EXHIBIT 4.6
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RELIANT ENERGY, INCORPORATED
GUARANTEE AGREEMENT
REI TRUST I
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Dated as of February 26, 1999
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS
Section 1.01. Definitions.............................................. 1
ARTICLE 2 TRUST INDENTURE ACT
Section 2.01. Trust Indenture Act; Application......................... 5
Section 2.02. Lists of Holders of Preferred Securities................. 5
Section 2.03. Reports by the Guarantee Trustee......................... 6
Section 2.04. Periodic Reports to the Guarantee Trustee................ 6
Section 2.05. Evidence of Compliance with Conditions Precedent......... 6
Section 2.06. Events of Default; Waiver................................ 6
Section 2.07. Disclosure of Information................................ 7
Section 2.08. Conflicting Interest..................................... 7
ARTICLE 3 POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
Section 3.01. Powers and Duties of the Guarantee Trustee............... 7
Section 3.02. Certain Rights and Duties of the Guarantee Trustee....... 8
Section 3.03. Not Responsible for Recitals or Issuance of Guarantee.... 11
Section 3.04. The Guarantee Trustee May Own Preferred Securities....... 11
Section 3.05. Moneys Received by the Guarantee Trustee to Be
Held In Trust Without Interest........................... 11
Section 3.06. The Guarantee Trustee Entitled to Compensation,
Reimbursement and Indemnity.............................. 11
Section 3.07. Right of the Guarantee Trustee to Rely on
Certificate of Officers of the Guarantor Where No
Other Evidence Specifically Prescribed................... 12
ARTICLE 4 GUARANTEE TRUSTEE
Section 4.01. Qualifications........................................... 12
Section 4.02. Appointment, Removal and Resignation of the Guarantee
Trustee.................................................. 13
ARTICLE 5 GUARANTEE
Section 5.01. Guarantee................................................ 14
Section 5.02. Waiver of Notice......................................... 14
Section 5.03. Obligations Not Affected................................. 14
Section 5.04. Enforcement of Guarantee................................. 15
Section 5.05. Guarantee of Payment..................................... 16
Section 5.06. Subrogation.............................................. 16
Section 5.07. Independent Obligations.................................. 16
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ARTICLE 6 LIMITATION OF TRANSACTIONS; SUBORDINATION
Section 6.01. Limitation of Transactions............................... 16
Section 6.02. Subordination............................................ 17
ARTICLE 7 TERMINATION
Section 7.01. Termination.............................................. 18
ARTICLE 8 LIMITATION OF LIABILITY; INDEMNIFICATION
Section 8.01. Exculpation.............................................. 18
Section 8.02. Indemnification.......................................... 18
Section 8.03. Survive Termination...................................... 19
ARTICLE 9 MISCELLANEOUS
Section 9.01. Successors and Assigns................................... 19
Section 9.02. Amendments............................................... 19
Section 9.03. Notices.................................................. 19
Section 9.04. Genders.................................................. 20
Section 9.05. Benefit.................................................. 20
Section 9.06. Governing Law............................................ 20
Section 9.07. Counterparts............................................. 20
Section 9.08. Limited Liability........................................ 20
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GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of February 26, 1999, is executed and
delivered by Houston Industries Incorporated, d/b/a Reliant Energy,
Incorporated, a Texas corporation ("Reliant Energy" or the "Guarantor"), and The
Bank of New York, a New York banking corporation, as the initial Guarantee
Trustee (as defined herein) for the benefit of the Holders (as defined herein)
from time to time of the Preferred Securities (as defined herein) of REI Trust
I, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of February 26, 1999 among the trustees of the Issuer
named therein, Reliant Energy, as Sponsor, and the Holders from time to time of
preferred undivided beneficial interests in the assets of the Issuer, the Issuer
may issue up to $375,000,000 aggregate liquidation amount of its 7.20%
Preferred Trust Securities, Series C (the "Preferred Securities") representing
preferred undivided beneficial interests in the assets of the Issuer and having
the terms set forth in Exhibit B to the Declaration, of which $375,000,000
aggregate liquidation amount of Preferred Securities is being issued as of the
date hereof; and
WHEREAS, as incentive for the Holders to purchase Preferred Securities, the
Guarantor desires to irrevocably and unconditionally agree, to the extent set
forth herein, to pay to the Holders the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein;
and
NOW, THEREFORE, in consideration of the purchase by the initial purchasers
thereof of Preferred Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders from time to time.
ARTICLE 1
DEFINITIONS
Section 1.0. Definitions. (a) Capitalized terms used in this Guarantee
Agreement but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.01;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Commission" means the Securities and Exchange Commission.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer, having the terms set forth in
Exhibit C to the Declaration.
"Debentures" means the series of unsecured junior subordinated debentures
issued by the Guarantor under the Indenture to the Property Trustee and entitled
the "7.20% Junior Subordinated Debentures due 2048."
"Declaration" has the meaning set forth in the first WHEREAS clause above.
"Distributions" means the periodic distributions and other payments payable
to Holders in accordance with the terms of the Preferred Securities set forth in
Exhibit B to the Declaration.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee Agreement; provided, however, that,
except with respect to a default in payment of any Guarantee Payment, any such
default shall constitute an Event of Default only if the Guarantor shall have
received notice of such default and shall not have cured such default within 60
days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid
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or made by or on behalf of the Issuer: (i) any accumulated and unpaid
Distributions and the Redemption Price, including all accumulated and unpaid
Distributions to the date of redemption, with respect to the Preferred
Securities called for redemption by the Issuer but only if and to the extent
that in each case the Guarantor has made a payment to the Property Trustee of
interest or principal or premium, if any, on the Debentures and (ii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Issuer
(other than in connection with the distribution of Debentures to Holders in
exchange for Preferred Securities or the redemption of all the Preferred
Securities upon the maturity or redemption of the Debentures as provided in the
Declaration), the lesser of (a) the aggregate of the liquidation amount and all
accumulated and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Issuer has funds on hand legally available therefor,
and (b) the amount of assets of the Issuer remaining available for distribution
to Holders in liquidation of the Issuer as required by applicable law (in either
case, the "Liquidation Distribution").
"Guarantee Trustee" means The Bank of New York, a New York banking
corporation, until a Successor Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Guarantee Agreement, and
thereafter means each such Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of the
Issuer, of any Preferred Securities; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, and any officers, directors, shareholders, members, partners,
employees, representatives or agents of the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of February
15, 1999 between the Guarantor and The Bank of New York, as trustee, as
supplemented by Supplemental Indenture No. 1 thereto dated as of February 15,
1999 (the "Supplemental Indenture"), pursuant to which the Debentures are to be
issued to the Property Trustee.
"Liquidation Distribution" has the meaning specified in the definition of
Guarantee Payments.
"Majority in liquidation amount of the Preferred Securities" means, except
as otherwise required by the Trust Indenture Act, Holder(s) of outstanding
Preferred Securities voting together as a single class, who are the record
owners of Preferred Securities whose liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and
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unpaid Distributions to the date upon which the voting percentages are
determined) represents more than 50% of the liquidation amount of all
outstanding Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman of the Board, the Chief Executive Officer, the President
or a Vice President, and by the Treasurer, an Associate Treasurer, an Assistant
Treasurer, the Comptroller, the Secretary or an Assistant Secretary, of such
Person, and delivered to the Guarantee Trustee. One of the officers signing an
Officers' Certificate given pursuant to Section 2.04 shall be the principal
executive, financial or accounting officer of the Guarantor. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee Agreement shall include:
(i) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(ii) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering the
Officers' Certificate;
(iii) a statement that each officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association or government or any agency
or political subdivision thereof, or any other entity of whatever nature.
"Preferred Securities" has the meaning set forth in the first WHEREAS
clause above.
"Property Trustee" means the Person acting as Property Trustee under the
Declaration.
"Redemption Price" means the amount payable on redemption of the
Preferred Securities in accordance with the terms of the Preferred Securities.
"Responsible Officer" means, when used with respect to the Guarantee
Trustee, any officer within the corporate trust department of the Guarantee
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Trustee, including any vice president, assistant vice president, assistant
secretary, assistant treasurer, trust officer or any other officer of the
Guarantee Trustee who customarily performs functions similar to those performed
by the Persons who at the time shall be such officers, respectively, or to whom
any corporate trust matter is referred because of such Person's knowledge of and
familiarity with the particular subject and who shall have direct responsibility
for the administration of this Guarantee Agreement.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as a Guarantee Trustee under Section 4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE 2
TRUST INDENTURE ACT
Section 2.01. Trust Indenture Act; Application. (a) This Guarantee
Agreement is subject to the provisions of the Trust Indenture Act that are
required to be part of this Guarantee Agreement and shall, to the extent
applicable, be governed by such provisions;
(b) if and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by (S)(S) 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control; and
(c) the application of the Trust Indenture Act to this Guarantee
Agreement shall not affect the nature of the Preferred Securities as equity
securities representing preferred undivided beneficial interests in the assets
of the Issuer.
Section 2.02. Lists of Holders of Preferred Securities. (a) The
Guarantor shall provide the Guarantee Trustee (unless the Guarantee Trustee is
otherwise the registrar of the Preferred Securities) (i) within 14 days after
each record date for payment of Distributions, a list, in such form as the
Guarantee Trustee may reasonably require, of the names and addresses of the
Holders ("List of Holders") as of such date, and (ii) at any other time within
30 days of receipt by the Guarantor of a written request for a List of Holders
as of a date no more than 14 days before such List of Holders is given to the
Guarantee Trustee; provided, that the Guarantor shall not be obligated to
provide such List of Holders at any time that the List of Holders does not
differ from the most recent List of Holders given to the Guarantee Trustee by
the Guarantor. The Guarantee Trustee shall preserve, in as current a form as is
reasonably practicable, all information
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contained in the List of Holders given to it; provided, that the Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) the Guarantee Trustee shall comply with its obligations under (S)(S)
310(b), 311 and 312(b) of the Trust Indenture Act.
Section 2.03. Reports by the Guarantee Trustee. Within 60 days after
January 15 of each year, commencing January 15, 2000, the Guarantee Trustee
shall provide to the Holders such reports as are required by (S) 313 of the
Trust Indenture Act, if any, in the form, in the manner and at the times
provided by (S) 313 of the Trust Indenture Act. The Guarantee Trustee shall
also comply with the other requirements of (S) 313 of the Trust Indenture Act.
A copy of each such report shall, at the time of such transmission to the
Holders, be filed by the Guarantee Trustee with the Guarantor, with each stock
exchange upon which any Preferred Securities are listed (if so listed) and also
with the Commission. The Guarantor agrees to notify the Guarantee Trustee when
any Preferred Securities become listed on any stock exchange and any delisting
thereof.
Section 2.04. Periodic Reports to the Guarantee Trustee. The Guarantor
shall provide to the Guarantee Trustee, the Commission and the Holders, as
applicable, such documents, reports and information as required by (S)
314(a)(1)-(3) (if any) of the Trust Indenture Act and the compliance
certificates required by (S) 314(a)(4) and (c) of the Trust Indenture Act, any
such certificates to be provided in the form, in the manner and at the times
required by (S) 314(a)(4) and (c) of the Trust Indenture Act (provided that any
certificate to be provided pursuant to (S) 314(a)(4) of the Trust Indenture Act
shall be provided within 120 days of the end of each fiscal year of the Issuer).
Delivery of such reports, information and documents to the Guarantee Trustee is
for informational purposes only and the Guarantee Trustee's receipt of such
shall not constitute constructive notice of any information contained therein,
including the Guarantor's compliance with any of its covenants hereunder (as to
which the Guarantee Trustee is entitled to rely exclusively on Officers'
Certificates).
Section 2.05. Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee Agreement
which relate to any of the matters set forth in (S) 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to (S) 314(c) may be given in the form of an Officers' Certificate.
Section 2.06. Events of Default; Waiver. (a) The Holders of a Majority
in liquidation amount of the Preferred Securities may, by vote, on behalf of the
Holders, waive any past Event of Default and its consequences. Upon such waiver,
any such Event of Default shall cease to exist, and any Event of Default
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arising therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default, or impair any right consequent thereon.
(b) The right of any Holder to receive payment of the Guarantee Payments
in accordance with this Guarantee Agreement, or to institute suit for the
enforcement of any such payment, shall not be impaired without the consent of
each such Holder.
Section 2.07. Disclosure of Information. The disclosure of information
as to the names and addresses of the Holders in accordance with (S) 312 of the
Trust Indenture Act, regardless of the source from which such information was
derived, shall not be deemed to be a violation of any existing law, or any law
hereafter enacted which does not specifically refer to (S) 312 of the Trust
Indenture Act, nor shall the Guarantee Trustee be held accountable by reason of
mailing any material pursuant to a request made under (S) 312(b) of the Trust
Indenture Act.
Section 2.08. Conflicting Interest. The Declaration shall be deemed to
be specifically described in this Guarantee Agreement for the purposes of clause
(i) of the first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
Section 3.01. Powers and Duties of the Guarantee Trustee. (a) This
Guarantee Agreement shall be held by the Guarantee Trustee in trust for the
benefit of the Holders. The Guarantee Trustee shall not transfer its right,
title and interest in this Guarantee Agreement to any Person except a Successor
Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its
appointment to act as Guarantee Trustee or to a Holder exercising his or her
rights pursuant to Section 5.04(iv). The right, title and interest of the
Guarantee Trustee to this Guarantee Agreement shall vest automatically in each
Person who may hereafter be appointed as Guarantee Trustee in accordance with
Article 4. Such vesting and cessation of title shall be effective whether or
not conveyancing documents have been executed and delivered.
(b) If an Event of Default has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) This Guarantee Agreement and all moneys received by the Property
Trustee in respect of the Guarantee Payments will not be subject to any right,
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charge, security interest, lien or claim of any kind in favor of, or for the
benefit of, the Guarantee Trustee or its agents or their creditors.
(d) The Guarantee Trustee shall, within 90 days after the occurrence of
an Event of Default known to a Responsible Officer of the Guarantee Trustee,
transmit by mail, first class postage prepaid, to the Holders, as their names
and addresses appear upon the List of Holders, notice of all such Events of
Default, unless such defaults shall have been cured before the giving of such
notice; provided, that, the Guarantee Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee,
or a trust committee of directors and/or Responsible Officers, of the Guarantee
Trustee in good faith determine that the withholding of such notice is in the
interests of the Holders. The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default except any Event of Default as to which the
Guarantee Trustee shall have received written notice or a Responsible Officer
charged with the administration of this Guarantee Agreement shall have obtained
written notice of such Event of Default.
(e) The Guarantee Trustee shall continue to serve as a trustee until a
Successor Guarantee Trustee has been appointed and accepted that appointment in
accordance with Article 4.
Section 3.02. Certain Rights and Duties of the Guarantee Trustee. (a)
The Guarantee Trustee, before the occurrence of an Event of Default and after
the curing or waiving of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this Guarantee
Agreement against the Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.06), the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee Agreement, and the Guarantee Trustee shall not be
liable except for the performance of such duties and obligations
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as are specifically set forth in this Guarantee Agreement, and
no implied covenants or obligations shall be read into this
Guarantee Agreement against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the case of any
such certificates or opinions that by any provision hereof or
the Trust Indenture Act are specifically required to be
furnished to the Guarantee Trustee, the Guarantee Trustee shall
be under a duty to examine the same to determine whether or not
they conform to the requirements of this Guarantee Agreement or
the Trust Indenture Act, as the case may be;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment
was made;
(iii) the Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in
liquidation amount of Preferred Securities relating to the time, method
and place of conducting any proceeding for any remedy available to the
Guarantee Trustee, or exercising any trust or power conferred upon the
Guarantee Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such risk or liability
is not reasonably assured to it.
(c) Subject to the provisions of Section 3.02(a) and (b):
(i) whenever in the administration of this Guarantee Agreement,
the Guarantee Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder,
the Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
rely upon an
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Officers' Certificate, which, upon receipt of such request, shall be
promptly delivered by the Guarantor;
(ii) the Guarantee Trustee (A) may consult with counsel (which
may be counsel to the Guarantor or any of its Affiliates and may include
any of its employees) selected by it in good faith and with due care and
the written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon and in accordance with such advice and
opinion and (B) shall have the right at any time to seek instructions
concerning the administration of this Guarantee Agreement from any court
of competent jurisdiction;
(iii) the Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys, and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed by it in good faith and with due care;
(iv) the Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such Holder
shall have offered to the Guarantee Trustee security and indemnity
satisfactory to the Guarantee Trustee against the costs, expenses
(including its attorneys' fees and expenses) and liabilities that might
be incurred by it in complying with such request or direction; provided
that nothing contained in this clause (iv) shall relieve the Guarantee
Trustee of the obligation, upon the occurrence of an Event of Default
(which has not been cured or waived) to exercise such of the rights and
powers vested in it by this Guarantee Agreement, and to use the same
degree of care and skill in this exercise as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs; and
(v) any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders and the signature of the Guarantee
Trustee or its agents alone shall be sufficient and effective to perform
any such action; and no third party shall be required to inquire as to
the authority of the Guarantee Trustee to so act, or as to its
compliance with any of the terms and provisions of this Guarantee
Agreement, both of which shall be conclusively evidenced by the
Guarantee Trustee's or its agent's taking such action.
Section 3.03. Not Responsible for Recitals or Issuance of Guarantee. The
recitals contained in this Guarantee Agreement shall be taken as the
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statements of the Guarantor and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representations as to the validity or sufficiency of this Guarantee Agreement.
Section 3.04. The Guarantee Trustee May Own Preferred Securities. The
Guarantee Trustee, in its individual or any other capacity, may become the owner
or pledgee of Preferred Securities and may otherwise deal with the Guarantor
with the same rights it would have if it were not Guarantee Trustee.
Section 3.05. Moneys Received by the Guarantee Trustee to Be Held In
Trust Without Interest. All moneys received by the Guarantee Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated from other funds except to
the extent required by law. The Guarantee Trustee shall be under no liability
for interest on any moneys received by it hereunder except such as it may agree
in writing to pay thereon.
Section 3.06. The Guarantee Trustee Entitled to Compensation,
Reimbursement and Indemnity. (a) The Guarantor covenants and agrees to pay to
the Guarantee Trustee from time to time, and the Guarantee Trustee shall be
entitled to, such compensation as the Guarantor and the Guarantee Trustee shall
from time to time agree in writing (which shall not be limited by any provision
of law in regard to the compensation of a Guarantee Trustee of an express trust)
for all services rendered by it in the execution of the trusts hereby created
and in the exercise and performance of any of the powers and duties hereunder of
the Guarantee Trustee, and the Guarantor will pay or reimburse the Guarantee
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Guarantee Trustee in accordance with any of the
provisions of this Guarantee Agreement (including the reasonable compensation
and the reasonable expenses and disbursements of its counsel and of all persons
not regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or bad faith. The Guarantor also covenants to
indemnify each of the Guarantee Trustee or any predecessor Guarantee Trustee and
their officers, agents, directors and employees for, and to hold them harmless
against, any and all loss, liability, damage, claim or expense including taxes
(other than taxes based upon, measured by or determined by the income of the
Guarantee Trustee) incurred without negligence or bad faith on the part of the
Guarantee Trustee and arising out of or in connection with the acceptance or
administration of this trust, including the reasonable costs and expenses of
defending itself against any claim (whether asserted by the Guarantor, any
Holder or any other Person) of liability in the premises. The provisions of this
Section 3.06 shall survive the termination of this Guarantee Agreement and
resignation or removal of the Guarantee Trustee.
(b) The obligations of the Guarantor under this Section 3.06 to
compensate and indemnify the Guarantee Trustee and to pay or reimburse the
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Guarantee Trustee for expenses, disbursements and advances shall constitute
additional indebtedness hereunder. Such additional indebtedness shall be secured
by a lien prior to that of the Preferred Securities upon all property and funds
held or collected by the Guarantee Trustee as such, except funds held in trust
for the benefit of the holders of particular Preferred Securities.
Section 3.07. Right of the Guarantee Trustee to Rely on Certificate of
Officers of the Guarantor Where No Other Evidence Specifically Prescribed.
Except as otherwise provided in Section 3.02, whenever in the administration of
the provisions of this Guarantee Agreement the Guarantee Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
suffering or omitting to take any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Guarantee Trustee, be
deemed to be conclusively proved and established by an Officers' Certificate
delivered to the Guarantee Trustee and such certificate, in the absence of
negligence or bad faith on the part of the Guarantee Trustee, shall be full
warrant to the Guarantee Trustee for any action taken, suffered or omitted to be
taken by it under the provisions of this Guarantee Agreement upon the faith
thereof.
ARTICLE 4
GUARANTEE TRUSTEE
Section 4.01. Qualifications. There shall at all times be a Guarantee
Trustee that shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a national banking association or corporation organized
and doing business under the laws of the United States of America or any
State or Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000, and subject to supervision or
examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this
clause (ii), the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
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If at any time the Guarantee Trustee shall cease to satisfy the
requirements of clauses (i) and (ii) above, the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.02. If
the Guarantee Trustee has or shall acquire any "conflicting interest" within the
meaning of (S) 310(b) of the Trust Indenture Act, the Guarantee Trustee and the
Guarantor shall in all respects comply with the provisions of (S) 310(b) of the
Trust Indenture Act.
Section 4.02. Appointment, Removal and Resignation of the Guarantee
Trustee. (a) Subject to Section 4.02(b), the Guarantee Trustee may be appointed
or removed without cause by the Guarantor upon 60 days' prior written notice.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.02(a) until a Successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.01 has been appointed
and has accepted such appointment by written instrument executed by such
Successor Guarantee Trustee and delivered to the Guarantor and the Guarantee
Trustee being removed.
(c) The Guarantee Trustee appointed to office shall hold office until
its successor shall have been appointed or until its removal or resignation.
(d) The Guarantee Trustee may resign from office (without need for prior
or subsequent accounting) by an instrument (a "Resignation Request") in writing
signed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that no such resignation of the Guarantee
Trustee shall be effective until a Successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.01 has been appointed
and has accepted such appointment by instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(e) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.02 within 60 days after
delivery of a notice of removal or a Resignation Request, the Guarantee
Trustee being removed or resigning, as the case may be, may petition, at the
expense of the Sponsor, any court of competent jurisdiction for appointment of a
Successor Guarantee Trustee. Such court may thereupon after such notice, if any,
as it may deem proper and prescribe, appoint a Successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.01.
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ARTICLE 5
GUARANTEE
Section 5.01. Guarantee. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by the Issuer), as and when due, regardless of any
defense, right of set-off or counterclaim which the Issuer may have or assert.
The Guarantor's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.
Section 5.02. Waiver of Notice. The Guarantor hereby waives notice of
acceptance of this Guarantee Agreement and of any liability to which it applies
or may apply, presentment, demand for payment, any right to require a proceeding
first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands. Notwithstanding anything to the
contrary herein, the Guarantor retains all of its rights under the Indenture to
extend the interest payment period on the Debentures and the Guarantor shall not
be obligated hereunder to make any Guarantee Payment during any Extended
Interest Payment Period (as defined in the Supplemental Indenture) with respect
to the Distributions on the Preferred Securities.
Section 5.03. Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all
or any portion of the Distributions (other than an extension of time for
payment of Distributions that result from any Extended Interest Payment
Period), Redemption Price, Liquidation Distribution (as defined in the
Declaration) or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Preferred
Securities (other than an extension of time for payment of Distributions
that result from any Extended Interest Payment Period);
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(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the
Preferred Securities, or any action on the part of the Issuer granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale
of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.03 that the obligations of the
Guarantor with respect to the Guarantee Payments shall be absolute and
unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.
Section 5.04. Enforcement of Guarantee. The Guarantor and the Guarantee
Trustee expressly acknowledge that (i) this Guarantee Agreement will be
deposited with the Guarantee Trustee to be held for the benefit of the Holders;
(ii) the Guarantee Trustee has the right to enforce this Guarantee Agreement on
behalf of the Holders; (iii) Holders representing not less than a Majority in
liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or other power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) if the Guarantee Trustee fails to enforce this Guarantee
Agreement as provided in clauses (ii) and (iii) above, any Holder may institute
a legal proceeding directly against the Guarantor to enforce its rights under
this Guarantee Agreement, without first instituting a legal proceeding against
the Issuer, the Guarantee Trustee or any other Person. Notwithstanding the
foregoing, if the Guarantor has failed to make a Guarantee Payment, a Holder may
directly institute a proceeding against the Guarantor for enforcement of this
Guarantee Agreement for such payment without first instituting a legal
proceeding against the Issuer, the Guarantee Trustee or any other Person.
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Section 5.05. Guarantee of Payment. This Guarantee Agreement creates a
guarantee of payment and not merely of collection. This Guarantee Agreement
will not be discharged except by payment of the Guarantee Payments in full
(without duplication of amounts theretofore paid by the Issuer) or upon the
distribution of the Debentures to the Holders as provided in the Declaration.
Section 5.06. Subrogation. The Guarantor shall be subrogated to all (if
any) rights of the Holders against the Issuer in respect of any amounts paid to
the Holders by the Guarantor under this Guarantee Agreement; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.
Section 5.07. Independent Obligations. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of the Issuer with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof.
ARTICLE 6
LIMITATION OF TRANSACTIONS; SUBORDINATION
Section 6.01. Limitation of Transactions. So long as any Preferred
Securities remain outstanding, the Guarantor will not declare or pay dividends
on, or redeem, purchase, acquire or make a distribution or liquidation payment
with respect to, any of its capital stock (other than (a) dividends or
distributions in shares of, or options, warrants, rights to subscribe for or
purchase shares of, common stock of the Guarantor, (b) any declaration of a
dividend in connection with the implementation of a shareholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) as a result of a
reclassification of the Guarantor's capital stock or the exchange or the
conversion of one class or series of the Guarantor's capital stock for another
class or series of the Guarantor's capital stock, (d) the payment of accrued
dividends and the purchase of fractional interests in shares of the Guarantor's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or
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exchanged, or (e) purchases of the Guarantor's common stock related to the
issuance of the Guarantor's common stock or rights under any of the Guarantor's
benefit plans for its directors, officers or employees, any of the Guarantor's
dividend reinvestment plans or stock purchase plans, or any of the benefit plans
of any of the Guarantor's Affiliates, for such Affiliate's directors, officers
or employees) or make any guarantee payment with respect thereto, if at such
time (i) the Guarantor shall be in default with respect to its Guarantee
Payments or other payment obligations hereunder, (ii) there shall have occurred
any event of default under the Declaration or (iii) the Guarantor shall have
given notice of its election of an Extended Interest Payment Period and such
period, or any extension thereof, is continuing. In addition, so long as any
Preferred Securities remain outstanding, the Guarantor (i) will remain the sole
direct or indirect owner of all of the outstanding Common Securities and shall
not cause or permit the Common Securities to be transferred except to the extent
such transfer is permitted under Section 9.01 of the Declaration; provided that
any permitted successor of the Guarantor under the Indenture may succeed to the
Guarantor's ownership of the Common Securities and (ii) will use reasonable
efforts to cause the Issuer to continue to be treated as a grantor trust for
United States federal income tax purposes except in connection with a
distribution of Debentures as provided in the Declaration.
Section 6.02. Subordination. This Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor, including the
Debentures, except those made pari passu or subordinate by their terms, and (ii)
senior to all capital stock (other than the most senior preferred stock issued,
from time to time, if any, by the Guarantor, which preferred stock will rank
pari passu with this Guarantee Agreement) now or hereafter issued by the
Guarantor and to any guarantee now or hereafter entered into by the Guarantor in
respect of any of its capital stock (other than the most senior preferred stock
issued, from time to time, if any, by the Guarantor). The Guarantor's
obligations under this Guarantee Agreement will rank pari passu with respect to
obligations under other guarantee agreements which it may enter into from time
to time to the extent that (i) such agreements shall be entered into in
substantially the form hereof and provide for comparable guarantees by the
Guarantor of payment on preferred securities issued by other trusts,
partnerships or other entities affiliated with the Guarantor that are financing
vehicles of the Guarantor and (ii) the debentures or other evidences of
indebtedness of the Guarantor relating to such preferred securities are junior
subordinated, unsecured indebtedness of the Guarantor.
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ARTICLE 7
TERMINATION
Section 7.01. Termination. This Guarantee Agreement shall terminate and
be of no further force and effect (i) upon full payment of the Redemption Price
of all Preferred Securities, (ii) upon the distribution of Debentures to Holders
and holders of Common Securities in exchange for all of the Preferred Securities
and Common Securities or (iii) upon full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Issuer. Notwithstanding
the foregoing, this Guarantee Agreement will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder must restore payment
of any sums paid with respect to the Preferred Securities or under this
Guarantee Agreement.
ARTICLE 8
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 8.01. Exculpation. (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Guarantor or any
Holder for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith in accordance with
this Guarantee Agreement and in a manner such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Guarantee Agreement or by law, except that an Indemnified Person
shall be liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's negligence or willful misconduct with respect to such acts
or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders might properly be paid.
Section 8.02. Indemnification. To the fullest extent permitted by
applicable law, the Guarantor shall indemnify and hold harmless each Indemnified
Person from and against any loss, liability, expense, damage or claim incurred
by such Indemnified Person by reason of any act or omission performed or omitted
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by such Indemnified Person in good faith in accordance with this Guarantee
Agreement and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this
Guarantee Agreement, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, liability, expense, damage or claim incurred
by such Indemnified Person by reason of negligence or willful misconduct with
respect to such acts or omissions.
Section 8.03. Survive Termination. The provisions of Sections 8.01 and
8.02 shall survive the termination of this Guarantee Agreement or the
resignation or removal of the Guarantee Trustee.
ARTICLE 9
MISCELLANEOUS
Section 9.01. Successors and Assigns. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assignees,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders then outstanding. Except in connection with a
consolidation, merger or sale involving the Guarantor that is permitted under
Article Ten of the Indenture, the Guarantor shall not assign its obligations
hereunder.
Section 9.02. Amendments. Except with respect to any changes which do
not adversely affect the rights of Holders in any material respect (in which
case no consent of Holders will be required), this Guarantee Agreement may only
be amended with the prior approval of the Guarantor and the Holders of not less
than a Majority in liquidation amount of the Preferred Securities. The
provisions of Section 12.02 of the Declaration concerning meetings of Holders
shall apply to the giving of such approval.
Section 9.03. Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:
(a) if given to the Guarantor, to the address set forth below or
such other address as the Guarantor may give notice of to the Holders:
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Reliant Energy, Incorporated
1111 Louisiana
Houston, Texas 77002
Attention: Treasurer
Telecopy: (713) 207-5782
(b) if given to the Guarantee Trustee, to the address set forth below or
such other address as the Guarantee Trustee may give notice of to the Holders:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telecopy: (212) 815-5915
(c) if given to any Holder, at the address set forth on the books and
records of the Issuer.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
Section 9.04. Genders. The masculine, feminine and neuter genders used
herein shall include the masculine, feminine and neuter genders.
Section 9.05. Benefit. This Guarantee Agreement is solely for the
benefit of the Holders and subject to Section 3.01(a) is not separately
transferable from the Preferred Securities.
Section 9.06. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS).
Section 9.07. Counterparts. This Guarantee Agreement may be executed in
counterparts, each of which shall be an original; but such counterparts shall
together constitute one and the same instrument.
Section 9.08. Limited Liability. The Holders, in their capacities as
such, shall not be personally liable for any liabilities or obligations of the
Guarantor arising out of this Guarantee Agreement, and the parties hereby agree
that the
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Holders, in their capacities as such, shall be entitled to the same limitation
of personal liability extended to the stockholders of private corporations for
profit organized under the General Corporation Law of the State of Delaware.
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THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
HOUSTON INDUSTRIES INCORPORATED, d/b/a
RELIANT ENERGY, INCORPORATED
By: /s/ Marc Kilbride
------------------------------
Name: Marc Kilbride
Title: Treasurer
THE BANK OF NEW YORK
As Guarantee Trustee
By: /s/ Remo J. Reale
------------------------------
Name: Remo J. Reale
Title: Assistant Vice President
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