Form of Amended Guaranty Re: Construction Agency

AMENDED AND RESTATED GUARANTY


[_____________] Project


THIS AMENDED AND RESTATED GUARANTY, dated as of November __, 2001 (this "Guaranty") made by RELIANT RESOURCES, INC., a Delaware corporation (the "Guarantor"), in favor of [_____________] TRUST, a Delaware business trust and the other Persons identified in the definition of Beneficiary below (the "Beneficiary").


WITNESSETH:


WHEREAS, the Beneficiary, Reliant Energy [_____________], LLC, a Delaware limited liability company (by way of assignment from Reliant Energy Construction, LLC) (the "Agent"), First Union Trust Company, National Association, a national banking association ("First Union"), Apple Investments LLC, a Delaware limited liability company ("Original Owner Trust Parent"), Apple Equity Capital Trust, a Delaware business trust and Westdeutsche Landesbank Girozentrale, New York Branch have entered in a Construction Agency Agreement, dated as of April 27, 2001, as amended by Amendment No. 1 to Construction Agency Agreement, dated as of July 25, 2001, and as amended by Amendment No. 1 to Letter of Intent and Amendment No. 2 to Construction Agency Agreements dated October 23, 2001 (as so amended, the "Existing CAA");


WHEREAS, in connection with the Existing CAA, Guarantor entered into a Guaranty Agreement, dated as of April 27, 2001, in favor of Owner Trust (the "Original Guaranty");


WHEREAS, Owner Trust, Agent, First Union, Apple Investments 2001 Trust ("Owner Trust Parent"), certain lenders and agents for such lenders and equity participants have amended and restated the Existing CAA by entering into an Amended and Restated Construction Agency Agreement, dated as of November __, 2001 (as the same may be amended, supplemented or otherwise modified from time to time, the "Construction Agency Agreement");


WHEREAS, the Construction Agency Agreement requires that Guarantor amend and restate the Original Guaranty by executing and delivering this Guaranty as a condition to the obligation of Owner Trust to make Payments (as defined in the Construction Agency Agreement) thereunder, and Guarantor has concluded that it will derive substantial benefits from the transactions contemplated by the Construction Agency Agreement; and


WHEREAS, Guarantor is executing and delivering this Guaranty to induce Owner Trust, the lenders and equity participants to enter into the Construction Agency Agreement and to induce other Secured Parties from time to time to enter into Financing Documents (as defined in the Intercreditor Agreement) in respect of Lease Indebtedness (as defined in the Intercreditor Agreement);


NOW, THEREFORE, for value received, Guarantor hereby agrees with and for the benefit of Beneficiary as follows:


ARTICLE I


DEFINED TERMS


SECTION 1.01 Interpretation. In this Guaranty, unless a clear contrary intention appears:


(a) the singular number includes the plural number and vice
versa;


(b) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Guaranty, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually;


(c) reference to any gender includes each other gender;


(d) reference to any agreement (including this Guaranty),
document or instrument means such agreement, document or instrument as
amended or modified and in effect from time to time in accordance with
the terms thereof and, if applicable, the terms of this Guaranty and
the other Operative Agreements;


(e) reference to any Applicable Law means such Applicable Law
as amended, modified, codified, replaced or reenacted, in whole or in
part, and in effect from time to time, including rules and regulations
promulgated thereunder and reference to any section or other provision
of any Applicable Law means that provision of such Applicable Law from
time to time in effect and constituting the substantive amendment,
modification, codification, replacement or reenactment of such section
or other provision;


(f) reference in this Guaranty to any Article, Section,
Appendix, Schedule or Exhibit means such Article or Section thereof or
Appendix, Schedule or Exhibit thereto;


(g) "hereunder", "hereof", "hereto" and words of similar
import shall be deemed references to this Guaranty as a whole and not
to any particular Article, Section or other provision thereof;


(h) "including" (and with correlative meaning "include") shall
be deemed to be followed by the words "without limitation";


(i) relative to the determination of any period of time,
"from" means "from and including" and "to" means "to but excluding";


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(j) with reference to any time or date specified herein, time
is of the essence; and


(k) with respect to any rights and obligations of the parties
under the Operative Agreements, all such rights and obligations shall
be construed to the extent permitted by Applicable Law.


SECTION 1.02 Accounting Terms and Determinations. In this Guaranty, unless expressly otherwise provided, all terms of an accounting character used herein shall be construed and interpreted, and all accounting determinations and computations hereunder shall be made, and all financial statements required to be delivered shall be prepared, in accordance with GAAP, as in effect from time to time.


SECTION 1.03 Legal Representation of the Parties. This Guaranty was negotiated by the parties with the benefit of legal representation and any rule of construction or interpretation otherwise requiring this Guaranty to be construed or interpreted against any party shall not apply to any construction or interpretation hereof or thereof.


SECTION 1.04 Certain Defined Terms.


(a) The capitalized terms used herein which are defined in the Construction Agency Agreement or the Credit Agreement and not otherwise defined herein have, as used herein, the respective meanings provided for therein.


(b) As used in this Guaranty, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and the plural forms of the terms defined):


"Agent" shall have the meaning set forth in the first recital to this Guaranty, provided that except for purposes of such recitals, wherever the term Agent is used in this Guaranty, it shall be deemed to include Lessee.


"Beneficiary" shall mean Owner Trust and with respect to the indemnification provisions of the Lease, each Lease Indemnified Person (as defined in the Lease).


"Board" means the Board of Governors of the Federal Reserve System of the United States (or any successor).


"Business Day" means (a) any day other than a Saturday, Sunday or other day on which commercial banks in New York City or Houston, Texas are authorized or required by law to close, or (b) if the applicable Business Day relates to any LIBOR Payments, any day which is a "Business Day" described in clause (a) and which is also a day for trading by and between banks in the London interbank market.


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"Capital Lease" means a lease that would be recorded as a capital lease on the balance sheet of the lessee.


"Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, and any and all equivalent ownership interests in a Person (other than a corporation), including, partnership interests in partnerships and member interests in limited liability companies.


"Change of Control" means the occurrence of any Person or group of related Persons, other than REI, Regco, or any of REI's or Regco's Affiliates, acquiring directly or indirectly in the aggregate more than 30% of the outstanding shares of the voting stock of Guarantor unless (a) Guarantor is a wholly-owned Subsidiary of such Person and (b) the stockholders of Guarantor immediately prior to Guarantor becoming a wholly-owned Subsidiary of such Person hold shares of stock of such Person immediately after Guarantor becomes a wholly-owned Subsidiary of such Person representing at least a majority of the voting power in such Person.


"Code" means the Internal Revenue Code of 1986, as amended from time to time and any successor statute.


"Commonly Controlled Entity" means an entity, whether or not incorporated, that is under common control with Guarantor within the meaning of Section 4001 of ERISA or is part of a group that includes Guarantor and that is treated as a single employer under Section 414 of the Code.


"Consolidated Net Debt" means, as of any date of determination, the total principal amount of Debt (other than Subordinated Affiliate Debt) outstanding on such date less all cash and short-term investments on such date, all as shown on the consolidated balance sheet of Guarantor and its Consolidated Subsidiaries.


"Consolidated Shareholders' Equity" means, as of any date of determination, the consolidated common equity (including common stock, additional paid in capital, retained earnings, and other comprehensive income), preferred stock, and minority interests of Guarantor and its Consolidated Subsidiaries.


"Consolidated Subsidiary" means, at any date, any Subsidiary or any other Person, the accounts of which would be consolidated with those of Guarantor in its consolidated financial statements as of such date.


"Construction Agency Agreement" shall have the meaning set forth in the third recital to this Agreement.


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"Controlled" means, with respect to any Person, the ability of another Person (whether directly or indirectly and whether by the ownership of voting securities, contract or otherwise) to appoint and/or remove the majority of the members of the board of directors or other governing body of that Person (and "Control" shall be similarly construed except when used as part of the defined term "Change of Control").


"Corporate Rating" means the rating assigned by a Rating Agency (whether indicative or formal) to Guarantor as its corporate or counterparty rating, as applicable.


"Debt" of any Person means, at any date, without duplication, (a) obligations for the repayment of money borrowed which are or should be shown on a balance sheet as debt, including the unreimbursed amount of any drawings under letters of credit issued for the account of such Person, (b) obligations as lessee under Capital Leases, and (c) guaranties of payment or collection of any obligations described in clauses (a) and (b) of other Persons; provided, however, that Debt shall not include (i) any guaranties that may be incurred by endorsement of negotiable instruments for deposit or collection in the ordinary course of business or similar transactions, (ii) any obligations or guaranties of performance of obligations under performance bonds or obligations to reimburse drawings under letters of credit issued to support obligations that do not represent money borrowed or raised, so long as such reimbursement obligations are paid in full within ten (10) Business Days after the date upon which such obligation arises, (iii) trade payables, (iv) customer advance payments and deposits arising in the ordinary course of such Person's business, and (v) the liability of any Person as a general partner of a partnership for Debt of such partnership, if the partnership is not a Subsidiary of such Person.


"Default" means any event or condition which, with the lapse of time or the giving of notice, or both, would constitute a Guaranty Event of Default.


"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.


"Exchange Act" means the Securities Exchange Act of 1934, as amended.


"Existing CAA" shall have the meaning set forth in the first recital to this Agreement.


"Guaranty Event of Default" shall have the meaning set forth in Article V.


"Insolvency" means, with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA (and "Insolvent" shall be construed accordingly).


"Intercreditor Agreement" shall mean the Collateral Agency and Intercreditor Agreement, dated as of the Closing Date among [_____________] Trust, as a Borrower,


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[_____________] Trust, as a Borrower, Signal Peak Trust, as a Borrower, [_____________] County Trust, as a Borrower, Citicorp USA, Inc., as Lender Agent, Citibank N.A., as Collateral Agent, and certain other Secured Parties and authorized representatives.


"Lessee" shall mean Reliant Energy [_____________], LLC, in its capacity as lessee under the Lease.


"Lien" means any lien (statutory or other), mortgage, pledge, hypothecation, assignment as collateral, security interest, encumbrance, or other interest in Property to secure payment of any Debt.


"Margin Stock" has the meaning assigned to such term (or, in the case of Regulation T, the term "margin security") in Regulation T or U, as the case may be.


"Material Adverse Effect" means any material adverse effect on the ability of Guarantor to perform its obligations under this Guaranty.


"Multiemployer Plan" means a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.


"Obligations" shall have the meaning set forth in Section 2.01(a).


"PBGC" means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.


"Permitted Liens" means with respect to any Person:


(a) Liens existing on the date hereof;


(b) Liens upon the Capital Stock of a Significant Subsidiary
(or the Capital Stock of a holding company formed to acquire or hold
such stock) (i) created at the time of the acquisition thereof or
within one year after such time to only secure all or a portion of Debt
constituting the purchase price for such Capital Stock or (ii) existing
thereon (A) at the time of the acquisition thereof or (B) at the time
at which such Subsidiary first becomes a Significant Subsidiary, so
long as such Lien was in existence prior to such time;


(c) Liens created by Capital Leases provided that the Liens
created by any such Capital Lease attach only to the Property leased to
the Guarantor or one of its Subsidiaries pursuant thereto;


(d) purchase money Liens securing Debt (including such Liens
securing Debt incurred within 12 months of the date on which such
Property was acquired) provided


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that all such Liens attach only to the Property purchased with the
proceeds of the Debt secured thereby and only secure the Debt incurred
to finance such purchase;


(e) Liens on accounts (as defined in the applicable Uniform
Commercial Code at any time in effect), receivables, notes, ownership
interests, contracts or contract rights created in connection with a
sale, securitization or monetization of such accounts, receivables,
notes, ownership interests, contracts or contract rights, and Liens on
rights of the Guarantor or any Subsidiary related to such accounts,
receivables, notes, ownership interests, contracts or contract rights
which are transferred to the purchaser of such accounts, receivables,
notes, ownership interests, contracts or contract rights in connection
with such sale, securitization or monetization; provided that such
Liens secure only the obligations of the Guarantor or any of its
Subsidiaries in connection with such sale, securitization or
monetization;


(f) Liens on (i) Property owned by a Project Financing
Subsidiary or (ii) equity interests in a Project Financing Subsidiary
(including in each case a pledge of a partnership interest, common
stock or a membership interest in a limited liability company), in each
case securing any Debt which constitutes a Project Financing;


(g) Liens on Property of a Person which exist at the time such
Person becomes a Significant Subsidiary of the Guarantor which Liens
were not granted in contemplation of such Person becoming a Significant
Subsidiary of the Guarantor;


(h) extensions, renewals or replacements of any Permitted Lien
referred to in clauses (a) through (g) of this definition of "Permitted
Liens", provided that the principal amount of the Debt secured thereby
is no greater than the greater of (i) the outstanding principal amount
of such Debt immediately before such extension, renewal, or replacement
and (ii) the maximum commitment of such Debt or obligation immediately
before such extension, renewal, or replacement and that any such
extension, renewal or replacement Lien is limited to the Property
originally encumbered thereby; and


(i) other Liens securing Debt not to exceed 10% of
Consolidated Shareholders' Equity.


"Person" means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture, government (or any political subdivision or agency thereof) or any other entity of whatever nature.


"Plan" means, at a particular time, any employee benefit plan that is covered by ERISA and in respect of which Guarantor or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.


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"Principal Trading Subsidiary" means (a) Reliant Energy Services, Inc., a Delaware corporation ("RES"), but only for so long as RES is a Subsidiary of Guarantor or (b) if RES transfers its business and assets to another Subsidiary of Guarantor, such other Subsidiary.


"Project Financing" means any Debt, lease or other obligations that do not constitute Capital Leases at the time such leases are entered into, in each case that are incurred to finance a project or group of projects (including any construction financing) to the extent that such Debt (or other obligations) are not recourse to the Guarantor or any of its Subsidiaries (other than a Project Financing Subsidiary) or any of their respective Property other than the Property of a Project Financing Subsidiary.


"Project Financing Subsidiary" means any Subsidiary of the Guarantor whose principal purpose is to incur Project Financing or to become an owner of interests in a Person created to conduct the business activities for which such Project Financing was incurred, and substantially all the fixed assets of which Subsidiary or Person are those fixed assets being financed (or to be financed) in whole or in part by one or more Project Financings.


"Property" means any interest or right in any kind of property or asset, whether real, personal or mixed, owned or leased, tangible or intangible and whether now held or hereafter acquired.


"Rating Agencies" means (a) Standard & Poor's Ratings Group, a division of McGraw-Hill Companies, Inc.; (b) Fitch, Inc.; and (c) Moody's Investors Service, Inc., or any successor to any of such rating agencies.


"Regco" means Center Point Energy, Inc., the holding company which is expected to become the publicly traded holding company (direct or indirect) of REI as part of the overall restructuring described in REI's December 31, 2000 SEC Form 10-K.


"Regulation T" and "Regulation U" means Regulation T and U, respectively, of the Board or any other regulation hereafter promulgated by the Board to replace the prior Regulation T or U, as the case may be, and having substantially the same function.


"REI" means Reliant Energy, Incorporated, a Texas corporation.


"Reorganization" means, with respect to any Multiemployer Plan, the condition that such Plan is in reorganization within the meaning of Section 4241 of ERISA.


"Reportable Event" means any of the events specified in Section 4043(b) of ERISA, other than those events as to which the thirty-day notice period is waived under PBGC Reg. Section 4043.


"Responsible Officer" means the chief financial officer, the chief accounting officer, the senior vice president-finance, the treasurer, an assistant treasurer, or the comptroller


8 of Guarantor or any other officer of Guarantor whose primary duties are similar to the duties of any of the previously listed officers.


"Responsible Trust Officer" means a "Responsible Officer", as such term is defined in the Trust Agreement.


"SEC" means the Securities and Exchange Commission.


"Secured Parties" shall have the meaning set forth in the Intercreditor Agreement.


"Significant Subsidiary" means, as of any date, any Subsidiary of Guarantor (other than a Project Financing Subsidiary) having plant, property, and equipment net of accumulated depreciation as of the most recent fiscal year end equal to or greater than 10% of Guarantor's consolidated plant, property, and equipment net of accumulated depreciation as of the most recent fiscal year end based on the financial reports which have been delivered under Section 3.01(a).


"Single Employer Plan" means any Plan that is covered by Title IV of ERISA, but which is not a Multiemployer Plan.


"Subordinated Affiliate Debt" means all Debt of Guarantor and its Subsidiaries to REI or its Subsidiaries which are not Subsidiaries of Guarantor that is subordinated to the obligations under this Guaranty under subordination terms substantially similar to or more restrictive than the subordination terms listed on the attached Exhibit 1.01.


"Subsidiary" means, as to any Person, a corporation, partnership or other entity of which more than 50% of the outstanding shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect directors or other managers of such corporation, partnership or other entity are at the time owned, directly or indirectly, through one or more Subsidiaries of such Person, by such Person.


"Termination Date" shall have the meaning set forth in Section 6.05.


SECTION 1.05 Amendment and Restatement. This Guaranty amends and restates in its entirety the Original Guaranty and, upon effectiveness of this Guaranty, the terms and provisions of the Original Guaranty shall be superseded hereby; provided that nothing contained herein shall be construed as a novation of the Original Guaranty.


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ARTICLE II


GUARANTEE AND INDEMNITIES


SECTION 2.01 Guarantee of Obligations Under Operative Agreements.


(a) The Guarantor hereby confirms and reaffirms its obligations under the Original Guaranty. Guarantor irrevocably and unconditionally guarantees to Beneficiary the due, complete and punctual performance and observance of all payment obligations of Agent and Lessee under the Operative Agreements, and the due, complete and punctual performance of, and compliance with, each and all other obligations, covenants and agreements of Agent and Lessee under the Operative Agreements (in each case, including any and all indemnities and liabilities for breach of covenant or warranty now or hereafter incurred by Agent or Lessee to Beneficiary arising pursuant or with respect to the Operative Agreements), in each case strictly in accordance with the terms thereof (all such obligations and other covenants, indemnities and agreements being referred to herein as the "Obligations"). In the event that Agent or Lessee fails to pay, perform or observe duly, completely and punctually any Obligation when and as the same shall be due and payable, or required to be observed or performed, as the case may be, in accordance with the terms of the applicable Operative Agreement, Guarantor shall forthwith pay, perform or observe, as the case may be, such Obligation or cause the same forthwith to be paid, performed or observed, as the case may be, within five (5) Business Days following Guarantor's receipt of written notice of such failure signed by a Responsible Trust Officer of Beneficiary to pay, perform or observe, as the case may be, regardless of whether or not Beneficiary or anyone on behalf of Beneficiary shall have instituted any suit, action or proceeding or exhausted its remedies or taken any steps to enforce any rights against Agent, Lessee or any other Person or entity to compel any such performance or observance or to collect all or any part of such amount pursuant to the provisions of the Operative Agreements or at law or in equity, or otherwise, and regardless of any other condition or contingency.


(b) Guarantor agrees to pay within five (5) Business Days following Guarantor's receipt of written demand signed by a Responsible Trust Officer of Beneficiary (which demand shall itemize in reasonable detail the expenses for which demand is made by Beneficiary) any and all reasonable expenses (including reasonable attorneys' fees and disbursements) that may be paid or incurred by Beneficiary in enforcing any rights with respect to, or collecting, any or all payments due pursuant to the terms of the Operative Agreements and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guaranty (whether pursuant to Section 2.01(a) or any other provision hereof); provided, that Guarantor shall not be liable for any expenses of Beneficiary if no payment under the Operative Agreements or this Guaranty is due or determined to be due.


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SECTION 2.02 Unconditional Obligations. This Guaranty is a primary obligation of Guarantor independent of the obligations of Agent or Lessee under any Operative Agreement, and is an ...