EXHIBIT 10.1
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PLEDGE AGREEMENT
made by
UTILITY HOLDING, LLC
in favor of
JPMORGAN CHASE BANK,
as Administrative Agent
Dated as of May 28, 2003
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TABLE OF CONTENTS
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Page
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SECTION 1. DEFINED TERMS ..................................................................... 1
1.1 Definitions ....................................................................... 1
1.2 Other Definitional Provisions ..................................................... 2
SECTION 2. GRANT OF SECURITY INTEREST ........................................................ 3
SECTION 3. REPRESENTATIONS AND WARRANTIES .................................................... 3
3.1 Title; No Other Liens ............................................................. 3
3.2 Perfected First Priority Liens .................................................... 4
3.3 Jurisdiction of Organization; Chief Executive Office .............................. 4
SECTION 4. COVENANTS ......................................................................... 4
4.1 Delivery of Instruments, Certificated Securities and Chattel Paper ................ 4
4.2 Payment of Credit Agreement Obligations ........................................... 4
4.3 Maintenance of Perfected Security Interest; Further Documentation ................. 4
4.4 Changes in Locations, Name, etc ................................................... 5
4.5 Notices ........................................................................... 5
4.6 Collateral ........................................................................ 5
SECTION 5. REMEDIAL PROVISIONS ............................................................... 6
5.1 Collateral ........................................................................ 6
5.2 Proceeds to be Turned Over To Administrative Agent ................................ 6
5.3 Application of Proceeds ........................................................... 7
5.4 Code and Other Remedies ........................................................... 7
5.5 Sale of Collateral ................................................................ 7
5.6 RRI Option. ....................................................................... 8
SECTION 6. THE ADMINISTRATIVE AGENT .......................................................... 8
6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc ....................... 8
6.2 Duty of Administrative Agent ...................................................... 9
6.3 Execution of Financing Statements ................................................. 9
6.4 Authority of Administrative Agent ................................................. 9
SECTION 7. MISCELLANEOUS .....................................................................10
7.1 Amendments in Writing .............................................................10
7.2 Notices ...........................................................................10
7.3 No Waiver by Course of Conduct; Cumulative Remedies ...............................10
7.4 Enforcement Expenses; Indemnification .............................................10
7.5 Successors and Assigns ............................................................10
7.6 Counterparts ......................................................................11
7.7 Severability ......................................................................11
7.8 Section Headings ..................................................................11
7.9 Integration .......................................................................11
7.10 GOVERNING LAW .....................................................................11
7.11 Submission To Jurisdiction; Waivers ...............................................11
7.12 Acknowledgements ..................................................................11
7.13 Releases ..........................................................................12
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7.14 WAIVER OF JURY TRIAL ..............................................................12
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SCHEDULES
Schedule 1 Notice Addresses
Schedule 2 Pledged Stock
Schedule 3 Jurisdictions of Organization and Chief Executive Offices
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PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of May 28, 2003, made by UTILITY HOLDING,
LLC (the "Grantor") in favor of JPMORGAN CHASE BANK, as Administrative Agent (in
such capacity, the "Administrative Agent") for the banks and other financial
institutions (the "Banks") from time to time parties to the Credit Agreement,
dated as of October 10, 2002 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among CENTERPOINT ENERGY, INC. (the
"Borrower"), the Banks and the Administrative Agent.
WITNESSETH:
WHEREAS, pursuant to the Credit Agreement, the Banks have severally
agreed to make extensions of credit to the Borrower upon the terms and subject
to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of companies
that includes the Grantor;
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement are used in part to enable the Borrower to make valuable transfers to
the Grantor in connection with the operation of its business;
WHEREAS, the Borrower and the Grantor are engaged in related
businesses, and the Grantor derives substantial direct and indirect benefit from
the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Banks to
enter into the Second Amendment, providing for the extension of the Termination
Date, among other things, that the Grantor shall have executed and delivered
this Agreement to the Administrative Agent for the ratable benefit of the Banks;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Banks to enter into the Second Amendment and to
induce the Banks to make their respective extensions of credit to the Borrower
under the Credit Agreement, the Grantor hereby agrees as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the term "Certificated Security" is used herein as
defined in the New York UCC.
(b) The following terms shall have the following meanings:
"Agreement": this Pledge Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"Collateral": as defined in Section 2.
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"Collateral Account": any collateral account established by
the Administrative Agent as provided in Section 5.2 or 5.3.
"Credit Agreement Obligations": the collective reference to
the unpaid principal of and interest on the Loans and Reimbursement Obligations
and all other obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the Credit
Agreement after the maturity of the Loans and Reimbursement Obligations and
interest accruing at the then applicable rate provided in the Credit Agreement
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Borrower, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding) to the Administrative Agent or any Bank (or, in the case of any
Specified Swap Agreement, any Affiliate of any Bank), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, the
Credit Agreement, this Agreement, the other Loan Documents, any Letter of
Credit, any Specified Swap Agreement or any other document made, delivered or
given in connection with any of the foregoing, in each case whether on account
of principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to the Administrative Agent or to the Banks that are required to be
paid by the Borrower pursuant to the terms of any of the foregoing agreements).
"Issuer": Texas Genco Holdings, Inc., as issuer of the Pledged
Stock.
"New York UCC": the Uniform Commercial Code as from time to
time in effect in the State of New York.
"Pledged Stock": any shares, stock certificates, options,
interests or rights of any nature whatsoever in respect of the Capital Stock of
the Issuer that may be held by the Grantor from time to time while this
Agreement is in effect, which, as of the date hereof, consists of the shares of
Capital Stock listed on Schedule 2.
"Proceeds": all "proceeds" as such term is defined in Section
9-102(a)(64) of the New York UCC and, in any event, shall include, without
limitation, all dividends or other income from the Pledged Stock, collections
thereon or distributions or payments with respect thereto.
"RRI": Reliant Resources, Inc.
"RRI Option": the option relating to the Texas Genco Stock
granted to RRI pursuant to the Texas Genco Option Agreement.
"Securities Act": the Securities Act of 1933, as amended.
"Texas Genco Option Agreement": the Texas Genco Option
Agreement, dated as of December 31, 2000, between the Borrower and RRI, as
amended, modified or supplemented on or prior to the date hereof, and, following
the date hereof, from time to time in a manner consistent with Section 5.6.
1.2 Other Definitional Provisions. (a) The words "hereof," "herein",
"hereto" and "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, and Section and Schedule references are to this Agreement unless
otherwise specified.
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(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. GRANT OF SECURITY INTEREST
2.1 Grant of Security Interests. The Grantor hereby assigns and
transfers to the Administrative Agent, and hereby grants to the Administrative
Agent, for the ratable benefit of the Banks, a security interest in, all of the
following property now owned or at any time hereafter acquired by the Grantor or
in which the Grantor now has or at any time in the future may acquire any right,
title or interest (collectively, the "Collateral"), as collateral security for
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Credit Agreement Obligations:
(a) all Pledged Stock;
(b) all shares, stock certificates, options, interests or rights of any
nature whatsoever in respect of the Capital Stock of the Issuer that may be
issued or granted to the Grantor while this Agreement is in effect; and
(c) to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing.
2.2 Maximum Liability.
(a) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of the Grantor hereunder and under the
other Loan Documents shall in no event exceed the amount which is permitted
under applicable federal and state laws relating to the insolvency of debtors.
(b) The Grantor agrees that the Credit Agreement Obligations may at any
time and from time to time exceed the amount of the liability of the Grantor
hereunder without impairing the Liens granted pursuant to this Section 2 or
affecting the rights and remedies of the Administrative Agent or any Bank
hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Banks to enter into
the Second Amendment and to induce the Banks to make their respective extensions
of credit to the Borrower under the Credit Agreement, the Grantor hereby
represents and warrants to the Administrative Agent and each Bank that:
3.1 Title; No Other Liens. (a) The Grantor is the record and beneficial
owner of, and has good and marketable title to, the Pledged Stock pledged by it
hereunder, free and clear of any and all Liens or options in favor of, or claims
of any other Person, except (x) the RRI Option and (y) the security interest
created by this Agreement. No financing statement or other public notice with
respect to all or any part of the Collateral is on file or of record in any
public office, except such as have been filed in favor of the Administrative
Agent, for the ratable benefit of the Banks, pursuant to this Agreement or as
are permitted by the Credit Agreement.
(b) The shares of the Pledged Stock pledged by the Grantor
hereunder constitute all of the issued and outstanding shares of all classes of
the Capital Stock of the Issuer owned by the Grantor.
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(c) All the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable.
3.2 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon delivery in certificated form to the
Administrative Agent of the Pledged Stock, together with undated stock powers
covering each certificate duly executed in blank by the Grantor and the filing
of financing statements with respect to the Collateral in the State of Delaware,
will constitute valid perfected security interests in all of the Collateral in
favor of the Administrative Agent, for the ratable benefit of the Banks, as
collateral security for the Credit Agreement Obligations, enforceable in
accordance with the terms hereof against all creditors of the Grantor and,
subject to Section 7.13(b) hereof, any Persons purporting to purchase any
Collateral from the Grantor and (b) are prior to all other Liens (other than the
RRI Option) on the Collateral in existence on the date hereof.
3.3 Jurisdiction of Organization; Chief Executive Office. On the date
hereof, the Grantor's jurisdiction of organization, identification number from
the jurisdiction of organization (if any), and the location of the Grantor's
chief executive office or sole place of business or principal residence, as the
case may be, are specified on Schedule 3. The Grantor has furnished to the
Administrative Agent a certified charter, certificate of incorporation or other
organization document and long-form good standing certificate as of a date which
is recent to the date hereof.
SECTION 4. COVENANTS
The Grantor covenants and agrees with the Administrative Agent
and the Banks that, from and after the date of this Agreement until the Credit
Agreement Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Commitments shall have terminated:
4.1 Delivery of Instruments, Certificated Securities and Chattel Paper.
If any amount payable under or in connection with any of the Collateral shall be
or become evidenced by any Certificated Security, such Certificated Security
shall be immediately delivered to the Administrative Agent, duly indorsed in a
manner satisfactory to the Administrative Agent, to be held as Collateral
pursuant to this Agreement.
4.2 Payment of Credit Agreement Obligations. The Grantor will pay and
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all taxes, assessments and governmental charges
or levies imposed upon the Collateral or in respect of income or profits
therefrom, as well as all claims of any kind (including, without limitation,
claims for labor, materials and supplies) against or with respect to the
Collateral, except that no such taxes, assessments, charges, levies or claims
need be paid if the amount or validity thereof is currently being contested in
good faith by appropriate proceedings, reserves in conformity with GAAP with
respect thereto have been provided on the books of the Grantor and such
proceedings could not reasonably be expected to result in the sale, forfeiture
or loss of any material portion of the Collateral or any material interest
therein.
4.3 Maintenance of Perfected Security Interest; Further Documentation.
(b) The Grantor shall, subject to the rights of the Grantor under the Loan
Documents to issue, sell, assign, transfer or otherwise dispose of all or any
part of the Collateral, (i) not take or omit to take any action, the taking or
the omission of which would result in an alteration or impairment of the
security interest created by this Agreement and (ii) defend such security
interest against claims and demands of all persons whomsoever. At any time and
from time to time, upon the written request of the Administrative Agent and at
the sole expense of the Grantor, the Grantor shall promptly and duly execute and
deliver, and have recorded, such further instruments and documents and take such
further actions as the Administrative Agent reasonably may request for the
purposes of obtaining or preserving the full benefits of this Agreement and of
the
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rights and powers herein granted, including, without limitation, (i) filing any
financing or continuation statements under the Uniform Commercial Code (or other
similar laws) in effect in any jurisdiction with respect to the security
interests created hereby and (ii) taking any actions necessary to enable the
Administrative Agent to obtain "control" (within the meaning of the applicable
Uniform Commercial Code) with respect thereto.
4.4 Changes in Locations, Name, etc. The Grantor will not, except upon
15 days' prior written notice to the Administrative Agent and delivery to the
Administrative Agent of all additional executed financing statements and other
documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for herein:
(i) change its jurisdiction of organization or the location of its
chief executive office or sole place of business or principal residence from
that referred to in Section 3.3; or
(ii) change its name.
4.5 Notices. The Grantor will advise the Administrative Agent promptly
after it becomes aware of such circumstance, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Administrative Agent to exercise any of its
remedies hereunder; and
(b) the occurrence of any other event (other than any event or
transaction permitted under the Credit Agreement) which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
4.6 Collateral. (a) If the Grantor shall become entitled to receive or
shall receive any certificate (including, without limitation, any certificate
representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Capital
Stock of the Issuer, whether in addition to, in substitution of, as a conversion
of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect
thereof, the Grantor shall accept the same as the agent of the Administrative
Agent and the Banks, hold the same in trust for the Administrative Agent and the
Banks and deliver the same forthwith to the Administrative Agent in the exact
form received, duly indorsed by the Grantor to the Administrative Agent, if
required, together with an undated stock power covering such certificate duly
executed in blank by the Grantor and with, if the Administrative Agent so
requests, signature guaranteed, to be held by the Administrative Agent, subject
to the terms hereof, as additional collateral security for the Credit Agreement
Obligations. Any sums paid upon or in respect of the Collateral upon the
liquidation or dissolution of the Issuer shall be paid over to the
Administrative Agent to be held by it hereunder as additional collateral
security for the Credit Agreement Obligations, and in case any distribution of
capital shall be made on or in respect of the Collateral or any property shall
be distributed upon or with respect to the Collateral pursuant to the
recapitalization or reclassification of the capital of the Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent,
be delivered to the Administrative Agent to be held by it hereunder as
additional collateral security for the Credit Agreement Obligations. If any sums
of money or property so paid or distributed in respect of the Collateral shall
be received by the Grantor, the Grantor shall, until such money or property is
paid or delivered to the Administrative Agent, hold such money or property in
trust for the Administrative Agent and the Banks, segregated from other funds of
the Grantor, as additional collateral security for the Credit Agreement
Obligations.
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(b) Except in connection with (i) the security interests created by
this Agreement, (ii) the RRI Option or (iii) any other transaction expressly
permitted by the Credit Agreement, without the prior written consent of the
Administrative Agent, the Borrower will not (i) vote to enable, or take any
other action to permit, the Issuer to issue any Capital Stock of any nature or
to issue any other securities convertible into or granting the right to purchase
or exchange for any Capital Stock of any nature of the Issuer, (ii) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Collateral, (iii) create, incur or permit to exist any Lien or
option in favor of, or any claim of any Person with respect to, any of the
Collateral, or any interest therein or (iv) enter into any agreement or
undertaking restricting the right or ability of the Grantor or the
Administrative Agent to sell, assign or transfer any of the Collateral.
SECTION 5. REMEDIAL PROVISIONS
5.1 Collateral. (a) Unless an Event of Default shall have occurred and
be continuing and the Administrative Agent shall have given notice to the
Grantor of the Administrative Agent's intent to exercise its corresponding
rights pursuant to Section 5.1(b), the Grantor shall be permitted to receive and
use all Proceeds, to the extent permitted in the Credit Agreement, and to
exercise all voting and corporate or other organizational rights with respect to
the Collateral.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall have given notice to the Grantor of its intent to
exercise such rights, (i) the Administrative Agent shall have the right to
receive any and all Proceeds and make application thereof to the Credit
Agreement Obligations in such order as the Administrative Agent may determine,
and (ii) any or all of the Collateral shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its nominee
may thereafter exercise (x) all voting, corporate and other rights pertaining to
such Collateral at any meeting of shareholders of the Issuer or otherwise and
(y) subject to Section 5.6, any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Collateral as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Collateral upon the merger, consolidation, reorganization, recapitalization or
other fundamental change in the corporate or other organizational structure of
the Issuer, or upon the exercise by the Grantor or the Administrative Agent of
any right, privilege or option pertaining to such Collateral, and in connection
therewith, the right to deposit and deliver any and all of the Collateral with
any committee, depositary, transfer agent, registrar or other designated agency
upon such terms and conditions as the Administrative Agent may determine), all
without liability except to account for property actually received by it, but
the Administrative Agent shall have no duty to the Grantor to exercise any such
right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.
(c) The Grantor hereby authorizes and instructs the Issuer to (i)
comply with any instruction received by it from the Administrative Agent in
writing that (x) states that an Event of Default has occurred and is continuing
and (y) is otherwise in accordance with the terms of this Agreement, without any
other or further instructions from the Grantor, and (ii) following receipt of
such instruction, pay any dividends or other payments with respect to the
Collateral directly to the Administrative Agent.
5.2 Proceeds to be Turned Over To Administrative Agent. If an Event of
Default shall occur and be continuing, all Proceeds received by the Grantor
consisting of cash, checks and other near-cash items shall be held by it in
trust for the Administrative Agent and the Banks, segregated from other funds of
the Grantor, and shall, forthwith upon receipt by the Grantor, be turned over to
the Administrative Agent in the exact form received by the Grantor (duly
indorsed by the Grantor to the Administrative Agent, if required). All Proceeds
received by the Administrative Agent hereunder shall be held by the
Administrative Agent in a Collateral Account maintained under its sole dominion
and control. All
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Proceeds while held by the Administrative Agent in a Collateral Account (or by
the Grantor in trust for the Administrative Agent and the Banks) shall continue
to be held as collateral security for all the Credit Agreement Obligations and
shall not constitute payment thereof until applied as provided in Section 5.3.
5.3 Application of Proceeds. If an Event of Default shall have occurred
and be continuing, at any time at the Administrative Agent's election, the
Administrative Agent may apply all or any part of Proceeds constituting
Collateral, whether or not held in any Collateral Account, in payment of the
Credit Agreement Obligations in such order as the Administrative Agent may
elect, and any part of such funds which the Administrative Agent elects not so
to apply and deems not required as collateral security for the Credit Agreement
Obligations shall be paid over from time to time by the Administrative Agent to
the Grantor or to whomsoever may be lawfully entitled to receive the same. Any
balance of such Proceeds remaining after the Credit Agreement Obligations shall
have been paid in full, no Letters of Credit shall be outstanding and the
Commitments shall have terminated shall be paid over to the Grantor or to
whomsoever may be lawfully entitled to receive the same.
5.4 Code and Other Remedies. Subject to Section 5.6, if an Event of
Default shall occur and be continuing, the Administrative Agent, on behalf of
the Banks, may exercise, in addition to all other rights and remedies granted to
them in this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Credit Agreement Obligations, all rights and
remedies of a secured party under the New York UCC or any other applicable law.
Without limiting the generality of the foregoing, subject to Section 5.6, the
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Administrative Agent or any Bank or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. Subject to Section 5.6, the Administrative Agent
or any Bank shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in the Grantor, which right or equity is hereby waived and released.
The Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 5.4, after deducting all reasonable costs and expenses
of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Administrative Agent and the Banks hereunder, including,
without limitation, reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Credit Agreement Obligations, in such order as the
Administrative Agent may elect, and only after such application and after the
payment by the Administrative Agent of any other amount required by any
provision of law, including, without limitation, Section 9-615(a)(3) of the New
York UCC, need the Administrative Agent account for the surplus, if any, to the
Grantor. To the extent permitted by applicable law, the Grantor waives all
claims, damages and demands it may acquire against the Administrative Agent or
any Bank arising out of the exercise by them of any rights hereunder. If any
notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least 10
days before such sale or other disposition.
5.5 Sale of Collateral. (a) The Grantor recognizes that the
Administrative Agent may be unable to effect a public sale of any or all the
Pledged Stock, by reason of certain prohibitions contained in the Securities Act
and applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree,
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among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if the Issuer would agree to do so.
(b) The Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 5.5 valid and
binding and in compliance with any and all other applicable Requirements of Law.
5.6 RRI Option. Notwithstanding anything to the contrary in this
Agreement or any other Loan Document, the Administrative Agent, and any
successor, transferee or assignee of the Administrative Agent, whether in
connection with any foreclosure action or otherwise, shall be subject to all
rights of RRI, and all restrictions relating to the Pledged Shares, set forth in
the Texas Genco Option Agreement, until the expiration of the RRI Option;
provided, however, that the Texas Genco Option Agreement shall not be amended in
any manner that would adversely affect the Liens granted hereunder.
SECTION 6. THE ADMINISTRATIVE AGENT
6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. (a)
The Grantor hereby irrevocably constitutes and appoints the Administrative Agent
and any officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of the Grantor and in the name of the Grantor or in its own
name, for the purpose of carrying out the terms of this Agreement, to take any
and all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing, the Grantor
hereby gives the Administrative Agent the power and right, on behalf of the
Grantor, without notice to or assent by the Grantor, to do any or all of the
following:
(i) pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral;
(ii) execute, in connection with any sale provided for in Section 5.4
or 5.5, any indorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(iii) (1) ask or demand for, collect, and receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become due
at any time in respect of or arising out of the Collateral; (2) commence and
prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any portion thereof and to
enforce any other right in respect of the Collateral; (3) defend any suit,
action or proceeding brought against the Grantor with respect to the Collateral;
(4) settle, compromise or adjust any such suit, action or proceeding and, in
connection therewith, give such discharges or releases as the Administrative
Agent may deem appropriate; and (5) subject to Section 5.6, generally, sell,
transfer, pledge and make any agreement with respect to or otherwise deal with
the Collateral as fully and completely as though the Administrative Agent were
the absolute owner thereof for all purposes, and do, at the Administrative
Agent's option and the Grantor's expense, at any time, or from time to time, all
acts and things which the Administrative Agent deems necessary to protect,
preserve or realize upon the Collateral and the Administrative Agent's and the
Banks' security interests therein and to effect the intent of this Agreement,
all as fully and effectively as the Grantor might do.
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Anything in this Section 6.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 6.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If the Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 6.1, together with interest
thereon at a rate per annum equal to the highest rate per annum at which
interest would then be payable on any category of past due ABR Loans under the
Credit Agreement, from the date of payment by the Administrative Agent to the
date reimbursed by the Grantor, shall be payable by the Grantor to the
Administrative Agent on demand.
(d) The Grantor hereby ratifies all that said attorneys shall lawfully
do or cause to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.
6.2 Duty of Administrative Agent. The Administrative Agent's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Bank nor any of their respective officers, directors,
employees or agents shall be liable for failure to demand, collect or realize
upon any of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Grantor or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof. The powers conferred on the
Administrative Agent and the Banks hereunder are solely to protect the
Administrative Agent's and the Banks' interests in the Collateral and shall not
impose any duty upon the Administrative Agent or any Bank to exercise any such
powers. The Administrative Agent and the Banks shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, employees or agents shall
be responsible to the Grantor for any act or failure to act hereunder, except
for their own gross negligence or willful misconduct.
6.3 Execution of Financing Statements. Pursuant to any applicable law,
the Grantor authorizes the Administrative Agent to file or record financing
statements and other filing or recording documents or instruments with respect
to the Collateral without the signature of the Grantor in such form and in such
offices as the Administrative Agent reasonably determines appropriate to perfect
the security interests of the Administrative Agent under this Agreement. The
Grantor hereby ratifies and authorizes the filing by the Administrative Agent of
any financing statement reasonably necessary to perfect such security interests
made prior to the date hereof.
6.4 Authority of Administrative Agent. The Grantor acknowledges that
the rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the Banks,
be governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Grantor, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Banks with full and valid
authority so to act or refrain
10
from acting, and the Grantor shall not be under any obligation, or entitlement,
to make any inquiry respecting such authority.
SECTION 7. MISCELLANEOUS
7.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 11.1 of the Credit Agreement.
7.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or the Grantor shall be effected in the manner provided for
in Section 11.2 of the Credit Agreement; provided that any such notice, request
or demand to or upon any Grantor shall be addressed to such Grantor at its
notice address set forth on Schedule 1.
7.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any Bank shall by any act (except by a written
instrument pursuant to Section 7.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Bank, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Bank of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Bank would otherwise have
on any future occasion. The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
7.4 Enforcement Expenses; Indemnification. (a) The Grantor agrees to
pay or reimburse each Bank and the Administrative Agent for all its costs and
expenses incurred in enforcing or preserving any rights under this Agreement and
the other Loan Documents to which the Grantor is a party, including, without
limitation, the fees and disbursements of counsel (including the allocated fees
and expenses of inhouse counsel) to each Bank and of counsel to the
Administrative Agent.
(b) The Grantor agrees to pay, and to save the Administrative Agent and
the Banks harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the Collateral
or in connection with any of the transactions contemplated by this Agreement.
(c) The Grantor agrees to pay, and to save the Administrative Agent and
the Banks harmless from, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement to the extent the Borrower
would be required to do so pursuant to Section 11.5 of the Credit Agreement.
(d) The agreements in this Section 7.4 shall survive repayment of the
Credit Agreement Obligations and all other amounts payable under the Credit
Agreement and the other Loan Documents.
7.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Grantor and shall inure to the benefit of the
Administrative Agent and the Banks and their successors and assigns; provided
that the Grantor may not assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
11
7.6 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
7.7 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7.8 Section Headings. The Section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
7.9 Integration. This Agreement and the other Loan Documents represent
the agreement of the Grantor, the Administrative Agent and the Banks with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Bank relative to subject matter hereof and thereof not expressly set forth or
referred to herein or in the other Loan Documents.
7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
7.11 Submission To Jurisdiction; Waivers. The Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Grantor at its
address referred to in Section 7.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to sue
in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
7.12 Acknowledgements. The Grantor hereby acknowledges that:
12
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;
(b) neither the Administrative Agent nor any Bank has any fiduciary
relationship with or duty to the Grantor arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Grantor, on the one hand, and the Administrative Agent and Banks, on the
other hand, in connection herewith or therewith is solely that of debtor and
creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Banks or among the Grantor and the Banks.
7.13 Releases. (a) At such time as the Loans, the Reimbursement
Obligations and the other Credit Agreement Obligations (other than Credit
Agreement Obligations in respect of Specified Swap Agreements) shall have been
paid in full, the Commitments have been terminated and no Letters of Credit
shall be outstanding, the Collateral shall be released from the Liens created
hereby, and this Agreement and all obligations (other than those expressly
stated to survive such termination) of the Administrative Agent and the Grantor
hereunder shall terminate, all without delivery of any instrument or performance
of any act by any party, and all rights to the Collateral shall revert to the
Grantor. At the request and sole expense of the Grantor following any such
termination, the Administrative Agent shall deliver to the Grantor any
Collateral held by the Administrative Agent hereunder, and execute and deliver
to the Grantor such documents as the Grantor shall reasonably request to
evidence such release and termination.
(b) If any of the Collateral shall be sold, transferred, assigned,
exchanged or otherwise disposed of by the Grantor in connection with the RRI
Option or any other transaction permitted by the Credit Agreement, the
Collateral shall be released from the Liens created hereby, and this Agreement
and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent and the Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantor, and the
Administrative Agent, at the request and sole expense of the Grantor, shall
promptly deliver to the Grantor such Collateral held by the Administrative Agent
hereunder, and execute and deliver to the Grantor all releases or other
documents reasonably requested by the Grantor for the release of the Liens
created hereby on such Collateral.
7.14 WAIVER OF JURY TRIAL. THE GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
13
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be duly executed and delivered as of the date first above written.
UTILITY HOLDING, LLC
By: /s/ PATRICIA F. GENZEL
---------------------------------
Name: Patricia F. Genzel
Title: President and Secretary
Acknowledged and Agreed to
as of the date hereof:
CENTERPOINT ENERGY, INC.
By: /s/ GARY L. WHITLOCK
-----------------------------------
Name: Gary L. Whitlock
Title: Executive Vice President and
Chief Financial Officer
Schedule 1
NOTICE ADDRESS OF GRANTOR
200 West Ninth Street Plaza
Suite 411
Wilmington, Delaware 19801
Attention: Patricia F. Genzel
President and Secretary
(302) 655-8894
With a copy to: Marc Kilbride
Vice President and Treasurer
Texas Genco Holdings, Inc.
(713) 207-5782
Schedule 2
DESCRIPTION OF PLEDGED STOCK
<Table>
<Caption>
Issuer Class of Stock Stock Certificate No. No. of Shares
- -------------------------- -------------- --------------------- -------------
Texas Genco Holdings, Inc. Common Stock TG14348 64,764,240
</Table>
Schedule 3
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
Jurisdiction of Organization Location of Chief Executive Office
---------------------------- ----------------------------------
Delaware 200 West Ninth Street Plaza
Suite 411
Wilmington, Delaware 19801
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Pledge
Agreement dated as of May 28, 2003 (the "Agreement"), made by the Grantor for
the benefit of JPMorgan Chase Bank, as Administrative Agent. The undersigned
agrees for the benefit of the Administrative Agent and the Banks as follows:
1. The undersigned will be bound by the terms of the Agreement
and will comply with such terms insofar as such terms are applicable to the
undersigned.
2. The undersigned will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
4.6(a) of the Agreement.
3. The terms of Sections 5.1(c) and 5.5 of the Agreement shall
apply to it, mutatis mutandis, with respect to all actions that may be required
of it pursuant to Section 5.1(c) or 5.5 of the Agreement.
TEXAS GENCO HOLDINGS, INC.
By: /s/ MARC KILBRIDE
-----------------------------------
Name: Marc Kilbride
Title: Vice President and Treasurer
Address for Notices:
1111 Louisiana, 44th Floor
Houston, Texas 77002
Fax: 713.207.3301