EXHIBIT 10.1
SEPARATION AGREEMENT
BETWEEN
CENTERPOINT ENERGY, INC.
AND
TEXAS GENCO HOLDINGS, INC.
TABLE OF CONTENTS
ARTICLE I DEFINITIONS....................................................................................... 2
1.1 Action....................................................................................... 2
1.2 Affiliates................................................................................... 2
1.3 Ancillary Agreements......................................................................... 2
1.4 Business..................................................................................... 2
1.5 Business Day................................................................................. 2
1.6 Business Separation Plan..................................................................... 2
1.7 CenterPoint's Auditors....................................................................... 2
1.8 CenterPoint Business......................................................................... 2
1.9 CenterPoint Field of Use..................................................................... 3
1.10 CenterPoint Group............................................................................ 3
1.11 CenterPoint Indemnitees...................................................................... 3
1.12 CenterPoint Intellectual Property............................................................ 3
1.13 Code......................................................................................... 3
1.14 Commission................................................................................... 3
1.15 Distribution Shares.......................................................................... 3
1.16 Exchange Act................................................................................. 3
1.17 Final Order.................................................................................. 3
1.18 Genco Assets................................................................................. 3
1.19 Genco Auditors............................................................................... 3
1.20 Genco Balance Sheet.......................................................................... 3
1.21 Genco Business............................................................................... 4
1.22 Genco Common Stock........................................................................... 4
1.23 Genco Debt Obligations....................................................................... 4
1.24 Genco Distribution Agent..................................................................... 4
1.25 Genco Distribution Date...................................................................... 4
1.26 Genco Excluded Liabilities................................................................... 4
1.27 Genco Group.................................................................................. 4
1.28 Genco Indemnitees............................................................................ 4
1.29 Genco Intellectual Property.................................................................. 4
1.30 Genco Liabilities............................................................................ 4
1.31 Xxxxx XX..................................................................................... 5
1.32 Genco Option................................................................................. 5
1.33 Genco Option Agreement....................................................................... 5
1.34 Genco Option Agreement Undertaking........................................................... 5
1.35 Genco Separation Date........................................................................ 5
1.36 Genco Tax Allocation Agreement............................................................... 5
1.37 Genco Transition Services Agreement.......................................................... 5
1.38 Governmental Approvals....................................................................... 6
1.39 Governmental Authority....................................................................... 6
1.40 Holding Company Restructuring................................................................ 6
1.41 Indebtedness................................................................................. 6
1.42 Indemnifying Party........................................................................... 6
1.43 Indemnitee................................................................................... 6
1.44 Indemnity Payment........................................................................... 6
1.45 Information................................................................................. 6
1.46 Insurance Proceeds.......................................................................... 6
1.47 Intellectual Property....................................................................... 7
1.48 Liabilities................................................................................. 7
1.49 Losses...................................................................................... 7
1.50 Master Separation Agreement................................................................. 7
1.51 NYSE........................................................................................ 7
1.52 Person...................................................................................... 7
1.53 PUCT........................................................................................ 7
1.54 Record Date................................................................................. 7
1.55 Regulatory Proceedings...................................................................... 8
1.56 REI......................................................................................... 8
1.57 Resources................................................................................... 8
1.58 Subsidiary.................................................................................. 8
1.59 Taxes....................................................................................... 8
1.60 Technical Services Agreement................................................................ 8
1.61 Technical Services Assignment and Assumption Agreement...................................... 8
1.62 Third Party Claim........................................................................... 8
1.63 Utilities Code.............................................................................. 8
ARTICLE II THE GENCO DISTRIBUTION AND THE ACTIONS PENDING.................................................. 9
2.1 Delivery of Shares for Genco Distribution................................................... 9
2.2 Actions Prior to the Genco Distribution..................................................... 9
2.3 Conditions Precedent to the Genco Distribution.............................................. 9
2.4 Cooperation................................................................................. 10
2.5 Fractional Shares........................................................................... 10
ARTICLE III ............................................................................................ 11
3.1 Release of Pre-Distribution Claims.......................................................... 11
3.2 Indemnification by Genco.................................................................... 13
3.3 Indemnification by CenterPoint.............................................................. 13
3.4 Indemnification Obligations Net of Insurance Proceeds and Other Amounts..................... 14
3.5 Procedures for Indemnification of Third Party Claims........................................ 15
3.6 Additional Matters.......................................................................... 16
3.7 Remedies Cumulative......................................................................... 16
3.8 Survival of Indemnities..................................................................... 16
3.9 Indemnification of Directors and Officers................................................... 16
ARTICLE IV CORPORATE GOVERNANCE AND CERTAIN OTHER MATTERS.................................................. 17
4.1 Charter, Bylaws and Board of Directors of Genco............................................. 17
4.2 Issuance of Stock........................................................................... 17
ARTICLE V INTELLECTUAL PROPERTY............................................................................ 17
5.1 Assignment.................................................................................. 17
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5.2 License Grants.............................................................................. 17
5.3 Cooperation and Further Undertakings........................................................ 18
5.4 CenterPoint Disclaimer of Warranties........................................................ 18
5.5 Genco Disclaimer of Warranties.............................................................. 18
ARTICLE VI ARBITRATION; DISPUTE RESOLUTION...................................................................... 19
6.1 Agreement to Arbitrate...................................................................... 19
6.2 Escalation.................................................................................. 19
6.3 Demand for Arbitration...................................................................... 19
6.4 Arbitrators................................................................................. 20
6.5 Hearings.................................................................................... 21
6.6 Discovery and Certain Other Matters......................................................... 21
6.7 Certain Additional Matters.................................................................. 22
6.8 Continuity of Service and Performance....................................................... 23
6.9 Law Governing Arbitration Procedures........................................................ 23
ARTICLE VII COVENANTS AND OTHER MATTERS......................................................................... 23
7.1 Other Agreements............................................................................ 23
7.2 Agreement for Exchange of Information....................................................... 23
7.3 Auditors and Audits; Annual and Quarterly Statements and Accounting......................... 25
7.4 Audit Rights................................................................................ 27
7.5 Preservation of Legal Privileges............................................................ 27
7.6 Payment of Expenses......................................................................... 28
7.7 Governmental Approvals...................................................................... 28
7.8 Regulatory Proceedings...................................................................... 28
7.9 Continuance of CenterPoint Credit Support; Borrowings....................................... 29
7.10 [Reserved Section]..........................................................................
7.11 Confidentiality............................................................................. 30
7.12 Capacity Auctions........................................................................... 31
7.13 Nuclear Decommissioning Trust and Investment................................................ 31
ARTICLE VIII MISCELLANEOUS...................................................................................... 31
8.1 Limitation of Liability..................................................................... 31
8.2 Entire Agreement............................................................................ 31
8.3 Governing Law............................................................................... 32
8.4 Termination................................................................................. 32
8.5 Notices..................................................................................... 32
8.6 Counterparts................................................................................ 32
8.7 Binding Effect; Assignment.................................................................. 32
8.8 Severability................................................................................ 32
8.9 Failure or Indulgence Not Waiver; Remedies Cumulative....................................... 32
8.10 Amendment................................................................................... 33
8.11 Authority................................................................................... 33
8.12 Interpretation.............................................................................. 33
8.13 Conflicting Agreements...................................................................... 33
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SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT (this "Agreement") is entered into effective
as of August 31, 2002 between CenterPoint Energy, Inc., a Texas corporation
("CenterPoint"), and Texas Genco Holdings, Inc., a Texas corporation ("Genco").
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in Article I hereof.
RECITALS
WHEREAS, Genco was incorporated on August 24, 2001 and organized as a
wholly owned direct Subsidiary of Reliant Energy, Incorporated, a Texas
corporation ("REI"), on September 21, 2001; and
WHEREAS, effective Xxxxxx 00, 0000, XXX consummated a restructuring
transaction (the "Holding Company Restructuring") as a result of which it became
an indirect wholly owned subsidiary of CenterPoint; and
WHEREAS, as part of the Holding Company Restructuring, REI conveyed
the Genco Assets to Genco and Genco contributed the Genco Assets to Texas Xxxxx,
XX, a Texas limited partnership and a wholly owned subsidiary of Genco ("Xxxxx
XX"); and
WHEREAS, as part of the Holding Company Restructuring REI was
converted into a Texas limited liability company named CenterPoint Energy
Houston Electric, LLC ("CenterPoint Houston"); and
WHEREAS, under the Texas Electric Choice Plan (the "Texas Electric
Restructuring Law"), CenterPoint Houston is entitled to recover its "stranded
costs" associated with the Genco Assets; and
WHEREAS, the Texas Electric Restructuring Law allows alternate methods
for establishing a market value for the Genco Assets and under the Business
Separation Plan, REI agreed that the fair market value of the Genco Assets will
be determined using the partial stock market valuation method permitted under
the law; and
WHEREAS, CenterPoint intends to distribute (the "Genco Distribution")
approximately 19% of the outstanding shares of Genco Common Stock to
CenterPoint's common shareholders on a pro rata basis in order to effect the
partial stock valuation method for the Genco Assets as contemplated under the
Business Separation Plan; and
WHEREAS, in 2004 following the Genco Distribution, Reliant Resources,
Inc., a Delaware corporation ("Resources"), will have the option to purchase all
of the shares of Genco Common Stock then owned by CenterPoint pursuant to the
Genco Option Agreement; and
WHEREAS, the parties intend in this Agreement, including the Exhibits
and Schedules hereto, to set forth the principal arrangements between them
regarding the separation of the Genco Business from the CenterPoint Business and
the Genco Distribution.
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NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements set forth below, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Action. "Action" means any demand, action, suit, countersuit,
arbitration, inquiry, proceeding or investigation by or before any federal,
state, local, foreign or international Governmental Authority or any arbitration
or mediation tribunal.
1.2 Affiliates. An "Affiliate" of any Person means another Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For this purpose
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of the Person controlled,
whether through ownership of voting securities, by contract or otherwise. The
fact that any Person may be deemed at any time an Affiliate of another Person
for purposes of the Utilities Code shall not create any implication that such
Persons are "affiliates" for purposes of this Agreement. Notwithstanding
anything herein to the contrary, no member of the Genco Group shall be deemed an
Affiliate of any member of the CenterPoint Group and no member of the
CenterPoint Group shall be deemed an Affiliate of any member of the Genco Group.
1.3 Ancillary Agreements. "Ancillary Agreements" means (i) the Genco
Transition Services Agreement and the Genco Tax Allocation Agreement between the
parties hereto of even date herewith, (ii) the conveyances and other related
documents delivered in connection with the transfer of the Genco Assets to Xxxxx
XX in connection with the Holding Company Restructuring, (iii) the Technical
Services Assignment and Assumption Agreement, (iv) the Genco Option Agreement
Undertaking, and (v) such other agreements, documents or instruments as the
parties may agree are necessary or desirable and which specifically state that
they are Ancillary Agreements within the meaning of this Agreement.
1.4 Business. "Business" means either of the CenterPoint Business or the
Genco Business, as the context requires.
1.5 Business Day. "Business Day" means a day other than a Saturday, a
Sunday or a day on which banking institutions located in the State of Texas are
authorized or obligated by law or executive order to close.
1.6 Business Separation Plan. "Business Separation Plan" means the
Business Separation Plan, as amended, filed by REI with the PUCT in accordance
with Section 39.051 of the Utilities Code and approved by the PUCT at its open
meeting on December 1, 2000 (Docket No. 21956).
1.7 CenterPoint's Auditors. "CenterPoint's Auditors" means CenterPoint's
independent certified public accountants.
1.8 CenterPoint Business. "CenterPoint Business" means any business of
CenterPoint and its Subsidiaries other than the Genco Business.
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1.9 CenterPoint Field of Use. "CenterPoint Field of Use" means electric
power transmission and distribution; natural gas distribution; thermal utilities
and systems; and interstate pipeline activities.
1.10 CenterPoint Group. "CenterPoint Group" means CenterPoint, each
Subsidiary of CenterPoint (other than any member of the Genco Group) immediately
after the Genco Separation Date and each Person that becomes a Subsidiary of
CenterPoint after the Genco Separation Date.
1.11 CenterPoint Indemnitees. "CenterPoint Indemnitees" has the meaning
assigned to that term in Section 3.2.
1.12 CenterPoint Intellectual Property. "CenterPoint Intellectual Property"
means that Intellectual Property owned, in whole or in part, immediately prior
to the Genco Separation Date, by any entity that, subsequent to the Separation
Date, will be a part of the CenterPoint Group.
1.13 Code. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
1.14 Commission. "Commission" means the Securities and Exchange Commission.
1.15 Distribution Shares. "Distribution Shares" has the meaning set forth
in Section 2.1.
1.16 Exchange Act. "Exchange Act" means the Securities Exchange Act of
1934, as amended.
1.17 Final Order. Unless the context requires otherwise, "Final Order,"
"Order," "Injunction," "Decree," "Legal Restraint," "Prohibition," "Writ" or
other words of similar import shall mean final adjudication by a court or
regulatory agency that is no longer subject to rehearing or appeal.
1.18 Genco Assets. "Genco Assets" means all of the generation assets (as
that term is defined in Section 39.251(3) of the Utilities Code) that belonged
to the Reliant Energy HL&P Division of REI before such assets were conveyed,
assigned, transferred and delivered to Xxxxx XX pursuant to a Xxxx of Sale and
Assignment dated as of August 31, 2002 (the "Xxxxx Xxxx of Sale"). The Genco
Assets include, without limitation, the generation plants and other assets and
contract and permit rights associated with those generation plants as described
in the Xxxxx Xxxx of Sale. The methodology for determining the demarcation
between Genco Assets and CenterPoint's transmission and distribution assets is
set forth in Section D of the Business Separation Plan.
1.19 Genco Auditors. "Genco Auditors" means Genco's independent certified
public accountants.
1.20 Genco Balance Sheet. "Genco Balance Sheet" means the consolidated
balance sheet of Genco and affiliates as of August 31, 2002.
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1.21 Genco Business. "Genco Business" means the electric generation
business and operations conducted with the Genco Assets.
1.22 Genco Common Stock. "Genco Common Stock" means the Common Stock, par
value $.001 per share, of Genco.
1.23 Genco Debt Obligations. "Genco Debt Obligations" means all
Indebtedness of Genco or any other member of the Genco Group, excluding all
Indebtedness of any member of the CenterPoint Group to the extent it constitutes
Indebtedness of Genco by virtue of clause (f) or clause (g) of the definition of
Indebtedness. Genco Debt Obligations shall include, as of the date of the Genco
Balance Sheet, the Indebtedness of Genco reflected on such balance sheet.
1.24 Genco Distribution Agent. "Genco Distribution Agent" has the meaning
set forth in Section 2.1.
1.25 Genco Distribution Date. "Genco Distribution Date" has the meaning set
forth in Section 2.1.
1.26 Genco Excluded Liabilities. "Genco Excluded Liabilities" means any and
all Liabilities that are expressly contemplated by this Agreement or any
Ancillary Agreement as Liabilities to be retained or assumed by CenterPoint or
any other member of the CenterPoint Group, and all agreements and obligations of
any member of the CenterPoint Group under this Agreement or any of the Ancillary
Agreements.
1.27 Genco Group. "Genco Group" means Genco, each Subsidiary of Genco
immediately after the Genco Separation Date, including the Subsidiaries set
forth in Schedule 1.27, and each Person that becomes a Subsidiary of Genco after
the Genco Separation Date.
1.28 Genco Indemnitees. "Genco Indemnitees" has the meaning set forth in
Section 3.3.
1.29 Genco Intellectual Property. "Genco Intellectual Property" means that
Intellectual Property owned, in whole or in part, immediately prior to the Genco
Separation Date, by any entity which, subsequent to the Genco Separation Date,
will be a part of the Genco Group.
1.30 Genco Liabilities. "Genco Liabilities" means:
(i) any and all Liabilities under contracts for the purchase of
fuel, equipment or other goods and services for use in the Genco
Business;
(ii) any and all Liabilities that are expressly contemplated by
this Agreement or any Ancillary Agreement as Liabilities to be assumed
by Genco or any member of the Genco Group, including Liabilities under
the Technical Services Agreement and the contracts, agreements and
permits included in the Genco Assets;
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(iii) all Liabilities (other than Taxes based on, or measured by
reference to, net income), primarily relating to, arising out of, or
resulting from:
(A) the operation of the Genco Business, as conducted at
any time prior to, on or after, the Genco Separation Date
(including any Liability relating to, arising out of or resulting
from any act or failure to act by any director, officer,
employee, agent or representative (whether or not such act or
failure to act is or was within such Person's authority));
(B) the operation of any business conducted by the Genco
Group at any time after the Genco Separation Date (including any
Liability relating to, arising out of or resulting from any act
or failure to act by any director, officer, employee, agent or
representative (whether or not such act or failure to act is or
was within such Person's authority));
(C) the ownership or use of the Genco Assets; and
(D) the Genco Debt Obligations.
Notwithstanding the foregoing, the Genco Liabilities shall not include the Genco
Excluded Liabilities.
1.31 Xxxxx XX. "Xxxxx XX" means Texas Xxxxx, XX, a Texas limited
partnership and a wholly owned direct Subsidiary of Genco.
1.32 Genco Option. "Genco Option" means the "Option" as defined in the
Genco Option Agreement.
1.33 Genco Option Agreement. "Genco Option Agreement" means the Texas Genco
Option Agreement dated as of December 31, 2000 between REI and Resources.
1.34 Genco Option Agreement Undertaking. "Genco Option Agreement
Undertaking" means that certain Undertaking to Comply with Certain Provisions of
Option Agreement entered into as of August 31, 2002 by Genco under which Genco
has agreed to observe and comply with certain covenants of the Genco Option
Agreement.
1.35 Genco Separation Date. "Genco Separation Date" means August 31, 2002,
the date on which the Genco Assets were transferred to Xxxxx XX and the Genco
Liabilities were assumed by Genco or Xxxxx XX pursuant to that certain Xxxx of
Sale and Assignment of even date therewith.
1.36 Genco Tax Allocation Agreement. "Genco Tax Allocation Agreement" means
the Tax Allocation Agreement of even date herewith between CenterPoint and
Genco.
1.37 Genco Transition Services Agreement. "Genco Transition Services
Agreement" means the Transition Services Agreement of even date herewith between
CenterPoint and Genco.
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1.38 Governmental Approvals. "Governmental Approvals" means any notices,
reports or other filings to be made, or any consents, registrations, approvals,
permits or authorizations to be obtained from, any Governmental Authority.
1.39 Governmental Authority. "Governmental Authority" means any federal,
state, local, foreign or international court, government, department,
commission, board, bureau, agency, official or other regulatory, administrative
or governmental authority.
1.40 Holding Company Restructuring. "Holding Company Restructuring" has the
meaning set forth in the recitals hereto.
1.41 Indebtedness. "Indebtedness" of any Person means (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced
by bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid, (d) all obligations of
such Person under conditional sale or other title retention agreements relating
to property or assets purchased by such Person, (e) all obligations of such
Person issued or assumed as the deferred purchase price of property or services,
(f) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any mortgage, lien, pledge, or other encumbrance on property owned or acquired
by such Person, whether or not the obligations secured thereby have been
assumed, (g) all guarantees by such Person of Indebtedness of others, (h) all
capital lease obligations of such Person, and (i) all securities or other
similar instruments convertible or exchangeable into any of the foregoing, but
excluding daily cash overdrafts associated with routine cash operations.
1.42 Indemnifying Party. "Indemnifying Party" has the meaning set forth in
Section 3.4.
1.43 Indemnitee. "Indemnitee" has the meaning set forth in Section 3.4.
1.44 Indemnity Payment. "Indemnity Payment" has the meaning set forth in
Section 3.4.
1.45 Information. "Information" means information, whether or not
patentable or copyrightable, in written, oral, electronic or other tangible or
intangible forms, stored in any medium, including studies, reports, records,
books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data.
1.46 Insurance Proceeds. "Insurance Proceeds" means those monies:
(a) received by an insured from an insurance carrier; or
(b) paid by an insurance carrier on behalf of the insured;
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in any such case net of any applicable premium adjustments (including reserves
and retrospectively rated premium adjustments) and net of any costs or expenses
(including allocated costs of in-house counsel and other personnel) incurred in
the collection thereof.
1.47 Intellectual Property. "Intellectual Property" means all U.S. and
foreign intellectual and industrial property, including patent applications,
patents and any reissues or reexaminations thereof, trademarks, service marks,
trademark/service xxxx registrations and applications, brand names, trade names,
all other names and slogans embodying business or product goodwill (or both),
copyright registrations, mask works, copyrights, (including copyrights in
computer programs, software, computer code, documentation, programming tools,
drawings, specifications and data), moral rights of authorship, rights in
designs, trade secrets, technology, inventions, discoveries, improvements,
know-how, proprietary rights, formulae, processes, methods, technical
information, confidential and proprietary information, and all other
intellectual and industrial property rights, whether or not subject to statutory
registration or protection.
1.48 Liabilities. "Liabilities" means any and all Indebtedness, liabilities
and obligations, whether accrued, fixed or contingent, mature or inchoate, known
or unknown, reflected on a balance sheet or otherwise, including, but not
limited to, those arising under any law, rule, regulation, Action, order,
injunction or consent decree of any Governmental Authority or any judgment of
any court of any kind or any award of any arbitrator of any kind, and those
arising under any contract, commitment or undertaking.
1.49 Losses. "Losses" means any and all damages, losses, deficiencies,
Liabilities, obligations, penalties, judgments, settlements, claims, payments,
fines, interest costs and expenses (including, without limitation, the costs and
expenses of any and all Actions and demands, assessments, judgments, settlements
and compromises relating thereto and the costs and expenses of attorneys',
accountants', consultants' and other professionals' fees and expenses incurred
in the investigation or defense thereof or the enforcement of rights hereunder),
including direct and consequential damages, but excluding punitive damages
(other than punitive damages awarded to any third party against an Indemnified
Party).
1.50 Master Separation Agreement. "Master Separation Agreement" means that
certain Master Separation Agreement dated as of December 31, 2000 between REI
and Resources.
1.51 NYSE. "NYSE" means the New York Stock Exchange.
1.52 Person. "Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
1.53 PUCT. "PUCT" means the Public Utility Commission of Texas.
1.54 Record Date. "Record Date" means the close of business on the date
determined by the Board of Directors of CenterPoint as the record date for
determining the shareholders of CenterPoint entitled to receive shares of Genco
Common Stock in the Genco Distribution.
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1.55 Regulatory Proceedings. "Regulatory Proceedings" means filings,
notices, adjudicatory proceedings, rulemakings, enforcement actions before an
agency or in court relative to regulatory activity, and any other proceedings at
or before any regulatory or administrative agency. The term shall refer also to
appellate activities relative to any of the foregoing, including actions seeking
injunctions, writs of mandamus and appeals.
1.56 REI. "REI" has the meaning set forth in the recitals hereto.
1.57 Resources. "Resources" has the meaning set forth in the recitals
hereto.
1.58 Subsidiary. A "Subsidiary" of any Person means any corporation or
other organization whether incorporated or unincorporated of which at least a
majority of the securities or interests having by the terms thereof ordinary
voting power to elect at least a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries.
1.59 Taxes. "Taxes" has the meaning set forth in the Genco Tax Allocation
Agreement.
1.60 Technical Services Agreement. "Technical Services Agreement" means
that certain Technical Services Agreement dated as of December 31, 2000 between
REI and Resources.
1.61 Technical Services Assignment and Assumption Agreement. "Technical
Services Assignment and Assumption Agreement" means that certain Assignment and
Assumption Agreement for the Technical Services Agreement entered into as of
August 31, 2002 by and between Xxxxx XX and REI under which Xxxxx XX assumed
certain obligation of REI and REI assigned certain rights to Xxxxx XX under the
Technical Services Agreement.
1.62 Third Party Claim. "Third Party Claim" has the meaning set forth in
Section 3.5.
1.63 Utilities Code. "Utilities Code" means the Utilities Code of Texas.
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ARTICLE II
THE GENCO DISTRIBUTION AND THE ACTIONS PENDING
THE GENCO DISTRIBUTION
2.1 Delivery of Shares for Genco Distribution. (a) On or prior to the date
the Genco Distribution is made (the "Genco Distribution Date"), CenterPoint will
deliver or cause to be delivered to the distribution agent to be appointed by
CenterPoint (the "Genco Distribution Agent") a single stock certificate,
endorsed by CenterPoint in blank, representing 19% of the shares of Genco Common
Stock then owned by CenterPoint (the "Distribution Shares") and shall cause the
transfer agent for the shares of CenterPoint common stock to instruct the Genco
Distribution Agent to distribute on a prorata basis on the Genco Distribution
Date the appropriate number of such Distribution Shares to each such holder of
record or designated transferee or transferees of such holder of record of
CenterPoint common stock as of the Record Date.
(b) Obligation to Provide Information. CenterPoint and Genco, as the
case may be, will provide to the Genco Distribution Agent all share certificates
and any information required in order to complete the Genco Distribution on the
basis specified above.
2.2 Actions Prior to the Genco Distribution. CenterPoint and Genco shall
use their reasonable commercial efforts to consummate the Genco Distribution.
Such efforts shall include, but not necessarily be limited to, the following:
(a) CenterPoint and Genco shall cooperate in preparing, filing with
the Commission and causing to become effective a registration statement on Form
10 registering the Genco Common Stock under the Exchange Act. CenterPoint and
Genco shall each use its reasonable commercial efforts to obtain all necessary
approvals from the Commission with respect thereto as soon as practicable.
(b) CenterPoint and Resources shall prepare and mail, prior to the
Genco Distribution Date, to the holders of record of CenterPoint common stock as
of the Record Date such information concerning Genco and the Genco Distribution
and such other matters as CenterPoint shall reasonably determine are necessary
and as may be required by law.
(c) CenterPoint and Genco shall take all such actions as may be
necessary or appropriate under the securities or blue sky laws of the United
States (and any comparable laws under any foreign jurisdiction) in connection
with the Genco Distribution.
(d) Genco shall prepare and file, and shall use its reasonable
commercial efforts to have approved, an application for the listing of the Genco
Common Stock to be distributed in the Genco Distribution on the NYSE, subject to
official notice of distribution.
2.3 Conditions Precedent to the Genco Distribution. The parties hereto
shall use their reasonable commercial efforts to satisfy the conditions listed
below to the consummation of the Genco Distribution. The obligations of the
parties to use their reasonable commercial efforts to consummate the Genco
Distribution shall be conditioned on the satisfaction, or waiver by CenterPoint,
of the following conditions:
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(a) The registration statement on Form 10 related to the Genco
Distribution shall have been filed with and declared effective by the
Commission, and no stop order shall be in effect with respect thereto.
(b) The information concerning Genco and the Genco Distribution
described in Section 2.2(b) shall have been prepared and mailed to the holders
of common stock of CenterPoint.
(c) The actions and filings with regard to state securities and blue
sky laws of the United States (and any comparable laws under any foreign
jurisdictions) described in Section 2.2(c) shall have been taken and, where
applicable, have become effective or been accepted.
(d) The Genco Common Stock to be issued in the Genco Distribution
shall have been approved for listing on the NYSE, on official notice of
distribution.
(e) CenterPoint shall be satisfied in its sole discretion that it
will satisfy the stock ownership requirements of Section 1504(a)(2) of the Code
with respect to the stock of Genco.
(f) Any material Governmental Approvals necessary to consummate the
Genco Distribution shall have been obtained and be in full force and effect.
(g) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Genco Distribution or any of the other transactions
contemplated by this Agreement or any Ancillary Agreement shall be in effect and
no other event outside the control of Genco shall have occurred or failed to
occur that prevents the consummation of the Genco Distribution.
(h) Such other actions as the parties hereto may, based upon the
advice of counsel, reasonably request to be taken prior to the Genco
Distribution in order to assure the successful completion of the Genco
Distribution shall have been taken.
(i) This Agreement and all Ancillary Agreements have been executed
and shall not have been terminated.
(j) No events or developments shall have occurred that, in the
judgment of the Board of Directors of CenterPoint, would result in the Genco
Distribution's having a material adverse effect on CenterPoint or on the
shareholders of CenterPoint.
2.4 Cooperation. Genco shall consult with, and cooperate in all respects
with, CenterPoint in connection with the Genco Distribution and shall, at
CenterPoint's direction, promptly take any and all actions necessary or
desirable to consummate the Genco Distribution.
2.5 Fractional Shares. CenterPoint shall direct the Genco Distribution
Agent to determine the number of whole shares and fractional shares of Genco
Common Stock allocable to each holder of record of CenterPoint common stock as
of the Record Date, to aggregate all such fractional shares and to appoint an
independent broker-dealer that is not an Affiliate of CenterPoint or Genco (the
"Independent Broker-Dealer") to sell the whole shares obtained
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thereby in open market transactions. The Independent Broker-Dealer shall, in its
sole discretion, determine when, how and at what price to make its sales. The
Genco Distribution Agent shall cause to be distributed to each such holder or
for the benefit of each such beneficial owner to which a fractional share shall
be allocable such holder's or owner's ratable share of the proceeds of such
sales by the Independent Broker Dealer, after making appropriate deductions of
any amount required to be withheld for federal income tax purposes. CenterPoint
shall direct the Genco Distribution Agent to aggregate the shares of CenterPoint
common stock known to be held by any beneficial owner thereof through more than
one account in determining the fractional share allocable to such beneficial
owner.
ARTICLE III
MUTUAL RELEASES; INDEMNIFICATION
3.1 Release of Pre-Distribution Claims.
(a) Except as provided in Section 3.1(c), effective as of the Genco
Distribution Date, Genco does hereby, for itself and each other member of the
Genco Group, their respective Affiliates (other than any member of the
CenterPoint Group), successors and assigns, and all Persons who at any time
prior to the Genco Distribution Date have been shareholders, directors,
officers, agents or employees of any member of the Genco Group (in each case, in
their respective capacities as such), remise, release and forever discharge
CenterPoint, each member of the CenterPoint Group and their respective
Affiliates (other than any member of the Genco Group), successors and assigns,
and all Persons who at any time prior to the Genco Distribution Date have been
shareholders, directors, officers, agents or employees of any member of the
CenterPoint Group (in each case, in their respective capacities as such), and
their respective heirs, executors, administrators, successors and assigns, from
any and all Liabilities whatsoever to Genco and each other member of the Genco
Group, whether at law or in equity (including any right of contribution),
whether arising under any contract or agreement, by operation of law or
otherwise, existing or arising from any acts or events occurring or failing to
occur or alleged to have occurred or to have failed to occur or any conditions
existing or alleged to have existed on or before the Genco Distribution Date,
including in connection with the transactions and all other activities to
implement the Genco Distribution.
(b) Except as provided in Section 3.1(c), effective as of the Genco
Distribution Date, CenterPoint does hereby, for itself and each other member of
the CenterPoint Business, their respective Affiliates (other than any member of
the Genco Group), successors and assigns, and all Persons who at any time prior
to the Genco Distribution Date have been shareholders, directors, officers,
agents or employees of any member of the CenterPoint Group (in each case, in
their respective capacities as such), remise, release and forever discharge
Genco, each member of the Genco Group, and their respective Affiliates (other
than any member of the CenterPoint Group), successors and assigns, and all
Persons who at any time prior to the Genco Distribution Date have been
shareholders, directors, officers, agents or employees of any member of the
Genco Business (in each case, in their respective capacities as such), and their
respective heirs, executors, administrators, successors and assigns, from any
and all Liabilities whatsoever to CenterPoint and each other member of the
CenterPoint Group, whether at law or in equity (including any right of
contribution), whether arising under any contract or agreement,
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by operation of law or otherwise, existing or arising from any acts or events
occurring or failing to occur or alleged to have occurred or to have failed to
occur or any conditions existing or alleged to have existed on or before the
Genco Distribution Date, including in connection with the transactions and all
other activities to implement the Genco Distribution.
(c) Nothing contained in Section 3.1(a) or (b) shall impair any right
of any Person to enforce this Agreement, any Ancillary Agreement or any
agreements, arrangements, commitments or understandings that are specified in
this Agreement or in any Ancillary Agreement. Nothing contained in Section
3.1(a) or (b) shall release any Person from:
(i) any Liability, contingent or otherwise, assumed,
transferred, assigned or allocated to the Group of which such Person
is a member in accordance with, or any other Liability of any member
of any Group under, this Agreement or any Ancillary Agreement;
(ii) any Liability for the sale, lease, construction or receipt
of goods, property or services purchased, obtained or used in the
ordinary course of business by a member of one Group from a member of
any other Group prior to the Genco Distribution Date;
(iii) any Liability for unpaid amounts for products or services
or refunds owing on products or services due on a value-received basis
for work done by a member of one Group at the request or on behalf of
a member of another Business;
(iv) any Liability that the parties may have with respect to
indemnification or contribution pursuant to this Agreement for claims
brought against the parties by third Persons, which Liability shall be
governed by the provisions of this Article III and, if applicable, the
appropriate provisions of the Ancillary Agreements; or
(v) any Liability the release of which would result in the
release of any Person other than a Person released pursuant to this
Section 3.1; provided that the parties agree not to bring suit or
permit any of their Subsidiaries to bring suit against any Person with
respect to any Liability to the extent that such Person would be
released with respect to such Liability by this Section 3.1 but for
the provisions of this clause (v).
(d) Genco shall not make, and shall not permit any member of the
Genco Group to make, any claim or demand, or commence any Action asserting any
claim or demand, including any claim of contribution or any indemnification,
against CenterPoint or any member of the CenterPoint Group, or any other Person
released pursuant to Section 3.1(a), with respect to any Liabilities released
pursuant to Section 3.1(a). CenterPoint shall not make, and shall not permit any
member of the CenterPoint Group to make, any claim or demand, or commence any
Action asserting any claim or demand, including any claim of contribution or any
indemnification, against Genco or any member of the Genco Group, or any other
Person released pursuant to Section 3.1(b), with respect to any Liabilities
released pursuant to Section 3.1(b).
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(e) It is the intent of each of CenterPoint and Genco by virtue of
the provisions of this Section 3.1 to provide for a full and complete release
and discharge of all Liabilities existing or arising from all acts and events
occurring or failing to occur or alleged to have occurred or to have failed to
occur and all conditions existing or alleged to have existed on or before the
Genco Distribution Date, between or among Genco or any member of the Genco
Group, on the one hand, and CenterPoint or any member of the CenterPoint Group,
on the other hand (including any contractual agreements or arrangements existing
or alleged to exist between or among any such members on or before the Genco
Distribution Date), except as expressly set forth in Section 3.1(c). At any
time, at the request of any other party, each party shall cause each member of
its respective Group to execute and deliver releases reflecting the provisions
hereof.
3.2 Indemnification by Genco. Except as provided in Section 3.4, Genco
shall, and in the case of clauses (a), (b) and (c) below shall in addition cause
the Appropriate Member of the Genco Group (as defined below) to, indemnify,
defend and hold harmless CenterPoint, each member of the CenterPoint Group and
each of their respective directors, officers and employees, and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively,
the "CenterPoint Indemnitees") from and against any and all Losses of the
CenterPoint Indemnitees relating to, arising out of or resulting from any of the
following (without duplication):
(a) the failure of Genco or any other member of the Genco Group or
any other Person to pay, perform or otherwise promptly discharge any Genco
Liabilities in accordance with their respective terms, whether prior to or after
the Genco Distribution Date or the date thereof;
(b) the Genco Business or any Genco Liability;
(c) any breach by Genco or any member of the Genco Group of this
Agreement or any of the Ancillary Agreements; and
(d) any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, with
respect to all information contained in the registration statement on Form 10
and the related information statement sent to the holders of CenterPoint's
common stock related to the Genco Distribution (other than information regarding
CenterPoint provided by CenterPoint to Genco for inclusion therein).
As used in this Section 3.2, "Appropriate Member of the Genco Group" means the
member or members of the Genco Group, if any, whose acts, conduct or omissions
or failures to act caused, gave rise to or resulted in the loss from and against
which indemnity is provided.
3.3 Indemnification by CenterPoint. Except as provided in Section 3.4,
CenterPoint shall, and in the case of clauses (a), (b) and (c) below shall in
addition cause the Appropriate Member of the CenterPoint Group (as defined
below) to, indemnify, defend and hold harmless Genco, each member of the Genco
Group and each of their respective directors, officers and employees, and each
of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Genco Indemnitees") from and against any and all Losses of
the
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Genco Indemnitees relating to, arising out of or resulting from any of the
following (without duplication):
(a) the failure of CenterPoint or any other member of the CenterPoint
Group or any other Person to pay, perform or otherwise promptly discharge any
Liabilities of any member of the CenterPoint Group other than the Genco
Liabilities, in accordance with their respective terms, whether prior to or
after the Genco Distribution Date or the date hereof;
(b) the CenterPoint Group or any Liability of any member of the
CenterPoint Group other than the Genco Liabilities;
(c) any breach by CenterPoint or any member of the CenterPoint Group
of this Agreement or any of the Ancillary Agreements; and
(d) any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, with
respect to information regarding CenterPoint provided by CenterPoint to Genco
for inclusion in the registration statement on Form 10 or the information
statement sent to the holders of CenterPoint's common stock related to the Genco
Distribution.
As used in this Section 3.3, "Appropriate Member of the CenterPoint Group" means
the member or members of the CenterPoint Group, if any, whose acts, conduct or
omissions or failures to act caused, gave rise to or resulted in the Loss from
and against which indemnity is provided.
3.4 Indemnification Obligations Net of Insurance Proceeds and Other
Amounts. (a) The parties intend that any Loss subject to indemnification or
reimbursement pursuant to this Article III will be net of Insurance Proceeds
that actually reduce the amount of the Loss. Accordingly, the amount which any
party (an "Indemnifying Party") is required to pay to any Person entitled to
indemnification hereunder (an "Indemnitee") will be reduced by any Insurance
Proceeds theretofore actually recovered by or on behalf of the Indemnitee in
reduction of the related Loss. If an Indemnitee receives a payment (an
"Indemnity Payment") required by this Agreement from an Indemnifying Party in
respect of any Loss and subsequently receives Insurance Proceeds, then the
Indemnitee will pay to the Indemnifying Party an amount equal to the excess of
the Indemnity Payment received over the amount of the Indemnity Payment that
would have been due if the Insurance Proceeds recovery had been received,
realized or recovered before the Indemnity Payment was made.
(b) An insurer who would otherwise be obligated to pay any claims
shall not be relieved of the responsibility with respect thereto or, solely by
virtue of the indemnification provisions hereof, have any subrogation rights
with respect thereto, it being expressly understood and agreed that no insurer
or any other third party shall be entitled to a "windfall" (i.e., a benefit they
would not be entitled to receive in the absence of the indemnification
provisions) by virtue of the indemnification provisions hereof. Nothing
contained in this Agreement or any Ancillary Agreement shall obligate any member
of any Business to seek to collect or recover any Insurance Proceeds.
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3.5 Procedures for Indemnification of Third Party Claims. (a) If an
Indemnitee shall receive notice or otherwise learn of the assertion by a Person
(including any Governmental Authority) who is not a member of the CenterPoint
Group or the Genco Group of any claims or of the commencement by any such Person
of any Action (collectively, a "Third Party Claim") with respect to which an
Indemnifying Party may be obligated to provide indemnification to such
Indemnitee pursuant to Section 3.2 or 3.3, or any other Section of this
Agreement or any Ancillary Agreement, such Indemnitee shall give such
Indemnifying Party written notice thereof within 20 days after becoming aware of
such Third Party Claim. Any such notice shall describe the Third Party Claim in
reasonable detail. Notwithstanding the foregoing, the failure of any Indemnitee
or other Person to give notice as provided in this Section 3.5(a) shall not
relieve the related Indemnifying Party of its obligations under this Article
III, except to the extent that such Indemnifying Party is actually prejudiced by
such failure to give notice.
(b) An Indemnifying Party may elect to defend (and, unless the
Indemnifying Party has specified any reservations or exceptions, to seek to
settle or compromise), at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third Party Claim. Within 30 days after
the receipt of notice from an Indemnitee in accordance with Section 3.5(a) (or
sooner, if the nature of such Third Party Claim so requires), the Indemnifying
Party shall notify the Indemnitee of its election whether the Indemnifying Party
will assume responsibility for defending such Third Party Claim, which election
shall specify any reservations or exceptions. After notice from an Indemnifying
Party to an Indemnitee of its election to assume the defense of a Third Party
Claim, such Indemnitee shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but the fees and expenses of such counsel shall be the expense of such
Indemnitee except as set forth in the next sentence. In the event that the
Indemnifying Party has elected to assume the defense of the Third Party Claim
but has specified, and continues to assert, any reservations or exceptions in
such notice, then, in any such case, the reasonable fees and expenses of one
separate counsel for all Indemnitees shall be borne by the Indemnifying Party.
(c) If an Indemnifying Party elects not to assume responsibility for
defending a Third Party Claim, or fails to notify an Indemnitee of its election
as provided in Section 3.5(b), such Indemnitee may defend such Third Party Claim
at the cost and expense (included allocated costs of in-house counsel and other
personnel) of the Indemnifying Party.
(d) Unless the Indemnifying Party has failed to assume the defense of
the Third Party Claim in accordance with the terms of this Agreement, no
Indemnitee may settle or compromise any Third Party Claim without the consent of
the Indemnifying Party.
(e) No Indemnifying Party shall consent to entry of any judgment or
enter into any settlement of the Third Party Claim without the consent of an
Indemnitee if the effect thereof is to permit any injunction, declaratory
judgment, other order or other nonmonetary relief to be entered, directly or
indirectly, against such Indemnitee.
(f) The provisions of Section 3.2 through 3.5 shall not apply to
Taxes (which are covered by the Genco Tax Allocation Agreement).
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3.6 Additional Matters. (a) Any claim on account of a Loss that does not
result from a Third Party Claim shall be asserted by written notice given by the
Indemnitee to the related Indemnifying Party. Such Indemnifying Party shall have
a period of 30 days after the receipt of such notice within which to respond
thereto. If such Indemnifying Party does not respond within such 30-day period,
such Indemnifying Party shall be deemed to have refused to accept responsibility
to make payment. If such Indemnifying Party does not respond within such 30-day
period or rejects such claim in whole or in part, such Indemnitee shall be free
to pursue such remedies as may be available to such party as contemplated by
this Agreement and the Ancillary Agreements.
(b) In the event of payment by or on behalf of any Indemnifying Party
to any Indemnitee in connection with any Third Party Claim, such Indemnifying
Party shall be subrogated to and shall stand in the place of such Indemnitee as
to any events or circumstances in respect of which such Indemnitee may have any
right, defense or claim relating to such Third Party Claim against any claimant
or plaintiff asserting such Third Party Claim or against any other person. Such
Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner,
and at the cost and expense (including allocated costs of in-house counsel and
other personnel) of such Indemnifying Party, in prosecuting any subrogated
right, defense or claim.
(c) In the event of an Action in which the Indemnifying Party is not a
named defendant, if either the Indemnified Party or Indemnifying Party shall so
request, the parties shall endeavor to substitute the Indemnifying Party for the
named defendant, if at all practicable. If such substitution or addition cannot
be achieved for any reason or is not requested, the named defendant shall allow
the Indemnifying Party to manage the Action as set forth in this Section 3.6 and
the Indemnifying Party shall fully indemnify the named defendant against all
costs of defending the Action (including court costs, sanctions imposed by a
court, attorneys' fees, experts' fees and all other external expenses, and the
allocated costs of in-house counsel and other personnel), the costs of any
judgment or settlement, and the cost of any interest or penalties relating to
any judgment or settlement.
(d) THE PARTIES UNDERSTAND AND AGREE THAT THE INDEMNIFICATION
OBLIGATIONS HEREUNDER AND UNDER THE ANCILLARY AGREEMENTS MAY INCLUDE
INDEMNIFICATION FOR LOSSES RESULTING FROM, OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, AN INDEMNIFIED PARTY'S OWN NEGLIGENCE OR STRICT LIABILITY.
3.7 Remedies Cumulative. The remedies provided in this Article III shall
be cumulative and, subject to the provisions of Article VI, shall not preclude
assertion by any Indemnitee of any other rights or the seeking of any and all
other remedies against any Indemnifying Party.
3.8 Survival of Indemnities. The rights and obligations of each
CenterPoint and Genco and their respective Indemnitees under this Article III
shall survive the sale or other transfer by any party of any Assets or
businesses or the assignment by it of any Liabilities.
3.9 Indemnification of Directors and Officers. For purpose of Sections 3.2
through 3.8, inclusive, and notwithstanding anything to the contrary contained
herein, Persons who serve
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on both the Board of Directors of Genco and the Board of Directors of
CenterPoint and persons who serve as officers of both Genco and CenterPoint
shall be deemed both Genco Indemnitees and CenterPoint Indemnitees.
ARTICLE IV
CORPORATE GOVERNANCE AND CERTAIN OTHER MATTERS
4.1 Charter, Bylaws and Board of Directors of Genco. As of the Genco
Distribution Date, (i) the Amended and Restated Articles of Incorporation and
Amended and Restated Bylaws of Genco shall be in the forms attached to Schedule
5.1(a) and 5.1(b) hereto, respectively, which shall comply in all material
respects with the requirements set forth in Sections 2.3 and 8.2 of the Genco
Option Agreement, and (ii) the individuals named in Schedule 5.1(c) shall
constitute the Board of Directors of Genco.
4.2 Issuance of Stock. In addition to and without limiting the scope of
any restrictions arising under Section 3.6 of the Genco Option Agreement,
following the Genco Distribution Date, without the prior consent of CenterPoint,
Genco shall not issue any stock of Genco or any securities, options, warrants or
rights convertible into or exercisable or exchangeable for stock of Genco if the
issuance would cause CenterPoint to fail to satisfy the stock ownership
requirements of Section 1504(a)(2) of the Code with respect to the stock of
Genco.
ARTICLE V
INTELLECTUAL PROPERTY
5.1 Assignment. CenterPoint hereby assigns to Genco all of its right,
title and interest in and to the Genco Intellectual Property; the goodwill of
CenterPoint symbolized by any trademarks or service marks assigned hereunder;
and all rights of action accrued or to accrue under or by virtue of any of the
Genco Intellectual Property, including the right to xxx and recover for past
infringement or misappropriation.
5.2 License Grants
(a) Grants to CenterPoint. Except as provided below in this Section
5.2(a), Genco grants to each Person within the CenterPoint Group a worldwide,
perpetual, royalty-free license to use in the CenterPoint Field of Use the Genco
Intellectual Property, including the right to sublicense customers or suppliers
of CenterPoint or its Subsidiaries to the extent necessary for such customers to
use in the CenterPoint Field of Use products or services of CenterPoint or its
Subsidiaries and for such suppliers to provide equipment or services to
CenterPoint or its Subsidiaries in connection with their operations in the
CenterPoint Field of Use. This license specifically excludes any grant to any
Person within the CenterPoint Group of any rights to use any trademarks, service
marks, trademark/service xxxx registrations and applications, brand names, trade
names, or other names and slogans embodying business or product goodwill (or
both) which are a part of the Genco Intellectual Property.
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(b) Grants to Genco. Except as provided below in this Section 5.2(b),
CenterPoint grants to each Person within the Genco Group a worldwide, perpetual,
royalty-free license to use the CenterPoint Intellectual Property, including the
right to sublicense customers or suppliers of Genco or its Subsidiaries to the
extent necessary for such customers to use the products or services of Genco or
its Subsidiaries and for such suppliers to provide equipment or services to
Genco or its Subsidiaries in connection with their operations. This license
specifically excludes any grant to any Person within the Genco Group of any
rights to use any trademarks, service marks, trademark/service xxxx
registrations and applications, brand names, trade names, or other names and
slogans embodying business or product goodwill (or both) which are a part of the
CenterPoint Intellectual Property.
5.3 Cooperation and Further Undertakings. CenterPoint agrees that it and
its Subsidiaries shall, without additional compensation, execute and deliver
further instruments of conveyance, transfer and assignment as requested by
Genco, its successors, or assigns; reasonably cooperate and assist in providing
information for making and completing regulatory and other filings; and take any
and all other actions as Genco, its successors, or assigns may reasonably
require to (1) effectively assign, convey and transfer the Genco Intellectual
Property and any associated goodwill, and all rights therein to Genco, its
successors, or assigns and (2) to protect, enforce and exploit the Genco
Intellectual Property. Genco agrees that it will continue to prosecute any
patent applications which it is currently prosecuting, but if it determines that
any such application should be abandoned, it will inform CenterPoint of its
decision and on request will assign to CenterPoint all its rights.
5.4 CenterPoint Disclaimer of Warranties. CENTERPOINT AND ITS SUBSIDIARIES
DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT, WITH RESPECT TO THE GENCO INTELLECTUAL PROPERTY AND THE
CENTERPOINT INTELLECTUAL PROPERTY. CENTERPOINT AND ITS SUBSIDIARIES MAKE NO
REPRESENTATIONS OR WARRANTIES AS TO THE QUALITY, SUITABILITY, VALIDITY OR
ADEQUACY OF THE GENCO INTELLECTUAL PROPERTY OR THE CENTERPOINT INTELLECTUAL
PROPERTY FOR ANY PURPOSE OR USE.
5.5 Genco Disclaimer of Warranties. GENCO AND ITS SUBSIDIARIES DISCLAIM
ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT, WITH RESPECT TO THE GENCO INTELLECTUAL PROPERTY. GENCO AND ITS
SUBSIDIARIES MAKE NO REPRESENTATIONS OR WARRANTIES AS TO THE QUALITY,
SUITABILITY, VALIDITY OR ADEQUACY OF THE GENCO INTELLECTUAL PROPERTY FOR ANY
PURPOSE OR USE.
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ARTICLE VI
ARBITRATION; DISPUTE RESOLUTION
6.1 Agreement to Arbitrate. Except as otherwise specifically provided in
any Ancillary Agreement, the procedures for discussion, negotiation and
arbitration set forth in this Article VI shall apply to all disputes,
controversies or claims (whether sounding in contract, tort or otherwise) that
may arise out of, under or in connection with, or relate to, this Agreement or
any Ancillary Agreement, the transactions contemplated hereby or thereby
(including all actions taken in furtherance of the transactions contemplated
hereby or thereby on or prior to the date hereof), or (for a period of ten years
after the date hereof) the commercial or economic relationship of the parties
relating hereto or thereto, between or among any member of the CenterPoint Group
and the Genco Group. Each party agrees on behalf of itself and each member of
its respective Group that the procedures set forth in this Article VI shall be
the sole and exclusive remedy in connection with any dispute, controversy or
claim relating to any of the foregoing matters and irrevocably waives any right
to commence any Action in or before any Governmental Authority, except as
expressly provided in Section 6.7 and except to the extent provided under the
Federal Arbitration Act in the case of judicial review of arbitration results or
awards. Each party on behalf of itself and each member of its respective Group
irrevocably waives any right to any trial by jury with respect to any claim,
controversy or dispute set forth in this Section 6.1.
6.2 Escalation. (a) It is the intent of the parties to use their
respective reasonable best efforts to resolve expeditiously and on a mutually
acceptable negotiated basis any dispute, controversy or claim between or among
them with respect to the matters covered hereby that may arise from time to
time. In furtherance of the foregoing, any party involved in a dispute,
controversy or claim may deliver a notice (an "Escalation Notice") demanding an
in-person meeting involving representatives of the parties at a senior level of
management of the parties (or if the parties agree, of the appropriate strategic
business unit or division within such entity). A copy of any such Escalation
Notice shall be given to the General Counsel or like officer or official of each
party involved in the dispute, controversy or claim (which copy shall state that
it is an Escalation Notice pursuant to this Agreement). Any agenda, location or
procedures for such discussions or negotiations between the parties may be
established by the parties from time to time; provided, however, that the
parties shall use their reasonable efforts to meet within 30 days of the date of
delivery of the Escalation Notice.
(b) The parties may, by mutual consent, retain a mediator to aid the
parties in their discussions and negotiations by informally providing advice to
parties. Any opinion expressed by the mediator shall be strictly advisory and
shall not be binding on the parties, nor shall any opinion expressed by the
mediator be admissible in any arbitration proceedings. The mediator may be
chosen from a list of mediators previously selected by the parties or by other
agreement of the parties. Costs of the mediation shall be borne equally by the
parties involved in the matter, except that each party shall be responsible for
its own expenses. Mediation is not a prerequisite to a demand for arbitration
under Section 6.3.
6.3 Demand for Arbitration. (a) At any time after the first to occur of
(i) the date of the meeting actually held pursuant to the applicable Escalation
Notice or (ii) 45 days after the
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delivery of an Escalation Notice (as applicable, the "Arbitration Demand Date"),
any party involved in the dispute, controversy or claim (regardless of whether
that party delivered the Escalation Notice) may deliver a notice demanding
arbitration of that dispute, controversy or claim (a "Arbitration Demand
Notice"). In the event that any party shall deliver an Arbitration Demand Notice
to another party, that other party may itself deliver an Arbitration Demand
Notice to the first party with respect to any related dispute, controversy or
claim with respect to which the Applicable Deadline (as defined below) has not
passed without the requirement of delivering an Escalation Notice. No party may
assert that the failure to resolve any matter during any discussions or
negotiations, the course of conduct during the discussions or negotiations or
the failure to agree on a mutually acceptable time, agenda, location or
procedures for the meeting, in each case, as contemplated by Section 6.2, is a
prerequisite to a demand for arbitration under Section 6.3. In the event that
any party delivers an Arbitration Demand Notice with respect to any dispute,
controversy or claim that is the subject of any then pending arbitration
proceeding or of a previously delivered Arbitration Demand Notice, all such
disputes, controversies and claims shall be resolved in the arbitration
proceeding for which an Arbitration Demand Notice was first delivered unless the
arbitrator in his or her sole discretion determines that it is impracticable or
otherwise inadvisable to do so.
(b) Except as may be expressly provided in any Ancillary Agreement,
any Arbitration Demand Notice may be given until one year and 45 days after the
later of the occurrence of the act or event giving rise to the underlying claim
or the date on which such act or event was, or should have been, in the exercise
of reasonable due diligence, discovered by the party asserting the claim (as
applicable and as it may in a particular case be specifically extended by the
parties in writing, the "Applicable Deadline"). Any discussions, negotiations or
mediations between the parties pursuant to this Agreement or otherwise will not
toll the Applicable Deadline unless expressly agreed in writing by the parties.
Each of the parties agrees on behalf of itself and each member of its Group that
if an Arbitration Demand Notice with respect to a dispute, controversy or claim
is not given prior to the expiration of the Applicable Deadline, as between or
among the parties and the members of their Groups, such dispute, controversy or
claim will be barred. Subject to Section 6.7(d), upon delivery of an Arbitration
Demand Notice pursuant to Section 6.3(a) prior to the Applicable Deadline, the
dispute, controversy or claim shall be decided by a sole arbitrator in
accordance with the rules set forth in this Article VI.
6.4 Arbitrators. (a) Within 15 days after a valid Arbitration Demand
Notice is given, the parties involved in the dispute, controversy or claim
referred to therein shall attempt to select a sole arbitrator satisfactory to
all such parties.
(b) In the event that the parties are not able jointly to select a
sole arbitrator within that 15-day period, the parties shall each appoint an
arbitrator (who need not be disinterested as to the parties or the matter)
within 30 days after delivery of the Arbitration Demand Notice. If one party
appoints an arbitrator within such time period and the other party or parties
fail to appoint an arbitrator within such time period, the arbitrator appointed
by the one party shall be the sole arbitrator of the matter.
(c) In the event that a sole arbitrator is not selected pursuant to
paragraph (a) or (b) above, the two arbitrators will, within 30 days after the
appointment of the later of them to
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be appointed, select an additional arbitrator who shall act as the sole
arbitrator of the dispute. After selection of such sole arbitrator, the initial
arbitrators shall have no further role with respect to the dispute. In the event
that the arbitrators so appointed do not, within 30 days after the appointment
of the later of them to be appointed, agree on the selection of the sole
arbitrator, any party involved in such dispute may apply to the Senior Judge of
the U.S. District Court for the Southern District of Texas to select the sole
arbitrator, which selection shall be made by such Person within 30 days after
such application. Any arbitrator selected pursuant to this paragraph (c) shall
be disinterested with respect to each of the parties and shall be reasonably
competent in the applicable subject matter.
(d) The sole arbitrator selected pursuant to paragraph (a), (b) or
(c) above will set a time for the hearing of the matter, which will commence no
later than 90 days after the date of appointment of the sole arbitrator pursuant
to paragraph (a), (b) or (c) above and which will be no longer than 30 days
(unless in the judgment of the arbitrator the matter is unusually complex and
sophisticated and thereby requires a longer time, in which event the hearing
shall be no longer than 90 days). The final decision of the arbitrator will be
rendered in writing to the parties not later than 60 days after the last hearing
date, unless otherwise agreed by the parties in writing.
(e) The place of any arbitration hereunder will be Houston, Texas,
unless otherwise agreed by the parties.
6.5 Hearings. Within the time period specified in Section 6.4(d), the
matter shall be presented to the arbitrator at a hearing by means of written
submissions of memoranda and verified witness statements, filed simultaneously,
and responses, if necessary in the judgment of the arbitrator or both the
parties. If the arbitrator deems it to be essential to a fair resolution of the
dispute, live cross-examination or direct examination may be permitted but is
not generally contemplated to be necessary. The arbitrator shall actively manage
the arbitration with a view to achieving a just, speedy and cost-effective
resolution of the dispute, claim or controversy. The arbitrator may, in his or
her discretion, set time and other limits on the presentation of each party's
case, its memoranda or other submissions, and refuse to receive any proffered
evidence, which the arbitrator, in his or her discretion, finds to be
cumulative, unnecessary, irrelevant or of low probative value. Except as
otherwise set forth herein, any arbitration hereunder will be conducted in
accordance with the procedures of the Center for Public Resources of New York
("CPR"). The decision of the arbitrator will be final and binding on the
parties, and judgment thereon may be had and will be enforceable in any court
having jurisdiction over the parties. Arbitration awards will bear interest at
an annual rate of the Prime Rate plus 2% per annum, or, if lower, the maximum
amount permitted by applicable law. To the extent that the provisions of this
Agreement and the prevailing rules of the CPR conflict, the provisions of this
Agreement shall govern.
6.6 Discovery and Certain Other Matters. (a) Any party involved in a
dispute subject to this Article VI may request limited document production from
the other party or parties of specific and expressly relevant documents, with
the reasonable expenses of the producing party incurred in such production paid
by the requesting party. The right to documents permitted herein shall be
substantially less than document discovery rights prevailing under the Federal
Rules of Civil Procedure. Any such discovery shall be conducted
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expeditiously and shall not cause the hearing provided for in Section 6.5 to be
adjourned except upon consent of all parties involved in the applicable dispute
or upon an extraordinary showing of cause demonstrating that such adjournment is
necessary to permit discovery essential to a party to the proceeding.
Depositions, interrogatories or other forms of discovery (other than the
document production set forth above) shall not occur except by consent of the
parties involved in the applicable dispute. Disputes concerning the scope of
document production and enforcement of the document production requests will be
determined by written agreement of the parties involved in the applicable
dispute or, failing such agreement, will be referred to the arbitrator for
resolution. All discovery requests will be subject to the parties' rights to
claim any applicable privilege. The arbitrator will adopt procedures to protect
the proprietary rights of the parties and to maintain the confidential treatment
of the arbitration proceedings (except as may be required by law). Subject to
the foregoing, the arbitrator shall have the power to issue subpoenas to compel
the production of documents relevant to the dispute, controversy or claim.
(b) The arbitrator shall have full power and authority to determine
issues of arbitrability but shall otherwise be limited to interpreting or
construing the applicable provisions of this Agreement or any Ancillary
Agreement, and will have no authority or power to limit, expand, alter, amend,
modify, revoke or suspend any condition or provision of this Agreement or any
Ancillary Agreement; it being understood, however, that the arbitrator will have
full authority to implement the provisions of this Agreement or any Ancillary
Agreement and to fashion appropriate remedies for breaches of this Agreement
(including interim or permanent injunctive relief); provided that the arbitrator
shall not have (i) any authority in excess of the authority a court having
jurisdiction over the parties and the controversy or dispute would have absent
these arbitration provisions or (ii) any right or power to award punitive or
double or treble damages. It is the intention of the parties that in rendering a
decision the arbitrator give effect to the applicable provisions of this
Agreement and the Ancillary Agreements and follow applicable law (it being
understood and agreed that this sentence shall not give rise to a right of
judicial review of the arbitrator's award).
(c) If a party fails or refuses to appear at and participate in an
arbitration hearing after due notice, the arbitrator may hear and determine the
controversy upon evidence produced by the appearing party.
(d) Arbitration costs will be borne equally by each party involved in
the matter, except that each party will be responsible for its own attorney's
fees and other costs and expenses (except as set forth in Section 6.6(a)),
including the costs of witnesses selected by such party.
6.7 Certain Additional Matters. (a) Any arbitration award shall be a bare
award limited to a holding for or against a party and shall be without findings
as to facts, issues or conclusions of law (including with respect to any matters
relating to the validity or infringement of patents or patent applications) and
shall be without a statement of the reasoning on which the award rests, but must
be in adequate form so that a judgment of a court may be entered thereupon.
Judgment upon any arbitration award hereunder may be entered in any court having
jurisdiction thereof.
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(b) Prior to the time at which an arbitrator is appointed pursuant to
Section 6.4, any party may seek one or more temporary restraining orders in a
court of competent jurisdiction if necessary in order to preserve and protect
the status quo. Neither the request for, or grant or denial of, any such
temporary restraining order shall be deemed a waiver of the obligation to
arbitrate as set forth herein and the arbitrator may dissolve, continue or
modify any such order. Any such temporary restraining order shall remain in
effect until the first to occur of the expiration of the order in accordance
with its terms or the dissolution thereof by the arbitrator.
(c) Except as required by law, the parties shall hold, and shall
cause their respective officers, directors, employees, agents and other
representatives to hold, the existence, content and result of mediation or
arbitration in confidence in accordance with the provisions of Article VII and
except as may be required in order to enforce any award. Each of the parties
shall request that any mediator or arbitrator comply with such confidentiality
requirement.
(d) In the event that at any time the sole arbitrator shall fail to
serve as an arbitrator for any reason, the parties shall select a new arbitrator
who shall be disinterested as to the parties and the matter in accordance with
the procedures set forth herein for the selection of the initial arbitrator. The
extent, if any, to which testimony previously given shall be repeated or as to
which the replacement arbitrator elects to rely on the stenographic record (if
there is one) of such testimony shall be determined by the replacement
arbitrator.
6.8 Continuity of Service and Performance. Unless otherwise agreed in
writing, the parties will continue to provide service and honor all other
commitments under this Agreement and each Ancillary Agreement during the course
of dispute resolution pursuant to the provisions of this Article VI with respect
to all matters not subject to such dispute, controversy or claim.
6.9 Law Governing Arbitration Procedures. The interpretation of the
provisions of this Article VI, only insofar as they relate to the agreement to
arbitrate and any procedures pursuant thereto, shall be governed by the Federal
Arbitration Act and other applicable federal law. In all other respects, the
interpretation of this Agreement shall be governed as set forth in Section 6.3.
ARTICLE VII
COVENANTS AND OTHER MATTERS
7.1 Other Agreements. In addition to the specific agreements, documents
and instruments annexed to this Agreement, CenterPoint and Genco agree to
execute or cause to be executed by the appropriate parties and deliver, as
appropriate, such other agreements, instruments and other documents as may be
necessary or desirable in order to effect the purposes of this Agreement and the
Ancillary Agreements.
7.2 Agreement for Exchange of Information. Each of CenterPoint and Genco
agrees to provide, or cause to be provided, to each other as soon as reasonably
practicable after written request therefor, any Information in the possession or
under the control of such party that
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the requesting party reasonably needs (i) to comply with reporting, disclosure,
filing or other requirements imposed on the requesting party (including under
applicable securities laws) by a Governmental Authority having jurisdiction over
the requesting party, (ii) for use in any Regulatory Proceeding, judicial
proceeding or other proceeding or in order to satisfy audit, accounting, claims,
regulatory, litigation or other similar requirements, (iii) to comply with its
obligations under this Agreement or any Ancillary Agreement or (iv) in
connection with the ongoing businesses of CenterPoint or Genco as it relates to
the conduct of such businesses, as the case may be; provided, however, that in
the event that any party determines that any such provision of Information could
be commercially detrimental, violate any law or agreement, or waive any
attorney-client privilege, the parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that avoids any such
harm or consequence.
(a) After the Genco Distribution Date, (i) each party shall maintain
in effect at its own cost and expense adequate systems and controls for its
business to the extent necessary to enable the other party to satisfy its
reporting, accounting, audit and other obligations, and (ii) each party shall
provide, or cause to be provided, to the other party and its Subsidiaries in
such form as such requesting party shall request, at no charge to the requesting
party, all financial and other data and information as the requesting party
determines necessary or advisable in order to prepare its financial statements
and reports or filings with any Governmental Authority.
(b) Any Information owned by a party that is provided to a requesting
party pursuant to this Section 7.2 shall be deemed to remain the property of the
providing party. Unless specifically set forth herein, nothing contained in this
Agreement shall be construed as granting or conferring rights of license or
otherwise in any such Information.
(c) To facilitate the exchange of Information pursuant to this
Section 7.2 and other provisions of this Agreement after the Genco Distribution
Date, each party agrees to use its reasonable commercial efforts to retain all
Information in its respective possession or control on the Genco Distribution
Date substantially in accordance with its policies as in effect on the date
hereof. Genco shall not amend its or its Subsidiaries' record retention policies
prior to the Genco Distribution Date without the consent of CenterPoint.
However, except as set forth in the Genco Tax Allocation Agreement, at any time
after the Genco Distribution Date, each party may amend its respective record
retention policies at its discretion; provided, however, that if a party desires
to effect the amendment within three years after the Genco Distribution Date,
the amending party must give 30 days' prior written notice of such change in the
policy to the other party to this Agreement. No party will destroy, or permit
any of its Subsidiaries to destroy, any Information that existed on the Genco
Separation Date (other than Information that is permitted to be destroyed under
the current record retention policy of such party) without first using its
reasonable commercial efforts to notify the other party of the proposed
destruction and giving the other party the opportunity to take possession of
such Information prior to such destruction.
(d) No party shall have any liability to any other party in the event
that any Information exchanged or provided pursuant to this Section 7.2 is found
to be inaccurate, in the absence of willful misconduct by the party providing
such Information. No party shall have any liability to any other party if any
Information is destroyed or lost after reasonable commercial efforts by such
party to comply with the provisions of Section 7.2(c).
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(e) The rights and obligations granted under this Section 7.2 are
subject to any specific limitations, qualifications or additional provisions on
the sharing, exchange or confidential treatment of Information set forth in this
Agreement and any Ancillary Agreement.
(f) Each party hereto shall, except in the case of a dispute subject
to this Article VII brought by one party against another party (which shall be
governed by the discovery rules that may be applicable under Article VI or
otherwise), use its reasonable commercial efforts to make available to each
other party, upon written request, the former, current and future directors,
officers, employees, other personnel and agents of such party as witnesses and
any books, records or other documents within its control or which it otherwise
has the ability to make available, to the extent that any such person (giving
consideration to business demands of such directors, officers, employees, other
personnel and agents) or books, records or other documents may reasonably be
required in connection with any Regulatory Proceeding, judicial proceeding or
other proceeding in which the requesting party may from time to time be
involved, regardless of whether such Regulatory Proceeding, judicial proceeding
or other proceeding is a matter with respect to which indemnification may be
sought hereunder. The requesting party shall bear all costs and expenses in
connection therewith.
(g) To the extent Genco or a member of the Genco Group is deemed or
determined by the PUCT by final order no longer subject to rehearing by the PUCT
to be an "affiliate" or a "competitive affiliate" of CenterPoint, Genco and
CenterPoint shall observe any applicable requirements of the Utilities Code,
PUCT rules and the CenterPoint code of conduct and shall require their
respective personnel and contractor personnel to observe that code of conduct.
No member of the CenterPoint Group or the Genco Group shall directly or
indirectly make application or request to the PUCT to make such a finding or
determination, nor will any member of the CenterPoint Group or the Genco Group
directly or indirectly take a position in support of such a finding or
determination.
7.3 Auditors and Audits; Annual and Quarterly Statements and Accounting.
Each party agrees that, for so long as Genco remains a Subsidiary of
CenterPoint, and with respect to any financial reporting period during which
Genco was a Subsidiary of CenterPoint:
(a) Genco shall not select a different accounting firm than the firm
selected by CenterPoint to audit its financial statements to serve as the Genco
Auditors for purposes of providing an opinion on its consolidated financial
statements without CenterPoint's prior written consent (which shall not be
unreasonably withheld).
(b) Genco shall use its reasonable commercial efforts to enable the
Genco Auditors to complete their audit such that they will date their opinion on
Genco's audited annual financial statements on the same date that CenterPoint's
Auditors date their opinion on CenterPoint's audited annual financial
statements, and to enable CenterPoint to meet its timetable for the printing,
filing and public dissemination of CenterPoint's annual financial statements.
Genco shall use its reasonable commercial efforts to enable the Genco Auditors
to complete their quarterly review procedures such that they will provide
clearance on Genco's quarterly financial statements on the same date that
CenterPoint's Auditors provide clearance on CenterPoint's quarterly financial
statements.
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(c) Genco shall provide to CenterPoint on a timely basis all
Information that CenterPoint reasonably requires to meet its schedule for the
preparation, printing, filing, and public dissemination of CenterPoint's annual
and quarterly financial statements. Without limiting the generality of the
foregoing, Genco will provide all required financial information with respect to
Genco and its Subsidiaries to the Genco Auditors in a sufficient and reasonable
time and in sufficient detail to permit the Genco Auditors to take all steps and
perform all reviews necessary to provide sufficient assistance to CenterPoint's
Auditors with respect to Information to be included or contained in
CenterPoint's annual and quarterly financial statements. Similarly, CenterPoint
shall provide to Genco on a timely basis all Information that Genco reasonably
requires to meet its schedule for the preparation, printing, filing, and public
dissemination of Genco's annual and quarterly financial statements. Without
limiting the generality of the foregoing, CenterPoint will provide all required
financial Information with respect to CenterPoint and its Subsidiaries to
CenterPoint's Auditors in a sufficient and reasonable time and in sufficient
detail to permit CenterPoint's Auditors to take all steps and perform all
reviews necessary to provide sufficient assistance to the Genco Auditors with
respect to Information to be included or contained in Genco's annual and
quarterly financial statements.
(d) Genco shall authorize the Genco Auditors to make available to
CenterPoint's Auditors both the personnel who performed or are performing the
annual audits and quarterly reviews of Genco and work papers related to the
annual audits and quarterly reviews of Genco, in all cases within a reasonable
time prior to the Genco Auditors' opinion date, so that CenterPoint's Auditors
are able to perform the procedures they consider necessary to take
responsibility for the work of the Genco Auditors as it relates to CenterPoint's
Auditors' report on CenterPoint's financial statements, all within sufficient
time to enable CenterPoint to meet its timetable for the printing, filing and
public dissemination of CenterPoint's annual and quarterly statements.
Similarly, CenterPoint shall authorize CenterPoint's Auditors to make available
to the Genco Auditors both the personnel who performed or are performing the
annual audits and quarterly reviews of CenterPoint and work papers related to
the annual audits and quarterly reviews of CenterPoint, in all cases within a
reasonable time prior to CenterPoint's Auditors' opinion date, so that the Genco
Auditors are able to perform the procedures they consider necessary to take
responsibility for the work of CenterPoint's Auditors as it relates to the Genco
Auditors' report on Genco's financial statements, all within sufficient time to
enable Genco to meet its timetable for the printing, filing and public
dissemination of Genco's annual and quarterly financial statements.
(e) Genco may not change its accounting principles or practices if a
change in such accounting principle or practice would be required to be
disclosed in Genco's financial statements as filed with the SEC or otherwise
publicly disclosed therein without the prior written consent of CenterPoint,
except for changes which are required by GAAP and as to which there is no
discretion on the part of Genco, as concurred in by Genco Auditors prior to its
implementation. Genco shall give CenterPoint as much prior notice as reasonably
practical of any proposed determination of, or any significant changes in, its
accounting estimates or, subject as aforesaid, accounting principles from those
in effect on the Genco Separation Date. Genco will consult with CenterPoint and,
if requested by CenterPoint, Genco will consult with CenterPoint's Auditors with
respect thereto. CenterPoint shall give Genco as much prior notice as reasonably
practical of any proposed determination of, or any significant changes in, its
accounting estimates or accounting principles from those in effect on the Genco
Separation Date.
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(f) Nothing in Sections 7.2 and 7.3 shall require Genco to violate
any agreement with any third parties regarding the confidentiality of
confidential and proprietary information relating to that third party or its
business; provided, however, that in the event that Genco is required under
Section 7.2 or Section 7.3 to disclose any such information, Genco shall use all
commercially reasonable efforts to seek to obtain such third party's consent to
the disclosure of such information. Similarly, nothing in Sections 7.2 and 7.3
shall require CenterPoint to violate any agreement with any third parties
regarding the confidentiality of confidential and proprietary information
relating to that third party or its business; provided, however, that in the
event that CenterPoint is required under Section 7.2 or Section 7.3 to disclose
any such information, CenterPoint shall use all commercially reasonable efforts
to seek to obtain such third party's consent to the disclosure of such
information.
7.4 Audit Rights. To the extent any member of the CenterPoint Group
provides goods or services to any member of the Genco Group or any member of the
Genco Group provides goods or services to a member of the CenterPoint Group
under this Agreement or under any Ancillary Agreement, the company providing
such goods or services (the "Providing Company") shall maintain complete and
accurate books and records relating to costs and charges made to the company
receiving such goods and services (the "Receiving Company"). Books and accounts
shall be maintained in accordance with generally accepted accounting principles,
consistently applied, and to the extent such books and records relate to
regulated business activities, shall conform to any applicable regulatory code
of accounts which the Receiving Company is required to comply with, to the
extent such conformity is reasonably feasible. If conformity to a regulatory
code of accounts is infeasible, the Providing Company shall maintain its books
and records related to the provision of goods and services in such a manner that
the Receiving Company may readily reconcile such books and records to the
applicable code of accounts. Annually, the Receiving Company shall be entitled
to audit the Providing Company's books and records related to the goods and
services provided, using its own personnel or personnel from its independent
auditing firm. Discrepancies identified as a result of any audit shall be
promptly reconciled between the parties in accordance with any provisions of the
Ancillary Agreement or, if no such provision is applicable, in accordance with
the dispute resolution provisions of this Agreement. Any charge which is not
questioned by the Receiving Company within the calendar year after the charge
was rendered shall be deemed incontestable.
7.5 Preservation of Legal Privileges. CenterPoint and Genco recognize that
the members of their respective Businesses possess and will possess information
and advice that has been previously developed but is legally protected from
disclosure under legal privileges, such as the attorney-client privilege or work
product exemption and other concepts of legal protection ("Privilege"). Each
party recognizes that they shall be jointly entitled to the Privilege with
respect to such privileged information and that each shall be entitled to
maintain and use for its own benefit all such information and advice, but both
parties shall ensure that such information is maintained so as to protect the
Privileges with respect to the other party's interest. To that end neither party
will knowingly waive or compromise any Privilege associated with such
information and advice without the consent of the other party. In the event that
privileged information is required to be disclosed to any arbitrator or mediator
in connection with a dispute between the parties, such disclosure shall not be
deemed a waiver of Privilege with respect to such information, and any party
receiving it in connection with a proceeding shall be informed of its nature and
shall be required to safeguard and protect it.
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7.6 Payment of Expenses. Except as otherwise provided in this Agreement,
the Ancillary Agreements or any other agreement between the parties, all
out-of-pocket costs and expenses of the parties hereto incurred in connection
with the preparation of this Agreement, the Ancillary Agreements, the
registration statement on Form 10 and related information statement and the
completion of the Genco Distribution shall be paid by CenterPoint.
7.7 Governmental Approvals. The parties acknowledge that certain of the
transactions contemplated by this Agreement and the Ancillary Agreements are
subject to certain conditions established by applicable government regulations,
orders, and approvals ("Existing Authority"). The parties intend to implement
this Agreement, the Ancillary Agreements and the transactions contemplated
thereby consistent with and to the extent permitted by Existing Authority and to
cooperate toward obtaining and maintaining in effect such Governmental Approvals
as may be required in order to implement this Agreement and each of the
Ancillary Agreements as fully as possible in accordance with their respective
terms. To the extent that any of the transactions contemplated by this Agreement
or any Ancillary Agreement require any Governmental Approvals, the parties will
use their reasonable commercial efforts to obtain any such Governmental
Approvals.
7.8 Regulatory Proceedings. It is recognized and understood that high
levels of cooperation and assistance will be required between members of the
CenterPoint Group and the Genco Group in connection with Regulatory Proceedings
necessary to implement the Genco Distribution and the Business Separation Plan
approved by the PUCT and all matters relating to the Genco Option. During the
period from the Genco Separation Date until an order issued by the PUCT in
connection with the stranded cost determination regarding the Genco Assets
becomes final and nonappealable, the parties agree as follows:
(a) Upon reasonable request, members of the CenterPoint Group and of
the Genco Group will provide personnel, information and other assistance to
members of the other Business in order to prepare, file and prosecute to
completion Regulatory Proceedings which are either (i) required to be filed
under the Utilities Code or under the Business Separation Plan or (ii) deemed by
the requesting party to be desirable to implement or preserve some aspect of the
Separation contemplated herein.
(b) Assistance provided may, without limitation, relate to
information that has been transferred to or retained by the assisting party in
the separation or which the assisting party is uniquely qualified to provide in
connection with Regulatory Proceedings that relate to the Separation and its
implementation under the Utilities Code. Assistance may take the form of
developing, filing and giving testimony and reports to the PUCT or other
regulatory authority.
(c) The appropriate members of the CenterPoint Group or the Genco
Group shall timely file with the PUCT or other regulatory authority or court and
shall prosecute to completion all Regulatory Proceedings required to implement
the Business Separation Plan approved by the PUCT, the Genco Option and the
other provisions of this Agreement.
(d) A member of the CenterPoint Group shall make all regulatory
filings contemplated above in this Section 7.8 except where a member of the
Genco Group is required by the Utilities Code to file separately or join in such
filings. A member of the CenterPoint
28
Group will be responsible for the direction and prosecution of all Regulatory
Proceedings in which CenterPoint Group filings are made.
(e) Except as provided below, the party supplying assistance shall be
reimbursed for costs incurred in providing assistance. For time expended by its
personnel, the assisting party shall be reimbursed for actual salary costs, plus
payroll burdens and overhead allocations in accordance with its standard
procedures for reimbursing other members of its Business. Services provided for
information technology or other internal services shall be charged in the same
manner they would be charged among the members of the providing company's
Business, and out of pocket costs paid to third parties shall be reimbursed at
actual cost.
The party requesting assistance shall endeavor to minimize the impacts of such
assistance on the other business needs of the assisting party.
7.9 Continuance of CenterPoint Credit Support; Borrowings. Notwithstanding
any other provision of this Agreement or the provisions of any Ancillary
Agreement to the contrary, the parties hereby agree that CenterPoint and each
Subsidiary of CenterPoint shall maintain in full force and effect each
guarantee, letter of credit, keepwell or support agreement or other credit
support document, instrument or other similar arrangement issued for the benefit
of any Person in the Genco Group by or on behalf of CenterPoint or a Subsidiary
of CenterPoint (the "Credit Support Arrangements") which is outstanding as of
the Genco Distribution Date, until the earlier of (a) such time as such Credit
Support Arrangement terminates in accordance with its terms or is otherwise
released at the request of Genco or (b) the date Genco ceases to be a Subsidiary
of CenterPoint; provided, that Genco shall use commercially reasonable efforts,
at the request of CenterPoint, to attempt to release or replace any Credit
Support Arrangement for which such replacement or release is reasonably
available. All such obligations shall be deemed Genco Liabilities. For so long
as CenterPoint or any Subsidiary of CenterPoint remains liable with respect to
any such Credit Support Arrangement, (1) Genco shall pay, or cause the Person in
the Genco Group for whose benefit the Credit Support Arrangement is provided to
pay, the underlying obligation as and when the same shall become due and
payable, to the end that neither CenterPoint nor such Subsidiary of CenterPoint
shall be required to make any payment under or by reason of its obligation under
such Credit Support Arrangement and (2) CenterPoint or such Subsidiary shall
retain all rights of reimbursement and subrogation it may have, whether arising
by law, by contract or otherwise, with respect to such Credit Support
Arrangement and such rights shall be enforceable against Genco as well as the
Subsidiary of Genco for whose benefit the Credit Support Arrangement was made.
Members of the CenterPoint Group may advance funds to or borrow funds from
members of the Genco Group from time to time at market-based rates; provided,
however, that except as provided in the Genco Option Agreement, no member of the
CenterPoint Group or the Genco Group shall have any obligation to do so.
To the extent covenants and agreements contained in any loan or credit
agreement or other financing document in effect on the date of this Agreement to
which any member of the CenterPoint Group is a party requires, or requires such
party to cause, any member of the Genco Group to take or refrain from taking any
action, or provides for a default or event of default if any member of the Genco
Group takes or refrains from taking any action, such member of the
29
Genco Group shall at all times prior to the Genco Distribution Date take or
refrain from taking any such action as would result in a breach or violation of,
or a default under, such agreement.
7.10 Reserved Section. [Reserved.]
7.11 Confidentiality.
(a) CenterPoint and Genco shall hold and shall cause the members of
the CenterPoint Group and the Genco Group, respectively, to hold, and shall each
cause their respective officers, employees, agents, consultants and advisors to
hold, in strict confidence and not to disclose or release without the prior
written consent of the other party, any and all Confidential Information (as
defined herein); provided, that the parties may disclose, or may permit
disclosure of, Confidential Information (i) to their respective auditors,
attorneys, financial advisors, bankers and other appropriate consultants and
advisors who have a need to know such information and are informed of their
obligation to hold such information confidential to the same extent as is
applicable to the parties hereto and in respect of whose failure to comply with
such obligations, CenterPoint or Genco, as the case may be, will be responsible
or (ii) to the extent any member of the CenterPoint Group or the Genco Group is
compelled to disclose any such Confidential Information by judicial or
administrative process or, in the opinion of legal counsel, by other
requirements of law. Notwithstanding the foregoing, in the event that any demand
or request for disclosure of Confidential Information is made pursuant to clause
(ii) above, CenterPoint or Genco, as the case may be, shall promptly notify the
other of the existence of such request or demand and shall provide the other a
reasonable opportunity to seek an appropriate protective order or other remedy,
which both parties will cooperate in seeking to obtain. In the event that such
appropriate protective order or other remedy is not obtained, the party whose
Confidential Information is required to be disclosed shall or shall cause the
other party to furnish, or cause to be furnished, only that portion of the
Confidential Information that is legally required to be disclosed. As used in
this Section 7.11, "Confidential Information" shall mean all proprietary,
technical or operational information, data or material of one party which, prior
to or following the Genco Distribution Date, has been disclosed by CenterPoint
or members of the CenterPoint Group, on the one hand, or Genco or members of the
Genco Group, on the other hand, in written, oral (including by recording),
electronic, or visual form to, or otherwise has come into the possession of, the
other, including pursuant to the access provisions of Section 7.2 hereof or any
other provision of this Agreement (except to the extent that such Information
can be shown to have been (a) in the public domain through no fault of such
party (or, in the case of CenterPoint, any other member of the CenterPoint Group
or, in the case of Genco, any other member of the Genco Group) or (b) later
lawfully acquired from other sources by the party (or, in the case of
CenterPoint, such member of the CenterPoint Group or, in the case of Genco, such
member of the Genco Group) to which it was furnished; provided, however, in the
case of (b) that such sources did not provide such Information in breach of any
confidentiality obligations).
(b) Notwithstanding anything to the contrary set forth herein, (i)
CenterPoint and the other members of the CenterPoint Group, on the one hand, and
Genco and the other members of the Genco Group, on the other hand, shall be
deemed to have satisfied their obligations hereunder with respect to
Confidential Information if they exercise the same degree of care (but no less
than a reasonable degree of care) as they take to preserve confidentiality for
their own similar Information and (ii) confidentiality obligations provided for
in any agreement
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between CenterPoint or any other member of the CenterPoint Group, or Genco or
any other members of the Genco Group, on the one hand, and any employee of
CenterPoint or any other member of the CenterPoint Group, or Genco or any other
members of the Genco Group, on the other hand, shall remain in full force and
effect. Confidential Information of CenterPoint or any other member of the
CenterPoint Group, on the one hand, or Genco or any other member of the Genco
Group, on the other hand, in the possession of and used by the other as of the
Genco Distribution Date may continue to be used by such Person in possession of
the Confidential Information in and only in the operation of the CenterPoint
Group or the Genco Group, as the case may be, and may be used only so long as
the Confidential Information is maintained in confidence and not disclosed in
violation of Section 7.11(a). Such continued right to use may not be transferred
to any third party unless the third party purchases all or substantially all of
the business and assets in which the relevant Confidential Information is used
or employed in one transaction or in a series or related transactions. In the
event that such right to use is transferred in accordance with the preceding
sentence, the transferring party shall not disclose the source of the relevant
Confidential Information.
7.12 Capacity Auctions. Genco shall cause Xxxxx XX to auction its capacity
in accordance with the terms of Section 10.14 of the Master Separation
Agreement.
7.13 Nuclear Decommissioning Trust and Investment. Genco shall comply with
the applicable terms of Section 10.13 of the Master Separation Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1 Limitation of Liability. EXCEPT TO THE EXTENT SPECIFICALLY PROVIDED IN
ANY ANCILLARY AGREEMENT, IN NO EVENT SHALL ANY MEMBER OF THE CENTERPOINT GROUP
OR THE GENCO GROUP OR THEIR RESPECTIVE DIRECTORS, OFFICERS OR EMPLOYEES BE
LIABLE TO ANY OTHER MEMBER OF THE CENTERPOINT GROUP OR THE GENCO GROUP FOR ANY
SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST
PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE)
ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE
FOREGOING LIMITATIONS SHALL NOT LIMIT EACH PARTY'S INDEMNIFICATION OBLIGATIONS
FOR LIABILITIES TO THIRD PARTIES AS SET FORTH IN THIS AGREEMENT OR ANY ANCILLARY
AGREEMENT.
8.2 Entire Agreement. This Agreement, the other Ancillary Agreements and
the Exhibits and Schedules referred to or attached hereto and thereto,
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof.
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8.3 Governing Law. This Agreement shall be governed and construed and
enforced in accordance with the laws of the State of Texas as to all matters
regardless of the laws that might otherwise govern under the principles of
conflicts of laws applicable thereto.
8.4 Termination. This Agreement and all Ancillary Agreements may be
terminated at any time prior to the Genco Distribution Date by and in the sole
discretion of CenterPoint without the approval of Genco. This Agreement may be
terminated at any time after the Genco Distribution Date by mutual consent of
CenterPoint and Genco. In the event of termination pursuant to this Section 8.4,
neither party shall have any liability of any kind to the other party.
8.5 Notices. Unless expressly provided herein, all notices, claims,
certificates, requests, demands and other communications hereunder shall be in
writing and shall be deemed to be duly given (i) when personally delivered or
(ii) if mailed registered or certified mail, postage prepaid, return receipt
requested, on the date the return receipt is executed or the letter refused by
the addressee or its agent or (iii) if sent by overnight courier which delivers
only upon the signed receipt of the addressee, on the date the receipt
acknowledgment is executed or refused by the addressee or its agent or (iv) if
sent by facsimile or other generally accepted means of electronic transmission,
on the date confirmation of transmission is received (provided that a copy of
any notice delivered pursuant to this clause (iv) shall also be sent pursuant to
clause (ii) or (iii)), addressed to the attention of the addressee's General
Counsel at the address of its principal executive office or to such other
address or facsimile number for a party as it shall have specified by like
notice.
8.6 Counterparts. This Agreement, including the Schedules and Exhibits
hereto and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
8.7 Binding Effect; Assignment. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective legal
representatives and successors, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement. This Agreement may
not be assigned by any party hereto without the prior written consent of the
other party hereto.
8.8 Severability. If any term or other provision of this Agreement or the
Schedules or Exhibits attached hereto is determined by a nonappealable decision
by a court, administrative agency or arbitrator to be invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to either
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
8.9 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of either party hereto in the exercise of any right hereunder
shall impair that right or
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be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude other or further exercise thereof or of any
other right. All rights and remedies existing under this Agreement or the
Schedules or Exhibits attached hereto are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
8.10 Amendment. No change or amendment will be made to this Agreement
except by an instrument in writing signed on behalf of each of the parties to
this Agreement.
8.11 Authority. Each of the parties hereto represents to the other that (a)
it has the corporate or other requisite power and authority to execute, deliver
and perform this Agreement and the Ancillary Agreements, (b) the execution,
delivery and performance of this Agreement and the Ancillary Agreements by it
have been duly authorized by all necessary corporate or other actions, (c) it
has duly and validly executed and delivered this Agreement and the Ancillary
Agreements and (d) this Agreement and the Ancillary Agreements are legal, valid
and binding obligations, enforceable against it in accordance with their
respective terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equity principles.
8.12 Interpretation. The headings contained in this Agreement, in any
Exhibit or Schedule hereto and in the table of contents to this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Schedule or
Exhibit but not otherwise defined therein shall have the meaning assigned to
that term in this Agreement. When a reference is made in this Agreement to an
Article or a Section, Exhibit or Schedule, that reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.
8.13 Conflicting Agreements. In the event of conflict between this
Agreement and any Ancillary Agreement or other agreement executed in connection
herewith, the provisions of that other agreement shall prevail.
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WHEREFORE, the parties have signed this Separation Agreement effective
as of the date first set forth above.
CENTERPOINT ENERGY, INC.
By:
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Xxxxx X. XxXxxxxxxx
President and Chief Executive Officer
TEXAS GENCO HOLDINGS, INC.
By:
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Xxxxx X. Tees
President and Chief Executive Officer
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