<PAGE>
EXHIBIT 4.2
================================================================================
RELIANT ENERGY RESOURCES CORP.
(formerly known as NorAm Energy Corp.)
To
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
Trustee
------------------
SUPPLEMENTAL INDENTURE NO. 3
Dated as of July 6, 2000
-----------------
$325,000,000
8.125% Notes due 2005
Series A and Series B
================================================================================
<PAGE>
RELIANT ENERGY RESOURCES CORP.
(formerly known as NorAm Energy Corp.)
SUPPLEMENTAL INDENTURE NO. 3
$325,000,000
8.125% Notes due 2005
Series A and Series B
SUPPLEMENTAL INDENTURE No. 3, dated as of July 6, 2000, between RELIANT
ENERGY RESOURCES CORP., a Delaware corporation formerly known as NorAm Energy
Corp. (the "Company"), and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, a national
banking association duly organized and existing under the laws of the United
States of America, as Trustee (the "Trustee").
RECITALS
The Company has heretofore executed and delivered to the Trustee an
Indenture, dated as of February 1, 1998 (the "Original Indenture" and, as
previously and hereby supplemented and amended, the "Indenture"), providing for
the issuance from time to time of one or more series of the Company's
Securities.
The Company has changed its name from "NorAm Energy Corp." to "Reliant
Energy Resources Corp." and all references in the Indenture to the "Company" or
"NorAm Energy Corp." shall be deemed to refer to Reliant Energy Resources Corp.
Pursuant to the terms of the Indenture, the Company desires to provide
for the establishment of two new series of Securities to be designated as the
"8.125% Notes due 2005, Series A" (the "Series A Notes") and the "8.125% Notes
due 2005, Series B" (the "Series B Notes" and, together with the Series A Notes,
the "Notes"), the form and substance of such Notes and the terms, provisions and
conditions thereof to be set forth as provided in the Original Indenture and
this Supplemental Indenture No. 3.
Section 301 of the Original Indenture provides that various matters
with respect to any series of Securities issued under the Indenture may be
established in an indenture supplemental to the Indenture.
-1-
<PAGE>
Subparagraph (7) of Section 901 of the Original Indenture provides that
the Company and the Trustee may enter into an indenture supplemental to the
Indenture to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301 of the Original Indenture.
For and in consideration of the premises and the issuance of the series
of Securities provided for herein, it is mutually covenanted and agreed, for the
equal and proportionate benefit of the Holders of the Securities of such series,
as follows:
ARTICLE ONE
Relation to Indenture; Additional Definitions
Section 101. RELATION TO INDENTURE. This Supplemental Indenture
No. 3 constitutes an integral part of the Original Indenture.
Section 102. ADDITIONAL DEFINITIONS. For all purposes of this
Supplemental Indenture No. 3:
Capitalized terms used herein shall have the meaning specified
herein or in the Original Indenture, as the case may be;
"Acquired Entity" has the meaning set forth in Section 303
hereof;
"Additional Interest" has the meaning set forth in Section
204(e) hereof;
"Certificated Notes" has the meaning set forth in Section
208(e) hereof;
"Comparable Treasury Yield" has the meaning set forth in
Section 402(a) hereof;
"Consolidated Net Tangible Assets" means the total amount of
assets of the Company and its Subsidiaries less, without duplication:
(a) total current liabilities (excluding indebtedness due within 12
months); (b) all reserves for depreciation and other asset valuation
reserves, but excluding reserves for deferred federal income taxes
arising from accelerated amortization or otherwise; (c) all intangible
assets such as goodwill, trademarks, trade names, patents and
unamortized debt discount and expense carried as an asset; and (d) all
appropriate adjustments on account of minority interests of other
Persons holding common stock of any Subsidiary, all as reflected in the
Company's most recent audited consolidated balance sheet preceding the
date of such determination;
"Distribution Compliance Period" means the period which
expires immediately after the 40th day following the later of: (a) the
commencement of the offering of the Notes to Persons other than
"distributors" (as defined in Regulation S) in reliance upon
Regulation S; and (b) the date of closing of the offering of the Notes;
-2-
<PAGE>
"Exchange Offer" means the offer by the Company pursuant to
the Registration Rights Agreement to the Holders of all outstanding
Transfer Restricted Securities to exchange all such outstanding
Transfer Restricted Securities held by such Holders for Series B Notes,
in an aggregate principal amount equal to the aggregate principal
amount of the Transfer Restricted Securities tendered in such exchange
offer by such Holders;
"Exchange Offer Registration Statement" has the meaning
assigned to such term in the Registration Rights Agreement;
"Global Notes" has the meaning set forth in Section 208(c)
hereof;
"H.15 Statistical Release" has the meaning set forth in
Section 402(b) hereof;
The term "indebtedness," as applied to the Company or any
Subsidiary, means bonds, debentures, notes and other instruments
representing obligations created or assumed by any such corporation:
(i) for money borrowed (other than unamortized debt discount or
premium); (ii) evidenced by a note or similar instrument given in
connection with the acquisition of any business, properties or assets
of any kind; (iii) as lessee under leases required to be capitalized on
the balance sheet of the lessee under generally accepted accounting
principles; and (iv) any amendments, renewals, extensions,
modifications and refundings of any such indebtedness or obligation
listed in clause (i), (ii) or (iii) above. All indebtedness secured by
a lien upon property owned by the Company or any Subsidiary and upon
which indebtedness any such corporation customarily pays interest,
although any such corporation has not assumed or become liable for the
payment of such indebtedness, shall for all purposes hereof be deemed
to be indebtedness of any such corporation. All indebtedness for
borrowed money incurred by other Persons which is directly guaranteed
as to payment of principal by the Company or any Subsidiary shall for
all purposes hereof be deemed to be indebtedness of any such
corporation, but no other contingent obligation of any such corporation
in respect of indebtedness incurred by other Persons shall for any
purpose be deemed to be indebtedness of such corporation. Indebtedness
of the Company or any Subsidiary shall not include: (i) amounts which
are payable only out of all or a portion of the oil, gas, natural gas,
helium, coal, metals, minerals, steam, timber, hydrocarbons, or
geothermal or other natural resources produced, derived or extracted
from properties owned or developed by such corporation; (ii) any
indebtedness incurred to finance oil, gas, natural gas, helium, coal,
metals, minerals, steam, timber, hydrocarbons, or geothermal or other
natural resources or synthetic fuel exploration or development,
payable, with respect to principal and interest, solely out of the
proceeds of oil, gas, natural gas, helium, coal, metals, minerals,
steam, timber, hydrocarbons, or geothermal or other natural resources
or synthetic fuel to be produced, sold, and/or delivered by the Company
or any Subsidiary; (iii) indirect guarantees or other contingent
obligations in connection with the indebtedness of others, including
agreements, contingent or otherwise, with such Persons or with third
Persons with respect to, or to permit or ensure the payment of,
obligations of such other Persons, including, without limitation,
agreements to advance or supply funds to or to invest in such
-3-
<PAGE>
other Persons, or agreements to pay for property, products or
services of such other Persons (whether or not conferred, delivered
or rendered), and any demand charge, throughput, take-or-pay,
keep-well, make-whole, cash deficiency, maintenance of working
capital or earnings or similar agreements; and (iv) any guarantees
with respect to lease or other similar periodic payments to be made
by other Persons;
"Independent Investment Banker" has the meaning set forth in
Section 401(c) hereof;
"Initial Purchasers" means Banc of America Securities LLC,
Credit Suisse First Boston Corporation and Deutsche Bank Securities
Inc., as initial purchasers in the offering of the Series A Notes
pursuant to the Offering Memorandum dated June 29, 2000 relating
thereto;
"Institutional Accredited Investor" has the meaning set forth
in Section 208(e) hereof;
"Interest Payment Date" has the meaning set forth in Section
204(a) hereof;
"Issue Date" has the meaning set forth in Section 204(a)
hereof;
"lien" or "liens" have the meanings set forth in Section 303
hereof;
"Long-Term Indebtedness" means, collectively, the Company's
outstanding: (a) Medium-Term Notes, Series A and B (due through 2001),
(b) 7 1/2% Notes due 2000, (c) 8.90% Debentures due 2006, and (d) any
long-term indebtedness (but excluding for this purpose any long-term
indebtedness, if any, incurred pursuant to any revolving credit
facility, letter of credit facility or other similar bank credit
facility) of the Company issued subsequent to the Notes and prior to
the Termination Date containing covenants substantially similar to the
covenants set forth in Sections 303 and 304 hereof, but not containing
a provision substantially similar to the provision set forth in Section
305 hereof;
"Make-Whole Premium" has the meaning set forth in Section
401(b) hereof;
"Maturity Date" has the meaning set forth in Section 203
hereof;
"Non-U.S. Person" has the meaning set forth in Section 208(b);
"Notes" has the meaning set forth in the second paragraph of
the Recitals hereof;
"Original Indenture" has the meaning set forth in the first
paragraph of the Recitals hereof;
"Principal Property" means any natural gas distribution
property, natural gas pipeline or gas processing plant located in the
United States, except any such property that in the
-4-
<PAGE>
opinion of the Board of Directors is not of material importance to
the total business conducted by the Company and its consolidated
Subsidiaries. "Principal Property" shall not include any oil or gas
property or the production or proceeds of production from an oil or
gas producing property or the production or any proceeds of
production of gas processing plants or oil or gas or petroleum
products in any pipeline or storage field;
"Qualified Institutional Buyer" has the meaning assigned to
such term in Rule 144A under the Securities Act;
"Redemption Price" has the meaning set forth in Section 401(a)
hereof;
"Registrable Securities" has the meaning assigned to such term
in the Registration Rights Agreement;
"Registration Default" has the meaning assigned to such term
in the Registration Rights Agreement;
"Registration Rights Agreement" means that certain
Registration Rights Agreement, dated as of July 6, 2000, by and among
the Company and the Initial Purchasers;
"Regular Record Date" has the meaning set forth in Section
204(b) hereof;
"Regulation S" means Regulation S under the Securities Act;
"Regulation S Global Notes" has the meaning set forth in
Section 208(b) hereof;
"Regulation S Permanent Global Note" has the meaning set forth
in Section 208(b) hereof;
"Regulation S Temporary Global Note" has the meaning set forth
in Section 208(b) hereof;
"Remaining Term" has the meaning set forth in Section 402(a)
hereof;
"Restricted Subsidiary" means any Subsidiary which owns a
Principal Property;
"Rule 144A Global Note" has the meaning set forth in Section
208(a) hereof;
"Sale and Leaseback Transaction" means any arrangement
entered into by the Company or any Restricted Subsidiary with any
Person providing for the leasing to the Company or any Restricted
Subsidiary of any Principal Property (except for temporary leases
for a term, including any renewal thereof, of not more than three
years and except for leases between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries),
-5-
<PAGE>
which Principal Property has been or is to be sold or transferred
by the Company or such Restricted Subsidiary to such Person;
"Series A Notes" has the meaning set forth in the third
paragraph of the Recitals hereof;
"Series B Notes" has the meaning set forth in the third
paragraph of the Recitals hereof;
"Shelf Registration Statement" has the meaning assigned to
such term in the Registration Rights Agreement;
"Termination Date" has the meaning set forth in Section 305;
"Transfer Restricted Securities" means the Registrable
Securities under the Registration Rights Agreement.
"Value" with respect to a Sale and Leaseback Transaction has
the meaning set forth in Section 303 hereof;
All references herein to Articles and Sections, unless
otherwise specified, refer to the corresponding Articles and Sections
of this Supplemental Indenture No. 3; and
The terms "herein," "hereof," "hereunder" and other words of
similar import refer to this Supplemental Indenture No. 3.
ARTICLE TWO
The Series of Securities
Section 201. TITLE OF THE SECURITIES. The Series A Notes shall be
designated as the "8.125% Notes due 2005, Series A," and the Series B Notes
shall be designated as the "8.125% Notes due 2005, Series B." The Series A Notes
and the Series B Notes shall be treated for all purposes under the Indenture as
a single class or series of Securities.
Section 202. LIMITATION ON AGGREGATE PRINCIPAL AMOUNT. The Trustee
shall authenticate and deliver (i) Series A Notes for original issue on the
Issue Date in the aggregate principal amount of $325,000,000 and (ii) Series
B Notes from time to time thereafter for issue only in exchange for a like
principal amount of Series A Notes, in each case upon a Company Order for the
authentication and delivery thereof and satisfaction of Sections 301 and 303
of the Original Indenture. Such order shall specify the amount of the Notes
to be authenticated, the date on which the original issue of Notes is to be
authenticated and the name or names of the initial Holder or Holders. The
aggregate principal amount of Notes that may initially be outstanding shall
not exceed $325,000,000; PROVIDED,
-6-
<PAGE>
HOWEVER, that the authorized aggregate principal amount of the Notes may be
increased above such amount by a Board Resolution to such effect.
Section 203. STATED MATURITY. The Stated Maturity of the Notes shall be
July 15, 2005 (the "Maturity Date").
Section 204. INTEREST AND INTEREST RATES.
(a) The Notes shall bear interest at the rate of 8.125% per annum, from
and including July 6, 2000 (the "Issue Date") to, but excluding, the Maturity
Date. Such interest shall be payable semiannually in arrears, on January 15 and
July 15, of each year (each such date, an "Interest Payment Date"), commencing
January 15, 2001.
(b) The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date shall be paid to the Persons in whose names the
Notes (or one or more Predecessor Securities) are registered at the close of
business on the immediately preceding January 1 and July 1, respectively,
whether or not such day is a Business Day (each such date, a "Regular Record
Date"). Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and
shall either (i) be paid to the Person in whose name such Note (or one or more
Predecessor Securities) is registered at the close of business on the Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of the Notes not less than 10
days prior to such Special Record Date, or (ii) be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
or automated quotation system on which the Notes may be listed or traded, and
upon such notice as may be required by such exchange or automated quotation
system, all as more fully provided in the Indenture.
(c) The amount of interest payable for any period shall be computed on
the basis of a 360-day year of twelve 30-day months. The amount of interest
payable for any partial period shall be computed on the basis of a 360-day year
of twelve 30-day months and the days elapsed in any partial month. In the event
that any date on which interest is payable on a Note is not a Business Day, then
a payment of the interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay) with the same force and effect as if made
on the date the payment was originally payable.
(d) Any principal and premium, if any, and any installment of interest,
which is overdue shall bear interest at the rate of 8.125% per annum (to the
extent permitted by law), from the dates such amounts are due until they are
paid or made available for payment, and such interest shall be payable on
demand.
(e) The interest rate borne by the Registrable Securities will be
increased by .25% per annum upon the occurrence of a Registration Default,
which rate will increase by an additional .25% per annum if such Registration
Default has not been cured within 90 days after the occurrence
-7-
<PAGE>
thereof and will continue until all Registration Defaults have been cured
("Additional Interest"); PROVIDED that the aggregate amount of any such
increase in the interest rate on the Registrable Securities shall in no event
exceed 1.0% per annum; PROVIDED, FURTHER, that if the Exchange Offer
Registration Statement is not declared effective on or prior to the 180th
calendar day following the Issue Date and the Company shall request Holders
of Registrable Securities to provide the information called for by the
Registration Rights Agreement for inclusion in the Shelf Registration
Statement, the Registrable Securities owned by Holders who do not deliver
such information to the Company or who do not provide comments to the Company
on the Shelf Registration Statement when required pursuant to the
Registration Rights Agreement shall not be entitled to any such Additional
Interest for any day after the 210th calendar day following the Issue Date.
All accrued Additional Interest shall be paid to Holders of Registrable
Securities in the same manner and at the same time as regular payments of
interest on the Registrable Securities. Following the cure of all
Registration Defaults, the accrual of Additional Interest shall cease and the
interest rate on the Registrable Securities will revert to 8.125% per annum.
Section 205. PLACE OF PAYMENT. The Trustee shall initially serve as the
Paying Agent for the Notes. The Place of Payment where the Notes may be
presented or surrendered for payment shall be the Corporate Trust Office of the
Trustee.
Section 206. PLACE OF REGISTRATION OR EXCHANGE; NOTICES AND DEMANDS
WITH RESPECT TO THE NOTES. The place where the Holders of the Notes may present
the Notes for registration of transfer or exchange and may make notices and
demands to or upon the Company in respect of the Notes shall be the Corporate
Trust Office of the Trustee.
Section 207. PERCENTAGE OF PRINCIPAL AMOUNT. The Notes shall be
initially issued at 99.789% of their principal amount plus accrued interest, if
any, from July 6, 2000.
Section 208. GLOBAL NOTES AND CERTIFICATED NOTES.
(a) Notes offered and sold to Qualified Institutional Buyers pursuant
to Rule 144A shall be issuable in whole or in part in the form of one or more
permanent Global Securities in definitive, fully registered, book-entry form,
without interest coupons (collectively, the "Rule 144A Global Note"). The Rule
144A Global Note shall be deposited on the Issue Date with, or on behalf of, the
Depositary. Interests in the Rule 144A Global Note shall be available for
purchase only by Qualified Institutional Buyers.
(b) Notes offered and sold in offshore transactions to persons other
than "U.S. persons," as defined in Regulation S under the Securities Act
(each, a "Non-U.S. Person") in reliance on Regulation S under the Securities
Act shall initially be issuable in whole or in part in the form of one or
more temporary Global Securities in definitive, fully registered, book-entry
form, without interest coupons (collectively, the "Regulation S Temporary
Global Note"). Beneficial interests in the Regulation S Temporary Global Note
shall be exchanged for beneficial interests in a corresponding Global
Security (the "Regulation S Permanent Global Note" and, together with the
Regulation S
-8-
<PAGE>
Temporary Global Note, the "Regulation S Global Notes") within a reasonable
period after the expiration of the Distribution Compliance Period upon
certification that the beneficial interests in the Regulation S Temporary Global
Note are owned by either Non-U.S. Persons or U.S. Persons who purchased such
interests pursuant to an exemption from, or in transactions not subject to, the
registration requirements of the Securities Act.
(c) Each of the Rule 144A Global Note and the Regulation S Global Notes
(collectively, the "Global Notes") shall represent such of the Notes as shall be
specified therein and shall each provide that it shall represent the aggregate
principal amount of Notes from time to time endorsed thereon and that the
aggregate principal amount of Notes represented thereby may from time to time be
reduced or increased, as appropriate, to reflect exchanges or redemptions. Any
endorsement of a Global Note to reflect the amount, or any increase or decrease
in the aggregate principal amount, of Notes represented thereby shall be
reflected by the Trustee on Schedule A attached to the Note and made by the
Trustee in accordance with written instructions or such other written form of
instructions as is customary for the Depositary, from the Depositary or its
nominee on behalf of any Person having a beneficial interest in the Global Note.
(d) The Depositary Trust Company shall initially serve as Depositary
with respect to the Global Notes. Such Global Notes shall bear the legends set
forth in the form of Security attached as EXHIBIT A hereto.
(e) Notes offered and sold exclusively to institutional "accredited
investors" as such term is defined in Rule 501(a)(1), (2), (3) and (7) of
Regulation D under the Securities Act (each, an "Institutional Accredited
Investor") shall be issuable in definitive, fully registered, certificated form,
without interest coupons (the "Certificated Notes"), in each case in a minimum
principal amount of the Notes of $250,000 and integral multiples of $1,000 in
excess thereof.
Section 209. FORM OF SECURITIES. The Global Notes and Certificated
Notes shall be substantially in the form attached as EXHIBIT A hereto.
Section 210. SECURITIES REGISTRAR. The Trustee shall initially serve as
the Security Registrar for the Notes.
Section 211. DEFEASANCE AND DISCHARGE; COVENANT DEFEASANCE.
(a) Article Fourteen of the Original Indenture, including without
limitation, Sections 1402 and 1403 (as modified by Section 211(b) hereof)
thereof, shall apply to the Notes.
(b) Solely with respect to the Notes issued hereby, the first sentence
of Section 1403 of the Original Indenture is hereby deleted in its entirety, and
the following is substituted in lieu thereof:
"Upon the Company's exercise of its option (if any) to have
this Section applied to any Securities or any series of
Securities, as the
-9-
<PAGE>
case may be, (1) the Company shall be released from its
obligations under Article Eight and under any covenants
provided pursuant to Section 301(20), 901(2) or 901(7) for
the benefit of the Holders of such Securities and (2) the
occurrence of any event specified in Sections 501(4) (with
respect to Article Eight and to any such covenants provided
pursuant to Section 301(20), 901(2) or 901(7)), and 501(7)
shall be deemed not to be or result in an Event of Default,
in each case with respect to such Securities as provided in
this Section on and after the date the conditions set forth
in Section 1404 are satisfied (hereinafter called "Covenant
Defeasance")."
Section 212. SINKING FUND OBLIGATIONS. The Company shall have no
obligation to redeem or purchase any Notes pursuant to any sinking fund or
analogous requirement or upon the happening of a specified event or at the
option of a Holder thereof.
ARTICLE THREE
Additional Covenants
Section 301. MAINTENANCE OF PROPERTIES. The Company shall cause all
properties used or useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and shall cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly conducted at all times;
PROVIDED, HOWEVER, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary.
Section 302. PAYMENT OF TAXES AND OTHER CLAIMS. The Company shall pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company or any Subsidiary; PROVIDED, HOWEVER, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.
Section 303. RESTRICTIONS ON LIENS. The Company shall not pledge,
mortgage or hypothecate, or permit to exist, and shall not cause, suffer or
permit any Restricted Subsidiary to pledge, mortgage or hypothecate, or permit
to exist, except in favor of the Company or any Restricted Subsidiary, any
mortgage, pledge, lien or other encumbrance (collectively, a "lien" or "liens")
upon, any Principal Property at any time owned by it or a Restricted Subsidiary,
to secure
-10-
<PAGE>
any indebtedness, without making effective provisions whereby the Notes shall
be equally and ratably secured with or prior to any and all such indebtedness
and any other indebtedness similarly entitled to be equally and ratably
secured; PROVIDED, HOWEVER, that this provision shall not apply to or prevent
the creation or existence of:
(a) undetermined or inchoate liens and charges incidental to
construction, maintenance, development or operation;
(b) the lien of taxes and assessments for the then current
year;
(c) the lien of taxes and assessments not at the time
delinquent;
(d) the lien of specified taxes and assessments which are
delinquent but the validity of which is being contested at the time by
the Company or such Restricted Subsidiary in good faith and by
appropriate proceedings;
(e) the lien reserved in leases for rent and for compliance
with the terms of the lease in the case of leasehold estates;
(f) any obligations or duties, affecting the property of the
Company or such Restricted Subsidiary, to any municipality or public
authority with respect to any franchise, grant, license, permit or
similar arrangement;
(g) the liens of any judgments or attachment in an aggregate
amount not in excess of $10,000,000, or the lien of any judgment or
attachment the execution or enforcement of which has been stayed or
which has been appealed and secured, if necessary, by the filing of an
appeal bond;
(h) any lien on any property held or used by the Company or a
Restricted Subsidiary in connection with the exploration for,
development of or production of oil, gas, natural gas (including
liquefied gas and storage gas), other hydrocarbons, helium, coal,
metals, minerals, steam, timber, geothermal or other natural resources
or synthetic fuels, such properties to include, but not be limited to,
the Company's or a Restricted Subsidiary's interest in any mineral fee
interests, oil, gas or other mineral leases, royalty, overriding
royalty or net profits interests, production payments and other similar
interests, wellhead production equipment, tanks, field gathering lines,
leasehold or field separation and processing facilities, compression
facilities and other similar personal property and fixtures;
(i) any lien on oil, gas, natural gas (including liquefied gas
and storage gas), and other hydrocarbons, helium, coal, metals,
minerals, steam, timber, geothermal or other natural resources or
synthetic fuels produced or recovered from
-11-
<PAGE>
any property, an interest in which is owned or leased by the Company
or a Restricted Subsidiary;
(j) liens upon any property heretofore or hereafter acquired,
constructed or improved, created at the time of acquisition or within
one year thereafter to secure all or a portion of the purchase price
thereof or the cost of such construction or improvement, or existing
thereon at the date of acquisition, whether or not assumed by the
Company or a Restricted Subsidiary, provided that every such lien shall
apply only to the property so acquired or constructed and fixed
improvements thereon;
(k) any extension, renewal or refunding, in whole or in part,
of any lien permitted by subparagraph (j) above, if limited to the same
property or any portion thereof subject to, and securing not more than
the amount secured by, the lien extended, renewed or refunded;
(l) liens upon any property heretofore or hereafter acquired
by any corporation that is or becomes a Restricted Subsidiary after the
date hereof ("Acquired Entity") provided that every such lien (1) shall
either (A) exist prior to the time the Acquired Entity becomes a
Restricted Subsidiary or (B) be created at the time the Acquired Entity
becomes a Restricted Subsidiary or within one year thereafter to secure
all or a portion of the acquisition price thereof and (2) shall only
apply to those properties owned by the Acquired Entity at the time it
becomes a Restricted Subsidiary or thereafter acquired by it from
sources other than the Company or any other Restricted Subsidiary;
(m) the pledge of current assets, in the ordinary course of
business, to secure current liabilities;
(n) mechanics' or materialmen's liens, any liens or charges
arising by reason of pledges or deposits to secure payment of workmen's
compensation or other insurance, good faith deposits in connection with
tenders, leases of real estate, bids or contracts (other than contracts
for the payment of money), deposits to secure duties or public or
statutory obligations, deposits to secure, or in lieu of, surety, stay
or appeal bonds, and deposits as security for the payment of taxes or
assessments or similar charges;
(o) any lien arising by reason of deposits with, or the giving
of any form of security to, any governmental agency or any body created
or approved by law or governmental regulation for any purpose at any
time in connection with the financing of the acquisition or
construction of property to be used in the business of the Company or a
Restricted Subsidiary or as required by law or governmental regulation
as a condition to the transaction of any business or the exercise of
any privilege or license, or to enable the Company or a Restricted
Subsidiary to maintain self-
-12-
<PAGE>
insurance or to participate in any funds established to cover any
insurance risks or in connection with workmen's compensation,
unemployment insurance, old age pensions or other social security, or
to share in the privileges or benefits required for companies
participating in such arrangements;
(p) any lien of or upon any office equipment, data processing
equipment (including, without limitation, computer and computer
peripheral equipment), or transportation equipment (including, without
limitation, motor vehicles, tractors, trailers, marine vessels, barges,
towboats, rolling stock and aircraft);
(q) any lien created or assumed by the Company or a Restricted
Subsidiary in connection with the issuance of debt securities the
interest on which is excludable from gross income of the holder of such
security pursuant to the Internal Revenue Code, as amended, for the
purposes of financing, in whole or in part, the acquisition or
construction of property to be used by the Company or a Restricted
Subsidiary; or
(r) the pledge or assignment of accounts receivable, or the
pledge or assignment of conditional sales contracts or chattel
mortgages and evidences of indebtedness secured thereby, received in
connection with the sale by the Company or such Restricted Subsidiary
or others of goods or merchandise to customers of the Company or such
Restricted Subsidiary.
In case the Company or any Restricted Subsidiary shall propose to
pledge, mortgage, or hypothecate any Principal Property at any time owned by it
to secure any indebtedness, other than as permitted by subdivision (a) to (r),
inclusive, of this Section 303, the Company shall prior thereto give written
notice thereof to the Trustee, and the Company shall or shall cause such
Restricted Subsidiary to, prior to or simultaneously with such pledge, mortgage
or hypothecation, by supplemental indenture executed to the Trustee (or to the
extent legally necessary to another trustee or additional or separate trustee),
in form satisfactory to the Trustee, effectively secure all the Notes equally
and ratably with, or prior to, such indebtedness.
Notwithstanding the foregoing provisions of this Section 303, the
Company or a Restricted Subsidiary may issue, assume or guarantee indebtedness
secured by a mortgage which would otherwise be subject to the foregoing
restrictions in an aggregate amount which, together with all other indebtedness
of the Company or a Restricted Subsidiary secured by a mortgage which (if
originally issued, assumed or guaranteed at such time) would otherwise be
subject to the foregoing restrictions (not including indebtedness permitted to
be secured under clauses (a) through (r) above) and the Value of all Sale and
Leaseback Transactions in existence at such time (other than any Sale and
Leaseback Transaction which, if such Sale and Leaseback Transaction had been a
lien, would have been permitted by paragraph (j) of this Section 303 and
other than Sale and Leaseback Transactions as to which application of amounts
have been made in accordance with paragraph (l) of this Section 303) does not
at the time of incurrence of such indebtedness exceed 5% of
-13-
<PAGE>
Consolidated Net Tangible Assets. "Value" means, with respect to a Sale and
Leaseback Transaction, as of any particular time, the amount equal to the
greater of (1) the net proceeds from the sale or transfer of the property leased
pursuant to such Sale and Leaseback Transaction or (2) the fair value, in the
opinion of the Board of Directors, of such property at the time of entering into
such Sale and Leaseback Transaction, in either case divided first by the number
of full years of the term of the lease and then multiplied by the number of full
years of such term remaining at the time of determination, without regard to any
renewal or extension options contained in the lease.
Section 304. RESTRICTIONS ON SALE AND LEASEBACK TRANSACTIONS. The
Company shall not, nor shall it permit any Restricted Subsidiary to, enter into
any Sale and Leaseback Transaction unless the net proceeds of such sale are at
least equal to the fair value (as determined by the Board of Directors) of such
Principal Property and either (a) the Company or such Restricted Subsidiary
would be entitled, pursuant to the provisions of (1) paragraph (j) of Section
303 or (2) paragraph (1) of Section 303, to incur indebtedness secured by a lien
on the Principal Property to be leased without equally and ratably securing the
Notes, or (b) the Company shall, and in any such case the Company covenants that
it will, within 120 days of the effective date of any such arrangement, apply an
amount not less than the fair value (as so determined) of such Principal
Property (i) to the payment or other retirement of Funded Debt incurred or
assumed by the Company which ranks senior to or pari passu with the Notes or of
Funded Debt incurred or assumed by any Restricted Subsidiary (other than, in
either case, Funded Debt owned by the Company or any Restricted Subsidiary), or
(ii) to the purchase at not more than fair value (as so determined) of Principal
Property (other than the Principal Property involved in such sale). For this
purpose, "Funded Debt" means any indebtedness which by its terms matures at or
is extendable or renewable at the sole option of the obligor thereon without
requiring the consent of the obligee to a date more than 12 months after the
date of the creation of such indebtedness.
Section 305. EXPIRATION OF RESTRICTIONS ON LIENS AND RESTRICTIONS ON
SALE AND LEASEBACK TRANSACTIONS. Notwithstanding anything to the contrary
herein, on the date (the "Termination Date") (and continuing thereafter) on
which there remains outstanding, in the aggregate, no more than $200,000,000 in
principal amount of Long-Term Indebtedness, the covenants of the Company set
forth in Sections 303 and 304 hereof shall terminate and the Company shall no
longer be subject to the covenants set forth in such Sections.
ARTICLE FOUR
Optional Redemption of the Notes
Section 401. REDEMPTION PRICE.
(a) The Company shall have the right to redeem the Notes, in whole or
in part, at its option at any time from time to time at a price equal to (i)
100% of the principal amount thereof plus (ii) accrued and unpaid interest
thereon, if any, including Additional Interest, if any, to but excluding
-14-
<PAGE>
the Redemption Date plus (iii) the Make-Whole Premium, if any (collectively,
the "Redemption Price").
(b) The amount of the Make-Whole Premium with respect to any Note (or
portion thereof) to be redeemed will be equal to the excess, if any, of: (i) the
sum of the present values, calculated as of the Redemption Date, of: (A) each
interest payment that, but for such redemption, would have been payable on the
Note (or portion thereof) being redeemed on each Interest Payment Date occurring
after the Redemption Date (excluding any accrued and unpaid interest for the
period prior to the Redemption Date); and (B) the principal amount that, but for
such redemption, would have been payable at the Maturity Date (or portion
thereof) being redeemed; over (ii) the principal amount of the Note (or portion
thereof) being redeemed. The present values of interest and principal payments
referred to in clause (i) above will be determined in accordance with generally
accepted principles of financial analysis. Such present values will be
calculated by discounting the amount of each payment of interest or principal
from the date that each such payment would have been payable, but for the
redemption, to the Redemption Date at a discount rate equal to the Comparable
Treasury Yield (as defined below) plus 25 basis points.
(c) The Make-Whole Premium shall be calculated by an independent
investment banking institution of national standing appointed by the Company;
PROVIDED, that if the Company fails to make such appointment at least 45
Business Days prior to the Redemption Date, or if the institution so appointed
is unwilling or unable to make such calculation, such calculation shall be made
by Banc of America Securities LLC, or, if such firm is unwilling or unable to
make such calculation, by an independent investment banking institution of
national standing appointed by the Company (in any such case, an "Independent
Investment Banker").
Section 402. MAKE-WHOLE PREMIUM.
(a) For purposes of determining the Make-Whole Premium, "Comparable
Treasury Yield" means a rate of interest per annum equal to the weekly average
yield to maturity of United States Treasury Securities that have a constant
maturity that corresponds to the remaining term to maturity of the Notes,
calculated to the nearest 1/12th of a year (the "Remaining Term"). The
Comparable Treasury Yield shall be determined as of the third Business Day
immediately preceding the applicable Redemption Date.
(b) The weekly average yields of United States Treasury Securities
shall be determined by reference to the most recent statistical release
published by the Federal Reserve Bank of New York and designated "H.15 (519)
Selected Interest Rates" or any successor release (the "H.15 Statistical
Release"). If the H.15 Statistical Release sets forth a weekly average yield for
United States Treasury Securities having a constant maturity that is the same as
the Remaining Term, then the Comparable Treasury Yield shall be equal to such
weekly average yield. In all other cases, the Comparable Treasury Yield shall be
calculated by interpolation, on a straight-line basis, between the weekly
average yields on the United States Treasury Securities that have a constant
maturity closest to and greater than the Remaining Term and the United States
Treasury Securities that have a
-15-
<PAGE>
constant maturity closest to and less than the Remaining Term (in each case
as set forth in the H.15 Statistical Release). Any weekly average yields so
calculated by interpolation shall be rounded to the nearest 1/100th of 1%,
with any figure of 1/200th of 1% or above being rounded upward. If weekly
average yields for United States Treasury Securities are not available in the
H.15 Statistical Release or otherwise, then the Comparable Treasury Yield
shall be calculated by interpolation of comparable rates selected by the
Independent Investment Banker.
Section 403. PARTIAL REDEMPTION. If the Company redeems the Notes in
part pursuant to this Article Four, the Trustee shall select the Notes to be
redeemed on a pro rata basis or by lot or by such other method that the Trustee
in its sole discretion deems fair and appropriate. The Company shall redeem
Notes pursuant to this Article Four in multiples of $1,000 in original principal
amount. A new Note in principal amount equal to the unredeemed portion of the
original Note shall be issued upon cancellation of the original Note.
Section 404. NOTICE OF OPTIONAL REDEMPTION. If the Company elects to
exercise its right to redeem all or some of the Notes pursuant to this Article
Four, the Company or the Trustee shall mail a notice of such redemption to each
Holder of a Note that is to be redeemed not less than 30 days and not more than
60 days before the Redemption Date. If any Note is to be redeemed in part only,
the notice of redemption shall state the portion of the principal amount to be
redeemed.
ARTICLE FIVE
Restrictions on Transfer
Section 501. TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF NOTES IN DEFINITIVE FORM. In
addition to the requirements set forth in Section 305 of the Original Indenture,
Notes in definitive form that are Transfer Restricted Securities presented or
surrendered for registration of transfer or exchange pursuant to Section 305 of
the Original Indenture shall be accompanied by the following additional
information and documents, as applicable, upon which the Security Registrar may
conclusively rely:
(i) if such Transfer Restricted Securities are being
delivered to the Security Registrar by a Holder for registration in
the name of such Holder, without transfer, a certification from such
Holder to that effect (in substantially the form of EXHIBIT B hereto);
or
(ii) if such Transfer Restricted Securities are being
transferred (1) to a Qualified Institutional Buyer in accordance with
Rule 144A under the Securities Act or (2) pursuant to an exemption from
registration in accordance with Rule 144 under the Securities Act (and
based upon an opinion of counsel if the Company or the Trustee so
requests) or (3) pursuant to an effective registration statement under
the Securities Act, a certification to that effect from such Holder (in
substantially the form of EXHIBIT B hereto); or
-16-
<PAGE>
(iii) if such Transfer Restricted Securities are being
transferred to an Institutional Accredited Investor pursuant to a
private placement exemption from the registration requirements of the
Securities Act, a certification to that effect from such Holder (in
substantially the form of EXHIBIT B hereto) and a certification from
the applicable transferee (in substantially the form of EXHIBIT C
hereto) and an opinion of counsel to that effect if the Company or the
Trustee so requests; or
(iv) if such Transfer Restricted Securities are being
transferred to a Non-U.S. Person pursuant to an exemption from
registration in accordance with Rule 904 of Regulation S under the
Securities Act, certifications to that effect from such transferor (in
substantially the form of EXHIBITS B and D hereto) and an opinion of
counsel to that effect if the Company or the Trustee so requests; or
(v) if such Transfer Restricted Securities are being
transferred in reliance on and in compliance with another exemption
from the registration requirements of the Securities Act, a
certification to that effect from such Holder (in substantially the
form of EXHIBIT B hereto) and an opinion of counsel to that effect if
the Company or the Trustee so requests.
(b) TRANSFER AND EXCHANGE OF THE NOTES.
(i) The transfer and exchange of Global Notes or beneficial interests
therein shall be effected through the Depositary, in accordance with
Section 305 of the Original Indenture and Article V hereof (including
the restrictions on transfer set forth therein and herein) and the
rules and procedures of the Depositary therefor, which shall include
restrictions on transfer comparable to those set forth therein and
herein to the extent required by the Securities Act.
(ii) The transfer and exchange of Global Notes or beneficial interests
therein for Certificated Notes (or vice versa) shall be effected
through the Trustee and the Depositary, as the case may be, in
accordance with Section 305 of the Original Indenture and Article Five
hereof (including the restrictions on transfer set forth therein and
herein) and the rules and procedures of the Depositary therefor, which
shall include restrictions on transfer comparable to those set forth
therein and herein to the extent required by the Securities Act.
Section 502. LEGENDS.
(a) Except as permitted by Sections 502(b) and (c) hereof,
each certificate evidencing the Global Notes or Certificated Notes in definitive
form (and all Notes issued in exchange therefor or substitution thereof) shall
bear a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION, AND THIS
-17-
<PAGE>
SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN
ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH
EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH
THIS SECURITY IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED
THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER
OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THIS
SECURITY AGREES FOR THE BENEFIT OF RELIANT ENERGY RESOURCES CORP.
THAT (A) PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE
DATE OF ORIGINAL ISSUANCE OF THIS SECURITY AND THE LAST DATE ON
WHICH RELIANT ENERGY RESOURCES CORP. OR ANY OF ITS AFFILIATES WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) OR
SUCH SHORTER PERIOD AS MAY BE PRESCRIBED BY RULE 144(K), OR ANY
SUCCESSOR PROVISION THEREOF, UNDER THE SECURITIES ACT (THE "RESALE
RESTRICTION TERMINATION DATE"), THIS SECURITY MAY BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED ONLY (1)(a) FOR SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (B) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (C) PURSUANT
TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES IN TRANSACTIONS MEETING THE REQUIREMENTS OF REGULATION S
UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF ANOTHER INSTITUTIONAL ACCREDITED INVESTOR FOR
INVESTMENT PURPOSES, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF
SECURITIES OF THIS SERIES OF $250,000, AND NOT WITH A VIEW TO, OR
FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, PROVIDED THAT, PRIOR TO THE TRANSFER, SUCH
INSTITUTIONAL ACCREDITED INVESTOR FURNISHES THE TRUSTEE WITH A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE), OR (E) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM
-18-
<PAGE>
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON
AN OPINION OF COUNSEL IF RELIANT ENERGY RESOURCES CORP. SO
REQUESTS), SO LONG AS, PRIOR TO ANY OFFER, SALE OR TRANSFER OF THIS
SECURITY PURSUANT TO CLAUSE (C), (D) OR (E) ABOVE, THE SECURITY
REGISTRAR RECEIVES A CERTIFICATION OF THE TRANSFEROR AND AN OPINION
OF COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
ACT, (2) TO RELIANT ENERGY RESOURCES CORP. OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER FROM
IT OF THIS SECURITY OF THE RESALE RESTRICTION SET FORTH IN (A)
ABOVE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE OR SUCH EARLIER TIME
AS DETERMINED BY RELIANT ENERGY RESOURCES CORP. IN ACCORDANCE WITH
APPLICABLE LAW.
Each certificate evidencing the Global Notes also shall bear the legend
specified for Global Notes in the form of Note attached hereto as EXHIBIT A.
(b) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a Global
Note) pursuant to Rule 144 under the Securities Act or an effective registration
statement under the Securities Act, which shall be certified to the Trustee and
Security Registrar upon which each may conclusively rely:
(i) in the case of any Transfer Restricted Security
represented by a Certificated Note, the Security Registrar shall permit
the Holder thereof to exchange such Transfer Restricted Security for a
Certificated Note that does not bear the legend set forth in Section
502(a) hereof and rescind any restriction on the transfer of such
Transfer Restricted Security; and
(ii) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted Security shall
not be required to bear the legend set forth in Section 502(a) hereof
if all other interests in such Global Note have been or are
concurrently being sold or transferred pursuant to Rule 144 under the
Securities Act or pursuant to an effective registration statement under
the Securities Act.
(c) Notwithstanding the foregoing, upon consummation of the
Exchange Offer, the Company shall issue and, upon receipt of a Company Order in
accordance with Section 303 of the Original Indenture, the Trustee shall
authenticate Series B Notes in exchange for Series A Notes accepted for exchange
in the Exchange Offer, which Series B Notes shall not bear the legend set
-19-
<PAGE>
forth in Section 502(a) hereof and shall not provide for Additional Interest,
and the Security Registrar shall rescind any restriction on the transfer of
such Notes, in each case unless the Holder of such Series A Notes (A) is a
broker-dealer tendering Series A Notes acquired directly from the Company or
an "affiliate" (as defined in Rule 144 under the Securities Act) of the
Company for its own account, (B) is a Person who has an arrangement or
understanding with any Person to participate in the "distribution" (within
the meaning of the Securities Act) of the Series B Notes, (C) is a Person who
is an "affiliate" (as defined in Rule 144 under the Securities Act) of the
Company or (D) will not be acquiring the Series B Notes in the ordinary
course of such Holder's business. The Company shall identify to the Trustee
such Holders of the Notes in a written certification signed by an Officer of
the Company and, absent certification from the Company to such effect, the
Trustee shall assume that there are no such Holders.
Section 503. REGISTRATION RIGHTS AGREEMENT.
The Company shall perform its obligations under the
Registration Rights Agreement and shall comply in all material respects with the
terms and conditions contained therein including, without limitation, the
payment of Additional Interest.
ARTICLE SIX
Miscellaneous Provisions
Section 6.01. The Indenture, as supplemented and amended by this
Supplemental Indenture No. 3, is in all respects hereby adopted, ratified and
confirmed.
Section 6.02. This Supplemental Indenture No. 3 may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 6.03. THIS SUPPLEMENTAL INDENTURE NO. 3 AND EACH NOTE SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
Section 6.04. If any provision in this Supplemental Indenture No. 3
limits, qualifies or conflicts with another provision hereof which is required
to be included herein by any provisions of the Trust Indenture Act, such
required provision shall control.
-20-
<PAGE>
Section 6.05. In case any provision in this Supplemental Indenture No.
3 or the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
-21-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture No. 3 to be duly executed, as of the day and year first written above.
RELIANT ENERGY RESOURCES CORP.
By: /s/ Marc Kilbride
----------------------------------------
Name: Marc Kilbride
Title: Treasurer
Attest:
/s/ Richard Dauphin
----------------------------
Name: Richard Dauphin
Title: Assistant Treasurer
(SEAL)
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Trustee
By: /s/ Debbie Miller
----------------------------------------
Name: Debbie Miller
Title: Vice President and Trust Officer
(SEAL)
-22-
<PAGE>
EXHIBIT A
[FORM OF FACE OF SECURITY]
[Rule 144A Global Note]
[Regulation S Global Note]
[Certificated Note]
[IF THIS SECURITY IS TO BE A GLOBAL NOTE -] THIS SECURITY IS A GLOBAL SECURITY
WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY.
[For as long as this Global Security is deposited with or on behalf of The
Depository Trust Company it shall bear the following legend.] Unless this
certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to Reliant Energy Resources Corp. or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
RELIANT ENERGY RESOURCES CORP.
8.125% Notes due 2005, Series [A/B]
No. __________ $ __________
CUSIP No. ______
RELIANT ENERGY RESOURCES CORP., a corporation duly organized
and existing under the laws of the State of Delaware (herein called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to
----------------
* Reference is made to Schedule A attached hereto with respect to decreases and
increases in the aggregate principal amount of Securities evidenced by this
Certificate.
A-1
<PAGE>
pay to_______________, or registered assigns, the principal sum of ____________
Dollars on July 15, 2005, and to pay interest thereon from July 6, 2000 or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semi-annually on January 15 and July 15 in each year,
commencing January 15, 2001, at the rate of 8.125% per annum, until the
principal hereof is paid or made available for payment, PROVIDED that any
principal and premium, and any such installment of interest, which is overdue
shall bear interest at the rate of 8.125% per annum (to the extent permitted
by applicable law), from the dates such amounts are due until they are paid
or made available for payment, and such interest shall be payable on demand.
The amount of interest payable for any period shall be computed on the basis
of twelve 30-day months and a 360-day year. The amount of interest payable
for any partial period shall be computed on the basis of a 360-day year of
twelve 30-day months and the days elapsed in any partial month. In the event
that any date on which interest is payable on this Security is not a Business
Day, then a payment of the interest payable on such date will be made on the
next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay) with the same force and effect as
if made on the date the payment was originally payable. A "Business Day"
shall mean, when used with respect to any Place of Payment, each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in that Place of Payment are authorized or obligated by law or
executive order to close. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the January 1 or July 1 (whether
or not a Business Day), as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid or duly provided for
shall forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange or automated quotation system on which the Securities
of this series may be listed or traded, and upon such notice as may be
required by such exchange or automated quotation system, all as more fully
provided in said Indenture.
Payment of the principal of (and premium, if any) and any such
interest on this Security will be made at the Corporate Trust Office of the
Trustee, in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; PROVIDED,
HOWEVER, that at the option of the Company payment of interest may be made (i)
by check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register or (ii) by wire transfer in immediately
available funds at such place and to such account as may be designated in
writing by the Person entitled thereto as specified in the Security Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
A-2
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION, AND THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED
UNDER THE INDENTURE PURSUANT TO WHICH THIS SECURITY IS ISSUED) AND IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER JURISDICTION. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE
SECURITIES ACT. THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF RELIANT
ENERGY RESOURCES CORP. THAT (A) PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE
LATER OF THE DATE OF ORIGINAL ISSUANCE OF THIS SECURITY AND THE LAST DATE ON
WHICH RELIANT ENERGY RESOURCES CORP. OR ANY OF ITS AFFILIATES WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) OR SUCH SHORTER PERIOD AS
MAY BE PRESCRIBED BY RULE 144(K), OR ANY SUCCESSOR PROVISION THEREOF, UNDER THE
SECURITIES ACT (THE "RESALE RESTRICTION TERMINATION DATE"), THIS SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(A) FOR SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (C) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES IN TRANSACTIONS MEETING THE REQUIREMENTS OF REGULATION
S UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER
INSTITUTIONAL ACCREDITED INVESTOR FOR INVESTMENT PURPOSES, IN EACH CASE IN A
MINIMUM PRINCIPAL AMOUNT OF SECURITIES OF THIS SERIES OF $250,000, AND NOT WITH
A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, PROVIDED THAT, PRIOR TO THE TRANSFER, SUCH
INSTITUTIONAL ACCREDITED INVESTOR FURNISHES THE TRUSTEE WITH A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF
THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE), OR (E) IN
ACCORDANCE
A-3
<PAGE>
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (AND BASED UPON AN OPINION OF COUNSEL IF RELIANT ENERGY RESOURCES CORP.
SO REQUESTS), SO LONG AS, PRIOR TO ANY OFFER, SALE OR TRANSFER OF THIS
SECURITY PURSUANT TO CLAUSE (C), (D) OR (E) ABOVE, THE SECURITY REGISTRAR
RECEIVES A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO RELIANT ENERGY
RESOURCES CORP. OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND,
IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER FROM IT
OF THIS SECURITY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE OR SUCH EARLIER TIME AS DETERMINED BY RELIANT
ENERGY RESOURCES CORP. IN ACCORDANCE WITH APPLICABLE LAW.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
A-4
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: RELIANT ENERGY RESOURCES CORP.
---------------
By:
------------------------------
Name:
(SEAL) Title:
Attest:
---------------------
Name:
Title:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, As Trustee
Dated:
---------------
By:
-------------------------------
Authorized Signatory
A-5
<PAGE>
[FORM OF REVERSE OF SECURITY]
This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities"), issued and to be issued in one
or more series under an Indenture, dated as of February 1, 1998 (herein called
the "Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and Chase Bank of Texas, National Association,
as Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is one
of the series designated on the face hereof, initially limited in aggregate
principal amount to $325,000,000; PROVIDED, HOWEVER, that the authorized
aggregate principal amount of the Securities may be increased above such amount
by a Board Resolution to such effect.
The Company shall have the right to redeem the Securities of
this series, in whole or in part, at its option at any time from time to time at
a price equal to (i) 100% of the principal amount thereof plus (ii) accrued and
unpaid interest thereon, if any, including Additional Interest, if any, to (but
excluding) the Redemption Date plus (iii) the Make-Whole Premium, if any.
The amount of the Make-Whole Premium with respect to any
Security of this Series (or portion thereof) to be redeemed will be equal to the
excess, if any, of: (i) the sum of the present values, calculated as of the
Redemption Date, of: (A) each interest payment that, but for such redemption,
would have been payable on the Securities of this series (or portion thereof)
being redeemed on each Interest Payment Date occurring after the Redemption Date
(excluding any accrued and unpaid interest for the period prior to the
Redemption Date); and (B) the principal amount that, but for such redemption,
would have been payable at the Maturity Date (or portion thereof) being
redeemed; over (ii) the principal amount of the Securities of this series (or
portion thereof) being redeemed. The present values of interest and principal
payments referred to in clause (i) above will be determined in accordance with
generally accepted principles of financial analysis. Such present values will be
calculated by discounting the amount of each payment of interest or principal
from the date that each such payment would have been payable, but for the
redemption, to the Redemption Date at a discount rate equal to the Comparable
Treasury Yield (as defined below) plus 25 basis points.
For purposes of determining the Make-Whole Premium, "Comparable
Treasury Yield" means a rate of interest per annum equal to the weekly
average yield to maturity of United States Treasury Securities that have a
constant maturity that corresponds to the remaining term to maturity of the
Securities of this series, calculated to the nearest 1/12th of a year (the
"Remaining Term"). The Comparable Treasury Yield shall be determined as of
the third Business Day immediately preceding the applicable Redemption Date.
The weekly average yields of United States Treasury Securities
shall be determined
A-6
<PAGE>
by reference to the most recent statistical release published by the Federal
Reserve Bank of New York and designated "H.15 (519) Selected Interest Rates" or
any successor release (the "H.15 Statistical Release"). If the H.15 Statistical
Release sets forth a weekly average yield for United States Treasury Securities
having a constant maturity that is the same as the Remaining Term, then the
Comparable Treasury Yield shall be equal to such weekly average yield. In all
other cases, the Comparable Treasury Yield shall be calculated by interpolation,
on a straight-line basis, between the weekly average yields on the United States
Treasury Securities that have a constant maturity closest to and greater than
the Remaining Term and the United States Treasury Securities that have a
constant maturity closest to and less than the Remaining Term (in each case as
set forth in the H.15 Statistical Release). Any weekly average yields so
calculated by interpolation shall be rounded to the nearest 1/100th of 1%, with
any figure of 1/200th of 1% or above being rounded upward. If weekly average
yields for United States Treasury Securities are not available in the H.15
Statistical Release or otherwise, then the Comparable Treasury Yield shall be
calculated by interpolation of comparable rates selected by the Independent
Investment Banker.
The Securities of this series are not entitled to the benefit
of any sinking fund.
The Indenture contains provisions for satisfaction and
discharge of the entire indebtedness of this Security upon compliance by the
Company with certain conditions set forth in the Indenture.
The Indenture contains provisions for defeasance at any time
of the entire indebtedness of this Security or certain restrictive covenants and
Events of Default with respect to this Security, in each case upon compliance
with certain conditions set forth in the Indenture.
If an Event of Default with respect to Securities of this
series shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of a majority in principal amount of
the Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture,
the Holder of this
A-7
<PAGE>
Security shall not have the right to institute any proceeding with respect to
the Indenture or for the appointment of a receiver or trustee or for any
other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal
amount of the Securities of this series at the time Outstanding shall have
made written request to the Trustee to institute proceedings in respect of
such Event of Default as Trustee and offered the Trustee reasonable
indemnity, and the Trustee shall not have received from the Holders of a
majority in principal amount of Securities of this series at the time
Outstanding a direction inconsistent with such request, and shall have failed
to institute any such proceeding, for 60 days after receipt of such notice,
request and offer of indemnity. The foregoing shall not apply to any suit
instituted by the Holder of this Security for the enforcement of any payment
of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any
premium and interest on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities
of this series and of like tenor, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee
or transferees. No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Securities of this series are issuable only in registered
form without coupons in denominations of $1,000 and any integral multiple
thereof, except pursuant to Section 208 of Supplemental Indenture No. 3 to the
Indenture. As provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor of a
different authorized denomination, as requested by the Holder surrendering the
same.
A-8
<PAGE>
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
By its acceptance of this Security bearing a legend
restricting transfer, each Holder of this Security acknowledges the restrictions
on transfer of this Security set forth in the Indenture and such legend and
agrees that it will transfer this Security only as provided in the Indenture. In
addition to the rights provided to Holders of this Security under the Indenture,
Holders shall have all the rights set forth in that certain Registration Rights
Agreement, dated as of July 6, 2000, among the Company and the Initial
Purchasers, including without limitation the right to receive Additional
Interest as described in Section 2.5 thereof.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
A-9
<PAGE>
SCHEDULE A
SCHEDULE OF ADJUSTMENTS
The initial aggregate principal amount of Securities evidenced
by the Certificate to which this Schedule is attached is _______________. The
notations on the following table evidence decreases and increases in the
aggregate principal amount of Securities evidenced by such Certificate.
<TABLE>
<CAPTION>
Aggregate Principal
Decrease in Aggregate Increase in Aggregate Amount of Securities Notation by
Date of Principal Amount of Principal Amount of Remaining After Such Security
Adjustment Securities Securities Decrease or Increase Registrar
---------- --------------------- --------------------- -------------------- -----------
<S> <C> <C> <C> <C>
</TABLE>
A-10
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 8.125% Notes due 2005, Series A of Reliant Energy Resources Corp.
(the "Company")
This Certificate relates to $_____ principal amount of
Notes held in *______ book-entry or *______ definitive form by
_____________________ (the "Transferor").
The Transferor has requested the Trustee by written order
to exchange or register the transfer of a Note or Notes.
In connection with such request and in respect of each such
Note, the Transferor does hereby certify that the Transferor is familiar with
the Indenture, dated as of February 1, 1998 (as amended or supplemented to
date, the "Indenture"), between the Company and Chase Bank of Texas, National
Association (the "Trustee") relating to the above-captioned Notes and that
the transfer of this Note does not require registration under the Securities
Act (as defined below) because:*
/ / Such Note is being acquired for the Transferor's own
account without transfer.
/ / Such Note is being transferred (i) to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act of
1933, as amended (the "Securities Act")), in accordance with Rule 144A under
the Securities Act or (ii) pursuant to an exemption from registration in
accordance with Rule 904 of Regulation S under the Securities Act (and in the
case of clause (ii), based upon an opinion of counsel if the Company or the
Trustee so requests, together with a certification in substantially the form
of Exhibit D to Supplemental Indenture No. 3 to the Indenture).
/ / Such Note is being transferred (i) pursuant to an exemption
from registration in accordance with Rule 144 under the Securities Act (and
based upon an opinion of counsel if the Company or the Trustee so requests)
or (ii) pursuant to an effective registration statement under the Securities
Act.
/ / Such Note is being transferred to an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
of Regulation D under the Securities Act pursuant to a private placement
exemption from the registration requirements of the Securities Act (and based
upon an opinion of counsel if the Company or the Trustee so requests),
together with a certification in substantially the form of Exhibit C to
Supplemental Indenture No. 3 the Indenture, and, to the knowledge of the
Transferor, such institutional accredited investor to whom such Note is to be
transferred is not an "affiliate" (as defined in Rule 144 under the
Securities Act) of the Company.
-----------------------
* Fill in blank or check appropriate box, as applicable.
B-1
<PAGE>
/ / Such Note is being transferred in reliance on and in
compliance with another exemption from the registration requirements of the
Securities Act (and based upon an opinion of counsel if the Company or the
Trustee so requests).
You are entitled to rely upon this certificate and you are
irrevocably authorized to produce this certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
----------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-------------------------------------
Name:
Title:
Address:
Date:
--------------------------
B-2
<PAGE>
EXHIBIT C
FORM OF TRANSFEREE LETTER OF REPRESENTATION
TO BE DELIVERED BY INSTITUTIONAL ACCREDITED INVESTORS
Reliant Energy Resources Corp.
1111 Louisiana
Houston, Texas 77002
Attention: General Counsel
Ladies and Gentlemen:
In connection with our proposed purchase of $ __________
aggregate principal amount of 8.125% Notes due 2005, Series A (the "Notes")
of Reliant Energy Resources Corp., a Delaware corporation (the "Company"):
1. We understand that the Notes have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or under any
other applicable securities laws, and may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any
investor account for which we are purchasing the Notes to offer, sell or
otherwise transfer such Notes prior to (x) the date which is two years after
July 6, 2000 and the last date on which the Company or any affiliate of the
Company was the owner of such Notes (or any predecessor thereto), or (y) the
expiration of such shorter period as may be prescribed by Rule 144(k) or any
successor provision thereof, under the Securities Act (the "Resale
Restriction Termination Date") only (a) to the Company, (b) pursuant to a
registration statement that has been declared effective by the Securities and
Exchange Commission (the "SEC") under the Securities Act, (c) for so long as
the Notes are eligible for resale pursuant to Rule 144A under the Securities
Act, to a person we reasonably believe is a qualified institutional buyer
under Rule 144A (a "QIB") in a transaction meeting the requirements of Rule
144A, (d) pursuant to offers and sales to non-U.S. persons that occur outside
the United States in transactions meeting the requirements of Regulation S
under the Securities Act, (e) to an institutional "accredited investor"
within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under
the Securities Act (an "Institutional Accredited Investor") purchasing the
Notes for its own account or for the account of another Institutional
Accredited Investor, in each case in a minimum principal amount of the Notes
of $250,000, for investment purposes and not with a view to, or for offer or
sale in connection with, any distribution thereof in violation of the
Securities Act or (f) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirement of law that the disposition of our
property and the property of such investor account or accounts be at all
times within our or their control and to compliance with any applicable state
securities laws. The foregoing restrictions on resale will not apply
subsequent to the Resale Restriction Termination Date. If any resale or other
transfer of the Notes is proposed to be made pursuant to clause (e) above
prior to the Resale Restriction Termination Date, the transferor shall
deliver to the Company and the Trustee a letter from
C-1
<PAGE>
the transferee substantially in the form of this letter, which shall provide,
among other things, that the transferee is an Institutional Accredited
Investor that is acquiring such Notes for investment purposes and not with a
view to, or for offer or sale in connection with, any distribution in
violation of the Securities Act. We acknowledge that the Company and the
Trustee reserve the right prior to any offer, sale or other transfer pursuant
to clause (d), (e) or (f) prior to the Resale Restriction Termination Date to
require the delivery of an opinion of counsel, certifications and/or other
information satisfactory to the Company and the Trustee.
2. We are an Institutional Accredited Investor purchasing for
our own account or for the account of another Institutional Accredited
Investor.
3. We are acquiring the Notes purchased by us for our own
account, or for one or more accounts as to each of which we exercise sole
investment discretion, for investment purposes and not with a view to, or for
offer or sale in connection with any distribution in violation of, the
Securities Act. We have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of
investment in the Notes. We invest in or purchase securities similar to the
Notes in the normal course of our business. We are aware that we, and all
accounts for which we are acting, may be required to bear the economic risk
of an investment in the Notes for an indefinite period of time, and we, and
all accounts for which we are acting, are able to bear such risk for an
indefinite period.
4. You are entitled to rely upon this letter and you are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
Very truly yours,
Name of Transferee:
--------------------
By:
------------------------------------
Date:
----------------------------------
Upon transfer the Notes would be registered in the name of
the new beneficial owner as follows:
Name:
----------------------------
Address:
-------------------------
-------------------------
Taxpayer ID No:
------------------
C-2
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
-------------, ----
Chase Bank of Texas, National Association, as Security Registrar
600 Travis, Suite 1150
Houston, Texas 77002
Attention: Global Trust Services
Ladies and Gentlemen:
In connection with our proposed sale of certain 8.125%
Notes due 2005, Series A (the "Notes") of Reliant Energy Resources Corp. (the
"Company"), we represent that:
(i) the offer or sale of the Notes was made in an
"offshore transaction";
(ii) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States;
(iii) no directed selling efforts have been made by us in
the United States in contravention of the requirements of Rule 903(a)
or Rule 904(a) of Regulation S under the U.S. Securities Act of 1933,
as applicable;
(iv) if this transfer of the Note is being made prior to
the expiration of the Distribution Compliance Period, such interest
that is being transferred is held immediately thereafter through The
Euroclear System or Clearstream Banking, societe anonyme; and
(v) the transaction is not part of a plan or scheme to
evade the registration requirements of the U.S. Securities Act of 1933.
D-1
<PAGE>
You and the Company are entitled to rely upon this letter
and you are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S under the U.S.
Securities Act of 1933.
Very truly yours,
--------------------------------------
Name of Transferor:
By:
-----------------------------------
Name:
Title:
Address:
D-2
