NORAM ENERGY CORP, S-3/A, 1996-03-07

NORAM ENERGY CORP
S-3/A, 1996-03-07
NATURAL GAS TRANSMISISON & DISTRIBUTION

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 7, 1996

REGISTRATION NO. 33-64001
POST-EFFECTIVE AMENDMENT NO. 2 TO REGISTRATION NO. 33-52853
POST-EFFECTIVE AMENDMENT NO. 2 TO REGISTRATION NO. 33-48750
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2

FORM S-3

REGISTRATION STATEMENT AND POST-EFFECTIVE AMENDMENT NO. 3

UNDER THE SECURITIES ACT OF 1933
---------------------

<TABLE>
<S> <C> <C>
NORAM ENERGY CORP. DELAWARE 72-0120530
NORAM FINANCING I DELAWARE APPLIED FOR
NORAM FINANCING II DELAWARE APPLIED FOR
(Exact name of registrant as (State or other jurisdiction of (I.R.S. Employer
specified in its charter) incorporation or organization) Identification No.)
</TABLE>

<TABLE>
<S> <C>
1600 SMITH STREET, 32ND FLOOR HUBERT GENTRY, JR.
HOUSTON, TEXAS 77002 SENIOR VICE PRESIDENT AND GENERAL COUNSEL
(713) 654-5699 NORAM ENERGY CORP.
(Address, including zip code, and telephone number, 1600 SMITH STREET, 11TH FLOOR
including HOUSTON TEXAS 77002
area code, of each registrant's principal executive (713) 654-5699
offices) (Name, address, including zip code, and telephone
number,
including area code, of agent for service)
</TABLE>

---------------------

Copies to:

<TABLE>
<S> <C>
GERRY D. OSTERLAND, ESQ. VINCENT J. PISANO, ESQ.
JONES, DAY, REAVIS & POGUE SKADDEN, ARPS, SLATE, MEAGHER & FLOM
2300 TRAMMELL CROW CENTER 919 THIRD AVENUE
2001 ROSS AVENUE NEW YORK, NEW YORK 10022
DALLAS, TEXAS 75201, (214) 220-3939 (212) 735-3000
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME
TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE, AS DETERMINED BY
MARKET CONDITIONS.
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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, PLEASE 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: /X/
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CALCULATION OF REGISTRATION FEE

<TABLE>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE OFFERING AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1)(2) PRICE PER UNIT(2)(3) PRICE(3)(4) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Debt Securities, Preferred Stock and Common
Stock of NorAm Energy Corp., Preferred
Securities of NorAm Trusts(6)..............
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Guarantees of Preferred Securities of NorAm
Trusts by NorAm Energy Corp. and certain
back-up undertakings(7).................... $500,000,000 100% $500,000,000 $133,760(5)
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Total........................................ $500,000,000 $500,000,000 $133,760
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</TABLE>

(1) In no event will the aggregate initial offering price of the Securities
being registered and issued under this Registration Statement exceed
$500,000,000.

(2) Not specified as to each class of securities to be registered pursuant to
General Instruction II.D. of Form S-3 under the Securities Act.

(3) The proposed maximum offering price per unit will be determined from time to
time by the Registrants in connection with, and at the time of, the issuance
of the securities registered hereunder.

(4) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(o) of the Securities Act.

(5) 14,950,000 shares of NorAm Energy Corp. Common Stock covered by Registration
Statement No. 33-52853 are being carried forward to this Registration
Statement, a registration fee of $38,342 was previously paid with regard to
such securities. $1,000,000 of debt securities covered by Registration
Statement No. 33-48750 is being carried forward to this Registration
Statement, a registration fee of $312.50 was previously paid with regard to
such securities.
<PAGE> 2

(6) Subordinated Debt Securities of NorAm Energy Corp. may be issued and sold to
NorAm Trusts in connection with the issuance by the NorAm Trusts of
Preferred Securities. The Subordinated Debt Securities may be distributed,
under certain circumstances, to the holders of Preferred Securities for no
additional consideration.

(7) Includes the rights of holders of the Preferred Securities under the
Guarantee and certain back-up undertakings, comprised of the obligations of
NorAm Energy Corp. to provide certain indemnities in respect of, and pay and
be responsible for certain costs, expenses, debts, and liabilities of each
NorAm Trust and such other obligations of NorAm Energy Corp. as set forth in
the Amended and Restated Declaration of Trust of each of the foregoing, the
Subordinated Indenture and Supplemental Subordinated Indentures thereto, in
each case as further described in the Registration Statement. The Preferred
Securities Guarantee, when taken together with NorAm's obligations under the
Subordinated Debt Securities, the Subordinated Indenture and Supplemental
Subordinated Indentures thereto, and the Declaration will provide a full and
unconditional guarantee on a subordinated basis by NorAm of payments due on
the Preferred Securities. Pursuant to Rule 457(n) under the Securities Act
of 1933, no fee is payable with respect to the Guarantee and the back-up
undertaking.

---------------------

THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

IN ACCORDANCE WITH RULE 429 UNDER THE SECURITIES ACT OF 1993, THE
PROSPECTUS INCLUDED HEREIN IS A COMBINED PROSPECTUS WHICH ALSO RELATES TO
REGISTRATION STATEMENT NO. 33-52853 AND REGISTRATION STATEMENT NO. 33-48750 (THE
"PRIOR REGISTRATION STATEMENTS") PREVIOUSLY FILED BY THE REGISTRANT. THIS
REGISTRATION STATEMENT WHICH IS A NEW REGISTRATION STATEMENT, ALSO CONSTITUTES
THE POST-EFFECTIVE AMENDMENT NO. 1, TO EACH OF THE PRIOR REGISTRATION
STATEMENTS. SUCH POST-EFFECTIVE AMENDMENTS SHALL HEREAFTER BECOME EFFECTIVE
CONCURRENTLY WITH THE EFFECTIVENESS OF THIS REGISTRATION STATEMENT IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933. THIS REGISTRATION STATEMENT AND
THE PRIOR REGISTRATION STATEMENTS ARE COLLECTIVELY REFERRED TO HEREIN AS THE
"REGISTRATION STATEMENT".
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<PAGE> 3

EXPLANATORY NOTE

This Registration Statement contains three forms of prospectus, one
covering Debt Securities, one covering Equity Securities and one covering
Preferred Securities of the NorAm Trusts.
<PAGE> 4

***************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
* SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* STATE. *
* *
***************************************************************************

SUBJECT TO COMPLETION, DATED MARCH 7, 1996

PROSPECTUS
NORAM ENERGY CORP.
DEBT SECURITIES

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NorAm Energy Corp. (the "Company") may offer from time to time its
unsecured debt securities consisting of notes, debentures or other evidences of
indebtedness (the "Debt Securities") in an aggregate initial offering price of
not more than $500,000,000. The Debt Securities may be offered as separate
series in amounts, at prices and on terms to be determined in light of market
conditions at the time of sale and set forth in a Prospectus Supplement or
Prospectus Supplements.

The terms of each series of Debt Securities, including, where applicable,
the specific designation, aggregate principal amount, authorized denominations,
maturity, interest rate or rates and time or times of payment of interest, any
terms for optional or mandatory redemption or payment of additional amounts or
any sinking fund provisions, any initial public offering price, the proceeds to
the Company and any other specific terms in connection with the offering and
sale of such series ("Offered Securities") will be set forth in a Prospectus
Supplement or Prospectus Supplements. Debt Securities may be issued with amounts
payable in respect of principal or premium or interest on the Debt Securities
determined by reference to the value, rate or price of one or more specific
indices.

The Prospectus Supplement will also contain information, where applicable,
concerning certain United States federal income tax considerations relating to,
and as to any listing on a securities exchange of, the Debt Securities covered
by such Prospectus Supplement.

The Debt Securities may be sold directly by the Company, through agents
designated from time to time or to or through underwriters or dealers. See "Plan
of Distribution". If any agents of the Company or any underwriters are involved
in the sale of any Debt Securities in respect of which this Prospectus is being
delivered, the names of such agents or underwriters and any applicable
commissions or discounts will be set forth in a Prospectus Supplement. The net
proceeds to the Company from such sale also will be set forth in a Prospectus
Supplement.

This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.

---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

---------------------

The date of this Prospectus is , 1996.
<PAGE> 5

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER OR
AGENT. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY AND THEREBY IN JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE DATES.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission, at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511; and 7 World Trade Center, New York, New York
10048. Copies of such material can be obtained from the Public Reference Section
of the Commission, at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Certain securities of the Company are listed on, and reports,
proxy statements and other information concerning the Company can be inspected
at the offices of, The New York Stock Exchange, 20 Broad Street, New York, New
York 10005.

This Prospectus does not contain all of the information set forth in the
Registration Statement, of which this Prospectus is a part, and exhibits
relating thereto which the Company has filed with the Commission under the
Securities Act of 1933, as amended (the "Act"). Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Debt Securities offered hereby.
Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each statement is qualified in its
entirety by reference to the copy of the applicable document filed with the
Commission.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company hereby incorporates by reference herein its Annual Report on
Form 10-K for the fiscal year ended December 31, 1994 (the "Form 10-K") and its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995, June 30,
1995 and September 30, 1995 and its Current Reports on Form 8-K dated August 3,
1995, November 2, 1995 and February 7, 1996, which have been filed previously
with the Commission under File No. 1-3751.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference in this Prospectus. Any statement contained herein or
in a document all or a portion of which is incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.

THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF
THIS PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF ANY SUCH
PERSON, A COPY OF ANY AND ALL OF THE FOREGOING DOCUMENTS INCORPORATED BY
REFERENCE HEREIN, OTHER THAN THE EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH
EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS). REQUESTS
SHOULD BE DIRECTED TO THE OFFICE OF THE SECRETARY, NORAM ENERGY CORP., P.O. BOX
2628, HOUSTON, TEXAS 77252, TELEPHONE NUMBER (713) 654-5699.

2
<PAGE> 6

THE COMPANY

NorAm Energy Corp., a Delaware corporation (the "Company"), was
incorporated in 1928 and is principally engaged in the distribution and
transmission of natural gas including gathering, storage and marketing of
natural gas.

The Company's natural gas distribution business is conducted through its
three divisions, Arkla, Entex and Minnegasco, and their affiliates, which
collectively form the nation's third largest gas distribution operation with
over 500 billion cubic feet ("Bcf") of annual throughput to over 2.7 million
customers. Through these divisions and their affiliates, the Company engages in
both the natural gas distribution sales and transport businesses. The facilities
and terms of service related to Arkla's, Entex's and Minnegasco's sales to their
customers are largely regulated by state public service commissions and, in
Texas, by municipalities.

The Company's natural gas transmission business is conducted principally
through the following wholly-owned subsidiaries of the Company: NorAm Trading
and Transportation Group, Inc., NorAm Gas Transmission Company ("NGT"),
Mississippi River Transmission Corporation ("MRT"), NorAm Energy Services, Inc.
("NES") and NorAm Field Services Corp. ("NFS"). Such subsidiaries form the NorAm
Trading and Transportation Group. Through these subsidiaries and their
affiliates, the Company engages in the transmission and sale of natural gas,
including gathering, storage and marketing of natural gas. NGT and MRT are
interstate pipeline companies, NES serves as the Company's principal natural gas
supply aggregator and marketer and NFS owns and operates the natural gas
gathering assets previously held by NGT.

In March 1993, the Company transferred assets, liabilities and service
obligations of Arkla Energy Resources, formerly a division of the Company, into
a then newly-formed wholly-owned subsidiary of the Company, now called NGT,
pursuant to an order from the Federal Energy Regulatory Commission (the "FERC")
approving the transfer. As a result of this transfer of assets, liabilities and
service obligations, the FERC now has jurisdiction over NGT's interstate
pipeline business, including transportation services and certain of NGT's
transactions with affiliates of the Company, which historically were subject to
state regulatory oversight.

Effective February 1, 1995, after receipt of all necessary authorization
from the FERC, NFS assumed ownership and operation of NGT's gathering assets
pursuant to a transfer from NGT to NFS of such assets. While the FERC provided
for a two-year gathering service option for existing customers under existing
terms and conditions, the scope of the FERC's jurisdiction over NFS is limited,
and NFS is not generally subject to traditional cost-of-service rate regulation.
These gathering assets consist primarily of 3,500 miles of gathering pipeline
which collect gas from more than 200 separate systems in major producing fields
in Arkansas, Oklahoma, Louisiana and Texas.

NGT owns and operates a natural gas pipeline system located in portions of
Arkansas, Louisiana, Mississippi, Missouri, Kansas, Oklahoma, Tennessee and
Texas. The NGT system consists of approximately 6,400 miles of transmission
lines. The NGT pipeline system extends generally in an easterly direction from
the Anadarko Basin area of the Texas Panhandle and western Oklahoma through the
Arkoma Basin area of eastern Oklahoma and central Arkansas, from the mainline
system in Oklahoma and Arkansas to south central Kansas and southwest Missouri.
In its system, NGT operates various product extraction plants and compressor
facilities related to its transmission business.

The MRT system consists of approximately 2,200 miles of pipeline serving
principally the greater St. Louis area in Missouri and Illinois. This pipeline
system includes the "Main Line System," the "East Line," and the "West Line."
The Main Line System includes three transmission lines extending approximately
435 miles from Perryville, Louisiana, to the greater St. Louis area. The East
Line, also a main transmission line, extends approximately 94 miles from
southwestern Illinois to St. Louis. The West Line extends approximately 140
miles from east Texas to Perryville, Louisiana. The system also includes various
other branch, lateral, transmission and gathering lines and compressor stations.

3
<PAGE> 7

pipeline and have a maximum aggregate deliverability of approximately 570 MMcf
per day and a working gas capacity of approximately 31 Bcf.

NES markets gas under daily, baseload and term agreements which include
either market sensitive or fixed pricing provisions. Fixed price sales or
purchase contracts are hedged using gas futures contracts or other derivative
financial instruments. See Notes 1 and 11 of Notes to the Company's Consolidated
Financial Statements included in the Form 10-K.

On December 31, 1992, the Company completed the sale of Arkla Exploration
Company to Seagull Energy Corporation. The sale terminated the Company's
activities in the oil and gas exploration and production business. On June 30,
1993 the Company completed the sale of its intrastate pipeline businesses as
conducted by Louisiana Intrastate Gas Corporation and its subsidiaries, LIG
Chemical Company, LIG Liquids Corporation and Tuscaloosa Pipeline to a
subsidiary of Equitable Resources, Inc.

The Company's principal executive offices are located at 1600 Smith Street,
32nd Floor, Houston, Texas 77002. Its mailing address is P.O. Box 2628, Houston,
Texas 77252-2628, and its telephone number is (713) 654-5699.

USE OF PROCEEDS

Unless otherwise indicated in the Prospectus Supplement, the net proceeds
from the sale of the Debt Securities will be used to reduce the Company's
existing indebtedness and for general corporate purposes.

RATIOS OF EARNINGS TO FIXED CHARGES

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ------------------------------------
1995 1994 1993 1992 1991 1990
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1).... 1.42(2) 1.47 1.47 1.10 1.19 1.97
</TABLE>

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(1) The ratios of earnings to fixed charges have been computed using earnings
which are the sum of income from continuing operations, income taxes and
fixed charges. Fixed charges are interest, amortization of debt discount
and expense and the estimated interest portion of rental charges.

(2) Because of the seasonal nature of the Company's business, the ratio for the
nine month period may not necessarily be indicative of the ratio which will
result for the full year 1995.

DESCRIPTION OF DEBT SECURITIES

The Debt Securities will be issued under an Indenture dated as of April 15,
1990 (the "Indenture"), between the Company and Citibank, N.A., as trustee (the
"Trustee"), a copy of which is filed as an exhibit to the Registration Statement
of which this Prospectus is a part. The statements under this caption are brief
summaries of certain provisions of the Indenture, do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all of
the provisions of the Indenture, including the definitions therein of certain
terms. Wherever particular Sections of the Indenture or terms that are defined
in the Indenture are referred to herein or in a Prospectus Supplement, it is
intended that such Sections or defined terms shall be incorporated by reference
herein or therein, as the case may be.

The term "Securities", as used under this caption, refers to all Securities
issued under the Indenture and includes the Debt Securities.

4
<PAGE> 8

The Debt Securities may be issued from time to time in one or more series.
The following description sets forth certain general terms and provisions of the
Debt Securities. The particular terms of each series of Debt Securities offered
by any Prospectus Supplement or Prospectus Supplements will be described in such
Prospectus Supplement or Prospectus Supplements relating to such series.

GENERAL

The Indenture does not limit the aggregate amount of Securities which may
be issued thereunder and Securities may be issued thereunder from time to time
in separate series up to the aggregate amount from time to time authorized by
the Company for each series. The Securities will be unsecured obligations of the
Company and will rank pari passu with all other unsecured and unsubordinated
indebtedness of the Company.

The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the Offered Securities: (1) the title of the
Offered Securities; (2) any limitation on the aggregate principal amount of the
Offered Securities; (3) whether any of the Offered Securities are to be issuable
in permanent global form (a "Global Security") and the circumstances under which
any such Global Security or Securities may be exchanged for Securities
registered in the name of, and any transfer of such Global Security or
Securities may be registered to, a Person other than the depositary for such
Global Security (the "Depositary") or its nominee; (4) the price or prices
(expressed as a percentage of the aggregate principal amount thereof) at which
the Offered Securities will be issued; (5) the date or dates on which the
principal of the Offered Securities will be payable; (6) the rate or rates per
annum at which the Offered Securities will bear interest, if any, or the formula
pursuant to which such rate or rates will be determined, and the date or dates
from which any such interest will accrue; (7) the Interest Payment Dates on
which any such interest on the Offered Securities will be payable and the
Regular Record Date for any interest payable on any Offered Securities on any
Interest Payment Date; (8) the Person to whom any interest on any Offered
Security will be payable, if other than 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; (9) the place or places where the
principal of and any premium and interest on the Offered Securities will be
payable and where the Offered Securities may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Offered Securities and the Indenture may be served; (10) the
period or periods within which and the price or prices at which the Offered
Securities may, pursuant to any optional redemption provisions, be redeemed, in
whole or in part, and the other detailed terms and conditions of any such
optional redemption provisions; (11) the obligation, if any, of the Company to
redeem or purchase the Offered Securities pursuant to any sinking fund or
analogous provisions or at the option of the Holder thereof and the period or
periods within which and the price or prices at which the Offered Securities
will be redeemed or purchased, in whole or in part, pursuant to such obligation,
and the other detailed terms and conditions of such obligation; (12) the
denominations in which any Offered Securities will be issuable, if other than
denominations of $1,000 and any integral multiple thereof; (13) if the amount of
payment or principal of and any premium and interest on any of the Offered
Securities may be determined with reference to an index, the manner in which
such amounts shall be determined; (14) whether the Offered Securities will have
the benefit of the covenant described under "Put Right of Holders Upon a
Designated Event and a Rating Decline" and, if so, the dates as of which such
covenant shall become effective and expire, as applicable; (15) any additional
events of default or covenants applicable to the Offered Securities; (16) if
other than the principal amount thereof the portion of the principal amount of
the Offered Securities which shall be payable upon declaration of acceleration
of the Maturity thereof; and (17) any other terms of the Offered Securities not
inconsistent with the provisions of the Indenture (Section 3.01.)

Securities may be issued as Original Issue Discount Securities to be sold
at a substantial discount below their principal amount. Special United States
federal income tax considerations applicable to securities issued at an original
issue discount, including Original Issue Discount Securities, will be described,
if applicable, in a Prospectus Supplement.

5
<PAGE> 9

FORM, EXCHANGE, REGISTRATION AND TRANSFER

Although the Indenture provides for the issuance of securities either in
registered or bearer form, the Company intends to issue Debt Securities of each
series solely as Registered Securities. Securities of a series may be
represented, in whole or in part, by one or more permanent Global Securities in
a denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding Securities to be represented by such Global
Security or Securities. Any Global Security deposited with the Depositary or its
nominee identified in the applicable Prospectus Supplement may not be
surrendered for transfer or exchange except as may be specified in the
applicable Prospectus Supplement.

The specific terms of the depositary arrangement with respect to any
portion of a series of Securities to be represented by one or more Global
Securities will be described in the applicable Prospectus Supplement. Beneficial
interests in Global Securities will only be evidenced by, and transfers thereof
will only be effected through, records maintained by the Depositary and the
institutions that are participants in the Depositary.

At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Securities, Securities of any series will be
exchangeable for other Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor. (Section 3.05)

Securities may be presented for exchange or registration of transfer (with
the form of transfer endorsed thereon duly executed) as provided above, at the
office of the Security Registrar or at the office of any transfer agent
designated by the Company for such purpose with respect to any series of
Securities and referred to in an applicable Prospectus Supplement, without
service charge and upon payment of any taxes and other governmental charges as
described in the Indenture. Such transfer or exchange will be effected upon the
Security Registrar or such transfer agent, as the case may be, being satisfied
with the documents of title and identity of the person making the request. The
Company has appointed the Trustee as Security Registrar. (Section 3.05) If a
Prospectus Supplement refers to any transfer agents (in addition to the Security
Registrar) initially designated by the Company with respect to any series of
Securities, the Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, except that the Company will be required to maintain a
transfer agent in each Place of Payment for such series. The Company may at any
time designate additional transfer agents with respect to any series of
Securities. (Section 10.02)

In the event of any redemption in part, the Company shall not be required
to (i) issue, register the transfer of or exchange any Security during a period
beginning at the opening of business 15 days before any selection for redemption
of Securities of like tenor and of the series of which such Security is a part,
and ending at the close of business on the date of mailing of the relevant
notice of redemption to all Holders of Securities of like tenor and of such
series to be redeemed or; (ii) register the transfer of or exchange any Security
so selected for redemption, in whole or in part, except the unredeemed portion
of any security being redeemed in part. (Section 3.05)

PAYMENT AND PAYING AGENTS

Unless otherwise indicated in an applicable Prospectus Supplement,
principal of (and premium, if any) and interest on Debt Securities will be
payable, subject to any applicable laws and regulations, at the office of such
Paying Agent or Paying Agents as the Company may designate from time to time,
except that at the option of the Company payment of any interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register. Unless otherwise indicated in an applicable
Prospectus Supplement, payment of interest on a Debt Security on any Interest
Payment Date will be made to the Person in whose name such Debt Security (or
Predecessor Security) is registered at the close of business on the Regular
Record Date for such interest. (Section 3.07)

Unless otherwise indicated in an applicable Prospectus Supplement, the
corporate Trust Office of the Trustee in the City of New York will be designated
as the Company's sole Paying Agent for payments with respect to offered
Securities of each series. Any Paying Agents initially designated by the Company
for the Offered Securities will be named in an applicable Prospectus Supplement.
The Company may at any time

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<PAGE> 10

designate additional Paying Agents or rescind the designation of any Paying
Agent or approve a change in the office through which any Paying Agent acts,
except that the Company will be required to maintain a Paying Agent in each
Place of Payment for such series. (Section 10.02)

All moneys paid by the Company to a Paying Agent for the payment of the
principal of (and premium, if any) or interest on any Security of any series
which remain unclaimed at the end of two years after such principal (and
premium, if any) or interest shall have become due and payable will be repaid to
the Company and the Holder of such Security will thereafter look only to the
Company for payment thereof. (Section 10.03)

CERTAIN DEFINITIONS

"Consolidated Net Tangible Assets" means the total amount of assets of the
Company and its Subsidiaries less, without duplication: (a) total current
liabilities (excluding indebtedness due within 12 months), (b) all reserves for
depreciation and other asset valuation reserves but excluding reserves for
deferred federal income taxes, (c) all intangible assets such as goodwill,
trademarks, trade names, patents and unamortized debt discount and expense
carried as an asset and (d) appropriate adjustments on account of minority
interests of other persons holding common stock in any Subsidiary, all as
reflected on the Company's most recent audited consolidated balance sheet
preceding the date of determination. (Section 1.01)

The term "indebtedness," as applied to the Company or any Subsidiary, means
bonds, debentures, notes and other instruments representing obligations created
or assumed by any such corporation (i) for money borrowed (other than
unamortized debt discount or premium); (ii) evidenced by a note or similar
instrument given in connection with the acquisition of any business, properties
or assets of any kind; (iii) as lessee under leases required to be capitalized
on the balance sheet of the lessee under generally accepted accounting
principles; and (iv) any amendments, renewals, extensions, modifications and
refundings of any such indebtedness or obligation listed in clause (i), (ii) or
(iii) above. All indebtedness secured by a lien upon property owned by the
Company or any Subsidiary and upon which indebtedness any such corporation
customarily pays interest, although any such corporation has not assumed or
become liable for the payment of such indebtedness, is also deemed to be
indebtedness of any such corporation. All indebtedness for money borrowed
incurred by other persons which is directly guaranteed as to payment of
principal by the Company or any Subsidiary shall for all purposes of the
Indenture be deemed to be indebtedness of any such corporation, but no other
contingent obligation of any such corporation in respect of indebtedness
incurred by other persons shall for any purpose be deemed indebtedness of such
corporation. Indebtedness of the Company or any Subsidiary does not include (i)
amounts which are payable only out of all or a portion of the oil, gas, natural
gas, helium, coal, metals, minerals, steam, timber, hydrocarbons, or geothermal
or other natural resources produced, derived or extracted from properties owned
or developed by such corporation; (ii) any indebtedness incurred to finance oil,
gas, natural gas, helium, coal, metals, minerals, steam, timber, hydrocarbons,
or geothermal or other natural resources or synthetic fuel exploration or
development, payable, with respect to principal and interest, solely out of the
proceeds of oil, gas, natural gas, helium, coal, metals, minerals, steam,
timber, hydrocarbons, or geothermal or other natural resources or synthetic fuel
to be produced, sold and/or delivered by the Company or any Subsidiary; (iii)
indirect guarantees or other contingent obligations in connection with the
indebtedness of others, including agreements, contingent or otherwise, with such
other persons or with third persons with respect to, or to permit or insure the
payment of, obligations of such other persons, including, without limitation,
agreements to advance or supply funds to or to invest in such other persons, or
agreements to pay for property, products or services of such other persons
(whether or not conferred, delivered or rendered), and any demand charge,
throughput, take-or-pay, keep-well, make-whole, cash deficiency, maintenance of
working capital or earnings or similar agreements; and (iv) any guarantees with
respect to lease or other similar periodic payments to be made by other persons.
(Section 1.01)

"Principal Property" means any natural gas distribution property, natural
gas pipeline or gas processing plant located in the United States, except any
such property that in the opinion of the Board of Directors is not of material
importance to the total business conducted by the Company and its consolidated
subsidiaries. "Principal Property" shall not include any oil or gas property or
the production or proceeds of production from

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<PAGE> 11

an oil or gas producing property or the production or any proceeds of production
of gas processing plants or oil or gas or petroleum products in any pipeline or
storage field. (Section 1.01)

"Restricted Subsidiary" means any Subsidiary which owns a Principal
Property. "Subsidiary" means any corporation of which at least a majority of all
outstanding stock having by the terms thereof ordinary voting power in the
election of directors of such corporation (irrespective of whether or not at the
time stock of any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned by the Company or by one or more Subsidiaries, or
by the Company and one or more other Subsidiaries. (Section 1.01)

"Sale and Leaseback Transaction" means any arrangement with any Person
providing for the leasing to the Company or any Restricted Subsidiary of any
Principal Property (except for temporary leases for a term, including any
renewal thereof, of not more than three years and except for leases between the
Company and a Restricted Subsidiary or between Restricted Subsidiaries), which
Principal Property has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such person. (Section 10.09)

RESTRICTIVE COVENANTS

The Indenture contains the covenants summarized below, which are applicable
so long as any of the Debt Securities are outstanding.

Limitations On Liens. The Company will not, and will not permit any
Restricted Subsidiary to pledge, mortgage or hypothecate, or permit to exist,
except in favor of the Company or any Restricted Subsidiary, any mortgage,
pledge, lien or other encumbrance upon, any Principal Property at any time owned
by it or a Restricted Subsidiary, to secure any indebtedness (as defined above),
unless effective provision is made whereby outstanding Debt Securities will be
secured equally and ratably therewith (or prior thereto). This restriction will
not apply to: (a) mortgages, pledges, liens or encumbrances on any property held
or used by the Company or a Restricted Subsidiary in connection with the
exploration for, development of or production of, oil, gas, natural gas, other
hydrocarbons, helium, coal, metals, minerals, steam, timber or geothermal or
other natural resources or synthetic fuels, such properties to include, but not
be limited to, the Company's or a Restricted Subsidiary's interest in any
mineral fee interests, oil, gas or other mineral leases, royalty, overriding
royalty or net profits interests, production payments and other similar
interests, wellhead production equipment, tanks, field gathering lines,
leasehold or field separation and processing facilities, compression facilities
and other similar personal property and fixtures; (b) mortgages, pledges, liens
or encumbrances on oil, gas, natural gas, other hydrocarbons, helium, coal,
metals, minerals, steam, timber, geothermal or other natural resources or
synthetic fuels produced or recovered from any property, an interest in which is
owned or leased by the Company or a Restricted Subsidiary; (c) mortgages,
pledges, liens or encumbrances (or certain extensions, renewals or refundings
thereof) upon any property acquired before or after the date of the Indenture,
created at the time of acquisition or within one year thereafter to secure all
or a portion of the purchase price thereof or the cost of construction or
improvement, or existing thereon at the date of acquisition, provided that every
such mortgage, pledge, lien or encumbrance applies only to the property so
acquired or constructed and fixed improvements thereon; (d) mortgages, pledges,
liens or encumbrances upon any property acquired by any corporation that is or
becomes a Restricted Subsidiary after the date of the Indenture (an "Acquired
Entity"), provided that every such mortgage, pledge, lien or encumbrance (1)
shall either (i) exist prior to the time the Acquired Entity becomes a
Restricted Subsidiary or (ii) be created at the time the Acquired Entity becomes
a Restricted Subsidiary or within one year thereafter to secure payment of the
acquisition price thereof and (2) shall only apply to those properties owned by
the Acquired Entity at the time it becomes a Restricted Subsidiary or thereafter
acquired by it from sources other than the Company or any other Restricted
Subsidiary; (e) pledges of current assets, in the ordinary course of business,
to secure current liabilities; (f) mechanics' or materialmen's liens, any
mortgages, pledges, liens, encumbrances or charges arising by reason of pledge
or deposits to secure certain public or statutory obligations; (g) mortgages,
pledges, liens or encumbrances upon any office, data processing or
transportation equipment; (h) mortgages, pledges, liens or encumbrances created
or assumed in connection with the issuance of debt securities, the interest on
which is excludable from gross income of the holder of such security pursuant to
the Internal Revenue Code of 1986, as amended (the "Code"), for the purpose of
financing the acquisition or construction

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<PAGE> 12

of property to be used by the Company or a Restricted Subsidiary; (i) pledges or
assignments of accounts receivable or conditional sales contracts or chattel
mortgages and evidence of indebtedness secured thereby, received in connection
with the sale of goods or merchandise to customer; (j) certain liens for taxes,
judgments and attachments; or (k) certain other liens or encumbrances. (Section
10.08)

Notwithstanding the foregoing, the Company or a Restricted Subsidiary may
issue, assume or guarantee indebtedness secured by a mortgage which would
otherwise be subject to the foregoing restrictions in an aggregate amount which,
together with all other indebtedness of the Company or a Restricted Subsidiary
secured by a mortgage which (if originally issued, assumed or guaranteed at such
time) would otherwise be subject to the foregoing restrictions (not including
secured indebtedness permitted under the foregoing exceptions) and the Value of
Sale and Leaseback Transactions existing at such time (other than Sale and
Leaseback Transactions the proceeds of which have been applied to the retirement
of Debt Securities or of certain long-term indebtedness or to the purchase of
another Principal Property (Section 10.09) and other than Sale and Leaseback
Transactions in which the property involved would have been permitted to be
mortgaged under (c) or (d) above) does not at the time such indebtedness is
incurred exceed 5% of Consolidated Net Tangible Assets, as shown on the
Company's most recent audited consolidated balance sheet preceding the date of
determination. (Section 10.08)

Limitation on Sale and Leaseback Transactions. Sale and Leaseback
Transactions by the Company or any Restricted Subsidiary of any Principal
Property are generally prohibited unless the net proceeds of such sale are at
least equal to the fair value of such Principal Property and either (a) the
Company or such Restricted Subsidiary would be entitled to incur indebtedness
secured by a lien on the Principal Property to be leased without equally and
ratably securing the Debt Securities of each series, or (b) the Company applies
an amount not less than the fair value of such property (i) to the optional
redemption of Debt Securities in accordance with the provisions of the Indenture
and the terms of the Debt Securities so to be redeemed, (ii) to the retirement
of certain long-term indebtedness of the Company or a Restricted Subsidiary or
(iii) to the purchase at not more than the fair value of Principal Property
(other than that involved in such Sale and Leaseback Transaction). (Section
10.09)

Put Right of Holders Upon a Designated Event and a Rating Decline. If so
specified in the terms of the Debt Securities of any series, such series shall
have the benefit of the following covenant. In the event that there occurs at
any time prior to any date specified in the terms of such series of Debt
Securities both (a) a Designated Event (as hereinafter defined) with respect to
the Company and (b) a Rating Decline (as hereinafter defined), each holder of
the Debt Securities shall have the right, at the holder's option, to require the
Company to purchase all or any part of such holder's Debt Securities on the date
("Repurchase Date") that is 100 days after the last to occur of public notice of
the Designated Event and the Rating Decline, at 100% of the principal amount
thereof or such other price as is specified in the applicable Prospectus
Supplement, plus accrued interest to the Repurchase Date.

On or about the twenty-eighth day after the last to occur of public notice
of the occurrence of a Designated Event and the Rating Decline, the Company is
obligated to notify the Trustee of such events and give notice to all holders of
the Debt Securities of such series regarding the Designated Event, the Rating
Decline and the repurchase right. The notice shall state the Repurchase Date,
the date by which the repurchase right must be exercised (which date shall be at
least ten days prior to the Repurchase Date), the applicable price for such Debt
Securities and the procedure which the holder must follow to exercise this
right. To exercise this right, the holder of such Debt Securities must deliver
at least ten days prior to the Repurchase Date written notice to the Company (or
an agent designated by the Company for such purpose and notified to the Trustee
and the holders) of the holder's exercise of such right, the name in which such
Debt Securities were registered and the principal amount to be repurchased,
together with the Debt Securities with respect to which the right is being
exercised, duly endorsed for transfer to the Company. Such written notice shall
be irrevocable. Debt Securities repurchased pursuant to this covenant shall be
cancelled as provided in the Indenture.

A default in the performance of this covenant which continues for 90 days
after the date on which written notice thereof is given to the Company by the
Trustee or the holders of 25% or more in aggregate principal

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<PAGE> 13

amount of the Outstanding Debt Securities of all series entitled to the benefits
of this covenant will be an Event of Default with respect to Debt Securities of
all series entitled to the benefits of this covenant. The holders of 66 2/3% in
principal amount of the Outstanding Debt Securities of any series entitled to
the benefits of this covenant may on behalf of the holders of all Debt
Securities of that series waive, insofar as that series is concerned, compliance
by the Company with this covenant.

As used herein, a "Designated Event" shall be deemed to have occurred at
such time as (i) a "person" or "group" (within the meaning of Sections 13(d)(3)
of the Exchange Act) becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of more than 30% of the total voting power of all
classes of stock then outstanding of the Company normally entitled to vote in
elections of directors ("Voting Stock"); or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Company's Board of Directors (together with any new director whose election
by the Company's Board of Directors or whose nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the directors then in
office; or (iii) the Company consolidates with or merges into another
corporation or conveys, transfers or leases all or substantially all of its
assets to any person, or any corporation consolidates with or merges into the
Company, in either event pursuant to a transaction in which Voting Stock of the
Company is changed into or exchanged for cash, securities and other property,
provided that such transaction (a) between the Company and its Subsidiaries or
between Subsidiaries or (b) involving the exchange of the Company's Voting Stock
as consideration in the acquisition of another business or businesses (without
change or exchange of the Company's outstanding Voting Stock into or for cash,
securities or other property) shall be excluded from the operation of this
clause (iii); or (iv) the Company, one or more employee benefit plans ("Employee
Benefit Plans") as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, maintained by the Company or any Subsidiary
thereof, or any Subsidiary of the Company purchases or otherwise acquires,
directly or indirectly, beneficial ownership of Voting Stock of the Company if,
after giving effect to such purchase or acquisition, the Company (together with
such Employee Benefit Plans and such Subsidiaries) acquires 20% or more of the
Company's Voting Stock within any 12-month period; or (v) on any date (a
"Calculation Date") the Company makes any distribution or distributions of cash,
property or securities (other than regular dividends, and distributions of
capital stock of the Company) to holders of Voting Stock of the Company or the
Company, any Employee Benefit Plan or any Subsidiary purchases or otherwise
acquires beneficial ownership of Voting Stock of the Company and the sum of the
fair market value of such distribution or purchase plus the fair market value of
all other such distributions and purchases which have occurred during the
preceding 12-month period, is at least 20% of the fair market value of the
outstanding Voting Stock of the Company. The percentage in (v) above is
calculated on such Calculation Date by determining the percentage of fair market
value of the Company's outstanding Voting Stock as of such Calculation Date
which is represented by the fair market value of the distributions and purchases
which have occurred on such date and adding to that percentage all of the
percentages which have been similarly calculated on the Calculation Dates of all
such distributions and purchases during the preceding 12-month period.

As used herein, a "Rating Decline" shall be deemed to have occurred if on
any date within the 90-day period following public notice of the occurrence of a
Designated Event (which period shall be extended so long as the rating of the
Debt Securities is under publicly announced consideration for possible downgrade
by a Rating Agency (as hereinafter defined)) (i) in the event the Debt
Securities are rated by one or both Rating Agencies on the Rating Date (as
hereinafter defined) as Investment Grade (as hereinafter defined), the rating of
the Debt Securities by such Rating Agency or Rating Agencies shall fall below
Investment Grade, or (ii) in the event the Debt Securities are rated by both
Rating Agencies on the Rating Date below Investment Grade, the rating of the
Debt Securities by either Rating Agency shall be at least one Full Rating
Category (as hereinafter defined) below the rating of the Debt Securities by
such Rating Agency on the Rating Date. Since a Rating Decline will be deemed to
exist only if the conditions set forth in either (i) or (ii) above have
occurred, it is possible that events could occur which would result in a
significant downgrade in the rating of the Debt Securities without necessarily
allowing the Holders of Debt Securities entitled to the benefits of this
covenant the option to exercise such right.

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<PAGE> 14

As used herein, "Rating Agency" shall mean Standard & Poor's Corporation
and its successors ("S&P"), and Moody's Investors Service, Inc. and its
successors ("Moody's"), or if S&P or Moody's or both shall not make a rating on
the Debt Securities publicly available, a nationally recognized statistical
rating agency or agencies, as the case may be, selected by the Company which
shall be substituted for S&P or Moody's or both, as the case may be, "Investment
Grade" shall mean BBB -- or higher by S&P or Baa3 or higher by Moody's or the
equivalent of such ratings by S&P or Moody's or by any other Rating Agency
selected as provided above, and "Rating date" shall mean the date which is 121
days prior to public notice of the occurrence of a Designated Event.

As used herein, the term "Full Rating Category" shall mean (i) with respect
to S&P, any of the following categories: BB, B, CCC, CC and C; (ii) with respect
to Moody's any of the following categories: Ba, B, Caa, Ca and C; and (iii) with
respect to any other Rating Agency, the equivalent of any such category of S&P
or Moody's used by such other Rating Agency. In determining whether the rating
of the Debt Securities has decreased by the equivalent of one Full Rating
Category, gradation within Full Rating Categories (+ and - for S&P; 1, 2, and 3
for Moody's; or the equivalent gradation for another Rating Agency) shall be
taken into account (e.g., with respect to S&P, a decline in a rating from BB+ to
BB-, or from BB to B+, will constitute a decrease of less than one Full Rating
Category).

The Company will comply with any applicable provisions of the federal
securities laws in connection with the put right described above, including, if
applicable, Section 14(e) of the Exchange Act and the rules and regulations of
the Commission thereunder.

Other than the Debt Securities entitled to the benefit of the put right
described above, there are no other obligations of the Company which would
become accelerated upon the triggering of such put right.

In the event that the put right described above were triggered, funds to
repurchase the Debt Securities entitled to the benefit of the put right would be
obtained from cash on hand and other internally generated funds, from external
financing or from a combination of these sources.

Because a Designated Event could be expected to occur in connection with
certain forms of takeover attempts, these provisions could deter hostile or
friendly acquisitions of the Company where the person attempting the acquisition
views itself as unable to finance the purchase of the principal amount of the
Debt Securities which may be tendered to the Company upon occurrence of a
Designated Event and a Rating Decline. (Section 10.14)

EVENTS OF DEFAULT

The following are Events of Default under the Indenture with respect to
Debt Securities of any series: (i) failure to pay principal of, or premium, if
any, on any Debt Security of that series when due; (ii) failure to pay any
interest on any Debt Security of that series when due, which failure continues
for 30 days, (iii) failure to deposit any sinking fund payment, when due, in
respect of any Debt Security of that series; (iv) failure to observe or perform
any other covenants or agreements of the Company in the Indenture other than a
covenant or agreement a default in whose performance or whose breach is
elsewhere specifically dealt with in the Indenture or which is specifically
included in the Indenture solely for the benefit of a series of Debt Securities
other than that series, which continues for 90 days after written notice as
provided in the Indenture; (v) certain events in bankruptcy, insolvency or
reorganization; and (vi) any other Event of Default provided with respect to
Debt Securities of that series. (Section 5.01)

A default under any indebtedness of the Company other than the Debt
Securities will not be an Event of Default under the Indenture. An Event of
Default under one series of Debt Securities will not necessarily be an Event of
Default with respect to any other series of Debt Securities.

The Indenture provides that (1) if an Event of Default described in clause
(i), (ii), (iii) or (vi) above occurs and is continuing with respect to Debt
Securities of any series, either the Trustee or the Holders of not less than 25%
in aggregate principal amount of the Debt Securities of such series then
outstanding may declare the principal (or, if the Debt Securities of that series
are Original Issue Discount Securities, such portion of the principal amount as
may be specified in the terms of that series) of all outstanding Debt

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<PAGE> 15

Securities of that series and the interest accrued thereon, if any, to be due
and payable immediately; (2) if an Event of Default described in clause (iv)
above occurs and is continuing, then in such case the Trustee or the Holders of
not less than 25% in aggregate principal amount of all the then Outstanding
Securities (treated as one class) of each series entitled to the benefit of the
covenant or agreement which the Company has failed to observe or perform may
declare the principal amount (or, if any such Securities are Original Issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of that series) of all of such Securities to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by the Holders) and upon any such declaration such principal amount (or
specified portion thereof) of such Securities shall become immediately due and
payable; and (3) if an Event of Default described in clause (v) above occurs and
is continuing, either the Trustee or the Holders of not less than 25% in
aggregate principal amount of all Debt Securities then outstanding (treated as
one class) may declare the principal (or, in the case of Original Issue Discount
Securities, the portion of the principal amount thereof specified in the terms
thereof) of all Debt Securities then outstanding and the interest accrued
thereon, if any, to be due and payable immediately. (Section 5.02.) Upon certain
conditions such declarations may be annulled and past defaults (except for a
default in the payment of principal of, or premium, if any, or interest on such
Debt Securities or in respect of covenants or provisions which cannot be
modified or amended without the consent of the holder of each Debt Security
affected) may be waived by the holders of a majority in aggregate principal
amount of the then outstanding Debt Securities of each such series. (Section
5.13.) For information as to waiver of defaults, see "Meetings, Modification and
Waiver" below.

The Indenture provides that the Trustee will be under no obligation,
subject to the duty of the Trustee during default to act with the required
standard of care, to exercise any of its rights and powers under the Indenture
at the request or direction of any of the holders, unless such holders shall
have offered to the Trustee reasonable indemnity. (Sections 6.01 and 6.03.)
Subject to such provisions for indemnification of the Trustee, the holders of a
majority in principal amount of the outstanding Securities of any series will
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, with respect to the Debt Securities of that series.
(Section 5.12.)

The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (Section 10.11.)

Under the Indenture, the Trustee must give to the holders of each series of
Debt Securities notice of all uncured defaults with respect to such series
within 90 days after the occurrence of such a default (the term default to
include the events specified above without grace periods); provided that, except
in the case of default in the payment of principal of (or premium, if any) or
interest on, any of the Debt Securities, the Trustee shall be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the interests of the holders of the Debt Securities of such
series. (Section 6.02.)

MEETINGS, MODIFICATIONS AND WAIVER

Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of not less than 66 2/3% in
aggregate principal amount of the Outstanding Securities of each series affected
by such modification or amendment; provided, however, that no such modification
or amendment may, without the consent of the Holder of each Outstanding Security
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on any Security, (b) reduce the
principal amount of, or premium or interest on, any Security, (c) change any
obligation of the Company to pay additional amounts, (d) reduce the amount of
principal of an Original Issue Discount Security payable upon acceleration of
the Maturity thereof, (e) change the coin or currency in which any Security or
any premium or interest thereon is payable, (f) impair the right to institute
suit for the enforcement of any payment on or with respect to any Security, (g)
reduce the percentage in principal amount of Outstanding Securities of any
series, the consent of whose Holders is required for modification or amendment
of the Indenture or for waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults, (h) reduce the requirements
contained in the Indenture for quorum or voting, (i) change

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<PAGE> 16

any obligation of the Company to maintain an office or agency in the places and
for the purposes required by the Indenture, or (j) modify any of the above
provisions. (Section 9.02.)

The Holders of at least 66 2/3% in aggregate principal amount of the
Outstanding Securities of each series may, on behalf of the Holders of all the
Securities of that series, waive, insofar as that series is concerned,
compliance by the Company with certain restrictive provisions of the Indenture.
(Section 10.15.) The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities of each series may, on behalf of all
Holders of Securities of that series, waive any past default under the Indenture
with respect to Securities of that series, except a default (a) in the payment
of principal of (or premium, if any) or interest on any Security of such series,
or (b) in respect of a covenant or provision of the Indenture which cannot be
modified or amended without the consent of the Holder of each Outstanding
Security of such series affected. (Section 5.13.)

The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver thereunder or are
present at a meeting of Holders of Securities for quorum purposes, the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof. (Section 1.01.)

The Indenture contains provisions for convening meetings of the Holders of
Securities of a series. (Section 13.01.) A meeting may be called at any time by
the Trustee, and also by the Company or the Holders of at least 10% in principal
amount of the Outstanding Securities of such series if the Trustee fails to call
the meeting upon request of the Company or such Holders, in any such case upon
notice given in accordance with "Notices" below. (Section 13.02.) Except for any
consent which must be given by the Holder of each Outstanding Security affected
thereby, as described above, any resolution presented at a meeting or adjourned
meeting at which a quorum is present may be adopted by the affirmative vote of
the Holders of a majority in principal amount of the Outstanding Securities of
that series; provided, however, that any resolution with respect to any consent,
waiver, request, demand, notice, authorization, direction or other action which
may be given by the Holders of no less than a specified percentage in principal
amount of the Outstanding Securities of a series may be adopted at a meeting or
an adjourned meeting at which a quorum is present only by the affirmative vote
of the Holders of not less than such specified percentage in principal amount of
the Outstanding Securities of that series. Except for any consent which must be
given by the Holder of each Outstanding Security affected thereby, as described
above, any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with the Indenture will be
binding on all Holders of Securities of that series. The quorum at any meeting
called to adopt a resolution, and at any adjourned meeting, will be persons
holding or representing a majority in principal amount of the Outstanding
Securities of a series; provided, however, that if any action is to be taken at
such meeting with respect to a consent, waiver, request, demand, notice,
authorization, direction or other action which may be given by the Holders of
not less than 66 2/3% in principal amount of the Outstanding Securities of a
series, the persons holding or representing such 66 2/3% in principal amount of
the Outstanding Securities of such series will constitute a quorum. (Section
13.04.)

CONSOLIDATION, MERGER AND SALE OF ASSETS

The Company, without the consent of the Holders of any of the Outstanding
Securities under the Indenture, may consolidate or merge with or into, or
transfer or lease its assets substantially as an entirety to, any Person or may
permit any such 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, provided that any successor Person is a corporation, partnership or
trust organized and validly existing under the laws of any domestic
jurisdiction, which assumes the Company's obligations on the Securities and
under the Indenture, that, after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time, would become an
Event of Default, shall have happened and be continuing, and that certain other
conditions are met. (Sections 8.01 and 8.02.)

13
<PAGE> 17

NOTICES

Notices to Holders of Debt Securities will be given by mail to the
addresses of such Holders as they appear in the Security Register. (Section
1.06.)

TITLE

The Company, the Trustee and any agent of the Company or the Trustee may
treat the registered owner of any Debt Security as the absolute owner thereof
(whether or not such Debt Security shall be overdue and notwithstanding any
notice to the contrary) for the purpose of making payment and for all other
purposes. (Section 3.08.)

REPLACEMENT OF SECURITIES

Any mutilated Security will be replaced by the Company at the expense of
the Holder upon surrender of such Security to the Trustee. Securities that
become destroyed, lost or stolen will be replaced by the Company at the expense
of the Holder upon delivery to the Trustee of evidence of the destruction, loss
or theft thereof satisfactory to the Company and the Trustee. In the case of a
destroyed, lost or stolen Security, an indemnity satisfactory to the Trustee and
the Company may be required at the expense of the Holder of such Security before
a replacement Security will be issued. (Section 3.06.)

GOVERNING LAW

The Indenture is and the Securities will be governed by, and construed in
accordance with, the laws of the State of New York. (Section 1.13.)

DISCHARGE AND TERMINATION

The Company may terminate its obligations with respect to any series of
Debt Securities on the terms and subject to the conditions specified in the
Indenture, by irrevocably depositing in trust with the Trustee cash or U.S.
Government Obligations the principal of and interest on which are sufficient
(without reinvestment and assuming no tax liability will be imposed on the
Trustee) to pay principal of and interest on such series to redemption or
maturity. The right of the Company to so terminate its obligations is
conditioned upon delivery to the Trustee of an opinion of counsel to the Company
to the effect that holders of Debt Securities will not recognize any income,
gain or loss for federal income tax purposes as a result of such deposit and
termination. Upon termination of the Company's obligations with respect to the
Debt Securities of a series, the Trustee, at the request of the Company, will
release the Company from its obligations under the Indenture, subject to the
continuation of certain obligations as set forth in the Indenture. Such
termination and release, however, will not relieve the Company of its obligation
to pay when due principal of or interest on such Debt Securities, if such Debt
Securities are not paid from the cash or U.S. Government Obligations held by the
Trustee for payment thereof. (Sections 4.02, 4.03 and 4.04)

REGARDING THE TRUSTEE

Citibank, N.A., the Trustee under the Indenture, has normal commercial
banking relationships with the Company and is the agent bank and a lending bank
under the Company's $400,000,000 revolving credit agreement.

PLAN OF DISTRIBUTION

The Company may sell Debt Securities to one or more underwriters for public
offering and sale by them or may sell Debt Securities to investors directly or
through agents. Any such underwriter or agent involved in the offer and sale of
the Offered Securities will be named in an applicable Prospectus Supplement.

Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market

14
<PAGE> 18

prices or at negotiated prices. The Company also may, from time to time,
authorize underwriters acting as the Company's agents to offer and sell the
Offered Securities upon the terms and conditions as shall be set forth in any
Prospectus Supplement. In connection with the sale of Offered Securities,
underwriters may be deemed to have received compensation from the Company in the
form of underwriting discounts or commissions and may also receive commissions
from purchasers of Offered Securities for whom they may act as agent.
Underwriters may sell Offered Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions (which may be changed from time to
time) from the purchasers for whom they may act as agent.

Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in an applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Securities may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the Offered Securities may be
deemed to be underwriting discounts and commissions, under the Act.
Underwriters, dealers and agents may be entitled, under agreements with the
Company, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Act, and to reimbursement by the
Company for certain expenses.

If so indicated in an applicable Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain
institutions to purchase Offered Securities from the Company at the public
offering price set forth in such Prospectus Supplement pursuant to Delayed
Delivery Contracts ("Contracts") providing for payment and delivery on the date
or dates stated in such Prospectus Supplement. Each Contract will be for an
amount not less than, and the aggregate principal amount of Offered Securities
sold pursuant to Contracts shall be not less nor more than, the respective
amounts stated in such Prospectus Supplement. Institutions with whom Contracts,
when authorized, may be made to include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and other institutions, but will in all cases be subject to the
approval of the Company. Contracts will not be subject to any conditions except
(i) the purchase by an institution of the Offered Securities covered by its
Contracts shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject, and (ii)
if the Offered Securities are being sold to underwriters, the Company shall have
sold to such underwriters the total principal amount of the Offered Securities
less the principal amount thereof covered by Contracts. Agents and underwriters
will have no responsibility in respect of the delivery or performance of
Contracts.

All Offered Securities will be a new issue of securities with no
established trading market. Any underwriters to whom Offered Securities are sold
by the Company for public offering and sale may make a market in such Offered
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of or the trading markets for any Offered Securities.

Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for the Company in the
ordinary course of business.

VALIDITY OF OFFERED SECURITIES

The validity of the Offered Securities will be passed upon for the Company
by Hubert Gentry, Jr., Senior Vice President and General Counsel of the Company,
P.O. Box 2628, Houston, Texas 77252. Mr. Gentry beneficially owns 38,558 shares
of common stock of the Company acquired pursuant to various employee benefit
plans of the Company.

15
<PAGE> 19

EXPERTS

The consolidated balance sheets of the Company as of December 31, 1994 and
1993 and the consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1994
incorporated by reference in the Form 10-K, which is incorporated by reference
in this Prospectus, have been incorporated herein in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.

16
<PAGE> 20

SUBJECT TO COMPLETION, DATED MARCH 7, 1996

PROSPECTUS

NORAM ENERGY CORP.

PREFERRED STOCK AND/OR COMMON STOCK
---------------------

This Prospectus may be used in connection with the offering of shares of
NorAm Energy Corp.'s (the "Company") preferred stock, par value $.10 per share
(the "Preferred Stock") and shares of its common stock, par value $.625 per
share (the "Common Stock"). The Preferred Stock and Common Stock (collectively,
the "Securities") may be offered separately or together, in separate series, in
amounts, at prices and on terms determined at the time of sale and set forth in
one or more supplements to this Prospectus (together, the "Prospectus
Supplement"). Pursuant to the terms of the Registration Statement of which this
prospectus forms a part, the Company's debt securities may also be offered under
the Registration Statement.

The specific terms of each offering of Securities made pursuant to this
Prospectus will be set forth in the applicable Prospectus Supplement, which in
each case will identify any underwriters or agents for the Securities being
offered thereby and their compensation, and the public offering or purchase
price.

The Prospectus Supplement will also include the following: (a) in the case
of any series of Preferred Stock, the specific designation, the aggregate number
of shares offered, the dividend rate or method of calculation, the dividend
period and dividend payment dates, whether such dividends will be cumulative or
noncumulative, the liquidation preference, the currency or composite currency,
if not the U.S. dollar, in which dividends and liquidation preference will be
denominated, voting rights, any terms for redemption at the option of the holder
or the Company and any applicable conversion provisions, in the event that such
series of Preferred Stock is convertible at the option of the holder thereof or
of the Company, into shares of Common Stock or into other securities of the
Company, and (b) in the case of Common Stock, the aggregate number of shares
offered.

The Securities may be offered by the Company directly to purchasers,
through agents designated from time to time, through underwriting syndicates led
by one or more managing underwriters or through one or more underwriters acting
alone. If the Company, directly or through agents, solicits offers to purchase
the Securities, the Company reserves the sole right to accept and, together with
its agents, to reject in whole or in part any proposed purchase of Securities.
Affiliates of the Company may from time to time act as agents or underwriters in
connection with the sale of the Securities to the extent permitted by applicable
law.

If any agent or underwriter is involved in the sale of the Securities
offered hereby, any applicable commissions or discounts will be set forth in, or
will be calculable from, the applicable Prospectus Supplement, and the net
proceeds to the Company or the selling securityholders from such sale will be
the purchase price of the Securities less such commissions or discounts and
other attributable issuance and distribution expenses. See "Plan of
Distribution" for possible indemnification arrangements for agents, underwriters
and their controlling persons.

This Prospectus may not be used to consummate sales of Securities unless a
Prospectus Supplement is also delivered. The delivery of this Prospectus
together with a Prospectus Supplement relating to particular Securities shall
not constitute an offer in any jurisdiction of any of the other Securities
covered by this Prospectus.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is , 1996.
<PAGE> 21

AVAILABLE INFORMATION

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

2
<PAGE> 22

THE COMPANY

3
<PAGE> 23

pipeline and have a maximum aggregate deliverability of approximately 570 MMcf
per day and a working gas capacity of approximately 31 Bcf.

The Company's principal executive offices are located at 1600 Smith Street,
32nd Floor, Houston, Texas 77002. Its mailing address is P. O. Box 2628,
Houston, Texas 77252-2628, and its telephone number is (713) 654-5699.

USE OF PROCEEDS

Unless otherwise indicated in the Prospectus Supplement, the net proceeds
from the sale of the Securities will be used to reduce the Company's
indebtedness and for general corporate purposes.

RATIOS OF EARNINGS TO FIXED CHARGES
INCLUDING PREFERRED STOCK DIVIDENDS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED ------------------------------------
SEPTEMBER 30, 1995 1994 1993 1992 1991 1990
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges
Including Preferred Stock
Dividends(1)...................... 1.39(2) 1.44 1.43 1.09 1.17 1.90
</TABLE>

- ---------------

(1) The ratios of earnings to fixed charges Including Preferred Stock Dividends
have been computed using earnings which are the sum of income from
continuing operations, income taxes and fixed charges including Preferred
Stock Dividends. Fixed charges are interest, amortization of debt discount
and expense and the estimated interest portion of rental charges.

(2) Because of the seasonal nature of the Company's business, the ratio for the
nine month period may not necessarily be indicative of the ratio which will
result for the full year 1995.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of (i) 250,000,000
shares of Common Stock, and (ii) 10,000,000 shares of Preferred Stock, of which
124,881,936 shares of Common Stock and 2,600,000 shares of $3.00 Convertible
Exchangeable Preferred Stock, Series A ("Series A Preferred"), were issued and
outstanding at January 31, 1996. The following summary description of these
securities is qualified in its entirety by reference to the Restated Certificate
of Incorporation of the Company ("Certificate") which is filed as an exhibit to
the Registration Statement of which this Prospectus is a part.

COMMON STOCK

4
<PAGE> 24

convert their Common Stock into any other securities and there are no redemption
provisions with respect to such shares. All outstanding shares of Common Stock
are fully paid and not subject to further calls or assessments. The Company's
Common Stock is listed on the New York Stock Exchange and prices are reported by
the New York Stock Exchange Composite Tape under the symbol NAE. The Transfer
Agent and Registrar of the Company's Common Stock is Boatmen's Trust Company of
Arkansas and the Co-Transfer Agent is First Chicago Trust Company.

PREFERRED STOCK

The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which a
Prospectus Supplement may relate. Specific terms of any series of Preferred
Stock offered by a Prospectus Supplement will be described in the Prospectus
Supplement relating to such series of Preferred Stock. The description set forth
below is subject to and qualified in its entirety by reference to the
Certificate and the form of Certificate of Designations (the "Designation")
establishing a particular series of Preferred Stock.

GENERAL. Under the Certificate, the Board of Directors of the Company (the
"Board of Directors") is authorized, without further shareholder action, to
provide for the issuance of up to 10,000,000 shares of Preferred Stock, in one
or more series, and to fix the designations, terms, and relative rights and
preferences, including the dividend rate, voting rights, conversion rights,
redemption and sinking fund provisions and liquidation values of each such
series. The Company may amend the Certificate from time to time to increase the
number of authorized shares of Preferred Stock. Any such amendment would require
the approval of the holders of a majority of the outstanding shares of all
series of Preferred Stock voting together as a single class without regard to
series. As of the date of this Prospectus, the Company has one series of
Preferred Stock outstanding.

The Preferred Stock will have the dividend, liquidation, redemption,
conversion, and voting rights set forth below unless otherwise provided in the
Prospectus Supplement relating to a particular series of Preferred Stock.
Reference is made to the Prospectus Supplement relating to the particular series
of the Preferred Stock offered thereby for specific terms, including, (i) the
title and liquidation preference per share of such Preferred Stock and the
number of shares offered; (ii) the price at which such Preferred Stock will be
issued; (iii) the dividend rate (or method of calculation), the dates on which
dividends shall be payable and the dates from which dividends shall commence to
accumulate; (iv) any redemption or sinking fund provisions of such Preferred
Stock; (v) any conversion or exchange provisions of such Preferred Stock; (vi)
the voting rights, if any, of such Preferred Stock; and (vii) any additional
dividend, liquidation, redemption, sinking fund and other rights, preferences,
privileges, limitations, and restrictions of such Preferred Stock. The Preferred
Stock will, when issued, be fully paid and nonassessable.

DIVIDEND RIGHTS. The Preferred Stock will be preferred over the Common
Stock as to payment of dividends. Before any dividends or distributions on the
Common Stock shall be declared and set apart for payment or paid, the holders or
shares of each series of Preferred Stock shall be entitled to receive dividends
(either in cash, shares of Common Stock or Preferred Stock, or otherwise) when,
as, and if declared by the Board of Directors, at the rate and on the date or
dates as set forth in the Prospectus Supplement. With respect to each series of
Preferred Stock, the dividends on each share of such series with respect to
which dividends are cumulative shall be cumulative from the date of issue of
such share unless some other date is set forth in the Prospectus Supplement
relating to any such series. Accruals of dividends shall not bear interest.

5
<PAGE> 25

RIGHTS UPON LIQUIDATION. The Preferred Stock shall be preferred over the
Common Stock as to assets so that the holders of each series of Preferred Stock
shall be entitled to be paid, upon the voluntary or involuntary liquidation,
dissolution, or winding up of the Company, and before any distribution is made
to the holders of Common Stock, the amount set forth in the Prospectus
Supplement relating to any such series, but in such case the holders of such
series of Preferred Stock shall not be entitled to any other or further payment.
If upon any such liquidation, dissolution, or winding up of the Company its net
assets shall be insufficient to permit the payment in full of the respective
amounts to which the holders of all outstanding Preferred Stock are entitled,
the entire remaining net assets of the Company shall be distributed among the
holders of each series of Preferred Stock in amounts proportionate to the full
amounts to which the holders of each such series are respectively so entitled.

REDEMPTION AND CONVERSION. All shares of any series of Preferred Stock
shall be redeemable to the extent set forth in the Prospectus Supplement
relating to any such series. All shares of any series of Preferred Stock shall
be convertible into shares of Common Stock or into shares of any other series of
Preferred Stock to the extent set forth in the Prospectus Supplement relating to
any such series.

VOTING RIGHTS. All shares of any series of Preferred Stock shall have the
voting rights set forth in the Prospectus Supplement relating to any such
series.

CONVERTIBLE EXCHANGEABLE PREFERRED STOCK, SERIES A

On March 24, 1987, the Company issued 2,600,000 shares of Series A
Preferred Stock. Each share of Series A Preferred Stock has a liquidation
preference of $50 per share and is convertible at the option of the holder at
any time, unless previously redeemed, into shares of Common Stock at a
conversion price of $28.625 per share of Common Stock, subject to adjustment in
certain events. The Series A Preferred Stock is redeemable for cash at any time
in whole or in part, at the option of the Company, at redemption prices
declining to $50 on March 15, 1997, plus accrued dividends to the redemption
date. Dividends on the Series A Preferred Stock are cumulative and are payable
quarterly at a rate of $3.00 annually. The Series A Preferred Stock is
exchangeable, in whole but not in part, at the option of the Company, on any
dividend payment date for the Company's 6% Convertible Subordinated Debentures
due 2012 (the "Debentures") at the rate of $50 principal amount of Debentures
per share of Series A Preferred Stock. The Debentures, if issued, will be
convertible at the option of the holder at any time, unless previously redeemed,
into shares of Common Stock at a price equivalent to the conversion price
applicable to the Series A Preferred Stock for which the Debentures were
exchanged, subject to adjustment in certain events. The holders of the Series A
Preferred Stock do not have voting rights. However, in the event that dividends
payable on the Series A Preferred Stock are in arrears and unpaid in an amount
equal to or exceeding the amount of dividends payable thereon for six quarterly
dividend periods, the holders thereof have the right to elect two directors to
the Company's Board. Holders of Series A have no preemptive rights.

CERTAIN PROVISIONS OF THE CERTIFICATE AND BY-LAWS

Under the Certificate, holders of Common Stock are entitled to cumulative
voting rights for the election of Company directors. Holders of Common Stock are
not otherwise entitled to cumulative voting rights. Under cumulative voting, a
stockholder may multiply the number of shares owned by the number of directors
to be elected, and cast that total number of votes in any proportion among as
many nominees as the stockholder desires.

The By-laws of the Company contain certain requirements concerning advance
notice of (i) nominations by stockholders of persons for election to the Board,
and (ii) other matters introduced by stockholders at annual meetings.

6
<PAGE> 26

PLAN OF DISTRIBUTION

The Company may sell the Securities to which this Prospectus relates to or
for resale to the public through one or more underwriters, acting alone or in
underwriting syndicates led by one or more managing underwriters, and also may
sell such Securities directly to other purchasers or dealers or through agents.

The distribution of Securities may be effected from time to time in one or
more transactions at a fixed price or prices, which may be changed from time to
time, at market prices prevailing at the time of sale, at prices related to such
prevailing market prices, or at negotiated prices. Each Prospectus Supplement
will describe the method of distribution of the Securities.

In connection with the sale of Securities, such underwriters, dealers, and
agents may receive compensation from the Company, or from purchasers of
Securities for whom they may act as agents, in the form of discounts,
concessions, or commissions. Underwriters, dealers, and agents that participate
in the distribution of Securities and, in certain cases, direct purchasers from
the Company, may be deemed to be "underwriters" and any discounts or commissions
received by them and any profit on the resale of Securities by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
Any such underwriters, dealers, or agents will be identified and any such
compensation will be described in the applicable Prospectus Supplement.

Under agreements which may be entered into by the Company, underwriters,
dealers, and agents who participate in the distribution of Securities may be
entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act. The place and time of delivery
for the Securities in respect of which this Prospectus is delivered will be set
forth in the applicable Prospectus Supplement.

VALIDITY OF OFFERED SECURITIES

The validity of the Securities will be passed upon for the Company by
Hubert Gentry, Jr., Senior Vice President and General Counsel of the Company,
P.O. Box 2628, Houston, Texas 77252. Mr. Gentry beneficially owns 38,558 shares
of common stock of the Company acquired pursuant to various employee benefit
plans of the Company.

EXPERTS

7
<PAGE> 27

SUBJECT TO COMPLETION, DATED MARCH 7, 1996

PROSPECTUS
NORAM ENERGY CORP.
SUBORDINATED DEBT SECURITIES

NORAM FINANCING I
NORAM FINANCING II
PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY

NORAM ENERGY CORP.
---------------------

NorAm Financing I and NorAm Financing II, each a statutory business trust
formed under the laws of Delaware (each, a "NorAm Trust"), may from time to time
offer preferred securities ("Preferred Securities") evidencing undivided
beneficial interests in the assets of the respective NorAm Trust. The payment of
periodic cash distributions ("distributions") with respect to Preferred
Securities of each of the NorAm Trusts, out of moneys held by each of the NorAm
Trusts, and payments on liquidation, redemption or otherwise with respect to
such Preferred Securities will be guaranteed by NorAm Energy Corp. (the
"Company") to the extent described herein (the "Preferred Securities
Guarantee"). The Company's obligations under the Preferred Securities Guarantees
will be subordinate and junior in right of payment to all other liabilities of
the Company and pari passu with the most senior preferred stock issued by the
Company. Subordinated debt securities ("Subordinated Debt Securities") may be
issued and sold from time to time in one or more series by the Company to a
NorAm Trust in connection with the investment of the proceeds from the offering
of Preferred Securities and Common Securities (as defined herein) of such NorAm
Trust. The Subordinated Debt Securities subsequently may be distributed pro rata
to holders of Preferred Securities and Common Securities in connection with the
dissolution of such NorAm Trust upon the occurrence of certain events as may be
described in the Prospectus Supplement. The Preferred Securities Guarantee, when
taken together with the Company's obligations under the Subordinated Debt
Securities, the Subordinated Indenture and the Declaration, including its
obligations to pay costs, expenses, debts and liabilities of such NorAm Trust
(other than with respect to the Trust Securities), will provide a full and
unconditional guarantee on a subordinated basis by the Company of payments due
on the Preferred Securities.

Specific terms of the particular Subordinated Debt Securities of any series
or the Preferred Securities of any NorAm Trust in respect of which this
Prospectus is being delivered (the "Offered Securities") will be set forth in
the accompanying Prospectus Supplement with respect to such series of
Subordinated Debt Securities or such Preferred Securities, which will describe,
without limitation and where applicable the following: (i) in the case of
Subordinated Debt Securities, the specific designation, aggregate principal
amount, denomination, maturity, premium, if any, interest rate (or the method of
determining such rate), if any, dates on which premium, if any, and interest, if
any, will be payable, any redemption provisions, any sinking fund provisions,
the initial public offering price, the conversion terms (if any), the
subordination terms, any listing on a securities exchange and any other terms
and (ii) in the case of Preferred Securities, the specific designation, number
of Preferred Securities, distribution rate (or the method of determining such
rate), dates on which distributions will be payable, liquidation amount, voting
rights (if any), any redemption provisions, terms for any conversion or exchange
into other securities (if any), the initial public offering price, any listing
on a securities exchange, and any other rights, preferences, privileges,
limitations and restrictions.

The Offered Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering; provided, however, that the aggregate
initial public offering price of all Offered Securities shall not exceed
$500,000,000. The Prospectus Supplement relating to any series of Offered
Securities will contain information concerning certain United States federal
income tax considerations, if applicable, to the Offered Securities.

The Offered Securities will be sold directly, through agents, underwriters
or dealers as designated from time to time, or through a combination of such
methods. If agents or any dealers or underwriters are involved in the sale of
the Offered Securities in respect of which this Prospectus is being delivered,
the names of such agents, dealers or underwriters and any applicable commissions
or discounts will be set forth in or may be calculated from the Prospectus
Supplement with respect to such Offered Securities.

This Prospectus may not be used to consummate sales of securities unless
accompanied by a Prospectus Supplement.
---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------

The date of this Prospectus is , 1996.
<PAGE> 28

AVAILABLE INFORMATION

No separate financial statements of the NorAm Trusts are included herein.
NorAm does not believe that such statements would be material to holders of the
Preferred Securities. The NorAm Trusts are not currently subject to the
informational reporting requirements of the Exchange Act. The NorAm Trusts will
become subject to such requirements upon the effectiveness of the Registration
Statement of which this Prospectus forms a part, although they intend to seek
and expect to receive an exemption therefrom.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

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<PAGE> 29

THE NORAM FINANCING TRUSTS

Each of NorAm Financing I and NorAm Financing II is a statutory business
trust formed under Delaware law pursuant to (i) a separate declaration of trust
(each a "Declaration") executed by the Company, as sponsor for such trust (the
"Sponsor") and the NorAm Trustees (as defined herein) for such trust and (ii)
the filing of a certificate of trust with the Delaware Secretary of State on
November 2, 1995. Each NorAm Trust exists for the exclusive purposes of (i)
issuing the Preferred Securities and common securities representing undivided
beneficial interests in the assets of such Trust (the "Common Securities" and,
together with the Preferred Securities, the "Trust Securities"), (ii) investing
the gross proceeds of the Trust Securities in the Subordinated Debt Securities
and (iii) engaging in only those other activities necessary or incidental
thereto. All of the Common Securities will be directly or indirectly owned by
the Company. The Common Securities will rank pari passu, and payments will be
made thereon pro rata, with the Preferred Securities except that upon an event
of default under the Declaration, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. The Company will, directly or indirectly, acquire
Common Securities in an aggregate liquidation amount equal to 3% of the total
capital of each NorAm Trust. Each NorAm Trust has a term of approximately 55
years, but may earlier terminate as provided in the Declaration. Each NorAm
Trust's business and affairs will be conducted by the trustees (the "NorAm
Trustees") appointed by the Company, as the direct or indirect holder of all the
Common Securities. The holder of the Common Securities will be entitled to
appoint, remove or replace any of, or increase or reduce the number of, the
NorAm Trustees of a NorAm Trust. The duties and obligations of the NorAm
Trustees shall be governed by the Declaration of such NorAm Trust. Each NorAm
Trust will have two NorAm Trustees who are employees or officers of or who are
affiliated with the Company. One NorAm Trustee of each NorAm Trust will be a
financial institution which will be unaffiliated with the Company and which
shall act as property trustee and as indenture trustee for purposes of the Trust
Indenture Act of 1939 (the "Trust Indenture Act"), pursuant to the terms set
forth in a Prospectus Supplement (the "Property Trustee"). In addition, unless
the Property Trustee maintains a principal place of business in the State of
Delaware, and otherwise meets the requirements of applicable law, one NorAm
Trustee of each NorAm Trust will have its principal place of business or reside
in the State of Delaware (the "Delaware Trustee"). The Company will pay all fees
and expenses related to the NorAm Trusts and the offering of Trust Securities.
The office of the Delaware Trustee for each NorAm Trust in the State of Delaware
is 23 White Clay Center, Route 273, Newark, Delaware 19711. The principal place
of business of each NorAm Trust shall be c/o NorAm Energy Corp., 1600 Smith
Street, 32nd Floor, Houston, Texas 77002.

THE COMPANY

The Company's natural gas distribution business is conducted through its
three divisions, Arkla , Entex and Minnegasco, and their affiliates, which
collectively form the nation's third largest gas distribution operation with
over 500 billion cubic feet ("Bcf") of annual throughput to over 2.7 million
customers. Through these divisions and their affiliates, the Company engages in
both the natural gas distribution sales and transport businesses. The facilities
and terms of service related to Arkla's, Entex's and Minnegasco's sales to their
customers are largely regulated by state public service commissions and, in
Texas, by municipalities.

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<PAGE> 30

interstate pipeline companies, NES serves as the Company's principal natural gas
supply aggregator and marketer and NFS owns and operates the natural gas
gathering assets previously held by NGT.

The Company owns and operates seven gas storage fields. Four storage fields
are associated with NGT's pipeline and have a combined maximum deliverability of
approximately 655 million cubic feet ("MMcf") per day and a working gas capacity
of approximately 22.5 Bcf. Three storage fields are associated with MRT's
pipeline and have a maximum aggregate deliverability of approximately 570 MMcf
per day and a working gas capacity of approximately 31 Bcf.

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<PAGE> 31

The Company's principal executive offices are located at 1600 Smith Street,
32nd Floor, Houston, Texas 77002. Its mailing address is P. O. Box 2628,
Houston, Texas 77252-2628, and its telephone number is (713) 654-5699.

RATIOS OF EARNINGS TO FIXED CHARGES
INCLUDING PREFERRED STOCK DIVIDENDS

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ------------------------------------
1995 1994 1993 1992 1991 1990
---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges
Including Preferred Stock
Dividends(1)...................... 1.39(2) 1.44 1.43 1.09 1.17 1.90
</TABLE>

- ---------------

(1) The ratios of earnings to fixed charges have been computed using earnings
which are the sum of income from continuing operations, income taxes and
fixed charges. Fixed charges are interest, amortization of debt discount and
expense and the estimated interest portion of rental charges.

(2) Because of the seasonal nature of the Company's business, the ratio for the
nine month period may not necessarily be indicative of the ratio which will
result for the full year 1995.

USE OF PROCEEDS

Each NorAm Trust will invest all proceeds received from the sale of its
Trust Securities in Subordinated Debt Securities. Unless otherwise specified in
the Prospectus Supplement, the Company will apply the net proceeds from the sale
of the Subordinated Debt Securities to its general funds.

The summaries set forth below and in the applicable Prospectus Supplement
address the material terms of the Preferred Securities but do not purport to be
complete and are subject to, and qualified in their entirety by reference to,
the applicable Declaration.

DESCRIPTION OF THE PREFERRED SECURITIES

Each NorAm Trust may issue, from time to time, only one series of Preferred
Securities having terms described in the Prospectus Supplement relating thereto.
The Declaration of each NorAm Trust authorizes the Regular Trustees of such
NorAm Trust to issue on behalf of such NorAm Trust one series of Preferred
Securities. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Preferred Securities will have such terms, including
distributions, redemption, voting, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as shall be set forth in
the Declaration or made part of the Declaration by the Trust Indenture Act.
Reference is made to the Prospectus Supplement relating to the Preferred
Securities of the Company for specific terms, including (i) the distinctive
designation of such Preferred Securities; (ii) the number of Preferred
Securities issued by such NorAm Trust; (iii) the annual distribution rate (or
method of determining such rate) for Preferred Securities issued by such NorAm
Trust and the date or dates upon which such distributions shall be payable;
provided, however, that distributions on such Preferred Securities shall be
payable on a quarterly basis to holders of such Preferred Securities as of a
record date in each quarter during which such Preferred Securities are
outstanding; (iv) whether distributions on Preferred Securities issued by such
NorAm Trust shall be cumulative, and, in the case of Preferred Securities having
such cumulative distribution rights, the date or dates or method of determining
the date or dates from which distributions on Preferred Securities issued by
such NorAm Trust shall be cumulative; (v) the amount or amounts which shall be
paid out of the assets of such NorAm Trust to the holders of Preferred
Securities of such NorAm Trust upon voluntary or involuntary dissolution,
winding-up or termination of such NorAm Trust; (vi) the obligation, if any, of
such NorAm Trust to purchase or redeem Preferred Securities issued by such NorAm
Trust and the price or prices at which, the period or periods within which, and
the terms and conditions upon which, Preferred Securities issued by such NorAm
Trust shall be purchased or redeemed, in whole or in part, pursuant to such
obligation; (vii) the voting rights, if any, of

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<PAGE> 32

Preferred Securities issued by such NorAm Trust in addition to those required by
law, including the number of votes per Preferred Security and any requirement
for the approval by the holders of Preferred Securities, or of Preferred
Securities issued by one or more NorAm Trusts, or of both, as a condition to
specified action or amendments to the Declaration of such NorAm Trust; (viii)
the terms and conditions, if any, upon which Preferred Securities issued by such
NorAm Trust may be converted into shares of NorAm Common Stock, including the
conversion price per share and the circumstances, if any, under which any such
conversion right shall expire; (ix) the terms and conditions, if any, upon which
the Subordinated Debt Securities may be distributed to holders of Preferred
Securities; (x) if applicable, any securities exchange upon which the Preferred
Securities shall be listed; and (xi) any other relevant rights, preferences,
privileges, limitations or restrictions of Preferred Securities issued by such
NorAm Trust not inconsistent with the Declaration of such NorAm Trust or with
applicable law. All Preferred Securities offered hereby will be guaranteed by
the Company to the extent set forth below under "Description of the Preferred
Securities Guarantees." Any United States federal income tax considerations
applicable to any offering of Preferred Securities will be described in the
Prospectus Supplement relating thereto.

In connection with the issuance of Preferred Securities, each NorAm Trust
will issue one series of Common Securities. The Declaration of each NorAm Trust
authorizes the Regular Trustees of such trust to issue on behalf of such NorAm
Trust one series of Common Securities having such terms including distributions,
redemption, voting, liquidation rights or such restrictions as shall be set
forth therein. The terms of the Common Securities issued by a NorAm Trust will
be substantially identical to the terms of the Preferred Securities issued by
such trust and the Common Securities will rank pari passu, and payments will be
made thereon pro rata, with the Preferred Securities except that, upon an event
of default under the Declaration, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. Except in certain limited circumstances, the Common
Securities will also carry the right to vote to appoint, remove or replace any
of the NorAm Trustees of a NorAm Trust. All of the Common Securities of each
NorAm Trust will be directly or indirectly owned by the Company.

ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES

If an Event of Default under the Declaration of a NorAm Trust occurs and is
continuing, then the holders of Preferred Securities of such NorAm Trust would
rely on the enforcement by the Property Trustee of its rights as a holder of the
applicable series of Subordinated Debt Securities against the Company. In
addition, the holders of a majority in liquidation amount of the Preferred
Securities of such NorAm Trust will have the right to direct the time, method,
and place of conducting any proceeding for any remedy available to the Property
Trustee or to direct the exercise of any trust or power conferred upon the
Property Trustee under the applicable Declaration, including the right to direct
the Property Trustee to exercise the remedies available to it as a holder of the
Subordinated Debt Securities. If the Property Trustee fails to enforce its
rights under the applicable series of Subordinated Debt Securities, a holder of
Preferred Securities of such NorAm Trust may institute a legal proceeding
directly against the Company to enforce the Property Trustee's rights under the
applicable series of Subordinated Debt Securities without first instituting any
legal proceeding against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default under the applicable
Declaration has occurred and is continuing and such event is attributable to the
failure of the Company to pay interest or principal on the applicable series of
Subordinated Debt Securities on the date such interest or principal is otherwise
payable (or in the case of redemption, on the redemption date), then a holder of
Preferred Securities of such NorAm Trust may directly institute a proceeding for
enforcement of payment to such holder of the principal of or interest on the
applicable series of Subordinated Debt Securities having a principal amount
equal to the aggregate liquidation amount of the Preferred Securities of such
holder (a "Direct Action") on or after the respective due date specified in the
applicable series of Subordinated Debt Securities. In connection with such
Direct Action, NorAm will be subrogated to the rights of such holder of
Preferred Securities under the applicable Declaration to the extent of any
payment made by NorAm to such holder of Preferred Securities in such Direct
Action.

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<PAGE> 33

DESCRIPTION OF CAPITAL STOCK

COMMON STOCK

Holders of the Common Stock are entitled to one vote for each share held of
record. The Company provides for cumulative voting in the election of directors.
Subject to the preferential rights of the holders of Preferred Stock, the
holders of Common Stock are entitled to receive any dividends which may be
declared by the Company's Board of Directors out of funds legally available
therefor and to share pro rata in the net assets of the Company upon
liquidation. Holders of Common Stock have no preemptive rights and have no
rights to convert their Common Stock into any other securities and there are no
redemption provisions with respect to such shares. All outstanding shares of
Common Stock are fully paid and not subject to further calls or assessments. The
Company's Common Stock is listed on the New York Stock Exchange and prices are
reported by the New York Stock Exchange Composite Tape under the symbol NAE. The
Transfer Agent and Registrar of the Company's Common Stock is First Chicago
Trust Company.

PREFERRED STOCK

7
<PAGE> 34

(either in cash, shares of Common Stock or Preferred Stock, or otherwise) when,
as, and if declared by the Board of Directors, at the rate and on the date or
dates as set forth in the Prospectus Supplement. With respect to each series of
Preferred Stock, the dividends on each share of such series with respect to
which dividends are cumulative shall be cumulative from the date of issue of
such share unless some other date is set forth in the Prospectus Supplement
relating to any such series. Accruals of dividends shall not bear interest.

VOTING RIGHTS. All shares of any series of Preferred Stock shall have the
voting rights set forth in the Prospectus Supplement relating to any such
series.

CONVERTIBLE EXCHANGEABLE PREFERRED STOCK, SERIES A

CERTAIN PROVISIONS OF THE CERTIFICATE AND BY-LAWS

8
<PAGE> 35

DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES

Set forth below is a summary of information concerning the Preferred
Securities Guarantees which will be executed and delivered by the Company for
the benefit of the holders from time to time of Preferred Securities. Each
Preferred Securities Guarantee will be qualified as an indenture under the Trust
Indenture Act. The Bank of New York will act as indenture trustee under each
Preferred Securities Guarantee (the "Preferred Guarantee Trustee"). The terms of
each Preferred Securities Guarantee will be those set forth in such Preferred
Securities Guarantee and those made part of such Preferred Securities Guarantee
by the Trust Indenture Act. The summary does not purport to be complete and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the form of Preferred Securities Guarantee, which is filed as
an exhibit to the Registration Statement of which this Prospectus forms a part,
and the Trust Indenture Act. Each Guarantee will be held by the Preferred
Guarantee Trustee for the benefit of the holders of the Preferred Securities of
the applicable NorAm Trust.

GENERAL

Pursuant to each Preferred Securities Guarantee, the Company will agree, to
the extent set forth therein, to pay in full, to the holders of the Preferred
Securities issued by a NorAm Trust, the Guarantee Payments (as defined
herein)(except to the extent paid by such NorAm Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which such NorAm
Trust may have or assert. The following payments with respect to Preferred
Securities issued by a NorAm Trust to the extent not paid by such NorAm Trust
(the "Guarantee Payments"), will be subject to the Preferred Securities
Guarantee thereon (without duplication): (i) any accrued and unpaid
distributions which are required to be paid on such Preferred Securities, to the
extent such NorAm Trust shall have funds available therefor; (ii) the redemption
price, including all accrued and unpaid distributions (the "Redemption Price"),
to the extent such NorAm Trust has funds available therefor with respect to any
Preferred Securities called for redemption by such NorAm Trust and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of such NorAm
Trust (other than in connection with the distribution of Subordinated Debt
Securities to the holders of Preferred Securities or the redemption of all of
the Preferred Securities), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid distributions on such Preferred Securities to
the date of payment, to the extent such NorAm Trust has funds available therefor
and (b) the amount of assets of such NorAm Trust remaining available for
distribution to holders of such Preferred Securities in liquidation of such
NorAm Trust. The Company's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of Preferred Securities or by causing the applicable NorAm Trust to pay
such amounts to such holders.

Each Preferred Securities Guarantee will be a guarantee on a subordinated
basis with respect to the Preferred Securities issued by the applicable NorAm
Trust, but will not apply to any payment of distributions except to the extent
such NorAm Trust shall have funds available therefor. If the Company does not
make interest payments on the Subordinated Debt Securities purchased by a NorAm
Trust, such NorAm Trust will not pay distributions on the Preferred Securities
issued by such NorAm Trust and will not have funds available therefor. See
"Description of the Subordinated Debt Securities -- Certain Covenants." The
Preferred Securities Guarantee, when taken together with the Company's
obligations under the Subordinated Debt Securities, the Subordinated Indenture
and the Declaration, including its obligations to pay costs, expenses, debts and
liabilities of such NorAm Trust (other than with respect to the Trust
Securities); will provide a full and unconditional guarantee on a subordinated
basis by the Company of payments due on the Preferred Securities.

The Company has also agreed separately to guarantee the obligations of the
NorAm Trusts with respect to the Common Securities (the "Common Securities
Guarantees") to the same extent as the Preferred

9
<PAGE> 36

Securities Guarantee, except that upon an event of default under the
Subordinated Indenture, holders of Preferred Securities shall have priority over
holders of Common Securities with respect to distributions and payments on
liquidation, redemption or otherwise.

CERTAIN COVENANTS OF THE COMPANY

In each Preferred Securities Guarantee, the Company will covenant that, so
long as any Preferred Securities issued by the applicable NorAm Trust remain
outstanding, if there shall have occurred any event that would constitute an
event of default under such Preferred Securities Guarantee or the Declaration of
such NorAm Trust, then (a) the Company shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of NorAm Common Stock in connection with the
satisfaction by NorAm of its obligations under any employee benefit plans or the
satisfaction by NorAm of its obligations pursuant to any contract or security
requiring NorAm to purchase shares of NorAm Common Stock, (ii) as a result of a
reclassification of NorAm capital stock or the exchange or conversion of one
class or series of NorAm's capital stock for another class or series of NorAm
capital stock or, (iii) the purchase of fractional interests in shares of
NorAm's capital stock pursuant to the conversion or exchange provisions of such
NorAm capital stock or the security being converted or exchanged) or make any
guarantee payments with respect to the foregoing) and (b) the Company shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by the
Company which rank pari passu with or junior to such Subordinated Debt
Securities.

MODIFICATION OF THE PREFERRED SECURITIES GUARANTEES; ASSIGNMENT

Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required),
each Preferred Securities Guarantee may be amended only with the prior approval
of the holders of not less than a majority in liquidation amount of the
outstanding Preferred Securities issued by the applicable NorAm Trust. The
manner of obtaining any such approval of holders of such Preferred Securities
will be as set forth in an accompanying Prospectus Supplement. All guarantees
and agreements contained in a Preferred Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Company and
shall inure to the benefit of the holders of the Preferred Securities of the
applicable NorAm Trust then outstanding.

TERMINATION

Each Preferred Securities Guarantee will terminate as to the Preferred
Securities issued by the applicable NorAm Trust (a) upon full payment of the
Redemption Price of all Preferred Securities of such NorAm Trust, (b) upon
distribution of the Subordinated Debt Securities held by such NorAm Trust to the
holders of the Preferred Securities of such NorAm Trust or (c) upon full payment
of the amounts payable in accordance with the Declaration of such NorAm Trust
upon liquidation of such NorAm Trust. Each Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of Preferred Securities issued by the applicable NorAm Trust
must restore payment of any sums paid under such Preferred Securities or such
Preferred Securities Guarantee.

EVENTS OF DEFAULT

An event of default under a Preferred Securities Guarantee will occur upon
(a) the failure of the Company to perform any of its payment or other
obligations thereunder or (b) if applicable, the failure by the Company to
deliver NorAm Common Stock upon an appropriate election by the holder or holders
of Preferred Securities to convert the Preferred Securities into shares of NorAm
Common Stock.

The holders of a majority in liquidation amount of the Preferred Securities
relating to such Preferred Securities Guarantee have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee in respect of the Preferred Securities Guarantee
or to direct the exercise of any trust or power conferred upon the Preferred
Guarantee Trustee under such Preferred

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<PAGE> 37

Securities Guarantee. Notwithstanding the foregoing, any holder of Preferred
Securities relating to such Preferred Securities Guarantee may institute a legal
proceeding directly against the Company to enforce such holder's rights to
receive payment under such Preferred Securities Guarantee, without first
instituting a legal proceeding against the relevant NorAm Trust, the Preferred
Guarantee Trustee or any other person or entity. The Company waives any right or
remedy to require that any action be brought first against such NorAm Trust or
any other person or entity before proceeding directly against the Company.

STATUS OF THE PREFERRED SECURITIES GUARANTEES

The Preferred Securities Guarantees will constitute unsecured obligations
of the Company and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Company, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Company and with
any guarantee now or hereafter entered into by NorAm in respect of any preferred
or preference stock of any affiliate of the Company; and (iii) senior to the
Company's common stock. The terms of the Preferred Securities provide that each
holder of Preferred Securities issued by the applicable NorAm Trust by
acceptance thereof agrees to the subordination provisions and other terms of the
Preferred Securities Guarantee relating thereto.

The Preferred Securities Guarantees will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without instituting a legal proceeding against any other person or
entity).

INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE

The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to a Preferred Securities Guarantee, undertakes to perform only such
duties as are specifically set forth in such Preferred Securities Guarantee and,
after default, shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to such
provisions, the Preferred Guarantee Trustee is under no obligation to exercise
any of the powers vested in it by a Preferred Securities Guarantee at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby.

The Company and certain of its affiliates maintain a banking relationship
with the Preferred Guarantee Trustee.

GOVERNING LAW

The Preferred Securities Guarantees will be governed by and construed in
accordance with the internal laws of the State of New York.

DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES

Subordinated Debt Securities may be issued from time to time in one or more
series under a Subordinated Indenture (the "Subordinated Indenture"), between
the Company and The Bank of New York, as Trustee (the "Debt Trustee"). The terms
of the Subordinated Debt Securities will include those stated in the
Subordinated Indenture and those made part of the Subordinated Indenture by
reference to the Trust Indenture Act. The following summary does not purport to
be complete and is subject in all respects to the provisions of, and is
qualified in its entirety by reference to, the Subordinated Indenture, which is
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part, and the Trust Indenture Act. Whenever particular provisions or defined
terms in the Subordinated Indenture are referred to herein, such provisions or
defined terms are incorporated by reference herein. Section and Article
references used herein are references to provisions of the Subordinated
Indenture unless otherwise noted.

GENERAL

The Subordinated Debt Securities will be unsecured, subordinated
obligations of the Company. The Subordinated Indenture does not limit the
aggregate principal amount of Subordinated Debt Securities which

11
<PAGE> 38

may be issued thereunder and provides that the Subordinated Debt Securities may
be issued from time to time in one or more series. The Subordinated Debt
Securities are issuable in one or more series pursuant to an indenture
supplemental to the Subordinated Indenture or a resolution of the Company's
Board of Directors or a special committee thereof (each, a "Supplemental
Subordinated Indenture") (Section 2.1).

In the event Subordinated Debt Securities are issued to a NorAm Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
such NorAm Trust, such Subordinated Debt Securities subsequently may be
distributed pro rata to the holders of such Trust Securities in connection with
the dissolution of such NorAm Trust upon the occurrence of certain events
described in the Prospectus Supplement relating to such Trust Securities. Only
one series of Subordinated Debt Securities will be issued to a NorAm Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
such NorAm Trust.

Reference is made to the Prospectus Supplement which will accompany this
Prospectus for the following terms of the series of Subordinated Debt Securities
being offered thereby: (i) the specific title of such Subordinated Debt
Securities; (ii) any limit on the aggregate principal amount of such
Subordinated Debt Securities; (iii) the date or dates on which the principal of
such Subordinated Debt Securities is payable and the right, if any, to extend
such date or dates; (iv) the rate or rates at which such Subordinated Debt
Securities will bear interest or the method of determination of such rate or
rates; (v) the date or dates from which such interest shall accrue, the interest
payment dates on which such interest will be payable or the manner of
determination of such interest payment dates and the record dates for the
determination of holders to whom interest is payable on any such interest
payment dates; (vi) the right, if any, to extend the interest payment periods
and the duration of such extension; (vii) the period or periods within which,
the price or prices at which, and the terms and conditions upon which, such
Subordinated Debt Securities may be redeemed, in whole or in part, at the option
of the Company; (viii) the right and/or obligation, if any, of the Company to
redeem or purchase such Subordinated Debt Securities pursuant to any sinking
fund or analogous provisions or at the option of the holder thereof and the
period or periods for which, the price or prices at which, and the terms and
conditions upon which, such Subordinated Debt Securities shall be redeemed or
purchased, in whole or part, pursuant to such right and/or obligation; (ix) the
terms and conditions, if any, upon which the Subordinated Debt Securities may be
converted into shares of NorAm Common Stock, including the conversion price and
the circumstances, if any, under which such conversion right shall expire; (x)
the terms of subordination; (xi) the form of such Subordinated Debt Securities;
(xii) if other than denominations of $25 or any integral multiple thereof, the
denominations in which such Subordinated Debt Securities shall be issuable;
(xiii) any and all other terms with respect to such series; and (xiv) whether
such Subordinated Debt Securities are issuable as a global security, and in such
case, the identity of the depositary. (Section 2.1).

The Subordinated Indenture does not contain any provisions that afford
holders of Subordinated Debt Securities protection in the event of a highly
leveraged transaction involving the Company.

PROPOSED TAX LEGISLATION

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<PAGE> 39

the Preferred Securities if their maximum term were more than 20 years, and such
securities would not qualify for the transition relief as presently contemplated
because a prospectus supplement with respect to preferred securities of a trust
was not filed as an exhibit to the shelf registration statement on or before
December 7, 1995. If the Proposed Legislation were to apply to the Subordinated
Debt Securities, the United States federal income tax consequences of the
purchase, ownership and disposition of the Preferred Securities would differ
from those described herein. If the Proposed Legislation were to apply to the
Subordinated Debt Securities, the Company would not be able to deduct interest
paid on the Subordinated Debt Securities, which would constitute a Tax Event. A
Tax Event could result in the distribution of the Subordinated Debt Securities
to holders of the Preferred Securities or, at the Company's option, redemption
of the Subordinated Debt Securities by the Company. See UNITED STATES FEDERAL
INCOME TAXATION -- "Receipt of Subordinated Debt Securities or Cash upon
Liquidation of a NorAm Trust" in the applicable prospectus supplement. There can
be no assurances as to whether or in what form the Proposed Legislation may be
enacted into law or whether other legislation will be enacted that otherwise
adversely affects the tax treatment of the Subordinated Debt Securities and the
Preferred Securities. The discussion herein assumes that the Proposed
Legislation, if enacted, will not apply to the Subordinated Debt Securities or
the Preferred Securities.

SUBORDINATION

The Subordinated Debt Securities will be subordinated and junior in right
of payment to certain other indebtedness of the Company to the extent set forth
in the Prospectus Supplement that will accompany this Prospectus.

The Prospectus Supplement relating to an issue of Subordinated Debt
Securities will set forth the aggregate amount of outstanding indebtedness as of
the most recent practicable date that by the terms of such Subordinated Debt
Securities will be senior to the Subordinated Debt Securities. The Prospectus
Supplement will also describe any limitations on the issuance of additional
indebtedness senior to the Subordinated Debt Securities.

CERTAIN COVENANTS

If Subordinated Debt Securities are issued to a NorAm Trust or a trustee of
such trust in connection with the issuance of Trust Securities by such NorAm
Trust and (i) there shall have occurred any event that would constitute an Event
of Default or (ii) the Company shall be in default with respect to its payment
of any obligations under the related Preferred Securities Guarantee or Common
Securities Guarantee, then (a) the Company shall not declare or pay any dividend
on, make any distributions with respect to, or redeem, purchase or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of NorAm Common Stock in connection with the
satisfaction by NorAm of its obligations under any employee benefit plans or the
satisfaction by NorAm of its obligations pursuant to any contract or security
requiring NorAm to purchase shares of NorAm Common Stock, (ii) as a result of a
reclassification of NorAm capital stock or the exchange or conversion of one
class or series of NorAm's capital stock for another class or series of Nor Am
capital stock or, (iii) the purchase of fractional interests in shares of
NorAm's capital stock pursuant to the conversion or exchange provisions of such
NorAm capital stock or the security being converted or exchanged) or make any
guarantee payments with respect to the foregoing), and (b) the Company shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by the
Company which rank pari passu with or junior to such Subordinated Debt
Securities.

If Subordinated Debt Securities are issued to a NorAm Trust or a trustee of
such trust in connection with the issuance of Trust Securities by such NorAm
Trust and the Company shall have given notice of its election to defer payments
of interest on such Subordinated Debt Securities by extending the interest
payment period as provided in the Subordinated Indenture and such period, or any
extension thereof, shall be continuing, then (a) the Company shall not declare
or pay any dividend on, make any distributions with respect to, or redeem,
purchase or make a liquidation payment with respect to, any of its capital
stock, and (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt

13
<PAGE> 40

securities (including guarantees) issued by the Company which rank pari passu
with or junior to such Subordinated Debt Securities.

In the event Subordinated Debt Securities are issued to a NorAm Trust or a
trustee of such trust in connection with the issuance of Trust Securities of
such NorAm Trust, for so long as such Trust Securities remain outstanding, the
Company will covenant (i) to directly or indirectly maintain 100% ownership of
the Common Securities of such NorAm Trust; provided, however, that any permitted
successor of the Company under the Subordinated Indenture may succeed to the
Company's ownership of such Common Securities the Company, (ii) to use its
reasonable efforts to cause such NorAm Trust (a) to remain a statutory business
trust, except in connection with the distribution of Subordinated Debt
Securities to the holders of Trust Securities in liquidation of such NorAm
Trust, the redemption of all of the Trust Securities of such NorAm Trust, or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration of such NorAm Trust, and (b) to otherwise continue not to be
classified as an association taxable as a corporation or partnership for United
States federal income tax purposes and (iii) to use its reasonable efforts to
cause each holder of Trust Securities to be treated as owning an undivided
beneficial interest in the Subordinated Debt Securities. (Section 4.7).

FORM, EXCHANGE, REGISTRATION AND TRANSFER

Subordinated Debt Securities of each series will be issued in registered
form and in either certificated form or represented by one or more global
securities. If not represented by one or more global securities, Subordinated
Debt Securities may be presented for registration of transfer (with the form of
transfer endorsed thereon duly executed) or exchange, at the office of the
Debenture Registrar or at the office of any transfer agent designated by the
Company for such purpose with respect to any series of Subordinated Debt
Securities and referred to in an applicable Prospectus Supplement, without
service charge and upon payment of any taxes and other governmental charges as
described in the Subordinated Indenture. Such transfer or exchange will be
effected upon the Debenture Registrar or such transfer agent, as the case may
be, being satisfied with the documents of title and identity of the person
making the request. The Company has appointed the Debt Trustee as Debenture
Registrar with respect to the Subordinated Debt Securities. (Section 2.5). If a
Prospectus Supplement refers to any transfer agents (in addition the Debenture
Registrar) initially designated by the Company with respect to any series of
Subordinated Debt Securities, the Company may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that the Company will be
required to maintain a transfer agent in each Place of Payment for such series.
(Section 4.2). The Company may at any time designate additional transfer agents
with respect to any series of Subordinated Debt Securities.

In the event of any redemption in part, the Company shall not be required
to (i) issue, register the transfer of or exchange any Subordinated Debt
Securities during a period beginning at the opening of business 15 days before
any selection for redemption of Subordinated Debt Securities of like tenor and
of the series of which such Subordinated Debt Securities are a part, and ending
at the close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all holders of Subordinated Debt
Securities of like tenor and of such series to be redeemed and (ii) register the
transfer of or exchange any Subordinated Debt Securities so selected for
redemption, in whole or in part, except the unredeemed portion of any
Subordinated Debt Securities being redeemed in part. (Section 2.5).

PAYMENT AND PAYING AGENTS

Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and premium (if any) on any Subordinated Debt Securities will be
made only against surrender to the Paying Agent of such Subordinated Debt
Securities. Unless otherwise indicated in an applicable Prospectus Supplement,
principal of and any premium and interest, if any, on Subordinated Debt
Securities will be payable, subject to any applicable laws and regulations, at
the office of such Paying Agent or Paying Agents as the Company may designate
from time to time, except that at the option of the Company payment of any
interest may be made by check mailed to the address of the person entitled
thereto as such address shall appear in the Debenture Register with respect to
such Subordinated Debt Securities. (Section 4.3). Unless

14
<PAGE> 41

otherwise indicated in an applicable Prospectus Supplement, payment of interest
on a Subordinated Debt Security on any Interest Payment Date will be made to the
person in whose name such Subordinated Debt Security (or predecessor security)
is registered at the close of business on the Regular Record Date for such
interest payment. (Section 2.3).

The Company will act as Paying Agent with respect to the Subordinated Debt
Securities. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agents or approve a change in the office
through which any Paying Agent acts, except that the Company will be required to
maintain a Paying Agent in each Place of Payment for each series of the
respective Subordinated Debt Securities. (Sections 4.2 and 4.3).

All moneys paid by the Company to a Paying Agent for the payment of the
principal of or premium or interest, if any, on any Subordinated Debt Securities
of any series which remain unclaimed at the end of two years after such
principal, premium, if any, or interest shall have become due and payable will
be repaid to the Company and the holder of such Subordinated Debt Securities
will thereafter look only to the Company for payment thereof. (Section 11.5).

GLOBAL SECURITIES

If any Subordinated Debt Securities of a series are represented by one or
more global securities (each, a "Global Security"), the applicable Prospectus
Supplement will describe the circumstances, if any, under which beneficial
owners of interests in any such Global Security may exchange such interests for
Subordinated Debt Securities of such series and of like tenor and principal
amount in any authorized form and denomination. Principal of and any premium and
interest on a Global Security will be payable in the manner described in the
applicable Prospectus Supplement. (Section 2.11).

The specific terms of the depositary arrangement with respect to any
portion of a series of Subordinated Debt Securities to be represented by a
Global Security will be described in the applicable Prospectus Supplement.

MODIFICATION OF THE SUBORDINATED INDENTURE

The Subordinated Indenture contains provisions permitting the Company and
the Debt Trustee, with the consent of the holders of not less than a majority in
principal amount of the Subordinated Debt Securities of each series which are
affected by the modification, to modify the Subordinated Indenture or any
supplemental indenture affecting that series or the rights of the holders of
that series of Subordinated Debt Securities; provided that no such modification
may, without the consent of the holder of each outstanding Subordinated Debt
Security affected thereby, (i) extend the fixed maturity of any Subordinated
Debt Securities of any series, or reduce the principal amount thereof, or reduce
the rate or extend the time of payment of interest thereon, or reduce any
premium payable upon the redemption thereof, without the consent of the holder
of each Subordinated Debt Security so affected or (ii) reduce the percentage of
Subordinated Debt Securities, the holders of which are required to consent to
any such supplemental indenture, without the consent of the holders of each then
outstanding Subordinated Debt Security affected thereby. (Section 9.2). If a
NorAm Trust or the Property Trustee of a NorAm Trust holds a series of
Subordinated Debt Securities, no such supplemental indenture which requires the
approval of the holders of a certain percentage in aggregate principal amount of
Subordinated Debt Securities shall be effective without the approval of the
holders of the same percentage of aggregate liquidation preference of Preferred
Securities.

In addition, the Company and the Debt Trustee may execute, without the
consent of any holder of Subordinated Debt Securities, any supplemental
indenture for one or more of the following purposes: (i) to cure any ambiguity,
defect, or inconsistency herein, in the Subordinated Debt Securities of any
series; (ii) to comply with Article Ten of the Subordinated Indenture; (iii) to
provide for uncertificated Subordinated Debt Securities in addition to or in
place of certificated Subordinated Debt Securities; (iv) to add to the covenants
of the Company for the benefit of the holders of all or any Series of
Subordinated Debt Securities (and if such covenants are to be for the benefit of
less than all series of Subordinated Debt Securities, stating that such
covenants are expressly being included solely for the benefit of such series) or
to surrender any right or power

15
<PAGE> 42

herein conferred upon the Company; (v) to add to, delete from, or revise the
conditions, limitations, and restrictions on the authorized amount, terms, or
purposes of issue, authentication, and delivery of Subordinated Debt Securities,
as herein set forth; (vi) to make any change that does not adversely affect the
rights of any holder of Subordinated Debt Securities in any material respect; or
(vii) to provide for the issuance of and establish the form and terms and
conditions of the Subordinated Debt Securities of any series, to establish the
form of any certifications required to be furnished pursuant to the terms of
this Subordinated Indenture or any series of Subordinated Debt Securities, or to
add to the rights of the holders of any series of Subordinated Debt Securities.

EVENTS OF DEFAULT

The Subordinated Indenture provides that any one or more of the following
described events which has occurred and is continuing constitutes an "Event of
Default" with respect to each series of Subordinated Debt Securities:

(a) failure for 90 days to pay interest on the Subordinated Debt
Securities of that series, including any Additional Interest in respect
thereof, when due; provided, however, that a valid extension of the
interest payment period by the Company shall not constitute a default in
the payment of interest for this purpose; or

(b) failure to pay principal or premium, if any, on the Subordinated
Debt Securities of that series when due whether at maturity, upon
redemption by declaration or otherwise, or to make any sinking fund payment
with respect to that series; provided, however, that a valid extension of
the maturity of such Subordinated Debt Securities shall not constitute a
default for this purpose; or

(c) if applicable, failure by the Company to deliver NorAm Common
Stock upon an appropriate election by the holder or holders of Preferred
Securities to convert the Preferred Securities into shares of NorAm Common
Stock; or

(d) failure to observe or perform any other covenant (other than those
specifically relating to another series) contained in the Indenture for 90
days after written notice to the Company from the Debt Trustee or the
holders of at least 25% in principal amount of the outstanding Subordinated
Debt Securities of that series; or

(e) certain events in bankruptcy, insolvency or reorganization of the
Company; or

(f) in the event Subordinated Debt Securities are issued to a NorAm
Trust or a trustee of such trust in connection with the issuance of Trust
Securities by such NorAm Trust, the voluntary or involuntary dissolution,
winding-up or termination of such NorAm Trust, except in connection with
the distribution of Subordinated Debt Securities to the holders of Trust
Securities in liquidation of such NorAm Trust, the redemption of all of the
Trust Securities of such NorAm Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration of such NorAm Trust.
(Section 6.1).

The holders of a majority in aggregate outstanding principal amount of any
series of the Subordinated Debt Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debt Trustee for that series. (Section 6.6). The Debt Trustee or the holders of
not less than 25% in aggregate outstanding principal amount of any particular
series of the Subordinated Debt Securities may declare the principal due and
payable immediately on default with respect to such series, but the holders of a
majority in aggregate outstanding principal amount of such series may annul such
declaration and waive the default with respect to such series if the default has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration and any applicable premium has been
deposited with the Debt Trustee. (Sections 6.1 and 6.6).

The holders of a majority in aggregate outstanding principal amount of any
series of the Subordinated Debt Securities affected thereby may, on behalf of
the holders of all the Subordinated Debt Securities of such series, waive any
past default, except (i) a default in the payment of principal, premium, if any,
or interest (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration and any applicable premium has been deposited with the Debt

16
<PAGE> 43

Trustee) or (ii) a default in the covenants described in the first or second
paragraph under "-- Certain Covenants." (Section 6.6).

CONSOLIDATION, MERGER AND SALE

The Subordinated Indenture does not contain any covenant which restricts
the ability of the Company to merge or consolidate with or into any other
corporation, sell or convey all or substantially all of its assets to any
person, firm or corporation or otherwise engage in restructuring transactions.
(Section 10.1).

DEFEASANCE AND DISCHARGE

Under the terms of the Subordinated Indenture, the Company will be
discharged from any and all obligations in respect of the Subordinated Debt
Securities of any series (except in each case for certain obligations to
register the transfer or exchange of Subordinated Debt Securities, replace
stolen, lost or mutilated Subordinated Debt Securities, maintain paying agencies
and hold moneys for payment in trust) if the Company deposits with the Debt
Trustee, in trust, moneys or Government Obligations, in an amount sufficient to
pay all the principal of, and interest on, the Subordinated Debt Securities of
such series on the dates such payments are due in accordance with the terms of
such Subordinated Debt Securities. (Section 11.1).

GOVERNING LAW

The Subordinated Indenture and the Subordinated Debt Securities will be
governed by, and construed in accordance with, the internal laws of the State of
New York. (Section 13.5).

INFORMATION CONCERNING THE DEBT TRUSTEE

The Debt Trustee, prior to default, undertakes to perform only such duties
as are specifically set forth in the Subordinated Indenture and, after default,
shall exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. (Section 7.1). Subject to such provision,
the Debt Trustee is under no obligation to exercise any of the powers vested in
it by the Subordinated Indenture at the request of any holder of Subordinated
Debt Securities, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby. (Section 7.2).
The Debt Trustee is not required to expand or risk its own funds or otherwise
incur personal financial liability in the performance of its duties if the Debt
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it. (Section 7.1).

The Company and certain of its affiliates maintain a banking relationship
with the Debt Trustee.

MISCELLANEOUS

The Company will have the right at all times to assign any of their
respective rights or obligations under the Subordinated Indenture to a direct or
indirect wholly-owned subsidiary of the Company; provided that, in the event of
any such assignment, the Company will remain liable for all of their respective
obligations. Subject to the foregoing, the Subordinated Indenture will be
binding upon and inure to the benefit of the parties thereto and their
respective successors and assigns. The Subordinated Indenture provides that it
may not otherwise be assigned by the parties thereto. (Section 13.12).

PLAN OF DISTRIBUTION

The Company may sell any series of Subordinated Debt Securities and the
NorAm Trusts may sell the Preferred Securities being offered hereby in one or
more of the following ways from time to time: (i) to underwriters for resale to
the public or to institutional investors; (ii) directly to institutional
investors; or (iii) through agents to the public or to institutional investors.
The Prospectus Supplement with respect to any Offered Securities will set forth
the terms of the offering of such Offered Securities, including the name or
names of any underwriters or agents, the purchase price of such Offered
Securities and the proceeds to the Company or the applicable NorAm Trust, as the
case may be, from such sale, any underwriting discounts or

17
<PAGE> 44

agency fees and other item's constituting underwriters' or agents' compensation,
any initial public offering price, any discounts or concessions allowed or
reallowed or paid to dealers and any securities exchanges on which such Offered
Securities may be listed.

If underwriters are used in the sale, such Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.

Unless otherwise set forth in the Prospectus Supplement, the obligations of
the underwriters to purchase any series of Offered Securities will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all of such series of Offered Securities, if any are purchased.

Underwriters and agents may be entitled under agreements entered into with
the Company and/or a NorAm Trust to indemnification by the Company and/or such
NorAm Trust against certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments which the
underwriters or agents may be required to make in respect thereof. Underwriters
and agents may be customers of, engage in transactions with, or perform services
for the Company and its affiliates in the ordinary course of business.

Each series of Offered Securities will be a new issue of securities and
will have no established trading market. Any underwriters to whom Offered
Securities are sold by a NorAm Trust for public offering and sale may make a
market in such Offered Securities, but such underwriters will not be obligated
to do so and may discontinue any market making at any time without notice. The
Offered Securities may or may not be listed on a national securities exchange.

VALIDITY OF OFFERED SECURITIES

Certain matters of Delaware law relating to the validity of the Preferred
Securities, the Preferred Securities Guarantees, Subordinated Debt Securities
and certain United States federal income taxation matters will be passed upon by
Skadden, Arps, Slate, Meagher & Flom, special counsel to the Company.

EXPERTS

18
<PAGE> 45

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the various expenses to be paid by the
registrant in connection with the sale and distribution of the securities being
registered hereby, other than underwriting discounts and commissions. All
amounts are estimated except for the Securities and Exchange Commission
registration fee.

<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
Securities and Exchange Commission Registration Fee....................... $172,414
Printing Fees............................................................. $ 86,000
Trustee Fees and Expenses................................................. $ 15,000
Accountant's Fees and Expenses............................................ $ 60,000
Legal Fees and Expenses................................................... $ 75,000
Listing Fees and Expenses................................................. $ 25,000
Blue Sky Fees and Expenses................................................ $ 15,000
Miscellaneous............................................................. $ 11,586
--------
Total................................................................... $460,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the General Corporation Law of Delaware (the "DGCL") gives
corporations the power to indemnify officers and directors under certain
circumstances.

Article III of the Company's By-Laws provides for indemnification of
officers and directors to the extent permitted by the DGCL. The Company also has
policies insuring its officers and directors against certain liabilities for
action taken in such capacities, including liabilities under the Act.

Article Seventh of the Company's Restated Certificate of Incorporation, as
amended, adopted the provision of Delaware law limiting or eliminating the
potential monetary liability of directors to the Company or its stockholders for
breaches of a director's fiduciary duty of care. However, the provision does not
limit or eliminate the liability of a director for disloyalty to the Company or
its stockholders, failing to act in good faith, engaging in intentional
misconduct or a knowing violation of the law, obtaining an improper personal
benefit or paying a dividend or approving a stock repurchase that was illegal
under section 174 of the DGCL.

Article Seventh also provides that if the DGCL is subsequently amended to
authorize further limitation or elimination of the liability of directors, such
subsequent limitation or elimination of director's liability will be
automatically implemented without further stockholder action. Furthermore,
repeal or modification of the terms of the Article Seventh will not adversely
affect any right or protection of a director existing at the time of such repeal
or modification.

The Declaration of each NorAm Trust provides that no Institutional Trustee
or any of its Affiliates, Delaware Trustee or any of its Affiliates, or officer,
director, shareholder, member, partner, employee, representative or agent of the
Institutional Trustee or the Delaware Trustee (each a "Fiduciary Indemnified
Person"), and no Regular Trustee, Affiliate of any Regular Trustee, or any
officer, director, shareholder, member, partner, employee, representative or
agent of any Regular Trustee, or any employee or agent of the NorAm Trust or its
Affiliates (each a "Company Indemnified Person") shall be liable, responsible or
accountable in damages or otherwise to such Trust or any officer, director,
shareholder, partner, member, representative, employee or agent of the NorAm
Trust or its Affiliates for any loss, damage or claim incurred by reason of any
act or omission performed or omitted by such Fiduciary Indemnified Person or
Company Indemnified Person in good faith on behalf of such NorAm Trust and in a
manner such Fiduciary Indemnified Person or Company Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Fiduciary Indemnified Person or Company Indemnified Person by such Declaration
or by law, except that a Fiduciary Indemnified Person or Company Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason of
such Fiduciary Indemnified Person's or Company Indemnified Person's gross

II-1
<PAGE> 46

negligence (or, in the case of a Fiduciary Indemnified Person, negligence) or
willful misconduct with respect to such acts or omissions.

The Declaration of each NorAm Trust also provides that to the full extent
permitted by law, NorAm shall indemnify any Company Indemnified Person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust), by reason
of the fact that he is or was a Company Indemnified Person, against expenses
(including attorneys' fees), judgments, fines and any amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The Declaration of each NorAm Trust also provides that to
the full extent permitted by law, the Company shall indemnify any Company
Indemnified Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
Trust to procure a judgment in its favor by reason of the fact that he is or was
a Company Indemnified Person against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust
and except that no such indemnification shall be made in respect of any claim,
issue or matter as to which such Company Indemnified Person shall have been
adjudged to be liable to the Trust unless and only to the extent that the Court
of Chancery of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such Court of Chancery
or such other court shall deem proper. The Declaration of each NorAm Trust
further provides that expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in the immediately
preceding two sentences shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by NorAm as
authorized in the Declaration. The directors and officers of NorAm and the
Regular Trustees are covered by insurance policies indemnifying them against
certain liabilities, including certain liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), which might be incurred by them
in such capacities and against which they cannot be indemnified by NorAm or the
NorAm Trusts.

Any agents, dealers or underwriters who execute any of the Agreements filed
as Exhibit 1 to this Registration Statement will agree to indemnify the
Company's directors and their officers and the NorAm Trustees who signed the
Registration Statement against certain liabilities that may arise under the
Securities Act with respect to information furnished to NorAm or any of the
NorAm Trusts by or on behalf of any such indemnifying party.

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<S> <C>
1.1 -- Form of Agency Agreement for Debt or Equity Securities (incorporated
herein by reference to Exhibit 1.2 to the Company's Registration
Statement on Form S-3 (Registration No. 33-48750)).
1.2 -- Form of Underwriting Agreement for Debt or Equity Securities
(incorporated by reference to Exhibit 1.1 to the Company's
Registration Statement on Form S-3 (Registration No. 33-48750)).
1.3* -- Form of Underwriting Agreement for Offering of Preferred Securities.
4.1 -- Restated Certificate of Incorporation of the Company, dated May 11,
1994, as amended (incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-3 (Registration No.
33-52853)).
</TABLE>

II-2
<PAGE> 47

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<S> <C>
4.2 -- By-Laws of the Company, dated May 11, 1994 (incorporated herein by
reference to Exhibit 4.2 to the Company's Registration Statement on
Form S-8 (Registration No. 33-54241)).
4.3 -- Indenture, dated as of April 15, 1990, between the Company and
Citibank, N.A., as trustee (incorporated by reference to Exhibit 4.1
to the Company's Registration Statement on Form S-3 (Registration No.
33-23375)).
4.4* -- Certificate of Trust of NorAm Financing I.
4.5* -- Certificate of Trust of NorAm Financing II.
4.6* -- Form of Amended and Restated Declaration of Trust for Convertible
Preferred Securities
4.7* -- Form of Amended and Restated Declaration of Trust for Non-convertible
Preferred Securities
4.8* -- Form of Subordinated Indenture relating to Subordinated Debt
Securities between the Company and The Bank of New York, as trustee.
4.9* -- Form of Supplemental Subordinated Indenture, between the Company and
The Bank of New York, as trustee, providing for issuance of
convertible junior subordinated debentures.
4.10* -- Form of Supplemental Subordinated Indenture, between the Company and
The Bank of New York, as trustee providing for issuance of
non-convertible junior subordinated debentures.
4.11* -- Form of Convertible Preferred Security (included in Exhibit 4.6).
4.12* -- Form of Non-Convertible Preferred Security (included in Exhibit 4.7).
4.13* -- Form of Convertible Junior Subordinated Note (included in Exhibit
4.9).
4.14* -- Form of Non-Convertible Junior Subordinated Note (included in Exhibit
4.10).
4.15 -- Form of Preferred Securities Guarantee for the benefit of the holders
of Preferred Securities of NorAm Financing I.
4.16 -- Form of Preferred Securities Guarantee for the benefit of the holders
of Preferred Securities of NorAm Financing II.
4.17 -- Form of Prospectus Supplement for an offering of Convertible
Preferred Securities of the Trust.
4.18 -- Form of Prospectus Supplement for an offering of Preferred Securities
of the Trust.
5.1 -- Opinion of Hubert Gentry, Jr., Senior Vice President, General Counsel
and Secretary of the Company as to validity of Common Stock
(incorporated by reference to Exhibit 5 to the Company's Registration
Statement on Form S-3 (Registration Statement 33-52853)).
5.2 -- Opinion of Hubert Gentry, Jr., Senior Vice President, General Counsel
and Secretary of the Company as to validity of Debt Securities
(incorporated by reference to Exhibit 5.1 to the Company's
Registration Statement on Form S-3 (Registration Statement
33-48750)).
5.3* -- Opinion of Hubert Gentry, Jr., Senior Vice President, General Counsel
and Secretary of the Company as to the validity of the Equity and
Debt Securities of NorAm offered pursuant to this Registration
Statement.
5.4* -- Opinion of Skadden, Arps, Slate, Meagher & Flom as to validity of
Preferred Securities, Preferred Securities Guarantees and
Subordinated Debt Securities offered pursuant to this Registration
Statement.
8 -- Opinion of Skadden, Arps, Slate, Meagher & Flom as to certain tax
matters relating to the issuance of the Preferred Securities.
12* -- Computation of Ratio of Earnings to Fixed Charges.
23.1 -- Consent of Coopers & Lybrand L.L.P.
23.2 -- Consent of Hubert Gentry, Jr., Senior Vice President, General Counsel
and Secretary of the Company (included in Exhibits 5.1, 5.2 and 5.3).
</TABLE>

II-3
<PAGE> 48

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<S> <C>
23.3 -- Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibits
5.4 and 8).
24.1* -- Powers of Attorney of each of the directors and officers of the
Company whose name appears on the signature pages hereof.
24.2 -- Powers of Attorney of each of the directors and officers of the
Company whose name appears on the signature pages of the Registration
Statement No. 33-52853 (incorporated by reference to Exhibit 24.1 to
the Company's Registration Statement on Form S-3 (Registration
Statement 33-52853)).
24.3 -- Powers of Attorney of each of the directors and officers of the
Company whose name appears on the signature pages of the Registration
Statement No. 33-48750 (incorporated by reference to Exhibit 25.1 to
the Company's Registration Statement on Form S-3 (Registration
Statement 33-48750)).
25.1* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Citibank, N.A. as Trustee under the Indenture
(incorporated herein by reference to Exhibit 26.1 to the Company's
Registration Statement on Form S-3 (Registration No. 33-48750)).
25.2* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the Indenture
relating to Subordinated Debt Securities.
25.3* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the Amended and
Restated Declaration of Trust of NorAm Financing I.
25.4* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the Amended and
Restated Declaration of Trust of NorAm Financing II.
25.5* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the Preferred
Securities Guarantee of NorAm Energy Corp. for the Benefit of the
holders of Preferred Securities of NorAm Financing I.
25.6* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the Preferred
Securities Guarantee of NorAm Energy Corp. for the Benefit of the
holders of Preferred Securities of NorAm Financing II.
27* -- Financial Data Schedule.
</TABLE>

- ---------------

* Previously filed.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes that:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement,
Registration Statement No. 33-52853 and/or Registration Statement No.
33-48750:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, unless the information required to be included
in such post-effective amendment is contained in periodic reports filed
by the registrants pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 and incorporated herein by reference;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement, Registration
Statement No. 33-52853, and/or Registration Statement No. 33-48750 (or
the most recent post-effective amendment thereof) which, individually or
in the

II-4
<PAGE> 49

aggregate, represent a fundamental change in the information set forth
in this Registration Statement, Registration Statement No. 33-52853,
and/or Registration Statement No. 33-48750, unless the information
required to be included in such post-effective amendment is contained in
periodic reports filed by the registrants pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 and incorporated
herein by reference. 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 and 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 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement,
Registration Statement No. 33-52853, and/or Registration Statement No.
33-48750 or any material change to such information in this Registration
Statement, Registration Statement No. 33-52853, and/or Registration
Statement No. 33-48750.

(2) For purposes of determining any liability under the Securities Act
of 1933, each 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.

(4) 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 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities 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.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons for 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 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.

The undersigned Trust registrants hereby undertake to provide to the
underwriters at the closing specified in the underwriting agreement certificates
in such denominations and registered in such name as required by the
underwriters to permit prompt delivery to each purchaser.

II-5
<PAGE> 50

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
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 Amendment No. 2 to
the Registration Statement, Post-Effective Amendment No. 3 to Registration
Statement No. 33-52853 and Post-Effective Amendment No. 3 to Registration
Statement No. 33-48750 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on this 7th day of
March, 1996.

NORAM ENERGY CORP.
(Registrant)

By: /s/ MICHAEL B. BRACY
-------------------------------
(Michael B. Bracy)
Executive Vice President and
Principal Financial Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<S> <C> <C>
/s/ T. MILTON HONEA Principal executive officer March 7, 1996
- --------------------------------------------- and Director
(T. Milton Honea)
Chairman of the Board and
Chief Executive Officer

/s/ MICHAEL B. BRACY Principal financial officer March 7, 1996
- --------------------------------------------- and Director
(Michael B. Bracy)
Executive Vice President and
Principal Financial Officer

/s/ JACK W. ELLIS, II Principal accounting officer March 7, 1996
- ---------------------------------------------
(Jack W. Ellis, II)
Vice President and
Corporate Controller

JOE E. CHENOWETH* Director March 7, 1996
- ---------------------------------------------
(Joe E. Chenoweth)

O. HOLCOMBE CROSSWELL* Director March 7, 1996
- ---------------------------------------------
(O. Holcombe Crosswell)

WALTER A. DeROECK* Director March 7, 1996
- ---------------------------------------------
(Walter A. DeRoeck)

MICKEY P. FORET* Director March 7, 1996
- ---------------------------------------------
(Mickey P. Foret)

JOHN P. GOVER* Director March 7, 1996
- ---------------------------------------------
(John P. Gover)

JOSEPH M. GRANT* Director March 7, 1996
- ---------------------------------------------
(Joseph M. Grant)
</TABLE>

II-6
<PAGE> 51

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<S> <C> <C>
ROBERT C. HANNA* Director March 7, 1996
-----------------------------
(Robert C. Hanna)

JEFFREY W. HART* Director March 7, 1996
-----------------------------
(Jeffrey W. Hart)

MYRA JONES* Director March 7, 1996
-----------------------------
(Myra Jones)

LARRY C. WALLACE* Director March 7, 1996
------------------------------
(Larry C. Wallace)

* By /s/ MICHAEL B. BRACY
------------------------------
(Michael B. Bracy
Attorney-in-Fact)
</TABLE>

II-7
<PAGE> 52

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, NorAm Financing
I and NorAm Financing II certify that they have reasonable grounds to believe
that they meet all of the requirements for filing on Form S-3 and have duly
caused this Amendment No. 2 to the Registration Statement to be signed on their
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on this 7th day of March, 1996.

NORAM FINANCING I
By: NorAm Energy Corp., as sponsor

By: /s/ MICHAEL B. BRACY
--------------------------------
(Michael B. Bracy)
Executive Vice President and
Principal Financial Officer

NORAM FINANCING II
By: NorAm Energy Corp., as sponsor

By: /s/ MICHAEL B. BRACY
--------------------------------
(Michael B. Bracy)
Executive Vice President and
Principal Financial Officer

II-8
<PAGE> 53

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
- ----------
<S> <C>
1.1 -- Form of Agency Agreement for Debt or Equity Securities
(incorporated herein by reference to Exhibit 1.2 to the Company's
Registration Statement on Form S-3 (Registration No. 33-48750)).
1.2 -- Form of Underwriting Agreement for Debt or Equity Securities
(incorporated by reference to Exhibit 1.1 to the Company's
Registration Statement on Form S-3 (Registration No. 33-48750)).
1.3* -- Form of Underwriting Agreement for Offering of Preferred
Securities.
4.1 -- Restated Certificate of Incorporation of the Company, dated May 11,
1994, as amended (incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-3 (Registration No.
33-52853)).
4.2 -- By-Laws of the Company, dated May 11, 1994 (incorporated herein by
reference to Exhibit 4.2 to the Company's Registration Statement on
Form S-8 (Registration No. 33-54241)).
4.3 -- Indenture, dated as of April 15, 1990, between the Company and
Citibank, N.A., as trustee (incorporated by reference to Exhibit
4.1 to the Company's Registration Statement on Form S-3
(Registration No. 33-23375)).
4.4* -- Certificate of Trust of NorAm Financing I.
4.5* -- Certificate of Trust of NorAm Financing II.
4.6* -- Form of Amended and Restated Declaration of Trust for Convertible
Preferred Securities
4.7* -- Form of Amended and Restated Declaration of Trust for
Non-Convertible Preferred Securities
4.8* -- Form of Subordinated Indenture relating to Subordinated Debt
Securities between the Company and The Bank of New York, as
trustee.
4.9* -- Form of Supplemental Subordinated Indenture, between the Company
and The Bank of New York, as trustee, providing for issuance of
convertible junior subordinated debentures.
4.10* -- Form of Supplemental Subordinated Indenture, between the Company
and The Bank of New York, as trustee providing for issuance of
non-convertible junior subordinated debentures.
4.11* -- Form of Convertible Preferred Security (included in Exhibit 4.6).
4.12* -- Form of Non-Convertible Preferred Security (included in Exhibit
4.7).
4.13* -- Form of Convertible Junior Subordinated Note (included in Exhibit
4.9).
4.14* -- Form of Non-Convertible Junior Subordinated Note (included in
Exhibit 4.10).
4.15 -- Form of Preferred Securities Guarantee for the benefit of the
holders of Preferred Securities of NorAm Financing I.
4.16 -- Form of Preferred Securities Guarantee for the benefit of the
holders of Preferred Securities of NorAm Financing II.
4.17 -- Form of Prospectus Supplement for an offering of Convertible
Preferred Securities of the Trust.
4.18 -- Form of Prospectus Supplement for an offering of Preferred
Securities of the Trust.
5.1 -- Opinion of Hubert Gentry, Jr., Senior Vice President, General
Counsel and Secretary of the Company as to validity of Common Stock
(incorporated by reference to Exhibit 5 to the Company's
Registration Statement on Form S-3 (Registration Statement
33-52853)).
5.2 -- Opinion of Hubert Gentry, Jr., Senior Vice President, General
Counsel and Secretary of the Company as to validity of Debt
Securities (incorporated by reference to Exhibit 5.1 to the
Company's Registration Statement on Form S-3 (Registration
Statement 33-48750)).
</TABLE>
<PAGE> 54

<TABLE>
<CAPTION>
EXHIBIT
- ----------
<S> <C>
5.3* -- Opinion of Hubert Gentry, Jr., Senior Vice President, General
Counsel and Secretary of the Company as to the validity of the
Equity and Debt Securities of NorAm offered pursuant to this
Registration Statement.
5.4* -- Opinion of Skadden, Arps, Slate, Meagher & Flom as to validity of
Preferred Securities, Preferred Securities Guarantees and
Subordinated Debt Securities offered pursuant to this Registration
Statement.
8 -- Opinion of Skadden, Arps, Slate, Meagher & Flom as to certain tax
matters relating to the issuance of the Preferred Securities.
12* -- Computation of Ratio of Earnings to Fixed Charges.
23.1 -- Consent of Coopers & Lybrand L.L.P.
23.2 -- Consent of Hubert Gentry, Jr., Senior Vice President, General
Counsel and Secretary of the Company (included in Exhibits 5.1, 5.2
and 5.3).
23.3 -- Consent of Skadden, Arps, Slate, Meagher & Flom (included in
Exhibits 5.4 and 8).
24.1* -- Powers of Attorney of each of the directors and officers of the
Company whose name appears on the signature pages hereof.
24.2 -- Powers of Attorney of each of the directors and officers of the
Company whose name appears on the signature pages of the
Registration Statement No. 33-52853 (incorporated by reference to
Exhibit 24.1 to the Company's Registration Statement on Form S-3
(Registration Statement 33-52853)).
24.3 -- Powers of Attorney of each of the directors and officers of the
Company whose name appears on the signature pages of the
Registration Statement No. 33-48750 (incorporated by reference to
Exhibit 25.1 to the Company's Registration Statement on Form S-3
(Registration Statement 33-48750)).
25.1* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Citibank, N.A. as Trustee under the Indenture
(incorporated herein by reference to Exhibit 26.1 to the Company's
Registration Statement on Form S-3 (Registration No. 33-48750)).
25.2* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the Indenture
relating to Subordinated Debt Securities.
25.3* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the Amended and
Restated Declaration of Trust of NorAm Financing I.
25.4* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the Amended and
Restated Declaration of Trust of NorAm Financing II.
25.5* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the Preferred
Securities Guarantee of NorAm Energy Corp. for the Benefit of the
holders of Preferred Securities of NorAm Financing I.
25.6* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the Preferred
Securities Guarantee of NorAm Energy Corp. for the Benefit of the
holders of Preferred Securities of NorAm Financing II.
27* -- Financial Data Schedule.
</TABLE>

- ---------------

* Previously filed.

<PAGE> 1
EXHIBIT 4.15

[FORM OF PREFERRED
SECURITIES GUARANTEE]

====================================

PREFERRED SECURITIES GUARANTEE AGREEMENT

NorAm Financing [I]

Dated as of October __, 1995

====================================
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION

SECTION 1.1 Definitions and Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE II
TRUST INDENTURE ACT

SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.3 Reports by the Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.8 Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE

SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . 7
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee . . . . . . . . . . . . . . . . . . . 11

ARTICLE IV
PREFERRED GUARANTEE TRUSTEE

SECTION 4.1 Preferred Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee Trustees . . . . . . . . . . . 12

ARTICLE V
GUARANTEE

SECTION 5.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.2 Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.3 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.4 Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.5 Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.6 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.7 Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

</TABLE>

<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1 Limitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.2 Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE VII
TERMINATION

SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE VIII
INDEMNIFICATION

SECTION 8.1 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE IX
MISCELLANEOUS

SECTION 9.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 9.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 9.4 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

</TABLE>

ii
<PAGE> 4
PREFERRED SECURITIES GUARANTEE AGREEMENT

This GUARANTEE AGREEMENT (the "Preferred Securities
Guarantee"), dated as of October __, 1995, is executed and delivered by NorAm
Energy Corp., a Delaware corporation (the "Guarantor"), and [Name of Preferred
Guarantee Trustee], as trustee (the "Preferred Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of NorAm Financing [I], a Delaware statutory
business trust (the "Issuer").

WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of ________, 1995, among the trustees of
the Issuer named therein, the Guarantor, as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof [ ]
preferred securities, having an aggregate liquidation amount of $[ ],
designated the _____% Trust Originated Preferred Securities (the "Preferred
Securities");

WHEREAS, as incentive for the Holders to purchase the
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Preferred Securities Guarantee, to pay
to the Holders of the Preferred Securities the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set
forth herein.

WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") in substantially
identical terms to this Preferred Securities Guarantee for the benefit of the
holders of the Common Securities (as defined herein), except that if an Event
of Default (as defined in the Indenture), has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments under this Preferred
Securities Guarantee.

NOW, THEREFORE, in consideration of the purchase by each
Holder of Preferred Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Preferred
Securities Guarantee for the benefit of the Holders.

<PAGE> 5
ARTICLE I
DEFINITIONS AND INTERPRETATION

SECTION 1.1 Definitions and Interpretation

In this Preferred Securities Guarantee, unless the context
otherwise requires:

(a) Capitalized terms used in this Preferred Securities
Guarantee but not defined in the preamble above have
the respective meanings assigned to them in this
Section 1.1;

(b) a term defined anywhere in this Preferred Securities
Guarantee has the same meaning throughout;

(c) all references to "the Preferred Securities
Guarantee" or "this Preferred Securities Guarantee"
are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;

(d) all references in this Preferred Securities Guarantee
to Articles and Sections are to Articles and Sections
of this Preferred Securities Guarantee, unless
otherwise specified;

(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Preferred Securities
Guarantee, unless otherwise defined in this Preferred
Securities Guarantee or unless the context otherwise
requires; and

(f) a reference to the singular includes the plural and
vice versa.

"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule
thereunder.

"Business Day" means any day other than a day on which banking
institutions in the City of New York, New York are authorized or required by
any applicable law to close.

"Common Securities" means the convertible common securities
representing common undivided beneficial interests in the assets of the Issuer.

"Preferred Guarantee Trustee" means [Name of Preferred
Guarantee Trustee], until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment pursuant to

2
<PAGE> 6
the terms of this Preferred Securities Guarantee and thereafter means each such
Successor Preferred Guarantee Trustee.

"Corporate Trust Office" means the office of the Preferred
Guarantee Trustee at which the corporate trust business of the Preferred
Guarantee Trustee shall, at any particular time, be principally administered,
which office at the date of execution of this Agreement is located at
[address].

"Covered Person" means any Holder or beneficial owner of
Preferred Securities.

"Debentures" means the series of convertible junior
subordinated debt securities of the Guarantor designated the ___% Junior
Subordinated Debentures due [ ] held by the Institutional Trustee (as
defined in the Declaration) of the Issuer.

"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Preferred Securities Guarantee.

"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred Securities,
to the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Preferred Securities to the extent the Issuer shall have funds available
therefor, (ii) the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price") to the extent
the Issuer has funds available therefor, with respect to any Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Debentures to the Holders in exchange for
Preferred Securities as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid Distributions on
the Preferred Securities to the date of payment, to the extent the Issuer shall
have funds available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer
(in either case, the "Liquidation Distribution"). If an event of default under
the Indenture has occurred and is continuing, the rights of holders of the
Common Securities to receive payments under the Common Securities Guarantee
Agreement are subordinated to the rights of Holders of Preferred Securities to
receive Guarantee Payments.

"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any

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<PAGE> 7
request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.

"Indemnified Person" means the Preferred Guarantee Trustee,
any Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.

"Indenture" means the Indenture dated as of _______, 1995,
among the Guarantor (the "Debenture Issuer") and The Bank of New York, N.A., as
trustee, and any indenture supplemental thereto pursuant to which certain
subordinated debt securities of the Debenture Issuer are to be issued to the
Property Trustee of the Issuer.

"Majority in liquidation amount of the Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all Preferred Securities.

"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:

(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition
relating thereto;

(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;

(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and

(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.

"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorpo-

<PAGE> 8
rated association, or government or any agency or political subdivision thereof,
or any other entity of whatever nature.

"Responsible Officer" means, with respect to the Preferred
Guarantee Trustee, any officer within the Corporate Trust Office of the
Preferred Guarantee Trustee, including any vice-president, any assistant
vice-president, any assistant secretary, the treasurer, any assistant treasurer
or other officer of the Corporate Trust Office of the Preferred Guarantee
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 that officer's knowledge of and familiarity with the particular
subject.

"Successor Preferred Guarantee Trustee" means a successor
Preferred Guarantee Trustee possessing the qualifications to act as Preferred
Guarantee Trustee under Section 4.1.

"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.

ARTICLE II
TRUST INDENTURE ACT

SECTION 2.1 Trust Indenture Act; Application

(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and

(b) if and to the extent that any provision of this
Preferred Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.

SECTION 2.2 Lists of Holders of Securities

(a) The Guarantor shall provide the Preferred Guarantee Trustee
with a list, in such form as the Preferred Guarantee Trustee may reasonably
require, of the names and addresses of the Holders of the Preferred Securities
("List of Holders") as of such date, (i) within 1 Business Day after January 1
and June 30 of each year, and (ii) at any other time within 30 days of receipt
by the Guarantor of a written request for a List of Holders as of a date no
more than 14 days before such List of Holders is given to the Preferred
Guarantee Trustee provided, that the Guarantor shall not be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Preferred Guarantee Trustee

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<PAGE> 9
by the Guarantor. The Preferred Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.

(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.

SECTION 2.3 Reports by the Preferred Guarantee Trustee

Within 60 days after May 15 of each year, the Preferred
Guarantee Trustee shall provide to the Holders of the Preferred Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Preferred Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.

SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee

The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.

SECTION 2.5 Evidence of Compliance with Conditions Precedent

The Guarantor shall provide to the Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Preferred Securities Guarantee that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.

SECTION 2.6 Events of Default; Waiver

The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.

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<PAGE> 10
SECTION 2.7 Event of Default; Notice

(a) The Preferred Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Preferred Securities, notices of all
Events of Default actually known to a Responsible Officer of the Preferred
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice, provided, that, the Preferred Guarantee Trustee shall be protected
in withholding such notice if and so long as a Responsible Officer of the
Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Preferred Securities.

(b) The Preferred Guarantee Trustee shall not be deemed
to have knowledge of any Event of Default unless the Preferred Guarantee
Trustee shall have received written notice, or of which a Responsible Officer
of the Preferred Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge.

SECTION 2.8 Conflicting Interests

The Declaration shall be deemed to be specifically described
in this Preferred Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.

ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE

SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee

(a) This Preferred Securities Guarantee shall be held by
the Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee
shall automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.

(b) If an Event of Default actually known to a
Responsible Officer of the Preferred Guarantee Trustee has occurred and

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<PAGE> 11
is continuing, the Preferred Guarantee Trustee shall enforce this Preferred
Securities Guarantee for the benefit of the Holders of the Preferred
Securities.

(c) The Preferred Guarantee Trustee, before the
occurrence of any Event of Default and after the curing of all Events of
Default that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Preferred Securities Guarantee, and no
implied covenants shall be read into this Preferred Securities Guarantee
against the Preferred Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Preferred Guarantee Trustee, the
Preferred Guarantee Trustee shall exercise such of the rights and powers vested
in it by this Preferred Securities Guarantee, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.

(d) No provision of this Preferred Securities Guarantee
shall be construed to relieve the Preferred Guarantee Trustee from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:

(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:

(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the express
provisions of this Preferred Securities Guarantee, and the
Preferred Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no
implied covenants or obligations shall be read into this
Preferred Securities Guarantee against the Preferred Guarantee
Trustee; and

(B) in the absence of bad faith on the part of
the Preferred Guarantee Trustee, the Preferred Guarantee
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Preferred Guarantee Trustee and conforming to the requirements
of this Preferred Securities Guarantee; but in the case of any
such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall be
under a duty to examine the same to determine

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<PAGE> 12
whether or not they conform to the requirements of this
Preferred Securities Guarantee;

(ii) the Preferred Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible Officer
of the Preferred Guarantee Trustee, unless it shall be proved that the
Preferred Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;

(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Preferred Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Preferred Guarantee Trustee, or exercising any trust
or power conferred upon the Preferred Guarantee Trustee under this
Preferred Securities Guarantee; and

(iv) no provision of this Preferred Securities Guarantee
shall require the Preferred Guarantee Trustee to expend or risk its
own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers, if the Preferred Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Preferred Securities Guarantee or indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against such risk or liability is
not reasonably assured to it.

SECTION 3.2 Certain Rights of Preferred Guarantee Trustee

(a) Subject to the provisions of Section 3.1:

(i) The Preferred Guarantee Trustee may conclusively
rely, and shall be fully 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, sent or
presented by the proper party or parties.

(ii) Any direction or act of the Guarantor contemplated by
this Preferred Securities Guarantee shall be sufficiently evidenced by
a Direction or an Officers' Certificate.

(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established

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<PAGE> 13
before taking, suffering or omitting any action hereunder, the
Preferred Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Guarantor.

(iv) The Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).

(v) The Preferred Guarantee Trustee may consult with
counsel, and the written advice or opinion of such counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its Affiliates
and may include any of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from any court
of competent jurisdiction.

(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by
this Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Preferred
Guarantee Trustee such security and indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the
Preferred Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Preferred Guarantee Trustee; provided that, nothing
contained in this Section 3.2(a)(vi) shall be taken to relieve th
Preferred Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested in
it by this Preferred Securities Guarantee.

(vii) The Preferred Guarantee 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
Preferred Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.

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<PAGE> 14
(viii) The Preferred Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys,
and the Preferred Guarantee 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.

(ix) Any action taken by the Preferred Guarantee Trustee
or its agents hereunder shall bind the Holders of the Preferred
Securities, and the signature of the Preferred Guarantee Trustee or
its agents alone shall be sufficient and effective to perform any such
action. No third party shall be required to inquire as to the
authority of the Preferred Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Preferred
Securities Guarantee, both of which shall be conclusively evidenced by
the Preferred Guarantee Trustee's or its agent's taking such action.

(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy
or right or taking any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such
instructions.

(b) No provision of this Preferred Securities Guarantee
shall be deemed to impose any duty or obligation on the Preferred Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Preferred Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation. No permissive power
or authority available to the Preferred Guarantee Trustee shall be construed to
be a duty.

SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee

The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not
assume any responsibility for their correctness. The Preferred Guarantee
Trustee makes no representation as to the validity or sufficiency of this
Preferred Securities Guarantee.

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<PAGE> 15
ARTICLE IV
Preferred Guarantee TRUSTEE

SECTION 4.1 Preferred Guarantee Trustee; Eligibility

(a) There shall at all times be a Preferred Guarantee
Trustee which shall:

(i) not be an Affiliate of the Guarantor; and

(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent
report of condition so published.

(b) If at any time the Preferred Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Preferred Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 4.2(c).

(c) If the Preferred Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.

SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee
Trustees

(a) Subject to Section 4.2(b), the Preferred Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor.

(b) The Preferred Guarantee Trustee shall not be removed
in accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Preferred Guarantee Trustee and delivered to the
Guarantor.

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<PAGE> 16
(c) The Preferred Guarantee Trustee appointed to office
shall hold office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Preferred Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a Successor
Preferred Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor Preferred
Guarantee Trustee and delivered to the Guarantor and the resigning Preferred
Guarantee Trustee.

(d) If no Successor Preferred Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery to the Guarantor of an instrument of resignation,
the resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.

(e) No Preferred Guarantee Trustee shall be liable for
the acts or omissions to act of any Successor Preferred Guarantee Trustee.

(f) Upon termination of this Preferred Securities
Guarantee or removal or resignation of the Preferred Guarantee Trustee pursuant
to this Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee
all amounts accrued to the date of such termination, removal or resignation.

ARTICLE V
GUARANTEE

SECTION 5.1 Guarantee

The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.

SECTION 5.2 Waiver of Notice and Demand

The Guarantor hereby waives notice of acceptance of this
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any

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<PAGE> 17
right to require a proceeding first against the Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.

SECTION 5.3 Obligations Not Affected

The obligations, covenants, agreements and duties of the
Guarantor under this Preferred Securities Guarantee shall in no way be affected
or impaired by reason of the happening from time to time of any of the
following:

(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;

(b) the extension of time for the payment by the Issuer
of all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Preferred Securities (other
than an extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that results from the extension
of any interest payment period on the Debentures or any extension of the
maturity date of the Debentures permitted by the Indenture);

(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;

(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings affecting,
the Issuer or any of the assets of the Issuer;

(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;

(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or

(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of

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<PAGE> 18

a guarantor, it being the intent of this Section 5.3 that the obligations of
the Guarantor hereunder shall be absolute and unconditional under any and all
circumstances.

There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.

SECTION 5.4 Rights of Holders

(a) The Holders of a Majority in liquidation amount of
the Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Preferred
Guarantee Trustee in respect of this Preferred Securities Guarantee or
exercising any trust or power conferred upon the Preferred Guarantee Trustee
under this Preferred Securities Guarantee.

(b) Any Holder of Preferred Securities may institute a
legal proceeding directly against the Guarantor to enforce its rights under
this Preferred Securities Guarantee, without first instituting a legal
proceeding against the Issuer, the Preferred Guarantee Trustee or any other
Person.

SECTION 5.5 Guarantee of Payment

This Preferred Securities Guarantee creates a guarantee of
payment and not of collection.

SECTION 5.6 Subrogation

The Guarantor shall be subrogated to all (if any) rights of
the Holders of Preferred Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Preferred Securities
Guarantee; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under
this Preferred Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Preferred Securities Guarantee. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.

SECTION 5.7 Independent Obligations

The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee

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<PAGE> 19
Payments pursuant to the terms of this Preferred Securities Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.

ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1 Limitation of Transactions

So long as any Preferred Securities remain outstanding, if
there shall have occurred an Event of Default or an event of default under the
Declaration, then (a) the Guarantor shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, (b) the
Guarantor shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities (including guarantees)
issued by the Guarantor which rank pari passu with or junior to the Debentures
or (c) the Guarantor shall not make any guarantee payments with respect to the
foregoing (other than pursuant to the Preferred Securities Guarantee
Agreement); provided, however, the Guarantor may declare and pay a stock
dividend where the dividend stock is the same stock as that on which the
dividend is being paid.

SECTION 6.2 Ranking

This Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor, (ii) pari passu
with the most senior Preferred or preference stock now or hereafter issued by
the Guarantor and with any guarantee now or hereafter entered into by the
Guarantor in respect of any Preferred or preference stock of any Affiliate of
the Guarantor, and (iii) senior to the Guarantor's common stock.

ARTICLE VII
TERMINATION

SECTION 7.1 Termination

This Preferred Securities Guarantee shall terminate upon (i)
full payment of the Redemption Price of all Preferred Securities, (ii) upon the
distribution of the Guarantor's common stock to the Holders in respect of the
conversion of the Preferred Securities into the Guarantor's common stock or
upon the distribution of the Debentures to the Holders of all of the Preferred
Securities or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon liquidation of

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<PAGE> 20
the Issuer. Notwithstanding the foregoing, this Preferred Securities Guarantee
will continue to be effective or will be reinstated, as the case may be, if at
any time any Holder of Preferred Securities must restore payment of any sums
paid under the Preferred Securities or under this Preferred Securities
Guarantee.

ARTICLE VIII
INDEMNIFICATION

SECTION 8.1 Exculpation

(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.

(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Preferred Securities
might properly be paid.

SECTION 8.2 Indemnification

The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person 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 (including reasonable legal fees
and expenses) of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The obligation to indemnify as set forth in this Section
8.2 shall survive the termination of this Preferred Securities Guarantee.

17
<PAGE> 21
ARTICLE IX
MISCELLANEOUS

SECTION 9.1 Successors and Assigns

All guarantees and agreements contained in this Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Preferred Securities then outstanding.

SECTION 9.2 Amendments

Except with respect to any changes that do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Preferred Securities Guarantee may only be amended with the
prior approval of the Holders of at least a Majority in liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all the outstanding Preferred Securities.
The provisions of Section 12.2 of the Declaration with respect to meetings of
Holders of the Securities apply to the giving of such approval.

SECTION 9.3 Notices

All notices provided for in this Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by registered or certified mail, as
follows:

(a) If given to the Preferred Guarantee Trustee, at the
Preferred Guarantee Trustee's mailing address set forth below (or such other
address as the Preferred Guarantee Trustee may give notice of to the Holders
of the Preferred Securities):

[Name of Preferred Guarantee Trustee]
[Address]
Attention:

(b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Preferred Securities):

NorAm Energy Corp.
1600 Smith Street
32nd Floor
Houston, Texas 77002
Attention:__________

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<PAGE> 22
(c) If given to any Holder of Preferred Securities, at
the address set forth on the books and records of the Issuer.

All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.

SECTION 9.4 Benefit

This Preferred Securities Guarantee is solely for the benefit
of the Holders of the Preferred Securities and, subject to Section 3.1(a), is
not separately transferable from the Preferred Securities.

SECTION 9.5 Governing Law

THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

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THIS PREFERRED SECURITIES GUARANTEE is executed as of the day
and year first above written.

NorAm Energy Corp., as Guarantor

By:_____________________________
Name:
Title:

[Name of Preferred Guarantee
Trustee], as Preferred Guarantee
Trustee

By:______________________________
Name:
Title:

<PAGE> 1
EXHIBIT 4.16

[FORM OF PREFERRED
SECURITIES GUARANTEE]

====================================

PREFERRED SECURITIES GUARANTEE AGREEMENT

NorAm Financing [II]

Dated as of October __, 1995

====================================
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION

SECTION 1.1 Definitions and Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE II
TRUST INDENTURE ACT

ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE

ARTICLE IV
PREFERRED GUARANTEE TRUSTEE

ARTICLE V
GUARANTEE

</TABLE>

<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION

ARTICLE VII
TERMINATION

SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE VIII
INDEMNIFICATION

ARTICLE IX
MISCELLANEOUS

</TABLE>

ii
<PAGE> 4
PREFERRED SECURITIES GUARANTEE AGREEMENT

This GUARANTEE AGREEMENT (the "Preferred Securities
Guarantee"), dated as of October __, 1995, is executed and delivered by NorAm
Energy Corp., a Delaware corporation (the "Guarantor"), and [Name of Preferred
Guarantee Trustee], as trustee (the "Preferred Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of NorAm Financing [II], a Delaware statutory
business trust (the "Issuer").