffs or the Texas Electric Choice Plan);

(iii) collecting payments of Transition Charges and payments with

respect to Transition Property from all persons or entities responsible

for remitting Transition Charges and other payments with respect to

Transition Property to the Servicer under the Financing Order, the Texas

Electric Choice Plan, PUCT Regulations or applicable tariffs; provided,

however, the Issuer and the Servicer acknowledge and agree that pursuant

to the Intercreditor Agreement, payments in respect of Transition Charges

and Transition Property may be deposited initially into an account held

and processed by CenterPoint Houston in its capacity as the Utility for

the benefit of the Servicer, and that CenterPoint Houston in its

individual capacity may be replaced as the holder of such account by a

Replacement Servicer or Designated Account Holder as those terms are

defined and as set forth more fully in the Intercreditor Agreement;

(iv) posting all TC Collections remitted to the Servicer and posting

all late-payment penalties assessed against REPs (as described in Section

3.02);

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(v) responding to inquiries by Customers, REPs, the PUCT or any

other State, local or federal governmental authority with respect to the

Transition Property and the Transition Charges;

(vi) accounting for TC Collections and late-payment penalties of

REPs, investigating and resolving delinquencies (including, where

permitted by the Financing Order, Schedule TC2 and/or PUCT Regulations,

terminating transmission and distribution service for nonpayment of

charges), processing and depositing collections, making periodic

remittances to the Trustee and furnishing periodic reports to the Issuer,

the PUCT, the Trustee and each Rating Agency;

(vii) providing certified calculations and other information

reasonably requested by agents appointed by the Servicer to collect the

charges to enable the agents to perform collection services properly under

the Intercreditor Agreement and monitoring the collections of the agents

for compliance with the Intercreditor Agreement;

(viii) providing information reasonably requested by CenterPoint

Houston in connection with the allocation of collections between

Transition Charges and Transition Property on one hand, and other charges

and fees on the other;

(ix) monitoring payments by each REP, reviewing reports provided by

each REP and monitoring compliance by each REP with the credit standards

and deposit obligations set forth in the Financing Order;

(x) notifying each REP of any defaults by such REP in its payment

obligations and other obligations (including its credit standards) under

Schedule TC2, and enforcing against such REP at the earliest date

permitted by the Financing Order and Schedule TC2 any remedies provided by

such Schedule TC2, the Financing Order or other applicable law and

regulations;

(xi) making all filings with the PUCT and taking all other actions

necessary to perfect the Issuer's ownership interests in and the Trustee's

Lien on the Series Trust Estate;

(xii) selling, as the agent for the Issuer, as its interest may

appear, defaulted or written-off accounts in accordance with the

Servicer's usual and customary practices;

(xiii) taking action in connection with Transition Charge

Adjustments and PBRAF Adjustments as is set forth herein; and

(xiv) any other duties specified for a servicer under the Financing

Order, Schedule TC2, the Texas Electric Choice Plan or other applicable

law.

Anything to the contrary notwithstanding, the duties of the Servicer set

forth in this Agreement shall be qualified in their entirety by, and the

Servicer shall at all times comply with, the Financing Order, the Texas Electric

Choice Plan and any PUCT Regulations, orders or directions as in effect at the

time such duties are to be performed. Without limiting the generality of this

Section 3.01(a), in furtherance of the foregoing, the Servicer hereby agrees

that it shall

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also have, and shall comply with, the duties and responsibilities relating to

data acquisition, usage and bill calculation, billing, customer service

functions, collections, payment processing and remittance set forth in Exhibit A

hereto.

(b) Notification of Laws and Regulations. The Servicer shall

immediately notify the Issuer, the PUCT, the Trustee and each Rating Agency in

writing of any laws or PUCT Regulations, orders or directions hereafter

promulgated that have a material adverse effect on the Servicer's ability to

perform its duties under this Agreement.

the Trustee, the PUCT or any Rating Agency, the Servicer shall provide to the

Issuer, the Trustee, the PUCT or such Rating Agency, as the case may be, any

public financial information in respect of the Servicer, or any material

information regarding the Transition Property to the extent it is reasonably

available to the Servicer, that may be reasonably necessary and permitted by law

for the Issuer, the Trustee, the PUCT or such Rating Agency to monitor the

performance by the Servicer hereunder. In addition, so long as any of the

Transition Bonds are Outstanding, the Servicer shall provide to the Issuer, to

the PUCT and to the Trustee, within a reasonable time after written request

therefor, any information available to the Servicer or reasonably obtainable by

it that is necessary to calculate the Transition Charges applicable to each

Customer Class.

SECTION 3.02. COLLECTION AND ALLOCATION OF TRANSITION CHARGES.

(a) The Servicer shall use all reasonable efforts, subject to

applicable law, to collect all amounts owed in respect of Transition Charges and

late-payment penalties (as set forth in Section 3.02(c) below) as and when the

same shall become due and shall follow such collection procedures as it follows

with respect to collection activities that the Servicer conducts for itself or

others. The Servicer shall not change the amount of or reschedule the due date

of any scheduled payment of Transition Charges, except as contemplated in this

Agreement or as required by law or court or PUCT order. The Servicer shall

enforce at the earliest possible date the obligations with respect to the

Transition Charges of each REP and each other Person owing or collecting

Transition Charges, provided that any REP shall be entitled to hold back from

its payment of Transition Charges to the Servicer an allowance for charge-offs

according to the procedure and calculations set forth in the Financing Order,

Schedule TC2 and the Issuer Annex.

(b) If an REP does not pay the full amount it has been billed by the

Servicer, the amount paid by the REP will first be proportioned between the

Transition Charges and other fees and charges (including amounts billed and due

in respect of transition charges associated with transition bonds issued under

other financing orders), other than late fees, and second, any remaining portion

of the payment will be attributed to late fees owed to CenterPoint Houston or

any successor.

the date of each billing by the Servicer to such REP ("REP Billing Day"),

without regard to whether or when the REP receives payment from its retail

customers. The Servicer shall accept payment by electronic funds transfer, wire

transfer, and/or check. Payment will be considered received the date the

electronic funds transfer or wire transfer is received by the Servicer or, if

payment is made by check, the date the check clears. The Servicer shall assess

and collect a 5% late-

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payment penalty (the "Penalty") on all Transition Charges billed to an REP but

not paid by that REP by the close of business on the 35th day after the date on

which the Transition Charges were billed to the REP. Any and all such Penalty

payments shall be paid to the Trustee for deposit in the Collection Account and

shall be applied against Transition Charge obligations. An REP shall not be

obligated to pay the overdue Transition Charges of another REP. If an REP agrees

to assume the responsibility for the payment of overdue Transition Charges as a

condition of receiving the customers of another REP that has decided to

terminate service to those customers for any reason, the new REP shall not be

assessed the Penalty upon such Transition Charges; provided, however, that the

prior REP shall not be relieved of the previously assessed Penalties. Disputes

regarding whether and when an REP has made payment of billed Transition Charges

shall be resolved in accordance with Section 8(b) of the Issuer Annex.

SECTION 3.03. PAYMENT OF TC COLLECTIONS.

(a) The Servicer shall collect and remit to the Trustee, for deposit

in the Collection Account on a daily basis in accordance with Section 5.11, the

Transition Charges plus any Accrued Interest thereon from the date or dates such

Transition Charges were actually received in accordance with Section 3.02 upon

receipt of such collection from any source.

(b) The Servicer agrees and acknowledges that it will hold all TC

Collections and other Transition Property collected by it for the benefit of the

Issuer and the Trustee and that all amounts will be remitted by the Servicer in

accordance with this Agreement without any surcharge, fee, offset, charge or

other deduction other than as expressly permitted in the Financing Order and

without making any claim to reduce its obligation to remit all TC Collections

and any other proceeds of the Transition Property collected by it.

SECTION 3.04. SERVICING AND MAINTENANCE STANDARDS. The Servicer shall, on

behalf of the Issuer:

(a) manage, service, administer and make collections in respect of

the Transition Property with reasonable care and in material compliance with

applicable law, including all applicable PUCT Regulations and guidelines, using

the same degree of care and diligence that the Servicer exercises with respect

to billing and collection activities that the Servicer conducts for itself and

others;

(b) follow standards, policies and procedures in performing its

duties as Servicer that are customary in the electric transmission and

distribution industry or that the PUCT has mandated and that are consistent with

the terms and provisions of the Financing Order, Schedule TC2 and existing law;

servicing procedures, to enforce and maintain the Issuer's and the Trustee's

rights in respect of the Transition Property;

(d) calculate Transition Charges and PBRAFs in compliance with the

Texas Electric Choice Plan, the Financing Order, any PUCT order related to

Transition Charge allocation and any applicable tariffs;

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(e) provide all reports to such parties to the Intercreditor

Agreement regarding the Transition Charges and PBRAFs as are necessary to effect

collection, allocation and remittance of payments in respect of Transition

Charges and other collected funds in accordance with this Agreement and the

Intercreditor Agreement; and

(f) make all filings required under the Texas Electric Choice Plan

or the UCC to maintain the perfected security interest of the Trustee in the

Series Trust Estate and use all reasonable efforts to otherwise enforce and

maintain the Trustee's rights in respect of the Transition Property and the

Series Trust Estate;

except where the failure to comply with any of the foregoing would not

materially and adversely affect the Issuer's or the Trustee's respective

interests in the Transition Property. The Servicer shall follow such customary

and usual practices and procedures as it shall deem necessary or advisable in

its servicing of all or any portion of the Transition Property, which, in the

Servicer's judgment, may include the taking of legal action pursuant to Section

3.10 hereof or otherwise.

SECTION 3.05. SERVICER'S CERTIFICATES. The Servicer shall provide to the

Issuer, the PUCT, the Trustee and the Rating Agencies the statements and

certificates specified in the Issuer Annex at the time and in the manner set

forth therein.

SECTION 3.06. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT. The

Servicer shall deliver to the Issuer, the PUCT, the Trustee and each Rating

Agency, on or before March 31 of each year beginning March 31, 2006, an

Officers' Certificate, stating that:

(i) a review of the activities of the Servicer during the

preceding calendar year (or relevant portion thereof) and of its

performance under this Agreement has been made under such officers'

supervision; and

(ii) to the best of such officers' knowledge, based on such review,

the Servicer has fulfilled all its obligations under this Agreement

throughout such period or, if there has been a Servicer Default, stating

that there has been a default and describing each such default.

SECTION 3.07. ANNUAL REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM REPORT.

(a) The Servicer shall cause a registered independent public

accounting firm (which may also provide other services to the Servicer or the

Seller) to prepare, and the Servicer shall deliver to the Issuer, the PUCT, the

Trustee and each Rating Agency, on or before March 31 of each year, beginning

March 31, 2006, to and including the March 31 succeeding the retirement of all

Transition Bonds, a report addressed to the Servicer (the "Annual Accountant's

Report"), which may be included as part of the Servicer's customary auditing

activities, to the effect that such firm has performed certain procedures

related to financial matters in connection with the Servicer's compliance with

its obligations under this Agreement during the preceding calendar year (or, in

the case of the first Annual Accountant's Report, the period of time from the

Sale Date through December 31, 2005), identifying the results of such procedures

and including any exceptions noted. In the event such accounting firm requires

the Trustee or the Issuer to

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agree or consent to the procedures performed by such firm, the Issuer shall

direct the Trustee in writing to so agree; it being understood and agreed that

the Trustee shall deliver such letter of agreement or consent in conclusive

reliance upon the direction of the Issuer, and the Trustee shall not make any

independent inquiry or investigation as to, and shall have no obligation or

liability in respect of, the sufficiency, validity or correctness of such

procedures.

(b) The Annual Accountant's Report shall also indicate that the

accounting firm providing such report is independent of the Servicer within the

meaning of the Code of Professional Ethics of the American Institute of

Certified Public Accountants.

SECTION 3.08. TRANSITION PROPERTY DOCUMENTATION. To assure uniform quality

in servicing the Transition Property and to reduce administrative costs, the

Servicer shall keep on file, in accordance with its customary procedures, all

Transition Property Documentation, it being understood that the Servicer is

acting only as the servicing agent and custodian for the Issuer with respect to

the Transition Property Documentation.

SECTION 3.09. COMPUTER RECORDS; AUDITS OF DOCUMENTATION.

(a) Safekeeping. The Servicer shall maintain accurate and complete

accounts, records and computer systems pertaining to the Transition Property and

the Transition Property Documentation in accordance with its standard accounting

procedures and in sufficient detail to permit reconciliation between payments or

recoveries on (or with respect to) Transition Charges and the TC Collections

from time to time remitted to the Trustee pursuant to Section 5.11 and to enable

the Issuer to comply with this Agreement and the Indenture. The Servicer shall

conduct, or cause to be conducted, periodic audits of the Transition Property

Documentation held by it under this Agreement and of the related accounts,

records and computer systems, in such a manner as shall enable the Issuer and

the Trustee, as pledgee of the Issuer, to verify the accuracy of the Servicer's

record keeping. The Servicer shall promptly report to the Issuer, to the PUCT,

and to the Trustee any failure on the Servicer's part to hold the Transition

Property Documentation and maintain its accounts, records and computer systems

as herein provided and promptly take appropriate action to remedy any such

failure. Nothing herein shall be deemed to require an initial review or any

periodic review by the Issuer or the Trustee of the Transition Property

Documentation. The Servicer's duties to hold the Transition Property

Documentation on behalf of the Issuer set forth in this Section 3.09, to the

extent such Transition Property Documentation has not been previously

transferred to a successor Servicer, shall terminate three years after the

earlier of the date on which (i) the Servicer is succeeded by a successor

Servicer pursuant to the provisions of this Agreement or (ii) no Transition

Bonds of any Series are Outstanding.

(b) Maintenance of and Access to Records. The Servicer shall

maintain the Transition Property Documentation at 1111 Louisiana Street,

Houston, Texas or at such other office as shall be specified to the Issuer, to

the PUCT and to the Trustee by written notice not later than 30 days prior to

any change in location. The Servicer shall permit the Issuer and the Trustee or

their respective duly authorized representatives, attorneys, agents or auditors

at any time during normal business hours to inspect, audit and make copies of

and abstracts from the Servicer's records regarding the Transition Property, the

Transition Charges and the Transition Property Documentation. The failure of the

Servicer to provide access to such information as a

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result of an obligation or applicable law (including PUCT Regulations)

prohibiting disclosure of information regarding customers shall not constitute a

breach of this Section 3.09(b).

Trustee in accordance with the Indenture, the Servicer shall release any

Transition Property Documentation to the Trustee, the Trustee's agent or the

Trustee's designee, as the case may be, and to the PUCT at such place or places

as the Trustee may designate, as soon as practicable.

SECTION 3.10. DEFENDING TRANSITION PROPERTY AGAINST CLAIMS. The Servicer

shall, subject to applicable law, institute any action or Proceeding necessary

to compel performance by each REP and each party to the Intercreditor Agreement

(and in the case of each REP at the earliest possible time) of any of their

respective obligations or duties under the Texas Electric Choice Plan, the

Financing Order or the Intercreditor Agreement with respect to the Transition

Property, and the Servicer agrees, subject to applicable law, to take such legal

or administrative actions, including defending against or instituting and

pursuing legal actions and appearing or testifying at hearings or similar

proceedings as may be reasonably necessary to block or overturn any attempts to

cause a repeal of, modification of, or supplement to, the Texas Electric Choice

Plan or the Financing Order. The costs of any such action shall be payable from

TC Collections as an Operating Expense (and shall not be deemed to constitute a

portion of the Servicing Fee) in accordance with the Indenture. The Servicer's

obligations pursuant to this Section 3.10 shall survive and continue

notwithstanding the fact that the payment of Operating Expenses pursuant to the

Indenture may be delayed (it being understood that the Servicer may be required

initially to advance its own funds to satisfy its obligations hereunder).

SECTION 3.11. OPINIONS OF COUNSEL. The Servicer shall deliver to the

Issuer, to the PUCT and to the Trustee:

(a) promptly after the execution and delivery of this Agreement

and of each amendment hereto, an Opinion of Counsel either:

(i) to the effect that, in the opinion of such counsel, all

filings, including filings with the PUCT and the Secretary of State of the

State of Texas pursuant to the Texas Electric Choice Plan and the UCC,

that are necessary to perfect the interests of each of the Issuer and the

Trustee in the Transition Property have been executed and filed and are in

full force and effect, and reciting the details of such filings or

referring to prior Opinions of Counsel in which such details are given, or

(ii) to the effect that, in the opinion of such counsel, no such

action shall be necessary to preserve and protect such interests; and

(b) within 90 days after the beginning of each calendar year

beginning with the first calendar year beginning more than three months after

the Sale Date, an Opinion of Counsel, dated as of a date during such 90-day

period, either:

(i) to the effect that, in the opinion of such counsel, all

filings, including filings with the PUCT and the Secretary of State of the

State of Texas pursuant to the Texas Electric Choice Plan and the UCC,

that are necessary to maintain the perfection of the interests of each of

the Issuer and the Trustee in the Transition Property have been

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executed and filed and are in full force and effect, and reciting the

details of such filings or referring to prior Opinions of Counsel in which

such details are given, or

(ii) to the effect that, in the opinion of such counsel, no such

action shall be necessary to preserve and protect such interest.

Each Opinion of Counsel referred to in clause (a) or (b) above shall specify any

action necessary (as of the date of such opinion) to be taken in the following

year to preserve and protect such interests.

ARTICLE IV

SERVICES RELATED TO TRANSITION CHARGE ADJUSTMENTS AND PBRAF ADJUSTMENTS

SECTION 4.01. TRANSITION CHARGE ADJUSTMENTS AND PBRAF ADJUSTMENTS. The

Servicer shall perform the calculations and take the actions relating to

adjusting the Transition Charges and PBRAFs as set forth in the Issuer Annex at

the time and in the manner set forth therein.

ARTICLE V

THE SERVICER

SECTION 5.01. REPRESENTATIONS AND WARRANTIES OF THE SERVICER. The Servicer

makes the following representations and warranties as of the Sale Date, on which

the Issuer has relied in acquiring Transition Property. The representations and

warranties shall survive the execution and delivery of this Agreement, the sale

of any of the Transition Property to the Issuer and the pledge thereof to the

Trustee pursuant to the Indenture.

(a) Organization and Good Standing. The Servicer is a limited

liability company duly organized, validly existing and in good standing under

the laws of the State of Texas, with the limited liability company power and

authority to own its properties and to conduct its business as such properties

are currently owned and such business is presently conducted and to execute,

deliver and carry out the terms of this Agreement and the Intercreditor

Agreement and has the power, authority and legal right to service the Transition

Property.

(b) Due Qualification. The Servicer is duly qualified to do business

and is in good standing, and has obtained all necessary licenses and approvals,

in all jurisdictions in which the ownership or lease of property or the conduct

of its business (including the servicing of the Transition Property as required

by this Agreement and the Intercreditor Agreement) requires such qualifications,

licenses or approvals (except where the failure to so qualify would not be

reasonably likely to have a material adverse effect on the Servicer's business,

operations, assets, revenues, properties or prospects or adversely affect the

servicing of the Transition Property).

company or corporate, as the case may be, power and authority to execute and

deliver this Agreement and the Intercreditor Agreement and to carry out the

terms of each; and the execution, delivery

<PAGE>

and performance of this Agreement and the Intercreditor Agreement have been duly

authorized by the Servicer by all necessary limited liability company or

corporate, as the case may be, action.

(d) Binding Obligation. This Agreement and the Intercreditor

Agreement both constitute legal, valid and binding obligations of the Servicer

enforceable against the Servicer in accordance with their terms subject to

applicable bankruptcy, receivership, insolvency, reorganization, moratorium or

other laws affecting creditors' rights generally from time to time in effect and

to general principles of equity (regardless of whether considered in a court

proceeding in equity or at law).

(e) No Violation. The consummation of the transactions

contemplated by this Agreement and the Intercreditor Agreement (to the extent

applicable to the Servicer's responsibilities thereunder) and the fulfillment of

the terms of each will not conflict with, result in any breach of any of the

terms and provisions of, or constitute (with or without notice or lapse of time)

a default under, the limited liability company agreement or articles of

incorporation or by-laws, as the case may be, of the Servicer, or any material

agreement to which the Servicer is a party or by which it is bound or result in

the creation or imposition of any Lien upon any of its properties pursuant to

the terms of any such agreement (other than any Lien that may be granted under

the Basic Documents or any Lien created pursuant to Section 39.909 of the Texas

Electric Choice Plan); or violate any law or any existing order, rule or

regulation applicable to the Servicer of any court or of any federal or State

regulatory body, administrative agency or other governmental instrumentality

having jurisdiction over the Servicer or its properties.

(f) Approvals. No approval, authorization, consent, order or other

action of, or filing with, any court, federal or State regulatory body,

administrative agency or other governmental instrumentality is required in

connection with the execution and delivery by the Servicer of this Agreement or

the Intercreditor Agreement, the performance by the Servicer of the transactions

contemplated hereby or thereby or the fulfillment by the Servicer of the terms

of each, except those that have been obtained or made or that are required by

this Agreement to be made in the future by the Servicer, including the Issuance

Advice Letter, filings with the PUCT for adjusting Transition Charges and PBRAFs

pursuant to Section 4.01 and the Issuer Annex and filings with the Secretary of

State of the State of Texas under the Texas Electric Choice Plan and Article 9

of the UCC.

(g) No Proceedings. Except as disclosed by the Servicer on

Schedule A hereto, there are no Proceedings pending or, to the Servicer's

knowledge, threatened before any court, federal or State regulatory body,

administrative agency or other governmental instrumentality having jurisdiction

over the Servicer or its properties:

(i) asserting the invalidity of this Agreement or any of the other

Basic Documents;

(ii) seeking any determination or ruling that might materially and

adversely affect the Transition Property or the performance by the

Servicer of its obligations under, or the validity or enforceability

against the Servicer of, this Agreement;

<PAGE>

(iii) relating to the Servicer and which might materially and

adversely affect the federal income tax or State income, gross receipts or

franchise tax attributes of the Transition Property or the Transition

Bonds; or

(iv) seeking to prevent the issuance of the Transition Bonds or the

consummation of any of the transactions contemplated by this Agreement or

any of the other Basic Documents.

(h) Reports and Certificates. Each report and certificate

delivered in connection with any filing made to the PUCT by the Servicer on

behalf of the Issuer with respect to Transition Charges, Transition Charge

Adjustments or PBRAF Adjustments will be true and correct in all material

respects; provided, however, that to the extent any such report or certificate

is based in part upon or contains assumptions, forecasts or other predictions of

future events, the representation and warranty of the Servicer with respect

thereto will be limited to the representation and warranty that such

assumptions, forecasts or other predictions of future events are reasonable

based upon historical performance.

SECTION 5.02. INDEMNITIES OF THE SERVICER; RELEASE OF CLAIMS.

(a) THE SERVICER SHALL BE LIABLE IN ACCORDANCE HEREWITH ONLY TO

THE EXTENT OF THE OBLIGATIONS SPECIFICALLY UNDERTAKEN BY THE SERVICER UNDER THIS

AGREEMENT AND THE INTERCREDITOR AGREEMENT.

(b) THE SERVICER SHALL INDEMNIFY THE ISSUER AND THE TRUSTEE (FOR

ITSELF AND ON BEHALF OF THE TRANSITION BONDHOLDERS) AND EACH OF THEIR RESPECTIVE

TRUSTEES, MEMBERS, MANAGERS, OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS FOR, AND

DEFEND AND HOLD HARMLESS EACH SUCH PERSON FROM AND AGAINST, ANY AND ALL LOSSES

THAT MAY BE IMPOSED UPON, INCURRED BY OR ASSERTED AGAINST ANY SUCH PERSON AS A

RESULT OF:

(I) THE SERVICER'S WILLFUL MISCONDUCT, BAD FAITH OR NEGLIGENCE IN

THE PERFORMANCE OF ITS DUTIES OR OBSERVANCE OF ITS COVENANTS UNDER THIS

AGREEMENT OR THE SERVICER'S RECKLESS DISREGARD OF ITS OBLIGATIONS AND

DUTIES UNDER THIS AGREEMENT OR THE INTERCREDITOR AGREEMENT;

(II) THE SERVICER'S BREACH OF ANY OF ITS REPRESENTATIONS OR

WARRANTIES IN THIS AGREEMENT OR THE INTERCREDITOR AGREEMENT; OR

(III) LITIGATION AND RELATED EXPENSES RELATING TO ITS STATUS AND

OBLIGATIONS AS SERVICER (OTHER THAN ANY PROCEEDINGS THE SERVICER IS

REQUIRED TO INSTITUTE UNDER THIS AGREEMENT);

<PAGE>

PROVIDED, HOWEVER, THAT THE SERVICER SHALL NOT BE LIABLE FOR ANY LOSSES

RESULTING FROM THE BAD FAITH, WILLFUL MISCONDUCT OR NEGLIGENCE OF ANY PERSON

INDEMNIFIED PURSUANT TO THIS SECTION 5.02 (EACH, AN "INDEMNIFIED PERSON") OR

RESULTING FROM A BREACH OF A REPRESENTATION OR WARRANTY MADE BY SUCH INDEMNIFIED

PERSON TO THE SERVICER IN ANY BASIC DOCUMENT THAT GIVES RISE TO THE SERVICER'S

BREACH.

NOTICE OF ITS INVOLVEMENT IN ANY ACTION, PROCEEDING OR INVESTIGATION, SUCH

INDEMNIFIED PERSON SHALL, IF A CLAIM FOR INDEMNIFICATION IN RESPECT THEREOF IS

TO BE MADE AGAINST THE SERVICER UNDER THIS SECTION 5.02, NOTIFY THE SERVICER IN

WRITING OF SUCH INVOLVEMENT. FAILURE BY AN INDEMNIFIED PERSON TO SO NOTIFY THE

SERVICER SHALL RELIEVE THE SERVICER FROM THE OBLIGATION TO INDEMNIFY AND HOLD

HARMLESS SUCH INDEMNIFIED PERSON UNDER THIS SECTION 5.02 ONLY TO THE EXTENT THAT

THE SERVICER SUFFERS ACTUAL PREJUDICE AS DETERMINED BY A COURT OF COMPETENT

JURISDICTION AS A RESULT OF SUCH FAILURE. WITH RESPECT TO ANY ACTION, PROCEEDING

OR INVESTIGATION BROUGHT BY A THIRD PARTY FOR WHICH INDEMNIFICATION MAY BE

SOUGHT BY AN INDEMNIFIED PERSON UNDER THIS SECTION 5.02, THE SERVICER SHALL BE

ENTITLED TO ASSUME THE DEFENSE OF ANY SUCH ACTION, PROCEEDING OR INVESTIGATION

UNLESS (X) SUCH ACTION, PROCEEDING OR INVESTIGATION EXPOSES THE INDEMNIFIED

PERSON TO A RISK OF CRIMINAL LIABILITY OR FORFEITURE, (Y) THE SERVICER AND SUCH

INDEMNIFIED PERSON HAVE A CONFLICT OF INTEREST IN THEIR RESPECTIVE DEFENSES OF

SUCH ACTION, PROCEEDING OR INVESTIGATION OR (Z) THERE EXISTS AT THE TIME THE

SERVICER WOULD ASSUME SUCH DEFENSE AN ONGOING SERVICER DEFAULT. UPON ASSUMPTION

BY THE SERVICER OF THE DEFENSE OF ANY SUCH ACTION, PROCEEDING OR INVESTIGATION,

THE INDEMNIFIED PERSON SHALL HAVE THE RIGHT TO PARTICIPATE IN SUCH ACTION OR

PROCEEDING AND TO RETAIN ITS OWN COUNSEL (INCLUDING LOCAL COUNSEL), AND THE

SERVICER SHALL BEAR THE REASONABLE FEES, COSTS AND EXPENSES OF SUCH SEPARATE

COUNSEL. THE INDEMNIFIED PERSON SHALL NOT SETTLE OR COMPROMISE OR CONSENT TO THE

ENTRY OF ANY JUDGMENT WITH RESPECT TO ANY PENDING OR THREATENED CLAIM, ACTION,

SUIT OR PROCEEDING IN RESPECT OF WHICH INDEMNIFICATION MAY BE SOUGHT UNDER THIS

SECTION 5.02 (WHETHER OR NOT THE SERVICER IS AN ACTUAL OR POTENTIAL PARTY TO

SUCH CLAIM OR ACTION) UNLESS THE SERVICER AGREES IN WRITING TO SUCH SETTLEMENT,

COMPROMISE OR CONSENT AND SUCH SETTLEMENT, COMPROMISE OR CONSENT INCLUDES AN

UNCONDITIONAL RELEASE OF THE SERVICER FROM ALL LIABILITY ARISING OUT OF SUCH

CLAIM, ACTION, SUIT OR PROCEEDING.

(d) THE SERVICER SHALL INDEMNIFY THE TRUSTEE AND ITS RESPECTIVE

TRUSTEES, OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS

<PAGE>

FOR, AND DEFEND AND HOLD HARMLESS EACH SUCH PERSON FROM AND AGAINST, ANY AND ALL

LOSSES THAT MAY BE IMPOSED UPON, INCURRED BY OR ASSERTED AGAINST ANY SUCH PERSON

AS A RESULT OF THE ACCEPTANCE OR PERFORMANCE OF THE TRUSTS AND DUTIES CONTAINED

HEREIN AND IN THE INDENTURE, EXCEPT TO THE EXTENT THAT ANY SUCH LOSS (I) SHALL

BE DUE TO THE WILLFUL MISCONDUCT, BAD FAITH OR NEGLIGENCE OF THE TRUSTEE OR (II)

SHALL ARISE FROM THE TRUSTEE'S BREACH OF ANY OF ITS REPRESENTATIONS OR

WARRANTIES SET FORTH IN THE INDENTURE; PROVIDED, HOWEVER, THAT THE FOREGOING

INDEMNITY IS EXTENDED TO THE TRUSTEE SOLELY IN ITS INDIVIDUAL CAPACITY AND NOT

FOR THE BENEFIT OF THE TRANSITION BONDHOLDERS OR ANY OTHER PERSON. SUCH AMOUNTS

WITH RESPECT TO THE TRUSTEE SHALL BE DEPOSITED AND DISTRIBUTED IN ACCORDANCE

WITH THE INDENTURE.

(e) THE SERVICER'S INDEMNIFICATION OBLIGATIONS UNDER SECTION 5.02(B)

AND (D) FOR EVENTS OCCURRING PRIOR TO THE REMOVAL OR RESIGNATION OF THE TRUSTEE

OR THE TERMINATION OF THIS AGREEMENT SHALL SURVIVE THE RESIGNATION OR REMOVAL OF

THE TRUSTEE OR THE TERMINATION OF THIS AGREEMENT AND SHALL INCLUDE REASONABLE

COSTS, FEES AND EXPENSES OF INVESTIGATION AND LITIGATION (INCLUDING THE ISSUER'S

AND THE TRUSTEE'S REASONABLE ATTORNEYS' FEES AND EXPENSES).

(f) EXCEPT TO THE EXTENT EXPRESSLY PROVIDED FOR IN THIS AGREEMENT,

THE SALE AGREEMENT OR THE FORMATION DOCUMENTS (INCLUDING THE SERVICER'S CLAIMS

WITH RESPECT TO THE SERVICING FEES AND THE SELLER'S CLAIM FOR PAYMENT OF THE

PURCHASE PRICE OF TRANSITION PROPERTY), THE SERVICER HEREBY RELEASES AND

DISCHARGES THE ISSUER (INCLUDING ITS MEMBERS, MANAGERS, EMPLOYEES AND AGENTS, IF

ANY), AND THE TRUSTEE (INCLUDING ITS RESPECTIVE OFFICERS, DIRECTORS AND AGENTS)

(COLLECTIVELY, THE "RELEASED PARTIES") FROM ANY AND ALL ACTIONS, CLAIMS AND

DEMANDS WHATSOEVER, WHICH THE SERVICER, IN ITS CAPACITY AS SERVICER, SHALL OR

MAY HAVE AGAINST ANY SUCH PERSON RELATING TO THE TRANSITION PROPERTY OR THE

SERVICER'S ACTIVITIES WITH RESPECT THERETO OTHER THAN ANY ACTIONS, CLAIMS AND

DEMANDS ARISING OUT OF THE WILLFUL MISCONDUCT, BAD FAITH OR NEGLIGENCE OF THE

RELEASED PARTIES.

(g) THE SERVICER AND THE ISSUER HEREBY ACKNOWLEDGE THAT,

NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE TRUSTEE IS A THIRD-PARTY

BENEFICIARY OF THIS SECTION 5.02 AND IS ENTITLED TO THE BENEFITS OF THE

INDEMNITY FROM THE SERVICER CONTAINED HEREIN AND TO BRING ANY ACTION TO ENFORCE

SUCH INDEMNIFICATION DIRECTLY AGAINST THE SERVICER.

<PAGE>

(h) THE SERVICER SHALL INDEMNIFY THE PUCT (FOR THE BENEFIT OF

CUSTOMERS), THE ISSUER, THE TRUSTEE (FOR ITSELF AND ON BEHALF OF THE TRANSITION

BONDHOLDERS), AND EACH OF THEIR RESPECTIVE TRUSTEES, MEMBERS, MANAGERS,

OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS FOR, AND DEFEND AND HOLD HARMLESS EACH

SUCH PERSON FROM AND AGAINST, ANY AND ALL LOSSES THAT MAY BE IMPOSED UPON,

INCURRED BY OR ASSERTED AGAINST ANY SUCH PERSON AS A RESULT OF ANY INCREASE IN

THE SERVICING FEE THAT BECOMES PAYABLE PURSUANT TO SECTION 5.07(B) OF THIS

AGREEMENT AS A RESULT OF A DEFAULT RESULTING FROM THE SERVICER'S WILLFUL

MISCONDUCT, BAD FAITH OR NEGLIGENCE IN PERFORMANCE OF ITS DUTIES OR OBSERVANCE

OF ITS COVENANTS UNDER THIS AGREEMENT. THE INDEMNIFICATION OBLIGATION SET FORTH

IN THIS PARAGRAPH MAY BE ENFORCED BY THE PUCT BUT IS NOT ENFORCEABLE BY ANY REP

OR ANY CUSTOMER. ANY INDEMNITY PAYMENTS MADE TO THE PUCT UNDER THIS PARAGRAPH

FOR THE BENEFIT OF CUSTOMERS SHALL BE REMITTED TO THE TRUSTEE PROMPTLY FOR

DEPOSIT INTO THE COLLECTION ACCOUNT.

SECTION 5.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS

OF, THE SERVICER. Any Person:

(a) into which the Servicer may be merged, converted or consolidated

and which succeeds to all or substantially all of the electric transmission and

distribution business of the Servicer (or, if the Servicer's transmission and

distribution business is split, which provides distribution service directly to

a majority of the retail electric customers in the Seller's certificated service

area as it existed on May 1, 1999),

(b) which results from the division of the Servicer into two or more

Persons and which succeeds to all or substantially all of the electric

transmission and distribution business of the Servicer (or, if the Servicer's

transmission and distribution business is split, which provides distribution

service directly to a majority of the retail electric customers in the Seller's

certificated service area as it existed on May 1, 1999),

which the Servicer shall be a party and which succeeds to all or substantially

all of the electric transmission and distribution business of the Servicer (or,

if the Servicer's transmission and distribution business is split, which

provides distribution service directly to a majority of the retail electric

customers in the Seller's certificated service area as it existed on May 1,

1999),

(d) which may purchase or otherwise succeed to the properties and

assets of the Servicer substantially as a whole and which purchases or otherwise

succeeds to all or substantially all of the electric transmission and

distribution business of the Servicer (or, if the Servicer's transmission and

distribution business is split, which provides distribution service directly to

a majority of the retail electric customers in the Seller's certificated service

area as it existed on May 1, 1999), or

<PAGE>

(e) which may otherwise purchase or succeed to all or substantially

all of the electric transmission and distribution business of the Servicer (or,

if the Servicer's transmission and distribution business is split, which

provides distribution service directly to a majority of the retail electric

customers in the Seller's certificated service area as it existed on May 1,

1999),

which Person in any of the foregoing cases executes an agreement of assumption

to perform every obligation of the Servicer under this Agreement, shall be the

successor to the Servicer under this Agreement without the execution or filing

of any document or any further act by any of the parties to this Agreement;

provided, however, that:

(i) immediately after giving effect to such transaction, the

representations and warranties made pursuant to Section 5.01 shall be true

and correct and no Servicer Default, and no event that, after notice or

lapse of time, or both, would become a Servicer Default, shall have

occurred and be continuing;

(ii) the Servicer shall have delivered to the Issuer, the PUCT and

the Trustee an Officers' Certificate and an opinion of Independent counsel

each stating that such consolidation, merger, conversion or succession and

such agreement of assumption comply with this Section 5.03 and that all

conditions precedent, if any, provided for in this Agreement relating to

such transaction have been complied with;

(iii) the Servicer shall have delivered to the Issuer, the PUCT, the

Trustee and the Rating Agencies an Opinion of Counsel either

(A) stating that, in the opinion of such counsel, all filings

to be made by the Servicer, including filings with the PUCT pursuant

to the Texas Electric Choice Plan and the UCC, that are necessary

fully to preserve and protect the interests of each of the Issuer

and the Trustee in the Transition Property have been executed and

filed and are in full force and effect, and reciting the details of

such filings or

(B) stating that, in the opinion of such counsel, no such

action is necessary to preserve and protect such interests;

(iv) the Rating Agencies shall have received prior written notice

of such transaction and, if such Person is not an Affiliate of CenterPoint

Houston, the Rating Agency Condition shall be satisfied; and

(v) the Servicer shall have delivered to the Issuer, the PUCT, the

Trustee and the Rating Agencies an opinion of independent tax counsel (as

selected by, and in form and substance satisfactory to, the Servicer, and

which may be based on a ruling from the Internal Revenue Service) to the

effect that, for federal income tax purposes, such transaction will not

result in a material adverse federal income tax consequence to the Issuer

or the Transition Bondholders.

The Servicer shall not consummate any transaction referred to in clauses (a),

(b), (c), (d) or (e) above except upon execution of the above-described

agreement o

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