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EXHIBIT 3
STATEMENT OF RESOLUTION ESTABLISHING SERIES OF SHARES
designated
SERIES K PREFERENCE STOCK
of
RELIANT ENERGY, INCORPORATED
Pursuant to Article 2.13D of
the Texas Business Corporation Act
Pursuant to the provisions of Article 2.13D of the Texas Business
Corporation Act, the undersigned corporation submits the following statement for
the purpose of establishing and designating a series of shares of its Preference
Stock, without par value, designated "Series K Preference Stock" and fixing and
determining the relative rights and preferences thereof:
1. The name of the corporation is RELIANT ENERGY, INCORPORATED (the
"Company").
2. The following resolution establishing and designating a series of
shares and fixing and determining the relative rights and preferences thereof,
was duly adopted by all necessary action on the part of the Company on August
18, 2000:
RESOLVED, that pursuant to the authority vested in the Finance
Committee and the Preference Stock Committee, acting separately and/or
concurrently, by the Board of Directors of this Company in accordance with
the provisions of the Restated Articles of Incorporation, a series of
Preference Stock, without par value, of the Company be and hereby is
created, and that the designation and number of shares thereof and the
preferences, limitations and relative rights, including voting rights, of
the shares of such series and the qualifications, limitations and
restrictions thereof are as follows:
SERIES K PREFERENCE STOCK
1. Designation and Amount. There shall be a series of Preference Stock
that shall be designated as "Series K Preference Stock," and the number of
shares constituting such series shall be 11,580. Such number of shares may be
increased or decreased by resolution of the Finance Committee and the Preference
Stock Committee, acting separately and/or concurrently; provided, however, that
no decrease shall reduce the number of shares of Series K Preference Stock to
less than the number of shares then issued and outstanding plus the number of
shares issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Company.
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2. Certain Defined Terms.
Capitalized terms not otherwise defined herein shall have the
respective meanings ascribed to them in that certain $1,100,000,000 Senior C
Credit Agreement (the "Credit Agreement") to be entered into among Houston
Industries FinanceCo, LP, a Delaware limited partnership to be the Borrower
thereunder, the Company, the lenders parties thereto and The Chase Manhattan
Bank, as the Administrative Agent, and Chase Securities Inc. as Lead Arranger
and Sole Book Manager thereunder on or after August 24, 2000. In addition, the
following terms are used herein as defined below:
(i) "Computed Dividend Portion" means, within any Dividend Interval
Period, an amount equal to the interest expense accrued on the indebtedness
for borrowed money of the Borrower from the prior Dividend Payment Date to
the Determination Date for the current Dividend Interval Period.
(ii) "Determination Date" means the date occurring five Business
Days prior to a Dividend Declaration Date.
(iii) "Dividend" means the dividend on the Series K Preference Stock
declared by the Company's Board of Directors with respect to a Dividend
Interval Period.
(iv) "Dividend Declaration Amount" means, as of any Determination
Date, the Preliminary Dividend Amount, less the sum of (a) the Interest
Reconciliation Amount, (b) the Support Agreement Reconciliation Amount, and
(c) the Other Sources Reconciliation Amount. The Dividend Declaration Amount
may be greater than or less than the Preliminary Dividend Amount.
(v) "Dividend Declaration Date" means the date on which Dividends on
the Series K Preference Stock are declared (or would have been declared but
for the fact that the amount of the Dividend determined in accordance
herewith would have been zero) during a Dividend Interval Period by the
Company's Board of Directors.
(vi) "Dividend Interval Period" means the period beginning on a
Dividend Payment Date and extending to the next Dividend Payment Date.
(vii) "Dividend Payment Date" means the date occurring five Business
Days after a Dividend Declaration Date.
(viii) "Interest Reconciliation Amount" means an amount equal to (a)
the Preliminary Dividend Amount computed for the prior Dividend Interval
Period, less (b) the actual interest expense accrued on the indebtedness for
borrowed money of the Borrower during such period.
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(ix) "Other Sources Reconciliation Amount" means the sum of (a) to
the extent applied to pay interest on the indebtedness for borrowed money of
the Borrower or available in cash on the current Determination Date
therefor, the amount of income or cash proceeds received by the Borrower
from sources other than pursuant to the Support Agreement (including,
without limitation, interest received on loans to Affiliates), and (b) the
cash proceeds of new borrowings under the Credit Agreement or any other
Permitted Facility that are utilized to pay interest on outstanding
borrowings thereunder, from the Determination Date occurring in the Prior
Dividend Interval Period to the Determination Date occurring in the current
Dividend Interval Period.
(x) "Preliminary Dividend Amount" means the sum of the Computed
Dividend Portion and the Projected Dividend Portion.
(xi) "Projected Dividend Portion" means, within any Dividend
Interval Period, an amount equal to the projected interest expense that will
be accrued on the indebtedness for borrowed money of the Borrower from the
Determination Date for such Dividend Interval Period to the Dividend Payment
Date.
(xii) "Support Agreement Reconciliation Amount" means the amount of
cash payments made pursuant to the Support Agreement by the Company to the
Borrower from the Determination Date occurring in the immediately prior
Dividend Interval Period to the Determination Date occurring in the current
Dividend Interval Period.
3. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of (i) any
shares of any series of Preference Stock ranking prior and superior to the
shares of Series K Preference Stock with respect to dividends and (ii) any
shares of Preferred Stock, the holders of shares of Series K Preference Stock,
in preference to the holders of shares of any class or series of stock of the
Company ranking junior to the Series K Preference Stock, shall be entitled to
receive the amounts set forth below, when, as and if declared by the Board of
Directors in the manner described below out of assets of the Company legally
available for the purpose:
(i) On every regularly scheduled meeting of the Company's Board of
Directors while any shares of Series K Preference Stock remain outstanding,
the Board of Directors shall declare an aggregate Dividend (if a positive
amount) equal to the lesser of (a) the Dividend Declaration Amount or (b)
the Excess Cash Flow projected to be available as of the applicable Dividend
Payment Date with respect to the then current Dividend Interval Period.
(ii) If, with respect to any Dividend Interval Period, the
aggregate Dividend declared by the Company's Board of Directors is less than
the Dividend Declaration Amount for such Dividend Interval Period because
the Excess Cash Flow projected to be available as of the applicable Dividend
Payment Date is less than the Dividend Declaration Amount, the amount of
such deficiency shall be added to the Dividend Declaration Amount computed
for the next Dividend Interval Period and such aggregate amount shall become
the Dividend Declaration Amount for such period. The Dividend for such
succeeding Dividend Interval
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Period shall equal the Dividend Declaration Amount unless such amount would
exceed the Excess Cash Flow projected to be available as of the applicable
Dividend Payment Date, in which case the Dividend shall be the amount of the
projected Excess Cash Flow.
(iii) The aggregate Dividends paid on the shares of Series K
Preference Stock in accordance with this Section 3(A) shall be allocated pro
rata on a share-by-share basis among all such shares at the time
outstanding.
(B) Accrued but unpaid dividends shall not bear interest. The Board of
Directors may fix a record date for the determination of holders of shares of
Series K Preference Stock entitled to receive payment of a dividend or
distribution declared thereon.
4. Voting Rights. Except as otherwise required by law or the Restated
Articles of Incorporation of the Company or as otherwise provided herein, the
holders of shares of Series K Preference Stock shall have no voting rights.
5. Certain Restrictions. At any time when dividends or distributions
payable on the Series K Preference Stock as provided in Section 3 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series K Preference Stock
outstanding shall have been paid in full, the Company shall not:
(i) declare dividends on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series K Preference
Stock; or
(ii) declare dividends on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with
the Series K Preference Stock, except dividends declared ratably on the
Series K Preference Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled.
6. Reacquired Shares. Any shares of Series K Preference Stock purchased
or otherwise acquired by the Company in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preference Stock and
may be reissued as part of a new series of Preference Stock to be created by
resolution or resolutions of the Board of Directors, subject to any conditions
and restrictions on issuance set forth herein.
7. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Company, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series K Preference Stock unless, prior
thereto, the holders of shares of Series K Preference Stock shall have received
$100,000 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series K Liquidation Preference"). Following the
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payment of the full amount of the Series K Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series K Preference
Stock.
(B) In the event that there are not sufficient assets available to
permit payment in full of the Series K Liquidation Preference and the
liquidation preferences of all other series of Preference Stock, if any, that
rank on a parity with the Series K Preference Stock, then such remaining assets
shall be distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences.
(C) Neither the merger or consolidation of the Company into or with
another corporation nor the merger or consolidation of any other corporation
into or with the Company shall be deemed to be a liquidation, dissolution or
winding up of the Company within the meaning of this Section 7, but the sale,
lease or conveyance of all or substantially all of the Company's assets shall be
deemed to be a liquidation, dissolution or winding up of the Company within the
meaning of this Section 7.
8. Redemption.
(A) The Company, at its option, may redeem shares of the Series K
Preference Stock in whole at any time and in part from time to time, at a
redemption price equal to $100,000 per share plus, in the event all outstanding
shares of the Series K Preference Stock are to be redeemed, unpaid accumulated
dividends to the date of redemption.
(B) In the event that fewer than all the outstanding shares of the
Series K Preference Stock are to be redeemed, the number of shares to be
redeemed shall be determined by the Board of Directors and the shares to be
redeemed shall be determined by lot or pro rata as may be determined by the
Board of Directors or by any other method that may be determined by the Board of
Directors in its sole discretion to be equitable.
(C) Except to the extent notice is waived in accordance with applicable
law, notice of any such redemption shall be given by mailing to the holders of
the shares of Series K Preference Stock to be redeemed a notice of such
redemption, first class postage prepaid, not later than the twentieth day and
not earlier than the sixtieth day before the date fixed for redemption, at their
last address as the same shall appear upon the books of the Company. Each such
notice shall state: (i) the redemption date; (ii) the number of shares to be
redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on the close of
business on such redemption date. Any notice that is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the shareholder received such notice, and failure duly to give such notice by
mail, or any defect in such notice, to any holder of Series K Preference Stock
shall not affect the validity of the proceedings for the redemption of any other
shares of Series K Preference Stock that are to be redeemed. On or after the
date fixed for redemption as stated in such notice, each holder of the shares
called for redemption shall surrender the certificate evidencing such shares to
the Company at the place designated in such notice and shall thereupon be
entitled to receive payment of the
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redemption price. If fewer than all the shares represented by any such
surrendered certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
(D) The shares of Series K Preference Stock shall not be subject to the
operation of any purchase, retirement or sinking fund.
9. Ranking. The Series K Preference Stock shall rank junior to all
series of the Company's Preferred Stock and pari passu with all other series of
the Company's Preference Stock (other than any such series of Preference Stock
the terms of which shall provide otherwise) in respect to dividend and
liquidation rights and shall rank senior to the Common Stock as to such matters.
10. Amendment. At any time that any shares of Series K Preference Stock
are outstanding, the Restated Articles of Incorporation of the Company shall not
be amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series K Preference Stock so as to affect
them adversely without the affirmative vote of the holders of two-thirds or more
of the outstanding shares of Series K Preference Stock, voting separately as a
class.
11. Fractional Shares. Series K Preference Stock may be issued in
fractions of a share that shall entitle the holder, in proportion to such
holder's fractional shares, to exercise any voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series K Preference Stock.
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IN WITNESS WHEREOF, RELIANT ENERGY, INCORPORATED has caused this
Statement to be executed on its behalf by the undersigned officer this 22nd day
of August, 2000.
RELIANT ENERGY, INCORPORATED
/s/ MARC KILBRIDE
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Name: Marc Kilbride
Title: Treasurer
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