<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 9, 1997
REGISTRATION NO. 333-30443
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HOUSTON INDUSTRIES INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 74-1885573
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
HUGH RICE KELLY
1111 LOUISIANA EXECUTIVE VICE PRESIDENT, GENERAL
HOUSTON, TEXAS 77002 COUNSEL AND
(713) 207-3000 CORPORATE SECRETARY
(ADDRESS, INCLUDING ZIP CODE, AND 1111 LOUISIANA
TELEPHONE HOUSTON, TEXAS 77002
NUMBER, INCLUDING AREA CODE, OF (713) 207-3000
REGISTRANT'S (NAME, ADDRESS, INCLUDING ZIP CODE,
PRINCIPAL EXECUTIVE OFFICES) AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR
SERVICE OF REGISTRANT)
----------------
COPIES TO:
MARGO S. SCHOLIN ROBERT W. REEDER, III
BAKER & BOTTS, L.L.P. SULLIVAN & CROMWELL
910 LOUISIANA 125 BROAD STREET
ONE SHELL PLAZA NEW YORK, NEW YORK 10004
HOUSTON, TEXAS 77002-4995 (212) 558-4000
(713) 229-1234
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses payable by the Company
in connection with the sale of the Securities offered hereby.
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee..................... $328,450
Blue Sky fees and expenses........................................ 20,000
Trustee's fees and expenses....................................... 7,000
Attorney's fees and expenses...................................... 180,000
Independent Auditor's fees and expenses........................... 40,000
Printing and engraving expenses................................... 50,000
Listing fees...................................................... 55,000
Rating agency fees................................................ 174,000
Miscellaneous expenses............................................ 5,550
--------
Total........................................................... $860,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.02.A.(16) and Article 2.02-1 of the Texas Business Corporation Act
and Article V of the Company's Amended and Restated Bylaws provide the Company
with broad powers and authority to indemnify its directors and officers and to
purchase and maintain insurance for such purposes. Pursuant to such statutory
and Bylaw provisions, the Company has purchased insurance against certain
costs of indemnification that may be incurred by it and by its officers and
directors.
Additionally, Article IX of the Company's Restated Articles of Incorporation
provides that a director of the Company is not liable to the Company or its
shareholders for monetary damages for any act or omission in the director's
capacity as director, except that Article IX does not eliminate or limit the
liability of a director for (i) breaches of such director's duty of loyalty to
the Company and its shareholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or knowing violations of law, (iii)
transactions from which a director receives an improper benefit, irrespective
of whether the benefit resulted from an action taken within the scope of the
director's office, (iv) acts or omissions for which liability is specifically
provided by statute and (v) acts relating to unlawful stock repurchases or
payments of dividends.
Article IX also provides that any subsequent amendments to Texas statutes
that further limit the liability of directors will inure to the benefit of the
directors, without any further action by shareholders. Any repeal or
modification of Article IX shall not adversely affect any right of protection
of a director of the Company existing at the time of the repeal or
modification.
The Underwriting Agreement to be entered into in connection with the
offering of the Securities described in this Registration Statement will
provide that the Underwriters shall indemnify the Company, its directors and
certain officers of the Company against liabilities resulting from information
furnished by or on behalf of the Underwriters specifically for use in the
Registration Statement.
See "Item 17. Undertakings" for a description of the Commission's position
regarding such indemnification provisions.
ITEM 16. EXHIBITS.
See Index to Exhibits at page II-6.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section
do not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
II-2
<PAGE>
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, HOUSTON
INDUSTRIES INCORPORATED CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE
THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY
CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF
TEXAS, ON JULY 8, 1997.
HOUSTON INDUSTRIES INCORPORATED
(Registrant)
/s/ Don D. Jordan
By: _________________________________
(Don D. Jordan, Chairman and
Chief Executive Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT OR AMENDMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Don D. Jordan Chairman, Chief Execuitive July 8, 1997
____________________________________ Officer and Director
(Don D. Jordan) (Principal Executive
Officer)
/s/ Stephen W. Naeve Executive Vice President and July 8, 1997
____________________________________ Chief Financial Officer
(Stephen W. Naeve) (Principal Financial
Officer)
/s/ Mary P. Ricciardello Vice President and July 8, 1997
____________________________________ Comptroller (Principal
(Mary P. Ricciardello) Accounting Officer)
/s/ Milton Carroll Director July 8, 1997
____________________________________
(Milton Carroll)
/s/ John T. Cater Director July 8, 1997
____________________________________
(John T. Cater)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Cruikshank Director July 8, 1997
____________________________________
(Robert J. Cruikshank)
/s/ Linnet F. Deily Director July 8, 1997
____________________________________
(Linnet F. Deily)
/s/ Lee W. Hogan Director July 8, 1997
____________________________________
(Lee W. Hogan)
/s/ R. Steve Letbetter Director July 8, 1997
____________________________________
(R. Steve Letbetter)
/s/ Alexander F. Schilt Director July 8, 1997
____________________________________
(Alexander F. Schilt)
/s/ Bertram Wolfe Director July 8, 1997
____________________________________
(Bertram Wolfe)
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER NUMBER
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<C> <S> <C>
1.1 --Form of Underwriting Agreement relating to the Securities.
2.1 --Agreement and Plan of Merger among the Company, HL&P, HI
Merger, Inc. and NorAm dated August 11, 1996 (incorporated
by reference to Exhibit 2 to the Company's Form
8-K dated August 11, 1996 (Commission File Number 1-7629)).
2.2 --Amendment to Agreement and Plan of Merger dated as of
October 23, 1996 among the Company, HL&P, HI Merger, Inc.
and NorAm (incorporated by reference to Exhibit 2(c) to the
Company's Registration Statement on Form S-4 (Registration
Number 333-11329)).
4.1 --Form of Indenture governing the Securities between the
Company and The First National Bank of Chicago, as Trustee.
4.2 --Form of Securities (included in Exhibit 4.1).
4.3 --Stockholder's Agreement dated as of July 6, 1995 between
the Company and Time Warner (incorporated by reference to
Exhibit 2 to the Company's Schedule 13-D dated July 6, 1995
(Commission File Number 5-19351)).
4.4 --Amendment to Stockholder's Agreement dated November 18,
1996 (incorporated by reference to Exhibit 10(x)(3) to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 (Commission File Number 1-7629)).
5.1 --Opinion of Baker & Botts, L.L.P. relating to the
Securities.
8.1 --Opinion of Baker & Botts, L.L.P. as to certain tax matters.
12.1 --Computation of ratio of earnings to fixed charges
(incorporated by reference to (i)
Exhibit 12 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996 (Commission File
Number 1-7629) and (ii) Exhibit 12 to the Company's
Quarterly Report on Form 10-Q for the quarter ended ended
March 31, 1997 (Commission File Number 1-7629)).
23.1 --Consent of Deloitte & Touche LLP.
23.2 --Consent of Baker & Botts, L.L.P. (included in Exhibits 5.1
and 8.1).
24.1* --Powers of Attorney.
25.1* --Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as
Indenture Trustee.
</TABLE>
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* Previously filed.
II-6
<PAGE>
EXHIBIT 1.1
HOUSTON INDUSTRIES INCORPORATED
___% Automatic Common Exchange Securities due 2000
-------------------------------------
Underwriting Agreement
----------------------
July __, 1997
Goldman, Sachs & Co.,
Credit Suisse First Boston Corporation,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
As representatives of the several Underwriters
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
Houston Industries Incorporated, a Texas corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule 1 hereto (the "Underwriters") an aggregate
of 20,000,000 __% Automatic Common Exchange Securities due ______ 2000 (the
"Firm Securities") with a mandatory exchange at maturity for a number of shares
of common stock, par value $0.01 per share (the "Time Warner Common Stock"), of
Time Warner Inc., a Delaware corporation ("Time Warner"), (or, at the Company's
option, cash with an equal value) at a rate determined with reference to the
market price of Time Warner Common Stock at maturity, and, at the election of
the Underwriters, 2,909,040 additional __% Automatic Common Exchange Securities
due 2000 (the "Optional Securities") (the Firm Securities and the Optional
Securities which the Underwriters elect to purchase pursuant to Section 2(a)
hereof are herein collectively called the "Securities").
<PAGE>
1. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(i) A registration statement on Form S-3, and two amendments thereto, with
respect to the Securities (File Nos. 333-30443) including a prospectus (any
preliminary prospectus included in such registration statement being hereinafter
referred to as a "Preliminary Prospectus"), copies of which have been delivered
to you, have been prepared and filed by the Company with the Securities and
Exchange Commission (the "Commission") and have been declared effective under
the Securities Act of 1933, as amended (the "Act"). No other document with
respect to the registration statement or document incorporated by reference
therein has heretofore been filed or transmitted for filing with the Commission.
No stop order suspending the effectiveness of such registration statement has
been issued and no proceeding for that purpose has been initiated or, to the
best knowledge of the Company, threatened by the Commission. The various parts
of such registration statement including all exhibits thereto but excluding Form
T-1, and including the information contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) under the Act hereof and
deemed by virtue of Rule 430A under the Act to be part of the registration
statement at the time it was declared effective and the documents incorporated
by reference in the prospectus contained in the registration statement at the
time such part of the registration statement became effective, each as amended
at the time such part of the registration statement became effective are
hereinafter collectively called the "Registration Statement".
The final prospectus in the form first filed pursuant to Rule 424(b) under
the Act (including all documents then incorporated by reference therein), is
hereinafter referred to as the "Prospectus". Any reference herein to the
Prospectus or a Preliminary Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein, or deemed to be incorporated by
reference therein, and filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), on or before the date of such Prospectus or
Preliminary Prospectus. Any reference herein to the terms "amend", "amendment"
or "supplement" with respect to the Prospectus or the Preliminary Prospectus
shall be deemed to refer to and include, without limitation, the filing of any
document under the Exchange Act deemed to be incorporated therein by reference
after the date of such Prospectus or Preliminary Prospectus.
2
<PAGE>
(ii) The Registration Statement conforms, and any further amendments
thereto will conform, in all material respects to the requirements of the Act
and the Trust Indenture Act of 1939, as amended (the "TIA"), and the applicable
rules and regulations of the Commission thereunder, and does not and will not,
as of the applicable effective date of the Registration Statement and any
amendment thereto, include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading; each Preliminary Prospectus at the time of
the filing thereof conformed in all material respects to the requirements of the
Act and the TIA and the applicable rules and regulations of the Commission
thereunder, and did not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and no order preventing or suspending the
use of any Preliminary Prospectus has been issued by the Commission; and the
Prospectus conforms, and any further amendments or supplements thereto will
conform, in all material respects to the requirements of the Act and the TIA and
the applicable rules and regulations of the Commission thereunder, and do not
and will not, as of the applicable filing date of the Prospectus and any
amendment or supplement thereto, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading;
(iii) Each document filed or to be filed pursuant to the Exchange Act and
incorporated by reference, or deemed to be incorporated by reference in the
Prospectus (including any document to be filed pursuant to the Exchange Act
which will constitute an amendment to the Prospectus) conformed or, when so
filed, will conform in all material respects to the requirements of the Exchange
Act and the applicable rules and regulations of the Commission thereunder, and
none of such documents included or, when so filed, will include any untrue
statement of a material fact or omitted or, when so filed, will omit to state
any material fact required to be stated therein or necessary to make the
statements therein (and, in the case of a document filed after the effective
date of the Registration Statement and not treated as a post-effective amendment
to the Registration Statement for purposes of the liability provisions of the
Act, in the light of the circumstances at the time of the filing of such
document with the Commission) not misleading;
(iv) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Texas, with power
and authority to own, lease and operate its properties and conduct its business
as described in the Prospectus;
3
<PAGE>
(v) This Agreement has been duly authorized, executed and delivered by the
Company;
(vi) The Securities have been duly authorized by the Company and, when
executed and delivered pursuant to this Agreement and duly authenticated and
delivered by the Trustee under the Indenture (each as herein defined), such
Securities will be duly and validly issued and will constitute valid and legally
binding obligations of the Company enforceable in accordance with their terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors' rights and
to general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and entitled to the benefits
provided by the indenture to be dated as of July __, 1997 (the "Indenture")
between the Company and The First National Bank of Chicago, as Trustee (the
"Trustee"), under which they are to be issued, which will be substantially in
the form filed as an exhibit to the Registration Statement; the Indenture has
been duly authorized by the Company and, when executed and delivered by the
Company and the Trustee, will constitute a valid and legally binding instrument,
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); and the Securities and the Indenture conform to the
descriptions thereof in the Prospectus;
(vii) Neither the issue and sale of the Securities by the Company, the
compliance by the Company with all of the provisions of this Agreement, the
Securities and the Indenture nor the consummation of the transactions
contemplated herein and therein (i) conflicts with or results in a breach or
violation of any of the terms or provisions of, or constitutes a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or Houston Lighting & Power Company ("HL&P") is
a party or by which the Company or HL&P is bound or to which any of the property
or assets of the Company or HL&P is subject, which conflict, breach, violation
or default would, individually or in the aggregate, have a material adverse
effect on the business, properties or financial condition of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect"), (ii) violates the
provisions of the Articles of Incorporation or By-Laws of the Company or (iii)
violates any existing statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or HL&P or any
of their properties, which violation would, individually or in the aggregate,
have a Material Adverse Effect; the Commission has issued an order under
4
<PAGE>
the Act declaring the Registration Statement effective and qualifying the
Indenture under the TIA and no other consent, approval, authorization, order,
registration or qualification of or with any such court or governmental agency
or body is required for the issue and sale of the Securities by the Company or
the consummation by the Company of the transactions contemplated by this
Agreement or the Indenture, except such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Securities
by the Underwriters;
(viii) Neither the Company nor any of its subsidiaries is an
"affiliate" (as defined for purposes of Section 2(11) of the Act) of Time
Warner; neither the Company nor any of its subsidiaries has material non-public
information with respect to Time Warner; and neither the Company nor any of its
subsidiaries has the right to cause the registration of the shares of Time
Warner Common Stock under the Act; and
(ix) The Company owns of record and beneficially 11,000,000 shares of
Series D Convertible Preferred Stock, par value $.10 per share (the "Series D
Preferred Stock"); and the Series D Preferred Stock and the shares of Time
Warner Common Stock into which it is convertible are not "restricted securities"
as that term is defined in Rule 144 under the Act.
2. Sale and Delivery.
(a) Subject to the terms and conditions herein set forth, (i) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase, at a purchase price
of $______ per Security, plus accrued interest, if any, from ___________, 1997
to the Time of Delivery hereunder, the number of Securities set forth opposite
the name of such Underwriter in Schedule I hereto, and (ii) in the event and to
the extent that the Underwriters shall exercise the election to purchase
Optional Securities as provided below, the Company agrees to issue and sell to
each of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase, at the same purchase price set forth in clause (i) of this
Section 2(a), that number of the Optional Securities as to which such election
shall have been exercised determined by multiplying such number of Optional
Securities by a fraction, the numerator of which is the maximum number of
Optional Securities which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Securities which all of the
Underwriters are entitled to purchase hereunder.
5
<PAGE>
The Company hereby grants to the Underwriters the right to purchase at
their election up to 2,909,040 Optional Securities, at the purchase price set
forth in clause (a) of the first paragraph of this Section 2, for the sole
purpose of covering overallotments in the sale of Firm Securities. Any such
election to purchase Optional Securities may be exercised by written notice from
you to the Company, given within a period of 30 calendar days after the date of
this Agreement, setting forth the aggregate number of Optional Securities to be
purchased and the date on which such Optional Securities are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 2(b) hereof) or, unless you and the Company otherwise agree
in writing, earlier than two or later than ten business days after the date of
such notice.
(b) The Securities to be purchased by each Underwriter hereunder will be
represented by one or more definitive global Securities in book-entry form which
will be deposited by or on behalf of the Company with The Depository Trust
Company ("DTC") or its designated custodian. The Company will deliver the
Securities to Goldman, Sachs & Co., for the account of each Underwriter, against
payment by or on behalf of such Underwriter of the purchase price therefor by
wire transfer of Federal (same day) funds to a commercial bank account located
in the United States and designated in writing at least forty-eight hours prior
to the Time of Delivery by the Company to Goldman, Sachs & Co., by causing DTC
to credit the Securities to the account of Goldman, Sachs & Co. at DTC. The
Company will cause the global certificates representing the Securities to be
made available to Goldman, Sachs & Co. for checking at least twenty-four hours
prior to the Time of Delivery at the office of DTC or its designated custodian
(the "Designated Office"). The time and date of such delivery and payment shall
be, with respect to the Firm Securities, 9:30 a.m., New York City time, on
_________, 1997 or such other time and date as Goldman, Sachs & Co. and the
Company may agree upon in writing, and, with respect to the Optional Securities,
9:30 a.m., New York City time, on the date specified by Goldman, Sachs & Co. in
the written notice given by Goldman, Sachs & Co. of the Underwriters' election
to purchase such Optional Securities, or such other time and date as Goldman,
Sachs & Co. and the Company may agree upon in writing. Such time and date for
delivery of the Firm Securities is herein called the "First Time of Delivery",
such time and date of delivery of the Optional Securities, if not the First Time
of Delivery, is herein called the "Second Time of Delivery", and each such time
and date for delivery is herein called a "Time of Delivery".
(c) The documents to be delivered at the Time of Delivery by or on behalf
of the parties hereto pursuant to Section 5 hereof, including the cross-receipt
for the Securities and any additional documents requested by the Underwriters
6
<PAGE>
pursuant to Section 5(k) hereof, will be delivered at such time and date at the
offices of Baker & Botts, L.L.P., 910 Louisiana Street, Houston, Texas 77002-
4995 or such other location as Goldman, Sachs & Co. and the Company may agree in
writing (the "Closing Location"), and the Securities will be delivered at the
Designated Office, all at the Time of Delivery. A meeting will be held at the
Closing Location at 1:00 P.M., local time or at such other time as Goldman,
Sachs & Co. and the Company may agree in writing, on the New York Business Day
next preceding the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 2, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
3. Covenants and Agreements.
The Company covenants and agrees with each of the Underwriters:
(a) To furnish without charge to the Underwriters a copy of the
Registration Statement, including all documents incorporated by reference
therein and exhibits filed with the Registration Statement (other than exhibits
which are incorporated by reference and have previously been so furnished),
and, during the period mentioned in paragraph (c) below, as many copies of the
Prospectus, any Preliminary Prospectus and any documents incorporated by
reference therein at or after the date thereof (including documents from which
information has been so incorporated) and any supplements and amendments thereto
as each Underwriter may reasonably request so long as such Underwriter is
required to deliver a prospectus;
(b) To prepare and to file the Prospectus pursuant to, and in compliance
with, the applicable rules under the Act and to promptly advise the Underwriters
(i) when any amendment to the Registration Statement shall have been filed;
provided, that, with respect to documents filed pursuant to the Exchange Act and
incorporated by reference into the Registration Statement, such notice shall
only be required during such time as the Underwriters are required, in their
reasonable opinion after consultation with counsel, to deliver a prospectus,
(ii) of any request by the Commission for any amendment of the Registration
Statement, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose, and (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Securities for sale in any jurisdiction or the initiation or threatening
of
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any proceeding for such purpose. So long as any Underwriter is required, in its
reasonable opinion after consultation with counsel, to deliver a prospectus, the
Company will not file any amendment to the Registration Statement or supplement
to the Prospectus unless the Company has furnished one copy of such amendment or
supplement to Goldman, Sachs & Co., and, if such amendment or supplement is to
be filed on or prior to the Time of Delivery, or under circumstances where the
Underwriters are required, in their reasonable opinion after consultation with
counsel, to deliver a Prospectus, the Underwriters shall not reasonably have
objected thereto. If the Commission shall issue a stop order suspending the
effectiveness of the Registration Statement, the Company will take such steps to
obtain the lifting of that order as in the best judgment of the Company are not
contrary to the interests of the Company;
(c) If, at any time when in any Underwriter's reasonable opinion, after
consultation with counsel, the Prospectus is required by law to be delivered by
such Underwriter or a dealer, any event shall occur as a result of which it is
necessary, in the reasonable opinion of any Underwriter or the Company, after
consultation with counsel, to amend or supplement the Prospectus or modify the
information incorporated by reference therein in order to make the statements
therein, in light of the circumstances existing when the Prospectus is
delivered to a purchaser, not misleading, or if it shall be necessary in the
reasonable opinion of any Underwriter or the Company, after consultation with
counsel, to amend or supplement the Prospectus or modify such information to
comply with law, to forthwith (i) prepare and furnish, at the Company's own
expense, to the Underwriters and to the dealers (whose names and addresses the
Underwriters will furnish to the Company) to whom Securities may have been sold
by the Underwriters and to any other dealers upon reasonable request, either
amendments or supplements to the Prospectus or (ii) file with the Commission
documents incorporated by reference in the Prospectus, which shall be so
supplied to the Underwriters and such dealers, in either case so that the
statements in the Prospectus as so amended, supplemented or modified will not,
in light of the circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus will comply with law;
(d) To endeavor to qualify, at its expense, the Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Underwriters shall reasonably request and to pay all filing fees, reasonable
expenses and legal fees in connection therewith and in connection with the
determination of the eligibility for investment of the Securities; provided,
that the Company shall not be required to qualify as a foreign corporation or a
dealer in securities or to file any consents to service of process under the
laws of any jurisdiction;
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(e) To make generally available to its security holders as soon as
practicable an earnings statement of the Company covering a twelve-month period
beginning after the Time of Delivery which shall satisfy the provisions of
Section 11(a) of the Act and the rules and regulations of the Commission
thereunder (including Rule 158 under the Act);
(f) During the period beginning on the date of this Agreement and
continuing to and including the date 90 days after the date of this Agreement,
the Company will not offer, sell, contract to sell or otherwise dispose of any
Time Warner Common Stock, any securities of Time Warner which are substantially
similar to shares of Time Warner Common Stock or any securities which are
convertible into or exchangeable for Time Warner Common Stock or such
substantially similar securities (except for the Securities issued pursuant to
this Agreement) without the prior written consent of Goldman, Sachs & Co.; and
(g) To use best efforts to effect the listing of the Securities on the New
York Stock Exchange.
4. Expenses.
The Company covenants and agrees with the several Underwriters that the
Company will pay or cause to be paid the following: (i) all expenses in
connection with the preparation, printing and filing of the Registration
Statement as originally filed and of each amendment thereto; (ii) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the issue of the Securities and all other expenses in connection
with the preparation, printing and filing of the Registration Statement, the
Prospectus, any Preliminary Prospectus and any amendments and supplements
thereto and the mailing and delivering of copies thereof to the Underwriters and
dealers; (iii) all reasonable expenses in connection with the qualification of
the Securities, for offering and sale under state securities laws as provided in
Section 3(d) hereof, including the reasonable fees and disbursements of counsel
for the Underwriters in connection with such qualification and in connection
with the Blue Sky and legal investment surveys; (iv) any fees charged by
securities rating services for rating the Securities; (v) the cost of preparing
the Securities; (vi) the fees and expenses of the Trustee and any agent of the
Trustee and the fees and disbursements of counsel for the Trustee in connection
with the Indenture and the Securities; (vii) the fees and expenses incurred in
connection with the listing of the Securities on the New York Stock Exchange;
and (viii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section. It is understood, however, that, except as provided in this Section,
and Sections 6 and 9 hereof, the
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Underwriters will pay all of their own costs and expenses, including the fees of
their counsel and any advertising expenses connected with any offers they may
make.
5. Conditions of Underwriters' Obligations.
The obligations of the Underwriter hereunder shall be subject to the
accuracy, at and (except as otherwise stated herein) as of the date hereof and
at and as of the Time of Delivery, of the representations and warranties made
herein by the Company, to compliance at and as of the Time of Delivery by the
Company with its covenants and agreements herein contained and the other
provisions hereof to be satisfied at or prior to the Time of Delivery, and to
the following additional conditions:
(a) (i) The Prospectus shall have been filed with the Commission pursuant
to, and in compliance with, the applicable rules under the Act; no stop order
suspending the effectiveness of the Registration Statement shall be in effect,
and no proceeding for such purpose shall be pending before or threatened by the
Commission, and the Underwriters shall have received on and as of the Time of
Delivery, a certificate dated such date, signed by an executive officer of the
Company or an authorized agent of the Company designated as such by the Board of
Directors of the Company to the foregoing effect, and (ii) there shall have been
no material adverse change in or affecting the business, properties or financial
condition of the Company from that set forth in or contemplated by the
Registration Statement at the time it became effective, except as set forth in
or contemplated by the Prospectus, and the Underwriters shall have received on
and as of the Time of Delivery, a certificate dated such date, signed by an
executive officer of the Company to the foregoing effect. The officer or
agent executing such certificate may rely upon the best of his or her knowledge
as to any proceedings pending or threatened.
(b) Sullivan & Cromwell, counsel for the Underwriters, shall have
furnished to you such opinion or opinions, dated the Time of Delivery, with
respect to such matters as you may reasonably request, and such counsel shall
have received such papers and information as they may reasonably request to
enable them to pass upon such matters. In giving such opinion, such counsel may
rely as to matters of Texas law upon the opinions of Baker & Botts, L.L.P. and
Hugh Rice Kelly.
(c) Dewey Ballantine, special counsel for the Underwriters, shall have
furnished to you such opinion or opinions addressing such matters as you may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters.
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<PAGE>
(d) Hugh Rice Kelly, Executive Vice President, General Counsel, and
Corporate Secretary for the Company, shall have furnished to you his written
opinion, dated such Time of Delivery, in form and substance satisfactory to you,
to the effect that:
(i) The Company has been duly incorporated and is validly existing in good
standing under the laws of the State of Texas and has corporate power and
authority to enter into and perform its obligations under this Agreement and the
Indenture;
(ii) No consent, approval, authorization or other order of, or
registration with, any governmental regulatory body (other than such as may be
required under applicable securities laws, as to which such counsel need not
express an opinion) is required for the issuance and sale of the Securities
being delivered at such Time of Delivery or the consummation by the Company of
the transactions contemplated by this Agreement or the Indenture;
(iii) To the best of such counsel's knowledge and other than as set forth
or contemplated in the Prospectus, there are no legal or governmental
proceedings pending or threatened to which Company is subject, which,
individually or in the aggregate, are expected to have a material adverse effect
on the financial position, shareholders' equity or results of operations of the
Company;
(iv) The issuance by the Company of the Securities and the execution,
delivery and performance by the Company of this Agreement and the Indenture will
not result in the breach or violation of, or constitute a default under, the
Articles of Incorporation or the Bylaws of the Company, each as amended to date,
any indenture, mortgage, deed of trust or other agreement or instrument for
borrowed money to which the Company is a party or by which it is bound or to
which its property is subject or any law, order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or its
property, in any manner which would have a material adverse effect on the
business of the Company;
(v) The description of statutes and regulations set forth in Part I of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996 under the captions "Business-- Business of HL&P -- Regulatory Matters--
Rates and Services" and "--Environmental Quality" fairly describe in all
material respects the portions of the statutes and regulations addressed
thereby.
(e) Baker & Botts, L.L.P., counsel for the Company, shall have furnished to
you their written opinion, dated the Time
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<PAGE>
of Delivery, in form and substance satisfactory to you, to the effect that:
(i) Such counsel does not know of any contracts or documents of a
character required to be described in the Registration Statement or Prospectus
or to be filed as exhibits to the Registration Statement which are not so
described or filed;
(ii) The statements set forth in the Prospectus under the caption
"Description of the Securities" accurately summarize in all material respects
the terms of the Securities and the Indenture;
(iii) The Securities conform as to legal matters in all material respects
to the description thereof contained in the Prospectus, including, without
limitation, under the caption "Description of the Securities";
(iv) The Securities are in the form prescribed in or pursuant to the
Indenture, have been duly and validly authorized by all necessary corporate
action on the part of the Company and, when executed and delivered by the
Company and authenticated by the Trustee as specified in or pursuant to the
Indenture, will be valid and binding obligations of the Company, enforceable in
accordance with their terms, except as such enforceability is subject to the
effect of any applicable bankruptcy, insolvency, reorganization or other law
relating to or affecting creditors' rights generally and to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law); the Indenture has been duly authorized,
executed and delivered by the Company and, when executed and delivered by the
Trustee, will constitute a valid and binding obligation of the Company,
enforceable in accordance with its terms, except as such enforceability is
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or other law relating to or affecting creditors' rights generally and to general
principles of equity (regardless of whether such enforceability is considered in
proceeding in equity or at law);
(v) The Indenture has been duly qualified under the TIA;
(vi) The Registration Statement has become effective under the Act, and,
to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or any part thereof has been issued
and no proceedings for that purpose have been instituted and are pending or are
threatened by the Commission under the Act; the Registration Statement, as of
its effective date, and the Prospectus, as of its date, and any amendment or
supplement thereto after the
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<PAGE>
date hereof and prior to such Time of Delivery, as of the date thereof (except
for (A) the operating statistics, financial statements and financial statement
schedules contained or incorporated by reference therein or omitted therefrom
(including the auditors' reports on the financial statements and the notes to
the financial statements), (B) the other financial and statistical information
contained or incorporated by reference therein or omitted therefrom and (C) the
exhibits thereto, as to which such counsel need not express an opinion) complied
as to form in all material respects with the requirements of Form S-3 under the
Act and the applicable rules and regulations of the Commission thereunder, and
each document incorporated by reference therein as originally filed pursuant to
the Exchange Act (except for (A) the operating statistics, financial statements
and financial statement schedules contained or incorporated by reference therein
or omitted therefrom (including the auditors' reports on the financial
statements and the notes to the financial statements), (B) the other financial
and statistical information contained or incorporated by reference therein or
omitted therefrom and (C) the exhibits thereto, as to which such counsel need
not express an opinion) when so filed complied as to form in all material
respects with the Exchange Act and the applicable rules and regulations of the
Commission thereunder; and
(vii) The execution, delivery and performance by the Company of this
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, and this Agreement has been duly executed and delivered by
the Company.
In addition, such counsel shall state that no facts have come to the
attention of such counsel that lead them to believe that the Registration
Statement and any amendment made thereto prior to the time of such Time of
Delivery (except for (A) the operating statistics, financial statements and
financial statement schedules contained or incorporated by reference therein
(including the auditors' reports on the financial statements and the notes to
the financial statements, except to the extent that such notes describe legal or
governmental proceedings to which the Company is a party and are incorporated by
reference into one or more items of a report that is incorporated by reference
in the Registration Statement or the Prospectus, other than an item that
requires that financial statements be provided), (B) the other financial and
statistical information contained or incorporated by reference therein and (C)
the exhibits thereto, as to which such counsel need not comment) as of the time
such Registration Statement became effective or such amendment was filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus, and any amendment or supplement
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<PAGE>
thereto made prior to such Time of Delivery (except for (A) the operating
statistics, financial statements and financial statement schedules contained or
incorporated by reference therein (including the auditors, reports on the
financial statements and the notes to the financial statements, except to the
extent that such notes describe legal or governmental proceedings to which the
Company is a party and are incorporated by reference into one or more items of a
report that is incorporated by reference in the Prospectus, other than an item
that requires that financial statements be provided), (B) the other financial
and statistical information contained or incorporated by reference therein and
(C) the exhibits thereto, as to which such counsel need not comment), as of the
date of the Prospectus or such amendment or supplement contained, or as of the
Time of Delivery contains, any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(f) Baker & Botts, L.L.P., special tax counsel for the Company, shall have
furnished to you their written opinion, dated the Time of Delivery, in form and
substance satisfactory to you, to the effect that such firm confirms its opinion
set forth in the Prospectus under the caption "Certain United States Federal
Income Tax Considerations".
(g) At the time of execution of this Agreement, Deloitte & Touche LLP
shall have furnished to you a letter dated the date of such execution,
substantially in the form heretofore supplied and deemed satisfactory to you.
(h) At the Time of Delivery, Deloitte & Touche LLP shall have furnished
you a letter, dated the Time of Delivery, to the effect that such accountants
reaffirm, as of the Time of Delivery and as though made on the Time of Delivery,
the statements made in the letter furnished by such accountants pursuant to
paragraph (g) of this Section 5, except that the specified date referred to in
such letter will be a date not more than five business days prior to the Time of
Delivery.
(i) There shall have been no material adverse change in or affecting the
business, properties or financial condition of Time Warner from that set forth
in or contemplated by the publicly available documents referred to in the
Registration Statement at the time it became effective.
(j) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in
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<PAGE>
trading in the Company's or Time Warner's securities on the New York Stock
Exchange; (iii) a general moratorium on commercial banking activities declared
by either Federal or New York State authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by the
United States of a national emergency or war, if the effect of any such event
specified in this paragraph (j) in the reasonable judgment of the
Representatives makes it impracticable to market the Securities, to proceed with
the public offering or to deliver the Securities being issued at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus.
(k) The Company shall have furnished or caused to be furnished to you at
such Time of Delivery certificates of officers of the Company or an authorized
agent of the Company designated as such by the Board of Directors of the Company
satisfactory to you as to the accuracy of the representations and warranties of
the Company herein at and as of such Time of Delivery, as to the performance by
the Company of all of its obligations hereunder to be performed at or prior to
such Time of Delivery, as to the matters set forth in the introductory paragraph
to this Section 5 and subsection (a) of this Section and as to such other
matters as you may reasonably request.
6. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter,
and each person, if any, who controls each Underwriter within the meaning of the
Act or the Exchange Act, against any losses, claims, damages, liabilities or
expenses (including the reasonable cost of investigating and defending against
any claims therefore and counsel fees incurred in connection therewith), joint
or several, which may be based upon either the Act, or the Exchange Act, or any
other statute or at common law, on the ground or alleged ground that any
Preliminary Prospectus, the Registration Statement or the Prospectus (or any
such document, as from time to time amended, or deemed to be amended,
supplemented or modified) includes or allegedly includes an untrue statement of
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, unless such
statement or omission was made in reliance upon, and in conformity with, written
information furnished to the Company by any Underwriter through Goldman, Sachs &
Co. specifically for use in the preparation thereof; provided that in no case is
the Company to be liable with respect to any claims made against any Underwriter
or any such controlling person unless such Underwriter or such controlling
person shall have notified the Company in writing within a reasonable time after
the summons or other first legal process giving information of the nature of the
claim shall have been served upon such Underwriter or such controlling person,
but
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<PAGE>
failure to notify the Company of any such claim shall not relieve it from any
liability which it may have to such Underwriter or such controlling person
otherwise than on account of the indemnity agreement contained in this
paragraph; and provided, further, that the foregoing indemnity with respect to
the Preliminary Prospectus or the Prospectus shall not inure to the benefit of
any Underwriter if a copy of the Preliminary Prospectus or the Prospectus as
amended or supplemented, had not been sent or given by or on behalf of such
Underwriter to the person asserting any such losses, claims, damages or
liabilities concurrently with or prior to delivery of the written confirmation
of the sale of Securities to such person and the untrue statement or omission of
a material fact contained in any such Preliminary Prospectus or Prospectus was
corrected in the Preliminary Prospectus or Prospectus, as amended or
supplemented.
The Company will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but, if the Company elects to assume the defense,
such defense shall be conducted by counsel chosen by it. In the event that the
Company elects to assume the defense of any such suit and retains such counsel,
the Underwriter or Underwriters or controlling person or persons, defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) the Company shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include the Underwriter or Underwriters or controlling person or persons and the
Underwriter or Underwriters or controlling person or persons have been advised
by such counsel that one or more legal defenses may be available to it or them
which may not be available to the Company, in which case the Company shall not
be entitled to assume the defense of such suit on behalf of such Underwriter or
Underwriters or controlling person or persons, notwithstanding their obligation
to bear the reasonable fees and expenses of such counsel, it being understood,
however, that the Company shall not, in connection with any one such suit or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time for all such Underwriters and their
controlling persons, which firm shall be designated in writing by
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Goldman, Sachs & Co. The Company shall not be liable to indemnify any person
for any settlement of any such claim effected without the Company's consent.
The Company shall not, without the written consent of the Underwriter and/or
controlling person entitled to indemnification under this Section 6(a), effect
the settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not such
Underwriter or controlling person is an actual or potential party to such action
or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of such Underwriter and/or controlling person from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of such Underwriter and/or controlling person. This indemnity
agreement will be in addition to any liability, which the Company might
otherwise have.
(b) Each Underwriter agrees to indemnify and hold harmless the Company,
each of the Company's directors, each of the Company's officers who have signed
the Registration Statement and each person, if any, who controls the Company
within the meaning of the Act or the Exchange Act, against any losses, claims,
damages, liabilities or expenses (including the reasonable cost of investigating
and defending against any claims therefor and counsel fees incurred in
connection therewith), joint or several, which may be based upon the Act, or any
other statute or at common law, on the ground or alleged ground that any
Preliminary Prospectus, the Registration Statement or the Prospectus (or any
such document, as from time to time amended, or deemed to be amended,
supplemented or modified) includes or allegedly includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, but only
insofar as any such statement or omission was made in reliance upon, and in
conformity with, written information furnished to the Company by such
Underwriter through Goldman, Sachs & Co. specifically for use in the preparation
thereof; provided that in no case is such Underwriter to be liable with respect
to any claims made against the Company or any such director, officer or
controlling person unless the Company or any such director, officer or
controlling person shall have notified such Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the Company
or any such director, officer or controlling person, but failure to notify such
Underwriter of any such claim shall not relieve it from any liability which it
may have to the Company or any such director, officer or controlling person
otherwise than on account of the indemnity agreement contained in this
paragraph. Such
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Underwriter will be entitled to participate at its own expense in the defense,
or, if it so elects, to assume the defense of any suit brought to enforce any
such liability, but, if such Underwriter elects to assume the defense, such
defense shall be conducted by counsel chosen by it. In the event that such
Underwriter elects to assume the defense of any such suit and retain such
counsel, the Company or such director, officer or controlling person, defendant
or defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) such Underwriter shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include the Company or any such director, officer or controlling person and such
Underwriter and the Company or such director, officer, trustee or controlling
person have been advised by such counsel that one or more legal defenses may be
available to it or them which may not be available to such Underwriter, in which
case such Underwriter shall not be entitled to assume the defense of such suit
on behalf of the Company or such director, officer or controlling person,
notwithstanding its obligation to bear the reasonable fees and expenses of such
counsel, it being understood, however, that such Underwriter shall not, in
connection with any one such suit or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any time for
all of the Company and any such director, officer or controlling person, which
firm shall be designated in writing by the Company. Such Underwriter shall not
be liable to indemnify any person for any settlement of any such claim effected
without such Underwriter's consent. Such Underwriter shall not, without the
written consent of the Company or any such person, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the Company or
any such person from all liability arising out of such action or claim and (ii)
does not include a statement as to or an admission of fault, culpability or a
failure to act, by or on behalf of the Company or any such person. This
indemnity agreement will be in addition to any liability which such Underwriter
might otherwise have.
(c) If recovery is not available under Section 6(a) or 6(b) hereof, for
any reason other than as specified therein, the parties entitled to
indemnification by the terms thereof shall be entitled to contribution for
liabilities and expenses, except to the extent that contribution is not
permitted under Section 11(f) of the Act. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered
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the relative benefits received by each party from the offering of the Securities
(taking into account the portion of the proceeds of the offering realized by
each), the parties' relative knowledge and access to information concerning the
matter with respect to which the claim was asserted, the opportunity to correct
and prevent any statement or omission, and any other equitable considerations
appropriate under the circumstances. The Company and the Underwriters agree that
it would not be equitable if the amount of such contribution were determined by
pro rata or per capita allocation (even if the Underwriters were treated as one
entity for such purpose). No Underwriters or any person controlling such
Underwriters shall be obligated to make contribution hereunder which in the
aggregate exceeds the total public offering price of the Securities purchased by
such Underwriters under this Agreement, less the aggregate amount of any damages
which such Underwriters and its controlling persons have otherwise been required
to pay in respect of the same claim or any substantially similar claim. The
Underwriters' obligations to contribute are several in proportion to their
respective underwriting obligations, and not joint.
7. Substitution of Underwriters.
If any Underwriter shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder and the aggregate number of
such Securities which such defaulting Underwriter agreed but failed to purchase
does not exceed 10% of the aggregate number of all the Securities, the non-
defaulting Underwriters may make arrangements satisfactory to the Company for
the purchase of the aggregate number of such Securities by other persons,
including the non-defaulting Underwriters, but if no such arrangements are made
prior to the Time of Delivery, the non-defaulting Underwriters shall be
obligated severally in proportion to their respective commitments hereunder, to
purchase the Securities which such defaulting Underwriter agreed but failed to
purchase. If any Underwriter or Underwriters shall so default and the aggregate
number of such Securities with respect to which such default or defaults occur
is more than 10% of the aggregate number of all the Securities and arrangements
satisfactory to the non-defaulting Underwriters and the Company for the
purchase of such Securities by other persons are not made within 48 hours after
such default, this Agreement will terminate (or, with respect to the Second Time
of Delivery, the obligation of the Underwriters to purchase and of the Company
to sell the Optional Securities).
If the non-defaulting Underwriter or substituted underwriter or
underwriters are required hereby or agree to take up all or part of the
Securities of the defaulting Underwriter as provided in this Section 7, (i) the
Company shall have the right to postpone the Time of Delivery for a period of
not more than
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five full business days, in order that the Company may effect whatever changes
may thereby be made necessary in the Registration Statement or Prospectus or in
any other documents or arrangements, and the Company agrees to promptly file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective aggregate number of
Securities which the non-defaulting Underwriters or substituted purchaser or
purchasers shall thereafter be obligated to purchase shall be taken as the basis
of their underwriting obligation for all purposes of this Agreement. Nothing
herein contained shall relieve any defaulting Underwriter of its liability to
the Company or the non-defaulting Underwriters for damages occasioned by its
default hereunder. Any termination of this Agreement pursuant to this Section 7
shall be without liability on the part of the non-defaulting Underwriters or the
Company, other than as provided in Sections 6 and 9.
8. Survival of Indemnities, Representations, Warranties, etc.
The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.
9. Termination.
If this Agreement shall be terminated by the Underwriters, because of any
failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement, the
respective indemnities shall remain in full force and effect and the Company
will reimburse the Underwriter or such Underwriters as have so terminated this
Agreement with respect to themselves for all out-of-pocket expenses (including
the fees and disbursements of their counsel) reasonably incurred by them in
connection with the transactions contemplated by this Agreement.
10. Notices.
In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be
20
<PAGE>
entitled to act and rely upon any statement, request, notice or agreement on
behalf of any Underwriter made or given by you.
All statements, requests, notices and agreements hereunder shall be in
writing, and (i) if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to you in care of Goldman, Sachs & Co., 85
Broad Street, New York, New York 10004, Attention: Registration Department; (ii)
if to the Company shall be delivered or sent by mail, telex or facsimile
transmission to Houston Industries Incorporated, 1111 Louisiana, Houston, Texas
77002, Attention, Assistant Treasurer. Any such statements, requests, notices
or agreements shall take effect upon receipt thereof.
11. Successors.
This Agreement shall inure to the benefit of and be binding upon the
several Underwriters and the Company and their respective successors and the
directors, officers and controlling persons referred to in Section 6 of this
Agreement. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person other than the persons mentioned in the
preceding sentence any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained; this Agreement
and all conditions and provisions hereof being intended to be, and being, for
the sole and exclusive benefit of such persons and for the benefit of no other
person; except that the representations, warranties, covenants, agreements and
indemnities of the Company contained in this Agreement shall also be for the
benefit of the person or persons, if any, who control any Underwriter within the
meaning of the Act or the Exchange Act, and the representations, warranties,
covenants, agreements and indemnities of the several Underwriters shall also be
for the benefit of each director of the Company, each person who has signed the
Registration Statement and the person or persons, if any, who control the
Company within the meaning of the Act.
12. Applicable Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
13. Counterparts.
This Agreement may be executed by any one or more of the parties hereto in
any number of counterparts, each of which shall be deemed to be an original, but
all such respective counterparts shall together constitute one and the same
instrument.
21
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us seven counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement between each of the Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
Houston Industries Incorporated
By:__________________________________
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: ___________________________
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
22
<PAGE>
SCHEDULE I
Number of
Securities
to be
Underwriters Purchased
- ------------ ----------
Total..............................................
23
<PAGE>
EXHIBIT 4.1
================================================================================
HOUSTON INDUSTRIES INCORPORATED
TO
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
_______________
INDENTURE
Dated as of July __, 1997
_______________
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
Parties................................................................ 1
Recitals of the Company................................................ 1
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions............................................... 1
Act.................................................................. 2
Affiliate............................................................ 2
Authenticating Agent................................................. 2
Board of Directors................................................... 2
Board Resolution..................................................... 2
Business Day......................................................... 2
Calculation Agent.................................................... 2
Closing Price........................................................ 2
Commission........................................................... 3
Common Stock......................................................... 3
Company.............................................................. 3
Company Request...................................................... 3
Corporate Trust Office............................................... 3
corporation.......................................................... 3
Defaulted Interest................................................... 3
Delivery of Spin-Off Securities Option............................... 3
Depositary........................................................... 3
Event of Default..................................................... 3
Exchange Act......................................................... 3
Exchange Consideration............................................... 4
Exchange Rate........................................................ 4
ex-dividend date..................................................... 4
Expiration Date...................................................... 4
Extraordinary Dividend............................................... 4
Face Amount.......................................................... 4
Global Security...................................................... 4
Holder............................................................... 4
Houston.............................................................. 4
_______________
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE>
Page
Indenture............................................................ 4
Interest Payment Date................................................. 4
Maturity............................................................. 4
Maturity Price....................................................... 4
NYSE................................................................. 4
NorAm Merger......................................................... 4
Notice of Default.................................................... 4
Officers' Certificate................................................ 5
Opinion of Counsel................................................... 5
Outstanding.......................................................... 5
Paying Agent......................................................... 6
Person............................................................... 6
Predecessor Security................................................. 6
principal............................................................ 6
Redemption Date...................................................... 6
Redemption Price..................................................... 6
Regular Record Date.................................................. 6
Reorganization Event................................................. 6
Responsible Officer.................................................. 6
Securities Act....................................................... 6
Security Register.................................................... 7
Series D Preferred Stock............................................. 7
Special Record Date.................................................. 7
Spin-Off............................................................. 7
Spin-Off Securities.................................................. 7
Stated Maturity...................................................... 7
Subsidiary........................................................... 7
Tax Redemption Event................................................. 7
Threshold Appreciation Price......................................... 7
Time Warner.......................................................... 7
Time Warner Stock.................................................... 7
Time Warner Successor................................................ 7
Trading Day.......................................................... 8
Transaction Value.................................................... 8
Trust Indenture Act.................................................. 8
Trustee.............................................................. 8
Vice President....................................................... 8
Volume Weighted Average Price........................................ 8
SECTION 102. Compliance Certificates and Opinions...................... 8
SECTION 103. Form of Documents Delivered to Trustee.................... 9
SECTION 104. Acts of Holders; Record Dates............................. 9
SECTION 105. Notices, Etc., to Trustee and Company..................... 12
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<PAGE>
Page
SECTION 106. Notice to Holders; Waiver................................. 12
SECTION 107. Conflict with Trust Indenture Act......................... 12
SECTION 108. Effect of Headings and Table of Contents.................. 13
SECTION 109. Successors and Assigns.................................... 13
SECTION 110. Separability Clause....................................... 13
SECTION 111. Benefits of Indenture..................................... 13
SECTION 112. Governing Law............................................. 13
SECTION 113. Legal Holidays............................................ 13
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally........................................... 14
SECTION 202. Form of Face of Security.................................. 14
SECTION 203. Form of Reverse of Security............................... 19
SECTION 204. Form of Legend for Global Securities...................... 22
SECTION 205. Form of Trustee's Certificate of Authentication........... 22
ARTICLE THREE
The Securities
SECTION 301. Title and Terms........................................... 23
SECTION 302. Denominations............................................. 23
SECTION 303. Execution, Authentication, Delivery and Dating............ 24
SECTION 304. Temporary Securities...................................... 24
SECTION 305. Registration, Registration of Transfer and Exchange....... 25
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.......... 26
SECTION 307. Payment of Interest; Interest Rights Preserved............ 27
SECTION 308. Persons Deemed Owners..................................... 28
SECTION 309. Cancellation.............................................. 28
SECTION 310. Computation of Interest................................... 28
SECTION 311. CUSIP Numbers............................................. 28
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture................... 29
SECTION 402. Application of Trust Money................................ 30
-iii-
<PAGE>
Page
ARTICLE FIVE
Remedies
SECTION 501. Events of Default......................................... 30
SECTION 502. Acceleration of Maturity; Rescission and Annulment........ 31
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee............................................... 32
SECTION 504. Trustee May File Proofs of Claim.......................... 33
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities............................................... 33
SECTION 506. Application of Money or Common Stock Collected............ 33
SECTION 507. Limitation on Suits....................................... 34
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest..................................... 34
SECTION 509. Restoration of Rights and Remedies........................ 35
SECTION 510. Rights and Remedies Cumulative............................ 35
SECTION 511. Delay or Omission Not Waiver.............................. 35
SECTION 512. Control by Holders........................................ 35
SECTION 513. Waiver of Past Defaults................................... 36
SECTION 514. Undertaking for Costs..................................... 36
SECTION 515. Waiver of Usury, Stay or Extension Laws................... 36
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities....................... 37
SECTION 602. Notice of Defaults........................................ 37
SECTION 603. Certain Rights of Trustee................................. 37
SECTION 604. Not Responsible for Recitals or Issuance of Securities.... 38
SECTION 605. May Hold Securities....................................... 38
SECTION 606. Money Held in Trust....................................... 39
SECTION 607. Compensation and Reimbursement............................ 39
SECTION 608. Conflicting Interests..................................... 39
SECTION 609. Corporate Trustee Required; Eligibility................... 39
SECTION 610. Resignation and Removal; Appointment of Successor......... 40
SECTION 611. Acceptance of Appointment by Successor.................... 41
SECTION 612. Merger, Conversion, Consolidation or Succession
to Business.............................................. 41
SECTION 613. Preferential Collection of Claims Against Company......... 42
-iv-
<PAGE>
Page
SECTION 614. Appointment of Authenticating Agent...................... 42
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses
of Holders............................................. 43
SECTION 702. Preservation of Information; Communications to Holders.. 44
SECTION 703. Reports by Trustee...................................... 44
SECTION 704. Reports by Company...................................... 44
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc............................. 45
SECTION 802. Successor Substituted.................................... 46
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders....... 46
SECTION 902. Supplemental Indentures With Consent of Holders.......... 47
SECTION 903. Execution of Supplemental Indentures..................... 47
SECTION 904. Effect of Supplemental Indentures........................ 48
SECTION 905. Conformity with Trust Indenture Act...................... 48
SECTION 906. Reference in Securities to Supplemental Indentures....... 48
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest............... 48
SECTION 1002. Maintenance of Office or Agency.......................... 48
SECTION 1003. Money for Securities Payments to Be Held in Trust........ 49
SECTION 1004. Statement by Officers as to Default...................... 50
SECTION 1005. Existence................................................ 50
SECTION 1006. Waiver of Certain Covenants.............................. 50
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<PAGE>
Page
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Right of Redemption...................................... 51
SECTION 1102. Applicability of Article................................. 51
SECTION 1103. Election to Redeem....................................... 51
SECTION 1104. Notice of Redemption..................................... 51
SECTION 1105. Deposit of Redemption Price.............................. 52
SECTION 1106. Securities Payable on Redemption Date.................... 52
ARTICLE TWELVE
Exchange of Securities Into Common Stock
SECTION 1201. Exchange at Maturity..................................... 52
SECTION 1202. No Fractional Shares..................................... 53
SECTION 1203. Adjustment of Exchange Rate.............................. 53
SECTION 1204. Notice of Adjustments and Certain Other Events........... 57
SECTION 1205. Payment of Certain Taxes Upon Exchange; Tax
Characterization........................................ 57
SECTION 1206. Shares Free and Clear.................................... 58
SECTION 1207. Cancellation of Security................................. 58
SECTION 1208. Duties of Trustee Regarding Exchange..................... 58
SECTION 1209. Repayment of Certain Funds Upon Exchange................. 58
Testimonium
Signatures and Seals
Acknowledgements
-vi-
<PAGE>
Houston Industries Incorporated
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310 THROUGH 318,
INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
(SS) 310(a)(1) ............................................. 609
(a)(2) ............................................. 609
(a)(3) ............................................. Not Applicable
(a)(4) ............................................. Not Applicable
(b) ............................................. 608
610
(SS) 311(a) ............................................. 613
(b) ............................................. 613
(SS) 312(a) ............................................. 701
702
(b) ............................................. 702
(c) ............................................. 702
(SS) 313(a) ............................................. 703
(b) ............................................. 703
(c) ............................................. 703
(d) ............................................. 703
(SS) 314(a) ............................................. 704
(a)(4) ............................................. 101
1004
(b) ............................................. Not Applicable
(c)(1) ............................................. 102
(c)(2) ............................................. 102
(c)(3) ............................................. Not Applicable
(d) ............................................. Not Applicable
(e) ............................................. 102
(SS) 315(a) ............................................. 601
(b) ............................................. 602
(c) ............................................. 601
(d) ............................................. 601
(e) ............................................. 514
(SS) 316(a) ............................................. 101
(a)(1)(A) ............................................. 502
512
(a)(1)(B) ............................................. 513
(a)(2) ............................................. Not Applicable
(b) ............................................. 508
(c) ............................................. 104
(SS) 317(a)(1) ............................................. 503
(a)(2) ............................................. 504
(b) ............................................. 1003
(SS) 318(a) ............................................. 107
___________________
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
INDENTURE, dated as of July __, 1997, between Houston Industries
Incorporated, a corporation duly organized and existing under the laws of the
State of Texas (herein called the "Company"), having its principal office at
1111 Louisiana, Houston, Texas 77002, and The First National Bank of Chicago, a
national banking association duly organized and existing under the laws of the
United States, as Trustee (herein called the "Trustee").
Recitals of the Company
The Company has duly authorized the creation of an issue of its __%
Automatic Common Exchange Securities due _______, 2000 (herein called the
"Securities") of substantially the tenor and amount hereinafter set forth, and
to provide therefor the Company has duly authorized the execution and delivery
of this Indenture.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
Now, Therefore, This Indenture Witnesseth:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as
<PAGE>
otherwise herein expressly provided, the term "generally accepted accounting
principles" with respect to any computation required or permitted hereunder
shall mean such accounting principles as are generally accepted at the date of
such computation;
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified
in Section 104.
"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.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", means any day that is not a Saturday or Sunday or a
day on which banking institutions or trust companies in New York, New York or
Houston, Texas are authorized or obligated by law or executive order to close.
"Calculation Agent" means the Trustee or any successor Trustee
appointed pursuant to the applicable provisions of this Indenture.
"Closing Price" means, on any date of determination, the closing sale
price (or, if no closing price is reported, the last reported sale price) of
such security on the NYSE on such date or, if such security is not listed for
trading on the NYSE on any such date, as reported in the composite transactions
for the principal national securities exchange on which such security is so
listed, or if such security is not so listed on a United States national
securities exchange, as reported by the Nasdaq National Market, or, if such
-2-
<PAGE>
security is not so reported, the last quoted bid price for such security in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization, or, if such bid price is not available, the market value of such
security on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company.
"Commission" means the Securities and Exchange Commission, from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Stock" means, subject to adjustment as described in Section
1203(a), the Common Stock, par value $0.01 per share, of Time Warner Inc. and
any shares of capital stock of Time Warner received upon reclassification or
reclassifications thereof; provided that if at any time there shall be more than
one such resulting class, the shares of each such class issuable upon exchange
shall be substantially in the proportion which the total number of shares of
such class resulting from all such reclassifications bears to the total number
of shares of all such classes resulting from all such reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" means a written request or order signed in the name
of the Company by its Chairman of the Board, its Vice Chairman of the Board, its
President or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee in
Chicago, Illinois at which at any particular time its corporate trust business
shall be administered.
"corporation" means a corporation, association, company, including,
without limitation, any limited liability company, joint-stock company or
business trust.
"Defaulted Interest" has the meaning specified in Section 307.
"Delivery of Spin-Off Securities Option" has the meaning specified in
Section 1203.
"Depositary" means The Depository Trust Company or such other clearing
agency registered under the Exchange Act that is designated to act as Depositary
with respect to Securities issued in the form of one or more Global Securities.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any
successor statute thereto, in each case as amended from time to time.
-3-
<PAGE>
"Exchange Consideration" has the meaning specified in the form of
security.
"Exchange Rate" has the meaning specified in Section 1201.
"ex-dividend date" has the meaning specified in Section 1203.
"Expiration Date" has the meaning specified in Section 104.
"Extraordinary Dividend" has the meaning specified in Section 1203.
"Face Amount" and "Initial Price" mean $______ per Security.
"Global Security" means a Security that evidences all or part of the
Securities and bears the legend set forth in Section 204.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Houston" means the surviving corporation of the NorAm Merger, which
will be renamed "Houston Industries Incorporated."
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Interest Payment Date" means the Stated Maturity of an instalment of
interest on the Securities.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an instalment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Maturity Price" means the average of the Volume Weighted Average
Prices per share of Common Stock for the 20 Trading Days ending two Business
Days prior to Maturity.
"NYSE" means the New York Stock Exchange, Inc.
"NorAm Merger" means the merger of the Company into Houston Lighting &
Power Company, a Texas corporation ("HL&P"), as contemplated by the Agreement
and Plan of Merger, dated as of August 11, 1996, among the Company, HL&P, NorAm
Energy Corp.
-4-
<PAGE>
and HI Merger, Inc., as amended by Amendment to Agreement and Plan of Merger
dated as of October 23, 1996.
"Notice of Default" means a written notice of the kind specified in
Section 501(3).
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President or a Vice President, and
by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company, and delivered to the Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 1004 shall be the
principal executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of the Company, and who shall be reasonably acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(1) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(2) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the Holders of
such Securities; provided that, if such Securities are to be redeemed, notice
of such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made; and
(3) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to
it that such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
aggregate Face Amount of the Outstanding Securities have given, made or taken
any request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Out standing, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, waiver or other
action, only Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right
-5-
<PAGE>
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the Company
or of such other obligor.
"Paying Agent" means any Person authorized by the Company to deliver
Common Stock or pay the principal of or any premium or interest on any
Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint
venture, trust or other entity or any unincorporated organization or government
or any agency or political subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"principal" means all amounts other than instalments of interest
payable with respect to the Securities, assuming for this purpose that the
Company exercises its election to deliver cash upon the Maturity of the
Securities.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price" means one hundred and five percent (105%) of the
greater of (i) the average of the Closing Prices of the Securities over the five
Trading Days immediately preceding the day on which the Redemption Notice is
released on the PR Newswire and (ii) the Closing Price of the Securities on the
Trading Day immediately preceding the day on which the Redemption Notice is
released on the PR Newswire.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the ______________, ____________, ___________ or ______________
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date.
"Reorganization Event" has the meaning specified in Section 1203.
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or assistant trust officer, the controller or any assistant controller or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
-6-
<PAGE>
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Series D Preferred Stock" means the Series D Convertible Preferred
Stock, par value $0.10 per share, of Time Warner.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"Spin-Off" has the meaning specified in Section 1203.
"Spin-Off Securities" has the meaning specified in Section 1203.
"Stated Maturity", when used with respect to any Security, means the
date specified in such Security as the fixed date on which the principal amount
of such security will be mandatorily exchanged into a number of shares of Common
Stock (or at the Company's option, cash) or, with respect to any instalment of
interest thereon, the date on which such instalment of interest is due and
payable.
"Subsidiary" of any Person means (i) a corporation more than 50% of
the outstanding voting stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof, (ii) a partnership of which such Person, or
one or more other Subsidiaries of such Person or such Person and one or more
other Subsidiaries thereof, directly or indirectly, is the general partner and
has the power to direct the policies, management and affairs or (iii) any other
Person (other than a corporation or partnership) in which such Person, or one or
more other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
interest and power to direct the policies, management and affairs thereof. For
the purposes of this definition, "voting stock" means stock which ordinarily has
voting power for the election of directors (or persons performing similar
functions), whether at all times or only so long as no senior class of stock has
such voting power by reason of any contingency.
"Tax Redemption Event" has the meaning specified in the form of
Security set forth in Section 203.
"Threshold Appreciation Price" means $______.
"Time Warner" means, subject to Section 1203(a)(v), Time Warner Inc.,
a Delaware corporation.
"Time Warner Stock" means collectively the Series D Preferred Stock
and the Common Stock into which the Series D Preferred Stock is convertible.
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"Time Warner Successor" has the meaning specified in Section 1203.
"Trading Day" means, with respect to any security, any day on which
(A) trading in the security is not suspended on any national securities exchange
or association or over-the-counter market at the close of business and (B) such
security has traded at least once on the national securities exchange or
association or over-the-counter market that is the primary market for the
trading of such security.
"Transaction Value" has the meaning specified in Section 1203.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"Volume Weighted Average Price" means, with respect to any security,
the display designated as page Volume at Price on the Bloomberg Financial
Service (or such page as may replace the Volume at Price page on that service
for the purpose of displaying daily volume and weighted trading prices of equity
securities) or, if such service does not then publish daily volume and weighted
trading prices of such security, such other page and service selected by the
Calculation Agent that reports daily volume and weighted trading prices of such
security, or, if the Calculation Agent does not select another page or service,
the Closing Price of such security.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
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(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given, made or
taken by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such
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instrument or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 601)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities; provided that the Company may not set a record date for,
and the provisions of this paragraph shall not apply with respect to, the giving
or making of any notice, declaration, request or direction referred to in the
next paragraph. If any record date is set pursuant to this paragraph, the
Holders of Outstanding Securities on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite Face Amount of Outstanding Securities. Nothing in
this paragraph shall be construed to prevent the Company from setting a new
record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite Face Amount of Outstanding Securities
on the date such action is taken. Promptly after any record date is set pursuant
to this paragraph, the Company, at its own expense, shall cause notice of such
record date, the proposed action by Holders
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and the applicable Expiration Date to be given to the Trustee in writing and to
each Holder of Securities in the manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 502, (iii) any request to institute proceedings referred
to in Section 507(2) or (iv) any direction referred to in Section 512. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to join
in such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite Face Amount of Outstanding Securities on such record
date. Nothing in this paragraph shall be construed to prevent the Trustee from
setting a new record date for any action for which a record date has previously
been set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be cancelled and of no
effect), and nothing in this paragraph shall be construed to render ineffective
any action taken by Holders of the requisite Face Amount of Outstanding
Securities on the date such action is taken. Promptly after any record date is
set pursuant to this paragraph, the Trustee, at the Company's expense, shall
cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Company in writing and to each
Holder of Securities in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the
party hereto which sets such record dates may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Securities in the manner set forth in Section
106, on or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the Face Amount of such Security or by one or more
duly appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such Face Amount.
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SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, Attention: Corporate Trust, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to it
at the address of its principal office specified in the first paragraph of this
instrument or at any other address previously furnished in writing to the
Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act which is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act which may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be.
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SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities 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.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed
in accordance with the law of the State of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal (and premium, if any) need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
the Interest Payment Date or Redemption Date, or at the Stated Maturity and no
additional interest shall accrue as a result of such delayed payment.
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ARTICLE TWO
Security Forms
SECTION 201. Forms Generally.
The Securities and the Trustee's certificates of authentication shall
be in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or automated
quotation system or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution thereof.
The definitive Securities shall be typewritten, printed, lithographed
or engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange or automated quotation system on which the Securities may be
listed or traded, all as determined by the officers executing such Securities,
as evidenced by their execution of such Securities.
SECTION 202. Form of Face of Security.
[If Security is a Global Security, insert legend provided in
Section 204.]
HOUSTON INDUSTRIES INCORPORATED
___% AUTOMATIC COMMON EXCHANGE SECURITY DUE _______, 2000
(Subject to Exchange into Shares
of Common Stock of Time Warner Inc.)
No. __ Number of Securities:
Face Amount per Security: $
CUSIP No.___________________
HOUSTON INDUSTRIES INCORPORATED, a corporation duly organized and
existing under the laws of Texas (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to deliver or pay to
, or registered assigns, at Maturity
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either (i) shares of Common Stock as described below or (ii) at the option of
the Company, which election may be made as to any or all of this Security at the
Maturity Price, cash equal to such shares (or fractions thereof) of Common
Stock. This Security shall bear interest on the Face Amount hereof from _______,
1997 or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, quarterly in arrears on ________, _______,
____________ and ___________ in each year, commencing ____________, 1997 at the
rate of ____% per annum until this Security is exchanged for Common Stock (or,
at the Company's option, cash in an amount determined as set forth herein;
provided that any principal and premium, and any such instalment of interest,
which is overdue shall bear interest at the rate of ___% per annum, 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 a 360-day year of twelve 30-day months.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will 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 ____, ____, ____
or ____ (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. In any case where such Interest Payment Date shall not be
a Business Day, then (notwithstanding any other provision of said Indenture or
this Security) payment of such interest need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect as if
made on such date, and, if such payment is so made, no interest shall accrue for
the period from and after such date. Any such interest not so punctually paid or
duly provided for will forthwith cease to be payable to the Holder on the
relevant 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 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
shall 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.
At Maturity, the principal amount of each Security will be mandatorily
exchanged for a number of shares of Common Stock (or, at the Company's option,
which may be exercised with respect to any or all shares of Common Stock
deliverable upon exchange of the Securities, cash in an amount determined as set
forth herein) at the Exchange Rate (as defined below), together with any accrued
and unpaid interest up to Maturity. The "Exchange Rate" is equal to, subject to
adjustment pursuant to Section 1203 of the Indenture, (a) if the Maturity Price
is greater than or equal to $_______ (the "Threshold Appreciation Price"),
______ shares of Common Stock per Security, (b) if the Maturity Price is less
than the Threshold Appreciation Price but is greater than $____ (the "Initial
Price"), a fractional share of Common Stock per Security so that the value
thereof (determined at the Maturity Price) is equal to the Initial Price and (c)
if the Maturity Price is less than or equal to the Initial Price, one share of
Common Stock per Security. Notwithstanding the foregoing, the Company may, at
its option, in lieu of delivering shares of Common Stock (or fractions thereof)
at the Exchange Rate, deliver cash in an amount equal to the value of such
number of shares of Common Stock (or fractions thereof) at the Maturity Price.
Such option, if exercised, may be exercised with respect to any or all of the
shares of Common Stock otherwise deliverable upon exchange of the Outstanding
Securities. Such number of shares of Common Stock
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(or amount of cash in lieu thereof) deliverable upon mandatory exchange is
hereinafter referred to as the "Exchange Consideration." On or prior to the
twenty-fifth Business Day prior to Maturity, the Company will notify the Trustee
and publish a notice in a newspaper of national circulation published at least
five days a week stating whether the principal amount of each Security will be
exchanged for shares of Common Stock or cash or both. If less than all of the
Outstanding Securities are to be exchanged for Common Stock, the Securities to
be exchanged for Common Stock will be selected by the Trustee from the
Outstanding Securities by lot or pro rata (as nearly as may be) or by any other
method determined by the Trustee in its sole discretion to be equitable. No
fractional shares of Common Stock and/or other securities if a Spin-Off or a
Reorganization Event (each as defined in Section 1203 of the Indenture) has
occurred prior to Maturity, will be issued if the Company exchanges the
Securities for shares of Common Stock and/or such securities. If more than one
Security shall be surrendered for exchange at one time by the same Holder, the
number of full shares of Common Stock and/or such other securities which will be
delivered upon exchange will be computed on the basis of the aggregate number of
Securities so surrendered at Maturity. In lieu of any fractional share or
security otherwise issuable in respect of the Securities of any Holder which are
exchanged at Maturity, such Holder shall be entitled to receive an amount in
cash equal to the value of such fractional share or security at the Maturity
Price (or similarly calculated average price for a security other than Common
Stock) or in the case of redemption, at the average Volume Weighted Average
Prices (as defined below) of Common Stock (or of such other security) for the
five Trading Days immediately preceding the date on which the Redemption Notice
is released on the PR Newswire.
"Maturity Price" means the average of the Volume Weighted Average
Prices per share of Common Stock for the twenty Trading Days ending two Business
Days prior to Maturity. "Volume Weighted Average Price" means, with respect to
any security, the display designated as page Volume at Price on the Bloomberg
Financial Service (or such page as may replace the Volume at Price page on that
service for the purpose of displaying daily volume and weighted trading prices
of equity securities) or, if such service does not then publish daily volume and
weighted trading prices of such security, such other page and service selected
by the Calculation Agent that reports daily volume and weighted trading prices
of such security or, if the Calculation Agent does not select another page or
service, the Closing Price of such security. A "Trading Day", with respect to
any security, means any day on which (A) trading in the security is not
suspended on any national securities exchange or association or over-the-counter
market at the close of business and (B) such security has traded at least once
on the national securities exchange or association or over-the-counter market
that is the primary market for the trading of such security. A "Business Day"
means any day that is not a Saturday or Sunday or a day on which the banking
institutions or trust companies in New York, New York or Houston, Texas are
authorized or obligated by law or executive order to close.
The Exchange Rate and Maturity Price are subject to adjustment as
provided in the Indenture. In addition, the Indenture provides that in the case
of a Reorganization Event or Spin-Off, the Company may deliver the cash,
property or securities received in such Reorganization Event, or the Spin-Off
Securities received in such Spin-Off, in lieu of Common Stock (or, at its
option, may deliver the cash equivalent thereof).
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Interest on this Security will be payable, and delivery or payment of
the Exchange Consideration will be made, upon surrender of such Security at the
Corporate Trust Office of the Trustee (or such other office or agency as may be
designated by the Company pursuant to the Indenture), and payment of interest
(and, if the Company elects to deliver cash in lieu of Common Stock at Maturity,
the amount of cash payable at Maturity) on this Security will be made 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 on 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 Securities 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.
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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.
In Witness Whereof, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: _______, 1997
HOUSTON INDUSTRIES INCORPORATED
By.....................................
Attest:
.................................
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SECTION 203. Form of Reverse of Security.
[REVERSE OF SECURITY]
This Security is one of a duly authorized issue of securities of the
Company designated as its _____% Automatic Common Exchange Securities due
_______ __, 2000 (herein called the "Securities"), limited to 20,000,000
Securities (subject to increase up to 22,909,040 Securities), each with a Face
Amount of $______, issued under an Indenture, dated as of July __, 1997 (herein
called the "Indenture"), between the Company and The First National Bank of
Chicago, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), and reference is hereby made to the
Indenture 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.
Upon the occurrence of a Tax Redemption Event (as defined below), the
Company will have the right to redeem the Securities, as a whole and not in
part, at the Tax Redemption Price, together with accrued and unpaid interest to
but excluding the Redemption Date, upon not less than five Business Days' nor
more than 45 calendar days' notice. In order to exercise this redemption right,
the Company must release a notice of such redemption (a "Redemption Notice") on
the PR Newswire prior to 9:00 a.m., Eastern Standard Time, on any Trading Day no
later than 30 calendar days following the promulgation by the Internal Revenue
Service of Treasury regulations (the "Regulations") under proposed Section 1259
of the Internal Revenue Code of 1986, as amended. The Redemption Notice must be
given no later than the next Business Day following the date on which the
Redemption Notice is released on the PR Newswire, by publication in The Wall
Street Journal, or, if The Wall Street Journal is not then published, a similar
publication selected by the Calculation Agent, and, if the Securities at such
time are in registered certificated form, the Redemption Notice must be placed
in the mail to each holder of Securities no later than the next Business Day
following the date on which the Redemption Notice is released on the PR
Newswire. A Redemption Notice will be deemed given upon release of the
Redemption Notice through the PR Newswire, even if the Company does not comply
with its publication and mailing of notice obligations.
A "Tax Redemption Event" will occur if the Internal Revenue Service
promulgates the Regulations (which, if enacted, would require immediate
recognition of gain with respect to "constructive sales" of certain appreciated
financial positions) and, in the opinion of Baker & Botts, L.L.P., or other
nationally recognized legal counsel experienced in such matters, (i) as a result
of the promulgation of the Regulations, the Company will be required to
recognize gain with respect to all or a portion of the Time Warner Stock held by
the Company in an amount equal to the difference between the fair market value
of such Stock and the Company's basis in such Stock, and (ii) such gain
recognition may be deferred to a later taxable year if the Company redeems the
Securities. "Tax Redemption Price" means one hundred and five percent (105%) of
the greater of (i) the average of the Closing Prices of the Securities over the
five Trading Days immediately preceding the day on which the Redemption Notice
is released on the PR Newswire and (ii) the Closing Price of the Securities on
the Trading Day immediately preceding the day on which the Redemption Notice is
released on the PR Newswire.
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The Tax Redemption Price may be paid in cash or shares of Common Stock
or a combination of both as specified in the Redemption Notice. To the extent
that the Company chooses to pay the Tax Redemption Price in shares of Common
Stock, the Company will deliver per each such Security, subject to adjustment as
described in (i) Section 1203(a)(iv) of the Indenture if a Spin-Off has occurred
prior to the Redemption Date or (ii) Section 1203(a)(v) of the Indenture if a
Reorganization Event has occurred prior to the Redemption Date, the number of
shares of Common Stock which equals the quotient of (i) the Tax Redemption Price
per Security and (ii) the average of the Volume Weighted Average Prices of
Common Stock for the five Trading Days immediately preceding the date on which
the Redemption Notice is released on the PR Newswire.
If an Event of Default with respect to the Securities shall occur and
be continuing, the principal of the Securities may be declared due and payable
in the manner and with the effect provided in the Indenture, subject to the
provisions regarding mandatory exchange set forth on the face hereof.
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 under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of not
less than a majority in Face Amount of the Securities at the time Outstanding.
The Indenture also contains provisions permitting the Holders of specified
percentages in Face Amount of the Securities at the time Outstanding, on behalf
of the Holders of all Securities, 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 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, the Holders of not less than 25% in Face Amount of the Securities 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 aggregate Face Amount of Securities 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 or to exchange this Security as provided herein.
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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 authorized denominations and for the same aggregate Face Amount, will be
issued to the designated transferee or transferees.
The Securities are issuable only in registered form, without coupons,
each in denominations of $ [Initial Price]. As provided in the Indenture and
subject to certain limitations therein set forth, Securities are exchangeable
for a like aggregate Face Amount of Securities of a different authorized
denomination, as requested by the Holder surrendering the same.
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.
By its purchase of a Security, each Holder hereby agrees with the
Company (in the absence of an administrative determination or judicial ruling to
the contrary) to characterize this Security for all tax purposes as a forward
purchase contract to purchase Common Stock (and Spin-Off Securities, if any) at
Maturity (including as a result of acceleration or otherwise), under the terms
of which contract (i) at the time of issuance of this Security the Holder
deposits irrevocably with the Company a fixed amount of cash equal to the
purchase price of the Security to assure the fulfillment of the Holder's
purchase obligation described in clause (iii) below, which deposit will
unconditionally and irrevocably be applied at Maturity to satisfy such
obligation, (ii) until Maturity the Company will be obligated to pay interest on
such deposit at a rate equal to the stated rate of interest on this Security as
compensation to the Holder for the Company's use of such cash deposit during the
term hereof, and (iii) at Maturity such cash deposit unconditionally and
irrevocably will be applied by the Company in full satisfaction of the Holder's
obligation under the forward purchase contract, and the Company will deliver to
the Holder the number of shares of Common Stock (and Spin-Off Securities, if
any) that the Holder is entitled to receive at Maturity pursuant to the terms of
this Security (subject to the Company's right to deliver cash in lieu of the
shares of Common Stock (and Spin-Off Securities, if any)). Consistent with the
above characterization, (i) amounts paid to the Company in respect of the
original issue of this Security will be treated as allocable in their entirety
to the amount of the cash deposit attributable to such Security and (ii) amounts
denominated as interest that are payable with respect to the Security will be
characterized as interest payable on the amount of such deposit, includible
annually in the income of the Holder as interest income in accordance with such
Holder's method of accounting.
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All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
This Security shall be governed by and construed in accordance with
the law of the State of New York.
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SECTION 204. Form of Legend for Global Securities.
Every Global Security authenticated and delivered hereunder shall bear
a legend in substantially the following form:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO HOUSTON INDUSTRIES INCORPORATED OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN
EXCHANGE FOR THIS CERTIFICATE OR ANY PORTION HEREOF IS REGISTERED IN THE NAME OF
CEDE & CO. (OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON OTHER THAN THE DEPOSITORY
TRUST COMPANY OR A NOMINEE THEREOF IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
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 THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
SECTION 205. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
..........................................,
As Trustee
By.........................................
Authorized Officer
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ARTICLE THREE
The Securities
SECTION 301. Title and Terms.
The aggregate number of Securities which may be authenticated and
delivered under this Indenture is limited to 20,000,000, except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Section 304, 305, 306 or 906
and except for an aggregate of 2,909,040 Securities which may be issued pursuant
to the Underwriting Agreement dated July __, 1997 between the Company and the
underwriters named therein.
The Securities shall be known and designated as the "__% Automatic
Common Exchange Securities due July __, 2000" of the Company. Their Stated
Maturity shall be July __, 2000, and they shall bear interest on the Face Amount
thereof at the rate of ___% per annum, from __________, 1997, or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, as the case may be, payable quarterly in arrears on each __________,
__________, _________ and _____________, beginning _____________, until the Face
Amount thereof is exchanged for Common Stock or cash.
The principal of (and premium, if any) and interest on the Securities
shall be payable at the office or agency of the Corporate Trust Office of the
Trustee and at any other office or agency maintained by the Company for such
purpose; 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
Securities Register.
The Securities shall be redeemable as provided in Article Eleven.
The Securities shall be subject to exchange into Common Stock as
provided in Article Twelve.
The Securities will be unsecured obligations of the Company and will
rank pari passu with all other unsecured and unsubordinated indebtedness of the
Company.
SECTION 302. Denominations.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $ [Initial Price].
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SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced or impressed thereon
and attested by its Secretary or one of its Assistant Secretaries. The signature
of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Request for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Request shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Request the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated pursuant to Section 1002, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor one or more definitive Securities, of any
authorized denominations and of like tenor and aggregate principal amount. Until
so exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
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SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company designated by the Company pursuant to Section
1002 being herein sometimes collectively referred to as the "Security Register")
in which, subject to such reasonable regulations as it may prescribe, the
Company shall provide for the registration of Securities and of transfers of
Securities. The Trustee is hereby appointed "Security Registrar" for the purpose
of registering Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at the
office or agency of the Company designated by the Company pursuant to Section
1002 for such purpose, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities, of any authorized denominations and of
like aggregate Face Amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of like aggregate Face Amount,
upon surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304 or 906 not involving any transfer.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only
to Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global Security or
a nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the
name of any Person other than the Depositary for
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such Global Security or a nominee thereof unless (A) such Depositary (i) has
notified the Company that it is unwilling or unable to continue as Depositary
for such Global Security and the Company thereupon fails to appoint a successor
depositary or (ii) has ceased to be a clearing agency registered under the
Exchange Act, (B) there shall have occurred and be continuing an Event of
Default or any event which after notice or lapse of time or both would be an
Event of Default with respect to the Securities or (C) the Company in its sole
discretion determines that such Global Security shall be so exchangeable or
transferable.
(3) Subject to Clause (2) above, upon issuance of Securities in
definitive registered certificated form, the Trustee shall register the
Securities in the name of, and cause the Securities to be delivered to, the
Person or Persons (or the nominee thereof) identified as the beneficial owners
as the Depositary shall direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Section, Section 304, 306 or 906 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Security, unless such Security is registered in the name of a Person
other than the Depositary for such Global Security or a nominee thereof.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, together with
such security or indemnity as may be required by the Company or the Trustee to
save each of them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of like tenor and
Face Amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and Face Amount and bearing a number not con temporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of counsel to the Company and the fees
and expenses of the Trustee and its agents and counsel) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company,
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whether or not the mutilated, destroyed, lost or stolen Security shall be at any
time enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities duly
issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security and the
date of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed to
be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this Clause
provided. Thereupon the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more than 15 days and
not less than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the Special Record
Date therefor to be given to each Holder of Securities in the manner set
forth in Section 106, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant to the
following Clause (2).
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(2) The Company may make payment of any Defaulted Interest on the
Securities in any other lawful manner not inconsistent with the requirements
of any securities exchange or automated quotation system on which such
Securities may be listed or traded, and upon such notice as may be required
by such exchange or automated quotation system (or by the Trustee if the
Securities are not listed or traded), if, after notice given by the Company
to the Trustee of the proposed payment pursuant to this Clause, such manner
of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a 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 such Security, including a Global Security, is
registered as the owner of such Security for the purpose of receiving payment of
principal of and any premium and (subject to Section 307) any interest on such
Security and for all other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities cancelled as provided in this Section,
except as expressly permitted by this Indenture. All cancelled Securities held
by the Trustee shall be disposed of as directed by a Company Request.
SECTION 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
SECTION 311. CUSIP Numbers.
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The Company in issuing the Securities may use "CUSIP" numbers, and, if
so, the Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company shall promptly notify the Trustee in
writing of any change in CUSIP numbers.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other than (i)
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held
in trust by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 1003) have been delivered to the
Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable and the Company has irrevocably
elected to pay the Securities solely in cash, or
(ii) have been called for redemption and the Company in the
Redemption Notice has elected to pay the Redemption Price solely in cash,
and the Company, in the case of (i) or (ii) above, has deposited or caused to
be deposited with the Trustee as trust funds in trust for the purpose money
in an amount sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for cancellation,
for principal and any premium and interest to the date of such deposit (in
the case of Securities which have become due and payable) or to the
Redemption Date;
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(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive until such obligations have been
performed in full.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
ARTICLE FIVE
Remedies
SECTION 501. Events of Default.
"Event of Default", wherever used herein means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default in the payment of any interest upon any Security when it
becomes due and payable, and continuance of such default for a period of 30
days; or
(2) default in the exchange of the Securities for Common Stock or in the
payment of the principal amount of or any premium on any Security when due and
payable; or
(3) default in the performance, or breach, in any material respect of any
covenant or warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose perform ance or whose breach is elsewhere in this
Section specifically dealt with), and continuance of such default or breach for
a period of 90 days after there has been given, by
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registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in Face Amount of the
Outstanding Securities a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(4) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(5) the commencement by the Company of a voluntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree or order for relief in
respect of the Company in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State law, or
the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Company
in furtherance of any such action.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 501(4) or 501(5)) occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% aggregate Face Amount of the
Outstanding Securities may declare the principal amount of the Securities to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal
amount shall become immediately due and payable. If an Event of Default
specified in Section 501(4) or 501(5) occurs, the principal amount of the
Securities shall automatically, and without any declaration or other action on
the part of the Trustee or any Holder, become immediately due and payable.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in aggregate Face Amount of the Outstanding Securities, by
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written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if
(1) the Company has paid or deposited with the Trustee an amount of cash
(or, in the case of principal, at the option of the Company, Common Stock in an
amount) sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, on) any Securities which have
become due otherwise than by such declaration of acceleration and interest
thereon at the rate borne by the Securities,
(C) to the extent that payment of such interest is lawful, interest upon
overdue interest at the rate borne by the Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel;
and
(2) all Events of Default, other than the non-payment of the principal of
Securities which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security when
such interest becomes due and payable and such default continues for a period
of 30 days, or
(2) default is made in the exchange of Securities for Common Stock or in
the payment of the principal of (or premium, if any, on) any Security at the
Maturity thereof,
the Company will, upon demand of the Trustee, pay to it (i) in cash, with
respect to the payment of interest, costs and expenses, and (ii) in Common Stock
(or, at the Company's option cash) with respect to the payment of principal and
any premium, for the benefit of the Holders of such Securities, the whole amount
then due and payable on such Securities for principal and any premium and
interest and, to the extent that payment of such interest shall be legally
enforceable, interest on any overdue principal and premium and on any overdue
interest, at the rate or rates prescribed therefor in such Securities, and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
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If an Event of Default is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors'
or other similar committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. Application of Money or Common Stock Collected.
Any money or Common Stock collected by the Trustee pursuant to this
Article shall be applied in the following order, at the date or dates fixed by
the Trustee and, in case of the distribution of such money or Common Stock on
account of principal or any premium or interest,
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upon presentation of the Securities and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 607;
and
SECOND: To the payment of the amounts then due and unpaid for principal of
and any premium and interest on the Securities in respect of which or for the
benefit of which such money or Common Stock has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities for principal and any premium and interest,
respectively.
SECTION 507. Limitation on Suits.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
(2) the Holders of not less than 25% in Face Amount of the Outstanding
Securities shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable indemnity
against the costs, expenses and liabilities to be incurred in compliance with
such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in Face
Amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over
any other of such Holders or to enforce any right under this Indenture, except
in the manner herein provided and for the equal and ratable benefit of all of
such Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and any premium and (subject to Section 307)
interest on such Security on the respective Stated Maturities
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expressed in such Security (or, in the case of redemption, on the Redemption
Date), to exchange such Security for Common Stock as herein provided and to
institute suit for the enforcement of any such payment or exchange, and such
rights shall not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 512. Control by Holders.
The Holders of a majority in Face Amount of the Outstanding Securities
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or with
this Indenture, and
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(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in Face Amount of the
Outstanding Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except a default
(1) in the exchange of Securities for Common Stock or in the payment of the
principal of or any premium or interest on any Security, or
(2) in respect of a covenant or provision hereof which under Article Nine
cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company or any suit for the
enforcement of the exchange right in Article Twelve.
SECTION 515. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
If a default occurs hereunder, the Trustee shall give the Holders
notice of such default as and to the extent provided by the Trust Indenture Act;
provided, however, that in the case of any default of the character specified in
Section 501(3), no such notice to Holders shall be given until at least 30 days
after the occurrence thereof. For the purpose of this Section, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an Event of Default.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties or
reasonably believed by it to be the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Request, and any
resolution of the Board of Directors shall be sufficiently evidenced by a Board
Resolution;
(3) whenever in the administration of this Indenture the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely
upon an Officers' Certificate;
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(4) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel 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;
(5) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(6) the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
and
(7) the 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 Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
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SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation for all
services rendered by it hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
SECTION 608. Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder with respect to the
Securities, which shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000. If any such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of its supervising or examining
authority, then for the purposes of this Section and to the extent permitted by
the Trust Indenture Act, the combined capital and surplus of such Person shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
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SECTION 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
The Trustee may resign at any time by giving written notice thereof to
the Company. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
The Trustee may be removed at any time with respect to the Securities
by Act of the Holders of a majority in Face Amount of the Outstanding
Securities, delivered to the Trustee and to the Company.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written request
therefor by the Company or by any Holder who has been a bona fide Holder of a
Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall fail
to resign after written request therefor by the Company or by any such Holder,
or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee, or (B) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee or Trustees
and shall comply with the applicable requirements of Section 611. If, within one
year after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in Face Amount of the Outstanding Securities delivered to the Company
and the retiring Trustee, the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment in accordance with the applicable
requirements of Section 611, become the successor Trustee and to that extent
supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner
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required by Section 611, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to all Holders of
Securities in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
Every successor Trustee hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
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SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents which shall
be authorized to act on behalf of the Trustee to authenticate Securities issued
upon original issue and upon exchange, registration of transfer thereof or
pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Securities.
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
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hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.
If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities referred to in the within-mentioned
Indenture.
........................................,
As Trustee
By......................................,
As Authenticating Agent
By.......................................
Authorized Officer
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than January 1 and July 1 in each year, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders of Securities as of the preceding December 15 or June
15, as the case may be, and
(2) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
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SECTION 702. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and with the Company.
SECTION 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
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ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
Except as provided in the last paragraph of this Section 801, the
Company shall not consolidate with or merge into any other Person or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, and the Company shall not permit any Person to consolidate with or merge
into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge into another Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, partnership or trust, shall be organized and
validly existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual exchange of the Securities
for Common Stock and the payment of the principal of and any premium and
interest on all the Securities and the performance or observance of every
covenant of this Indenture on the part of the Company to be performed or
observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing;
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating to such
transaction have been complied with.
Notwithstanding the foregoing provisions of this Section 801, in the
case of the NorAm Merger, Houston will not be required to deliver a supplemental
indenture to the Trustee so long as the Trustee receives (i) an Officers'
Certificate to the effect that immediately after giving effect to the NorAm
Merger, no Event of Default, and no event which, after notice or lapse of time
or both, would become an Event of Default, shall have occurred and be
continuing, and (ii) an Opinion of Counsel to the effect that when the NorAm
Merger takes effect, Houston, by operation of law, will be liable for the
Company's obligations on the Securities and under this Indenture.
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SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 801, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company herein and in
the Securities; or
(2) to add to the covenants of the Company for the benefit of the Holders
of Securities or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default for the benefit of the Holders
of Securities; or
(4) to secure the Securities; or
(5) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee or Calculation Agent with respect to the Securities; or
(6) to make provision with respect to the exchange rights of Holders
pursuant to the requirements of Article Twelve; or
(7) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this Clause (7) shall not
materially adversely affect the interests of the Holders; or
(8) to comply with the requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the Trust Indenture Act.
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SECTION 902. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than a majority in Face
Amount of the Outstanding Securities, by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution, and
the Trustee may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the rights
of the Holders of Securities under this Indenture; provided, however, that no
such supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any instalment of
principal of or interest on, any Security, or reduce the Face Amount thereof or
the rate of interest thereon or any premium payable upon the redemption
thereof, or change any place of payment where, or the coin or currency in
which, any Security or any premium or interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on or after
the Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or
(2) reduce the percentage in Face Amount of the Outstanding Securities, the
consent of whose Holders is required for any such supplemental indenture, or
the consent of whose Holders is required for any waiver (of compliance with
certain provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513 or Section
1008, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent
of the Holder of each Outstanding Security affected thereby; or
(4) make any change that adversely affects the obligation of the Company to
exchange Securities for Common Stock as provided in Article Twelve or decrease
the exchange rate of any Security.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees that it will duly and punctually (i)
exchange the Securities for Common Stock or pay the principal amount of the
Securities and (ii) pay any premium and interest on the Securities, in each case
in accordance with the terms of the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City of New
York, an office or agency where Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of transfer or
exchange, where Securities may be exchanged in accordance with Article Twelve
and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company initially appoints the
Trustee, acting through its office located at 14 Wall Street, 8th Floor, New
York, New York 10005 (Attention: Corporate Trust Administration), as its agent
for said purposes. The Company will give prompt written notice to the Trustee
of the location, and any change in the location, of such
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office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of or any premium or interest on any
of the Securities, segregate and hold in trust for the benefit of the Persons
entitled thereto cash and/or Common Stock sufficient to pay the principal and
any premium and interest so becoming due until such cash and Common Stock shall
be paid to such Persons or otherwise disposed of as herein provided and will
promptly notify the Trustee of its failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of or any premium or interest on any
Securities, deposit with a Paying Agent cash and/or Common Stock sufficient to
pay such amount, such cash and/or Common Stock to be held as provided by the
Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will (1) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (2) during the continuance of any default
by the Company (or any other obligor upon the Securities) in the making of any
payment in respect of the Securities, upon the written request of the Trustee,
forthwith pay to the Trustee all cash and/or Common Stock held in trust by such
Paying Agent as such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, deliver,
or by Company Request direct any Paying Agent to deliver, to the Trustee all
cash and Common Stock held in trust by the Company or such Paying Agent, such
cash and Common Stock to be held by the Trustee upon the same trusts as those
upon which such cash and Common Stock were held by the Company or such Paying
Agent; and, upon such delivery by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such cash and
Common Stock.
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Any money or Common Stock deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of the principal of
or any premium or interest on any Security and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
delivered to the Company on Company Request, or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust cash and Common Stock, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such delivery, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that such
cash and Common Stock remain unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication, any
unclaimed cash and Common Stock then remaining will be delivered to the Company.
SECTION 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
SECTION 1005. Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence.
SECTION 1006. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Section 1005 if before the time for such
compliance the Holders of at least a majority in Face Amount of the Outstanding
Securities shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such covenant or condition, but not
such waiver shall extend to or affect such covenant or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company
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and the duties of the Trustee in respect of any such covenant or condition shall
remain in full force and effect.
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Right of Redemption.
The Securities are subject to redemption at the election of the
Company, as a whole (but not in part) following the occurrence of a Tax
Redemption Event, at the Redemption Price specified in the form of Security
hereinbefore set forth, together with accrued interest to the Redemption Date.
SECTION 1102. Applicability of Article.
The Securities shall be redeemable in accordance with their terms and
in accordance with this Article.
SECTION 1103. Election to Redeem.
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given in accordance with the form of the
Security hereinbefore set forth.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) whether and to what extent the Redemption Price will be paid in cash or
Common Stock,
(4) that on the Redemption Date the Redemption Price will become due and
payable upon each such Security to be redeemed and that interest thereon will
cease to accrue on and after said date, and
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(5) the place or places where each such Security is to be surrendered for
payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
SECTION 1105. Deposit of Redemption Price.
On or prior to the Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
cash and Common Stock sufficient to pay the Redemption Price of, and (except if
the Redemption Date shall be an Interest Payment Date) accrued and unpaid
interest on, the Securities.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company in cash and/or Common Stock as specified in the notice of
redemption at the Redemption Price, together with accrued and unpaid interest to
but excluding the Redemption Date; provided, however, that installments of
interest whose Stated Maturity is on or prior to the Redemption Date will be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
ARTICLE TWELVE
Exchange of Securities into Common Stock
SECTION 1201. Exchange at Maturity.
(a) At Maturity, the principal amount of each Security will be
mandatorily exchanged for a number of shares of Common Stock (or, at the
Company's option, which may be exercised with respect to any or all shares of
Common Stock deliverable upon exchange of the Securities, cash
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in an amount determined as set forth herein) at the Exchange Rate (as defined
below), together with any accrued and unpaid interest up to Maturity. The
"Exchange Rate" is equal to, subject to adjustment pursuant to Section 1203
hereof, (i) if the Maturity Price is greater than or equal to the Threshold
Appreciation Price, ______ shares of Common Stock per Security, (ii) if the
Maturity Price is less than the Threshold Appreciation Price but is greater than
the Initial Price, a fractional share of Common Stock per Security so that the
value thereof (determined at the Maturity Price) is equal to the Initial Price
and (iii) if the Maturity Price is less than or equal to the Initial Price, one
share of Common Stock per Security. Notwithstanding the foregoing, the Company
may, at its option, in lieu of delivering shares of Common Stock at the Exchange
Rate, deliver cash in an amount equal to the value of such number of shares (or
fractions thereof) of Common Stock at the Maturity Price. Such option, if
exercised, may be exercised with respect to any or all of the shares of Common
Stock otherwise deliverable upon exchange of the Outstanding Securities. Such
number of shares of Common Stock (or amount of cash in lieu thereof) deliverable
upon mandatory exchange is hereinafter referred to as the "Exchange
Consideration."
(b) If less than all of the Outstanding Securities are to be exchanged
for Common Stock, the Securities to be exchanged will be selected by the Trustee
from the Outstanding Securities by lot or pro rata (as nearly as may be) or by
any other method determined by the Trustee in its sole discretion to be
equitable.
SECTION 1202. No Fractional Shares.
No fractional shares of Common Stock and/or other securities if a
Spin-Off or a Reorganization Event has occurred prior to Maturity, will be
issued if the Company exchanges the Securities for shares of Common Stock and/or
such securities. If more than one Security shall be surrendered for exchange at
one time by the same Holder, the number of full shares of Common Stock and/or
such other securities which will be delivered upon exchange will be computed on
the basis of the aggregate number of Securities so surrendered at Maturity. In
lieu of any fractional share or security otherwise issuable in respect of all
Securities of any Holder which are exchanged at Maturity, such Holder shall be
entitled to receive an amount in cash equal to the value of such fractional
share or security at the Maturity Price (or similarly calculated average price
for a security other than Common Stock) or in the case of redemption, at the
average of the Volume Weighted Average Prices of Common Stock (or of such other
security) for the five Trading Days immediately preceding the date on which the
Redemption Notice is released on the PR Newswire.
SECTION 1203. Adjustment of Exchange Rate.
(a) The Exchange Rate will be subject to adjustment as described below
to the extent that any of the events requiring such adjustment occur during the
period commencing on the date of this Indenture and ending on the second
Business Day prior to Maturity. No adjustments to the Exchange Rate will be
made other than those specified below.
(i) If the Common Stock is subject to a stock split or reverse stock split,
then at the opening of business on the first day on which the Common Stock
trades without the right to receive the Common Stock resulting from such stock
split or reverse stock split
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dividend, the Exchange Rate will be adjusted by multiplying such Exchange Rate
by a fraction, the numerator of which will be the number of shares of Common
Stock outstanding at the close of business on the record date for holders of
Common Stock entitled to such split plus or minus the number of shares
resulting from such stock split or reverse stock split and the denominator will
be the number of shares of Common Stock outstanding at the close of business on
such record date.
(ii) If the Common Stock is subject to a stock dividend that is given
ratably to all holders of shares of Common Stock, then at the opening of
business on the first day on which the Common Stock trades without the right to
receive such dividend (the "ex-dividend date"), the Exchange Rate will be
adjusted by multiplying such Exchange Rate by a fraction, the numerator of
which will be the number of shares of Common Stock outstanding at the opening
of business on such ex-dividend date plus the number of shares constituting
such stock dividend and the denominator will be the number of shares of Common
Stock outstanding at the opening of business on such ex-dividend date.
(iii) If Time Warner issues rights or warrants to all holders of Common
Stock to subscribe for or purchase shares of Common Stock (other than rights to
purchase shares of Common Stock pursuant to a plan for the reinvestment of
dividends or interests) at an exercise price per share less than the Closing
Price of the Common Stock on the record date for determining the holders of
Common Stock entitled to receive such rights and warrants and the expiration
date of such rights or warrants precedes the second Business Day prior to
Maturity; then the Exchange Rate will be adjusted by multiplying such Exchange
Rate by a fraction, the numerator of which will be the number of shares of
Common Stock outstanding at the close of business on such record date, plus
the number of additional shares of Common Stock offered for subscription or
purchase pursuant to such rights or warrants and the denominator of which will
be the number of shares of Common Stock outstanding at the close of business on
such record date, plus the number of additional shares of Common Stock which
the aggregate offering price of the total number of shares of Common Stock so
offered for subscription or purchase pursuant to such rights or warrants would
purchase at the Closing Price of the Common Stock on such record date, which
will be determined by multiplying such total number of shares offered by the
exercise price of such rights or warrants and dividing the product so obtained
by such Closing Price. To the extent that shares of Common Stock are not
delivered after the expiration of such rights or warrants, the Exchange Rate
shall be readjusted to the Exchange Rate which would then be in effect had such
adjustments for the issuance of such rights or warrants been made upon the
basis of delivery of only the number of shares of Common Stock actually
delivered.
(iv) There will be no adjustments to the Exchange Rate to reflect cash
dividends or other distributions paid with respect to Common Stock other than
Extraordinary Dividends. A dividend or other distribution with respect to
Common Stock will be deemed to be an "Extraordinary Dividend" (i) if such
dividend or other distribution is of securities ("Spin-Off Securities") of an
issuer other than Time Warner (a "Spin-Off") or (ii) if such dividend or other
distribution exceeds the immediately preceding non-Extraordinary Dividend for
Common Stock by an amount equal to at least 10% of the Closing Price of Common
Stock on the first Business Day immediately preceding the date on which Common
Stock trades without the right to receive such Extraordinary Dividend (the "ex-
dividend date"). If an Extraordinary Dividend occurs with
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respect to Common Stock, the Exchange Rate will be adjusted at the opening of
business on the ex-dividend date by multiplying such Exchange Rate by a
fraction, the numerator of which will be the Closing Price of Common Stock on
the Business Day immediately preceding such ex-dividend date and the
denominator will be the difference between such Closing Price and the
Extraordinary Dividend Amount. The "Extraordinary Dividend Amount" with respect
to an Extraordinary Dividend for Common Stock will equal (i) in the case of
cash dividends or other distributions that constitute quarterly dividends, the
amount per share of such Extraordinary Dividends minus the amount per share of
the immediately preceding non-Extraordinary Dividend for Common Stock or (ii)
in the case of cash dividends or other distributions that do not constitute
quarterly dividends, the amount per share of such Extraordinary Dividend. To
the extent an Extraordinary Dividend is not paid in cash, the value of the non-
cash component will be determined by the Board of Directors of the Company,
whose determination will be conclusive and described in a Board Resolution.
Notwithstanding the foregoing, in the case of a Spin-Off, the Company may,
at its option, in lieu of adjusting the Exchange Rate as described in the
immediately preceding paragraph, adjust the Exchange Rate used to determine the
amount payable upon exchange at Maturity for each Security to provide that each
holder of Securities will receive at Maturity, in addition to the amount of
Common Stock deliverable (or cash in lieu thereof), an amount of Spin-Off
Securities equal to the product of the Exchange Rate (as otherwise in effect at
Maturity) and the amount of Spin-Off Securities issued per share of Common
Stock in the Spin-Off, so that the Maturity Price will take into account both
the value of the Spin-Off Securities and the value of the Common Stock
delivered upon exchange of the Securities (the "Delivery of Spin-Off Securities
Option"); provided, however, that the Company may, at its option, in lieu of
delivering an amount of Spin-Off Securities to the holders of the Securities at
Maturity, deliver cash in an amount equal to the value of such amount of Spin-
Off Securities. In order for the Company to exercise the Delivery of Spin-Off
Securities Option, the Company must issue a press release through the PR
Newswire prior to the opening of business on the ex-dividend date with respect
to such Spin-Off that it elects to deliver Spin-Off Securities in lieu of
adjusting the Exchange Rate as described in the immediately preceding
paragraph. For purposes of delivering cash in lieu of delivering Spin-Off
Securities at Maturity, or, if the Company elects to deliver Spin-Off
Securities at Maturity, for purposes of valuing the Spin-Off Securities
delivered at Maturity, the value of the Spin-Off Securities would be an amount
equal to the average of the Volume Weighted Average Prices per share or
security of such Spin-Off Securities for the 20 Trading Days ending two
Business Days prior to Maturity.
(v) In the event of (A) any consolidation or merger of Time Warner, or any
surviving entity or subsequent surviving entity of Time Warner (a "Time Warner
Successor"), with or into another entity (other than a merger or consolidation
in which Time Warner is the continuing corporation and in which the Common
Stock outstanding immediately prior to the merger or consolidation is not
exchanged for cash, securities or other property of Time Warner or another
entity), (B) any sale, transfer, lease or conveyance to another Person of the
property of Time Warner or any Time Warner Successor as an entirety or
substantially as an entirety, (C) any statutory exchange of securities of Time
Warner or any Time Warner Successor with another Person (other than in
connection with a merger or acquisition) or (D) any liquidation, dissolution or
winding up of Time Warner or any Time Warner Successor (any such event
described in
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clause (A), (B), (C) or (D), a "Reorganization Event"), the Exchange Rate used
to determine the amount payable upon exchange at Maturity for each Security
will be adjusted to provide that each holder of Securities will receive at
Maturity for each Security cash in an amount equal to (a) if the Transaction
Value (as defined below) is greater than or equal to the Threshold Appreciation
Price, ___________ multiplied by the Transaction Value, (b) if the Transaction
Value is less than the Threshold Appreciation Price but greater than the
Initial Price, the Initial Price and (c) if the Transaction Value is less than
or equal to the Initial Price, the Transaction Value. "Transaction Value" means
(i) for any cash received by the Company in any such Reorganization Event, an
amount equal to the product of (A) the Exchange Rate (applicable to such
Exchange Consideration as in effect on the second Business Day prior to
Maturity) and (B) the amount of cash received per share of Common Stock, (ii)
for any property other than cash or securities received by the Company in any
such Reorganization Event, an amount equal to the product of (A) the Exchange
Rate (applicable to such Exchange Consideration as in effect on the second
Business Day prior to Maturity) and (B) the then-current market value of such
property received per share of Common Stock as determined by a nationally
recognized independent investment banking firm retained for this purpose by the
Company and (iii) for any securities received by the Company in any such
Reorganization Event, an amount equal to the product of (A) the Exchange Rate
(applicable to such Exchange Consideration as in effect on the second Business
Day prior to Maturity) and (B) the average of the Volume Weighted Average
Prices per share of such securities on the 20 Trading Days ending two Business
Days prior to Maturity multiplied by the number of such securities received for
each share of Common Stock.
Notwithstanding the foregoing, the Company may, at its option, in lieu of
delivering cash as described above, deliver (a) an amount of cash equal to (i)
the Exchange Rate (adjusted as described above) times (ii) the amount of cash,
if any, received by the Company per share of Common Stock in such
Reorganization Event plus (b) property in an amount equal to (i) the Exchange
Rate (as so adjusted) times (ii) the amount of property, if any, received by
the Company per share of Common Stock in such Reorganization Event plus (c)
securities in a number or amount, as applicable, equal to (i) the Exchange Rate
(as so adjusted) times (ii) the number or amount, as applicable, of securities,
if any, received by the Company in such Reorganization Event per share of
Common Stock.
(b) No adjustments to the Exchange Rate will be required unless such
adjustment would require a change of at least 1% in the Exchange Rate;
provided, however, that any adjustments which by reason of the foregoing are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All adjustments to the Exchange Rate will be calculated
to the nearest 1/10,000th of a share of Common Stock (or if there is not a
nearest 1/10,000th of a share to the next lower 1/10,000th of a share).
(c) In the case of any such adjustments to the Exchange Rate (other
than as provided in (a)(iv) above if the Company elects to deliver Spin-Off
Securities rather than to adjust the Exchange Rate pursuant to the first
paragraph of clause (a)(iv) above, or as provided in clause (a)(v) above), the
Maturity Price shall be adjusted in the same manner. The required adjustment to
the Maturity Price shall be made at Maturity by multiplying the Maturity Price
by the cumulative number or fraction determined pursuant to the Exchange Rate
adjustment procedure described in this Section 1203.
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<PAGE>
(d) If as provided in this Article Twelve the Company elects to
deliver Common Stock, property and/or securities at Maturity, Holders of the
Securities will be responsible for the payment of any and all brokerage and
other transaction costs upon any subsequent sale of the Common Stock, property
or securities.
(e) For purposes of this Section 1203, any securities or other
property received pursuant to paragraph (a) shall be subject to the same
adjustments as provided in this Section 1203.
SECTION 1204. Notice of Adjustments and Certain Other Events.
The Company shall, within ten Business Days following the occurrence
of an event that requires an adjustment to the Exchange Rate or the occurrence
of a Spin-Off or a Reorganization Event (or, in any case, if the Company is not
aware of such occurrence, as soon as practicable after becoming so aware), to
provide written notice to the Calculation Agent and the Trustee and to the
Holders of the Securities of the occurrence of such event and a statement in
reasonable detail setting forth the method by which the adjustment to the
Exchange Rate was determined or the change in the consideration to be received
by the Holders of the Securities following a Spin-Off (if the Company elects to
exercise its Delivery of Spin-Off Securities Option) or a Reorganization Event
and setting forth the revised Exchange Rate or consideration. In connection
with a Spin-Off, such notice shall also include a statement by the Company as to
whether it has elected to exercise its Delivery of Spin-Off Securities Option.
SECTION 1205. Payment of Certain Taxes Upon Exchange; Tax Characterization.
The Company will pay any and all taxes that may be payable in respect
of the transfer and delivery of shares of Common Stock, other securities or
property on exchange of Securities pursuant hereto. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the delivery of shares of Common Stock or other securities
in a name other than that of the Holder of the Security or Securities to be
exchanged, and no such transfer or delivery shall be made unless and until the
person requesting such transfer has paid to the Company the amount of any such
tax, or has established, to the satisfaction of the Company, that such tax has
been paid.
The Company hereby agrees, and each Holder by such Holder's purchase
of a Security will be deemed to agree, (in the absence of an administrative
determination or judicial ruling to the contrary) to characterize the Securities
for all tax purposes as a forward purchase contract to purchase Common Stock
(and Spin-Off Securities, if any) at Maturity (including as a result of
acceleration or otherwise), under the terms of which contract (i) at the time of
issuance of the Securities the Holder deposits irrevocably with the Company a
fixed amount of cash equal to the purchase price of the Securities to assure the
fulfillment of the Holder's purchase obligation described in clause (iii) below,
which deposit will unconditionally and irrevocably be applied at Maturity to
satisfy such obligation, (ii) until Maturity the Company will be obligated to
pay interest on such deposit at a rate equal to the stated rate of interest on
the Securities as compensation to the Holder for the Company's use of such cash
deposit during the term of the Security, and (iii) at Maturity such cash deposit
unconditionally and irrevocably will
-58-
<PAGE>
be applied by the Company in full satisfaction of the Holder's obligation under
the forward purchase contract, and the Company will deliver to the Holder the
number of shares of Common Stock (and Spin-Off Securities, if any) that the
Holder is entitled to receive at Maturity pursuant to the terms of the
Securities (subject to the Company's right to deliver cash in lieu of the shares
of Common Stock (and Spin-Off Securities, if any)). Consistent with the above
characterization, (i) amounts paid to the Company in respect of the original
issue of the Securities will be treated as allocable in their entirety to the
amount of the cash deposit attributable to such Securities and (ii) amounts
denominated as interest that are payable with respect to the Securities will be
characterized as interest payable on the amount of such deposit, includible
annually in the income of the Holder as interest income in accordance with such
Holder's method of accounting.
SECTION 1206. Shares Free and Clear.
(a) The Company hereby represents and warrants and agrees that upon
exchange of Securities for Common Stock or other securities or property that the
Holders of the Securities shall hold good and valid title to, and become the
beneficial owners of, such Common Stock, securities or other property, free and
clear of any and all liens, claims, charges, encumbrances and equities. Except
as provided in Section 1203(d), the Company shall pay all taxes and charges with
respect to the delivery of such Common Stock, securities or other property
delivered in exchange for Securities hereunder.
(b) The Corporation shall prepare and obtain and keep in force such
governmental or regulatory permits or other authorizations as may be required by
law, and shall comply with all requirements as to registration or qualification,
in order that any shares of Common Stock, securities or other property delivered
upon exchange of the Securities will be freely transferable by the Holders and
not subject to any prospectus delivery or other requirements.
SECTION 1207. Cancellation of Security.
Upon receipt by the Trustee of Securities delivered to it for exchange
under this Article Twelve, the Trustee shall cancel and dispose of the same as
provided in Section 309.
SECTION 1208. Duties of Trustee Regarding Exchange.
Subject to the provisions of Section 601, neither the Trustee nor any
exchange agent shall be responsible for any failure of the Company to issue,
transfer or deliver any stock certificates or other securities or property upon
the surrender of any Security for the purpose of exchange.
SECTION 1209. Repayment of Certain Funds Upon Exchange.
Any funds which at any time shall have been deposited by the Company
or on its behalf with the Trustee or any other paying agent for the purpose of
paying the principal of, and premium, if any, and interest, if any, on any of
the Securities and which shall not be required for such purposes
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<PAGE>
because of the exchange of such Securities as provided in this Article Twelve
shall after such exchange be repaid to the Company by the Trustee upon the
Company's written request.
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<PAGE>
_____________________________
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
In Witness Whereof, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
HOUSTON INDUSTRIES INCORPORATED,
as Issuer
By.................................
Attest:
.....................
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By.................................
Attest:
.....................
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<PAGE>
EXHIBIT 5.1
001166.0393 July 8, 1997
Houston Industries Incorporated
Houston Industries Plaza
1111 Louisiana Street
Houston, Texas 77002
Ladies and Gentlemen:
We have acted as counsel for Houston Industries Incorporated, a Texas
corporation (the "Company"), in connection with the Registration Statement on
Form S-3 (the "Registration Statement"), filed by the Company with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), relating to the proposed issuance
and sale of up to 22,909,040 ___% Automatic Common Exchange Securities (the
"Securities"). The Securities will be issued under an Indenture (the
"Indenture") between the Company and The First National Bank of Chicago, as
Trustee (the "Trustee").
In our capacity as your counsel in the connection referred to above,
we have examined the Restated Articles of Incorporation and Amended and Restated
Bylaws of the Company, as amended to date, and the forms (filed as exhibits to
the Registration Statement) of the Indenture and the Underwriting Agreement (the
"Underwriting Agreement") to be entered into between the Company and Goldman,
Sachs & Co., Credit Suisse First Boston Corporation and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as representatives of the several underwriters
named therein (the "Underwriters"), and have examined the originals, or copies
certified or otherwise identified, of corporate records of the Company,
including minute books of the Company as furnished to us by the Company,
certificates of public officials and of representatives of the Company, statutes
and other instruments or documents, as a basis for the opinions hereinafter
expressed. In giving such opinions, we have relied upon certificates of officers
of the Company with respect to the accuracy of the material factual matters
contained in such certificates. In making our examination, we have assumed that
all signatures on documents examined by us are genuine, that all documents
submitted to us as originals are authentic and that all documents submitted to
us as certified or photostatic copies conform with the original copies of such
documents.
<PAGE>
Houston Industries Incorporated -2- July 8, 1997
On the basis of the foregoing, and subject to the assumptions,
limitations and qualifications set forth herein, we are of the opinion that:
When (i) the Registration Statement has become effective under the
Securities Act and the Indenture has been qualified under the Trust Indenture
Act of 1939, as amended, (ii) the issuance and sale of the Securities has been
duly authorized by all requisite corporate action on the part of the Company,
(iii) the Indenture and the Underwriting Agreement have been duly authorized,
executed and delivered, and (iv) the Securities have been duly authorized,
executed and authenticated in accordance with the terms of the Indenture and
delivered to and paid for by the Underwriters as contemplated by the
Underwriting Agreement, the Securities will be legal, valid and binding
obligations of the Company enforceable in accordance with their terms, except as
such enforceability is subject to (x) any applicable bankruptcy, insolvency,
reorganization or other laws relating to or affecting creditors' rights
generally and (y) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
The opinions set forth above are limited in all respects to matters of
Texas law and the contract law of the State of New York as in effect on the date
hereof. At your request, this opinion is being furnished to you for filing as
Exhibit 5 to the Registration Statement. Additionally, we hereby consent to the
reference to our Firm under the caption "Validity of the Securities" in the
Registration Statement. In giving such consent, we do not thereby concede that
we are within the category of persons whose consent is required under Section 7
of the Securities Act or the rules and regulations of the Commission promulgated
thereunder.
Very truly yours,
BAKER & BOTTS, L.L.P.
MSS/TST
<PAGE>
EXHIBIT 8.1
July 8, 1997
00116.0393
Houston Industries Incorporated
Houston Industries Plaza
1111 Louisiana Street
Houston, Texas 77002
Ladies and Gentlemen:
We have acted as counsel for Houston Industries Incorporated, a Texas
corporation (the "Company"), in connection with the Registration Statement on
Form S-3 (the "Registration Statement"), including a prospectus (the
"Prospectus"), filed by the Company with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, relating to the proposed issuance
and sale of up to 22,909,040 ___% Automatic Common Exchange Securities (the
"Securities"). The Securities will be issued under an Indenture (the
"Indenture") between the Company and The First National Bank of Chicago, as
Trustee.
We have examined the Prospectus and such other documents and corporate
records as we have deemed necessary or appropriate for purposes of this opinion.
In addition, we have assumed that the Securities will be issued in accordance
with the Indenture and the other operative documents described in the
Prospectus.
Based on certain assumptions set forth therein, statements of legal
conclusion set forth under the heading "Risk Factors--Uncertainty of Federal
Income Tax Consequences" and under the heading "Certain United States Federal
Income Tax Considerations" in the Prospectus reflect our opinions on the
material United States federal income tax consequences of the purchase,
ownership and disposition of the Securities based on the Internal Revenue Code
of 1986 and applicable regulations thereunder, both as in effect on the date
hereof, and on reported judicial decisions, although, as stated in the
Prospectus, no existing statutory, judicial or administrative authority
directly addresses the characterization of the Securities for U.S. federal
income tax purposes and therefore there exists significant uncertainty
concerning the proper tax treatment of the Securities.
Our opinion is limited to tax matters specifically covered hereby.
<PAGE>
Houston Industries Incorporated -2- July 8, 1997
We hereby consent to the filing of this opinion as Exhibit 8 to the
Registration Statement and to the references to this Firm in the sections
captioned "Certain United States Federal Income Tax Considerations" and
"Validity of the Securities" in the Prospectus. In giving this consent, we do
not thereby admit that we come within the category of a person whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
BAKER & BOTTS, L.L.P.
GVN: 430
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the incorporation by reference in Amendment No. 2 to
Registration Statement No. 333-30443 of Houston Industries Incorporated on Form
S-3 of our report dated February 21, 1997, appearing in the Annual Report on
Form 10-K of Houston Industries Incorporated for the year ended December 31,
1996 and to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Houston, Texas
July 8, 1997
