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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 10, 1996
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NorAm Energy Corp.
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(Exact name of registrant as specified in its charter)
Delaware 1-11739 72-0120530
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
1600 Smith Street, 11th Floor, Houston, TX 77002
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(Address of principal executive offices) (Zip Code)
(713) 654-5699
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(Registrant's telephone number, including area code)
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NORAM ENERGY CORP.
Current Report on Form 8-K
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibits:
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Exhibit No. Description
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1.01 Form of Underwriting Agreement, among NorAm Energy Corp., NorAm Financing I (the
"Trust"), Merrill Lynch &Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Salomon Brothers Inc and Smith Barney Inc., relating to the offer and sale of up to
3,450,000 Convertible Trust Originated Preferred Securities of the Trust, liquidation
value $50 per security.
1.02 Form of Underwriting Agreement, among NorAm Energy Corp., Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson Lufkin & Jenrette
Securities Corporation and Dean Witter Reynolds Inc.
4.01 Form of First Supplemental Indenture, between NorAm Energy Corp. and The Bank of New
York, as indenture trustee.
4.02 Form of the Company's Convertible Junior Subordinated Debentures (included in Exhibit
4.01 above).
4.03 Form of Amended and Restated Declaration of Trust, among Michael B. Bracy and Michael A.
Creel, as regular trustees, The Bank of New York (Delaware), as Delaware trustee, NorAm
Energy Corp., as sponsor and The Bank of New York, as property trustee.
4.04 Form of Preferred Securities Guarantee, between NorAm Energy Corp. and The Bank of New
York, as guarantee trustee
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: June 10, 1996
NORAM ENERGY CORP.
By:
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Michael B. Bracy
Executive Vice President and
Principal Financial Officer
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EXHIBIT INDEX
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Exhibit No. Description Filing Method
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1.01 Form of Underwriting Agreement, among NorAm Electronic
Energy Corp., NorAm Financing I (the "Trust")
Merrill Lynch &Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated, Salomon Brothers Inc, and
Smith Barney Inc., relating to the offer and sale
of up to 3,450,000 __% Convertible Trust Origi-
nated Preferred Securities of the Trust,
liquidation value $50 per security.
1.02 Form of Underwriting Agreement, among NorAm Energy Electronic
Corp., Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Donaldson Lufkin &
Jenrette Securities Corporation and Dean Witter
Reynolds Inc.
4.01 Form of First Supplemental Indenture, between Electronic
NorAm Energy Corp. and The Bank of New York, as
indenture trustee
4.02 Form of the Company's Convertible Junior Electronic
Subordinated Debentures (included in Exhibit 4.01
above).
4.03 Form of Amended and Restated Declaration of Trust, Electronic
among Michael B. Bracy and Michael A. Creel, as
regular trustees, The Bank of New York (Delaware),
as Delaware trustee, NorAm Energy Corp., as
sponsor and The Bank of New York, as property
trustee.
4.04 Form of Preferred Securities Guarantee, between Electronic
NorAm Energy Corp. and The Bank of New York, as
guarantee trustee
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EXHIBIT 1.01
3,000,000 Preferred Securities
NORAM FINANCING I
______% Convertible Trust Originated Preferred Securities
(Liquidation Amount of $50 Per Convertible Preferred Security)
guaranteed by, and convertible into
Common Stock of,
NORAM ENERGY CORP.
PURCHASE AGREEMENT
June ___, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
SALOMON BROTHERS INC
SMITH BARNEY INC.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Trade Center
New York, New York 10281
Dear Sirs:
NORAM FINANCING I (the "Trust"), a statutory business trust organized
under the Business Trust Act (the "Delaware Act") of the State of Delaware
(Chapter 38, Title 12, of the Delaware Code 12 Del. C. Section 3801 et seq.),
NORAM ENERGY CORP., a Delaware corporation (the "Company" and, together with
the Trust, the "Offerors"), confirm their agreement (the "Agreement") with
Merrill Lynch & Co. of Merrill Lynch Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), Salomon Brothers Inc and Smith Barney Inc. (collectively,
the "Underwriters", which term shall also include any underwriter substituted
as hereinafter provided in section 10 hereof), with respect to the sale by the
Trust and the purchase by the Underwriters, acting severally and not jointly,
of the respective numbers of ____%
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Convertible Trust Originated Preferred Securities (liquidation amount of $50
per preferred security) of the Trust ("Preferred Securities") set forth in said
Schedule A and with respect to the grant by the Trust to the Underwriters,
acting severally and not jointly, of the option described in Section 2(b)
hereof to purchase all or any part of 450,000 additional Preferred Securities
to cover over-allotments, in each case except as may otherwise be provided in
the Pricing Agreement, as hereinafter defined. The aforesaid 3,000,000
Preferred Securities (the "Initial Securities") to be purchased by the
Underwriters and all or any part of the 450,000 Preferred Securities subject to
the option described in Section 2(b) hereof (the "Option Securities") are
collectively hereinafter called the "Designated Securities". The Designated
Securities will be convertible at the option of the holders thereof into shares
of Common Stock, par value $.625 per share (shares of which class of stock are
hereinafter referred to as "Common Stock"), of NorAm Energy Corp. (the
"Company"). The Designated Securities are more fully described in the
Prospectus referred to below.
The Designated Securities will be guaranteed by the Company, to the
extent set forth in the Prospectus (as defined below), with respect to
distributions and amounts payable upon liquidation or redemption (the
"Preferred Securities Guarantee") pursuant to the Preferred Securities
Guarantee Agreement (the "Preferred Securities Guarantee Agreement") to be
dated as of Closing Time (as defined below) executed and delivered by the
Company and The Bank of New York (the "Guarantee Trustee"), a New York banking
corporation ("The Bank of New York") not in its individual capacity but solely
as trustee, for the benefit of the holders from time to time of the Designated
Securities. The Offerors understand that the Underwriters propose to make a
public offering of the Designated Securities as soon as the Representatives
deem advisable after the Pricing Agreement has been executed and delivered, and
the Declaration (as defined herein), the Indenture (as defined herein), and the
Preferred Securities Guarantee Agreement have been qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act"). The entire proceeds from
the sale of the Designated Securities will be combined with the entire proceeds
from the sale by the Trust to the Company of its common securities (the "Common
Securities") as guaranteed by the Company, to the extent set forth in the
Prospectus, with respect to distributions and amounts payable upon liquidation
or redemption (the "Common Securities Guarantee" and, together with the
Preferred Securities Guarantee, the "Guarantees") pursuant to the Common
Securities Guarantee Agreement (the "Common Securities Guarantee Agreement"
and, together with the Preferred Securities Guarantee Agreement, the "Guarantee
Agreements"), to be dated as of Closing Time, executed and delivered by the
Company for the benefit of the holders from time to time of the Common
Securities, and will be used by the Trust to purchase the _____% Convertible
Subordinated Debentures (the "Convertible Debentures") issued by the Company.
The Designated Securities and the Common Securities will be issued pursuant to
the Amended and Restated Declaration of Trust of the Trust, to be dated as of
Closing Time (the "Declaration"), among the Company, as Sponsor, The Bank of
New York, as property trustee (the "Property Trustee") and The Bank of New York
(Delaware), as Delaware trustee (the "Delaware Trustee"), and Michael B. Bracy
and Michael A. Creel, as regular trustees (the "Regular Trustees" and together
with the Property Trustee and the Delaware Trustee, the "Trustees") and the
holders from time to time of undivided beneficial interests in the assets of
the Trust. The Convertible Debentures will be issued pursuant to an Indenture,
to be dated as of Closing Time (the "Base Indenture"), between the Company and
The Bank of New York, as trustee (the "Debt Trustee") and a supplement to
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the Base Indenture, dated as of Closing Time (the "Supplemental Indenture," and
together with the Base Indenture and any other amendments or supplements
thereto, the "Indenture"). The Designated Securities, the Preferred Securities
Guarantee, the Convertible Debentures and the shares of Common Stock of the
Company initially issuable upon conversion of the Convertible Debentures (the
"Conversion Shares") are collectively referred to herein as the "Securities".
Capitalized terms used herein without definition have the respective meanings
specified in the Prospectus.
Prior to the purchase and public offering of the Designated Securities
by the several Underwriters, the Offerors and the Underwriters shall enter into
an agreement substantially in the form of Exhibit A hereto (the "Pricing
Agreement"). The Pricing Agreement may take the form of an exchange of any
standard form of written telecommunication between the Offerors and the
Underwriters and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the Designated Securities will be governed
by this Agreement, as supplemented by the Pricing Agreement. From and after
the date of the execution and delivery of the Pricing Agreement, this Agreement
shall be deemed to incorporate the Pricing Agreement.
The Offerors have filed with the Securities and Exchange Commission
(the "Commission"), and the Commission has declared effective, a registration
statement on Form S-3 (No. 33-64001), and Post-Effective Amendments to
Registration Statements No. 33-52853 and 33-48750 as amended by Amendment No. 1
to Registration Statement No. 33-64001 and Post- Effective Amendment No. 2 to
Registration Nos. 33-52853 and 33-48750 filed with the Commission on January
22, 1996 and as further amended by Amendment No. 2 to Registration Statement
No. 33-64001 and Post-Effective Amendment No. 3 to Registration Statement Nos.
33-52853 and 33-48750 filed with the Commission on March 7, 1996, covering the
registration of (i) the Securities, and (ii) certain other debt and equity
securities of the Company under the Securities Act of 1933, as amended (the
"1933 Act"), and the offering thereof from time to time in accordance with Rule
415 of the rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations"), including the related preliminary prospectus for the
registration of the Securities under the 1933 Act, have filed such amendments
thereto, if any, and such amended preliminary prospectuses as may have been
required to the date hereof, and will file such additional amendments thereto
and such amended prospectuses as may hereafter be required. Such registration
statements (as so amended) and the prospectuses constituting a part thereof, as
from time to time amended or supplemented pursuant to the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act") or otherwise, are
collectively hereinafter referred to as the "Registration Statement" and the
"Prospectus"; provided, however, that all references to the "Registration
Statement" and the "Prospectus" shall be deemed to include all documents
incorporated therein by reference pursuant to the 1934 Act, prior to the
execution of the Pricing Agreement; provided, further, that if the Company
files a registration statement with the Commission pursuant to Rule 462(b) of
the 1933 Act Regulations (the "Rule 462(b) Registration Statement"), then,
after such filing, all references to Registration Statement shall be deemed to
include the Rule 462(b) Registration Statement. A "preliminary prospectus"
shall be deemed to refer to any prospectus used before the registration
statement became effective and any prospectus that omitted any information to
be included upon pricing in a form of prospectus filed with the Commission
pursuant to Rule 424(b) of the 1933 Act Regulations, that was used after such
effectiveness and prior to the execution of the Pricing Agreement. For
purposes of
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this Agreement, all references to the Registration Statement, Prospectus or
preliminary prospectus or to any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules and
other information that is "contained," "included" or "stated" (and all other
references of like import) in the Registration Statement, Prospectus or
preliminary prospectus shall be deemed to mean and include all such financial
statements and schedules and other information that are or are deemed to be
incorporated by reference in the Registration Statement, Prospectus or
preliminary prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement,
Prospectus or preliminary prospectus shall be deemed to mean and include the
filing of any document under the 1934 Act that is or is deemed to be
incorporated by reference in the Registration Statement, Prospectus or
preliminary prospectus, as the case may be.
Section 1. REPRESENTATIONS AND WARRANTIES.
(a) The Offerors jointly and severally represent and warrant to
each Underwriter as of the date hereof and as of the date of the Pricing
Agreement (such latter date being hereinafter referred to as the
"Representation Date") as follows:
(i) The Company meets the requirements for use of Form
S-3 under the 1933 Act. Each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the 1933 Act and no stop
order suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are contemplated by the Commission, and any request
on the part of the Commission for additional information has been complied
with. At the respective times the Registration Statement and any
post-effective amendments thereto became effective and at each Representation
Date, the Registration Statement, and any Rule 462(b) Registration Statement
and any amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act, the 1933 Act
Regulations, the 1934 Act, the regulations of the Commission under the 1934 Act
(the "1934 Act Regulations"), and the 1939 Act and the rules and regulations of
the Commission under the 1939 Act (the "1939 Act Regulations"), and did not and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading. At the date of the Prospectus, at Closing Time and at
each Date of Delivery (as defined below), if any, the Prospectus and any
amendments and supplements thereto did not and will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply (A) to statements in or omissions
from the Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Offerors in writing by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement or Prospectus or (B) to that part of the Registration Statement that
constitutes the Statement of Eligibility and Qualification (Form T-1) under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), of the
Trustee.
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(ii) Coopers & Lybrand, who certified the financial
statements and supporting schedules incorporated by reference in the
Registration Statement, are independent public accountants with respect to the
Company and its subsidiaries as required by the 1933 Act and the 1933 Act
Regulations.
(iii) The consolidated financial statements, including the
notes thereto and supporting schedules, included in the Registration Statement
or incorporated by reference therein present fairly, in all material respects,
the financial position of the Company and its consolidated subsidiaries at the
dates indicated and the results of their operations for the periods specified;
except as otherwise stated in the Registration Statement, said financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis; and the supporting schedules
incorporated by reference in the Registration Statement present fairly, in all
material respects, the information required to be stated therein. The selected
financial data included in the Registration Statement presents fairly, in all
material respects, the information shown therein and has been compiled on a
basis consistent with that of the audited consolidated financial statements
from which it was derived.
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein or contemplated thereby, there has been no: (A) material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business; (B)
transaction entered into by the Company or any of its subsidiaries, other than
those in the ordinary course of business, which are material with respect to
the Company and its subsidiaries considered as one enterprise; and (C) except
for regular quarterly cash dividends on Common Stock and the Company's $3.00
Convertible Exchangeable Preferred Stock, Series A, there has been no dividend
or distribution of any kind declared, paid or made by the Company on any class
of its capital stock.
(v) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state of
Delaware with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and to
enter into and perform its obligations under this Agreement and the Pricing
Agreement; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify
would not, individually or in the aggregate, have a material adverse effect on
the condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise.
(vi) Each of Mississippi River Transmission Corporation,
NorAm Gas Transmission Company, NorAm Energy Services, Inc., NorAm Field
Services Corp. and NorAm Energy Management, Inc. (the "Significant
Subsidiaries") is duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation, has full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement, and is duly
qualified to
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do business as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to be so qualified or be in good standing would not, individually or in
the aggregate, have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise; except as disclosed
in the Registration Statement, all of the issued and outstanding capital stock
of each of the Company's Significant Subsidiaries has been duly authorized and
validly issued, are fully paid and nonassessable and (except as otherwise
stated or reflected in the Registration Statement) are owned by, the Company,
directly or indirectly, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(vii) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus under "Capitalization" (except
for subsequent issuances, if any, pursuant to the Company's Direct Stock
Purchase and Dividend Reinvestment Plan, employee benefit plans or pursuant to
executive compensation arrangements or the exercise of convertible securities
referred to in the Prospectus); the shares of issued and outstanding Common
Stock have been duly authorized and validly issued and are fully paid and
nonassessable; the Common Stock conforms to all statements relating thereto as
set forth in the Prospectus under "Description of Capital Stock".
(viii) Neither the Company nor any of the Significant
Subsidiaries is in violation of its charter or by-laws or in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company or any of the
Significant Subsidiaries is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company or any of the
Significant Subsidiaries is subject, except for such violations or defaults
that would not have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company and
its subsidiaries, considered as one enterprise; and the execution, delivery and
performance of this Agreement and the Pricing Agreement and the consummation of
the transactions contemplated herein and therein and compliance by the Company
with its obligations hereunder and thereunder, have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach
of, or default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the Company or any of the Significant
Subsidiaries is a party or by which it or any of them may be bound, or to which
any of the property or assets of the Company or any of the Significant
Subsidiaries is subject, except for such conflicts, breaches or encumbrances
that would not have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company and
its subsidiaries, considered as one enterprise, nor will such action result in
any breach or violation of the provisions of the charter or by-laws of the
Company or any applicable law, administrative regulation or administrative or
court decree.
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(ix) No material labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the knowledge of the Company,
is imminent; and the Company, having conducted no independent investigation,
has not received any notification of any existing or imminent labor disturbance
by the employees of any of its principal suppliers, manufacturers or
contractors which would be expected to result in any material adverse effect on
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise.
(x) Except as set forth in the Registration Statement,
there is no action, suit or proceeding before or by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened against or affecting the Company or any of its
subsidiaries, that is required to be disclosed in the Registration Statement
(other than as disclosed therein), or that would, individually or in the
aggregate, have a material adverse effect on the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, or which would
materially and adversely affect the properties or assets thereof or which might
be expected to materially and adversely affect the consummation of this
Agreement; and there are no contracts or documents of the Company or any of its
subsidiaries that are required to be filed as exhibits to the Registration
Statement by the 1933 Act or by the 1933 Act Regulations or which are required
to be filed as exhibits to a document incorporated by reference in the
Registration Statement, which in either such case have not been so filed.
(xi) The Company and its subsidiaries own or possess, or
can acquire on reasonable terms, the patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (collectively, "patent
and proprietary rights") presently employed by them in connection with the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any patent or proprietary rights
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding would result in any material adverse effect on the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise.
(xii) No authorization, approval or consent of, or filing
with or order of, any court or governmental authority or agency is necessary or
required in connection with the sale of the Securities hereunder, except such
as may be required under the 1933 Act, the 1933 Act Regulations or state
securities laws and which have been obtained or made or will have been obtained
or made prior to Closing Time and are or will be in full force and effect.
(xiii) Except as set forth in the Registration Statement,
the Company and the Significant Subsidiaries possess such certificates,
authorities or permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct the business now operated by
them, and neither the Company nor any of the Significant Subsidiaries has
received any notice of proceedings relating to the revocation or modification
of any such certificate, authority or permit which, singly or in the aggregate,
if the subject of an unfavorable decision
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ruling or finding, would have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise.
(xiv) None of the Company, its directors or officers or any
person who controls the Company within the meaning of Section 15 of the 1933
Act has taken, directly or indirectly, any action designed to cause or result
in, or which has constituted or resulted in, stabilization or manipulation of
the price of any security of the Company in order to facilitate the sale or
resale of the Securities.
(xv) Except as may be set forth in the Registration
Statement, there are no persons with registration or other similar rights to
have any securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the 1933 Act.
(xvi) The documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the Prospectus, at
the time they were filed with the Commission, complied in all material respects
with the requirements of the 1934 Act and the 1934 Act Regulations and, when
read together with the other information in the Prospectus, at the date of the
Prospectus, at the Closing Time and at each Date of Delivery, if any, did not
and will not include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall not apply (A)
to statements in or omissions from the Registration Statement or Prospectus
made in reliance upon and in conformity with information furnished to the
Offerors in writing by any Underwriter through Merrill Lynch expressly for use
in the Registration Statement or Prospectus or (B) to that part of the
Registration Statement that constitutes the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act, of the Trustee.
(xvii) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act with the
power and authority to own its property and to conduct its business as
described in the Prospectus and to enter into and perform its obligations under
this Agreement, the Designated Securities, the Common Securities and the
Declaration; the Trust is duly qualified to transact business as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is necessary, except to the extent that the failure to so qualify
or be in good standing would not have a material adverse effect on the Trust;
and the Trust is not a party to or otherwise bound by any agreement other than
those described in the Prospectus.
(xviii) The Common Securities have been duly authorized by
the Declaration, and, if authentication is so required by the Declaration,
authenticated, in the manner provided for in the Declaration, issued and
delivered by the Trust to the Company against payment therefor as described in
the Prospectus, will be validly issued and (subject to the terms of the
Declaration) fully paid and nonassessable undivided beneficial interests in the
assets of the Trust and will conform in all material respects to the
description thereof in the Prospectus; the issuance of the Common Securities is
not subject to preemptive or other similar rights; and at Closing Time, all of
the issued and outstanding Common Securities of the Trust will be directly
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owned by the Company free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
(xix) The Declaration has been duly authorized by the
Company and, at Closing Time, will have been duly executed and delivered by
the Company and the Regular Trustees (as defined in the Declaration), and
assuming the due authorization, execution and delivery of the Declaration by
the Delaware Trustee and the Property Trustee (as defined in the Declaration),
the Declaration will, at Closing Time, be a valid and binding obligation of the
Company and the Regular Trustees, enforceable against the Company and the
Regular Trustees in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
(xx) The Preferred Securities Guarantee Agreement has been
duly authorized by the Company and, when validly executed and delivered by the
Company (and assuming due authorization, execution and delivery by The Bank of
New York, not in its individual capacity but solely as trustee), will
constitute a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(xxi) The Designated Securities have been duly authorized
by the Declaration and, issued and delivered pursuant to this Agreement against
payment of the consideration set forth in the Pricing Agreement, will be
validly issued and (subject to the terms of the Declaration) fully paid and
nonassessable undivided beneficial interests in the assets of the Trust; the
issuance of the Designated Securities is not subject to preemptive or other
similar rights; and subject to the terms of the Declaration, holders of
Designated Securities will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
incorporated under the General Corporation Law of the State of Delaware.
(xxii) The Indenture has been duly authorized by the Company
and, when validly executed and delivered by the Company and the Debt Trustee,
will constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
(xxiii) The Convertible Debentures have been duly authorized
by the Company. When executed, authenticated, issued and delivered in the
manner provided for in the Indenture and sold and paid for as provided in this
Agreement, the Convertible Debentures will constitute
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<PAGE> 10
valid and binding obligations of the Company entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their terms,
except as enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(xxiv) None of the Offerors is, or after giving effect to
the consummation of the transactions contemplated herein, will be, and neither
the Company nor the Trust is directly or indirectly controlled by, or acting on
behalf of any person which is, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(xxv) The Conversion Shares have been duly authorized and
validly reserved for issuance upon conversion of the Convertible Debentures by
all necessary corporate action of the Company and, when duly issued by the
Company upon such conversion, will be validly issued, fully paid and
nonassessable; no holder thereof will be subject to personal liability for
obligations of the Company solely by reason of being such a holder; and the
issuance of the Conversion Shares is not subject to preemptive or similar
rights.
Section 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Trust
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Trust, at
the price per security set forth in the Pricing Agreement, the number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter (except as otherwise provided in the Pricing Agreement), plus any
additional number of Initial Securities that such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
The purchase price per security to be paid by the several Underwriters
for the Designated Securities shall be an amount equal to the initial public
offering price. The initial public offering price per Designated Security
shall be a fixed price to be determined by agreement between the Underwriters
and the Offerors. The initial public offering price and the purchase price,
when so determined, shall be set forth in the Pricing Agreement. In the event
that such prices have not been agreed upon and the Pricing Agreement has not
been executed and delivered by all parties thereto by the close of business on
the fourth business day following the date of this Agreement, this Agreement
shall terminate forthwith, without liability of any party to any other party,
unless otherwise agreed to by the Offerors and the Underwriters. As
compensation to the Underwriters for their commitments hereunder and in view of
the fact that the proceeds of the sale of the Designated Securities will be
used to purchase the Convertible Debentures of the Company, the Company hereby
agrees to pay at Closing Time to the Underwriters, for the accounts of the
several Underwriters, a commission per Preferred Security determined by
agreement between the Underwriters and the Company for the Preferred Securities
to be delivered by the Trust hereunder at Closing Time or relevant Date of
Delivery, as the case may be. The commission, when so determined, shall be set
forth in the Pricing Agreement.
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<PAGE> 11
(b) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Trust hereby grants an option to the Underwriters, severally and not
jointly, to purchase up to an additional 450,000 Preferred Securities at the
price per share set forth in the Pricing Agreement. The option hereby granted
will expire 30 days after the date of the Pricing Agreement, and may be
exercised in whole or in part from time to time only for the purpose of
covering over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Underwriters to the
Trust setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment
and delivery for such Option Securities. Any such time and date of delivery (a
"Date of Delivery") shall be determined by the Underwriters, but shall not be
later than seven full business days after the exercise of said option, nor in
any event prior to Closing Time, unless otherwise agreed by the Underwriters
and the Trust. If the option is exercised as to all or any portion of the
Option Securities, each of the Underwriters, acting severally and not jointly,
will purchase that proportion of the total number of Option Securities then
being purchased which the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter bears to the total number of Initial
Securities (except as otherwise provided in the Pricing Agreement), subject in
each case to such adjustments as the Underwriters in their discretion shall
make to eliminate any sales or purchases of fractional securities.
(c) Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of the
Company, 1600 Smith Street, 32nd Floor, Houston, Texas 77002 or at such other
place as shall be agreed upon by the Underwriters and the Trust, at 10:00 A.M.
New York time on the third business day or fourth business day (as permitted by
Rule 15c6-1 of the 1934 Act) (unless postponed in accordance with the
provisions of Section 10) following the execution of the Pricing Agreement, or
such other time not later than ten business days after such date as shall be
agreed upon by the Underwriters, the Trust and the Company (such time and date
of payment and delivery being herein called "Closing Time"). In addition, in
the event that any or all of the Option Securities are purchased by the
Underwriters, payment of the purchase price for, and delivery of certificates
for, such Option Securities shall be made at the above-mentioned offices of the
Company or at such other place as shall be agreed upon by the Underwriters and
the Trust, on each Date of Delivery as specified in the notice from the
Underwriters to the Trust.
Payment shall be made to the Trust by wire transfer of immediately
available funds payable to the order of the Trust to an account designated by
the Trust, against delivery to the Underwriters for the respective accounts of
the Underwriters of certificates for the Designated Securities to be purchased
by them. It is understood that each Underwriter has authorized Merrill Lynch,
for its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Initial Securities and the Option Securities, if any,
which it has agreed to purchase. The Underwriters, individually and not as
representatives of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Initial Securities or the Option
Securities, if any, to be purchased by any Underwriter whose check has not been
received by the Closing Time or the relevant Date of Delivery, as the case may
be, but such payment shall not relieve such Underwriter from its obligations
hereunder.
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<PAGE> 12
(d) Certificates for the Initial Securities and the Option
securities, if any, shall be in such denominations and registered in such names
as the Underwriters may request in writing at least two business days before
the Closing Time or the relevant Date of Delivery, as the case may be. The
certificates for the Initial Securities and the Option Securities, if any, will
be made available for examination and packaging by the Underwriters not later
than 10:00 A.M. on the last business day prior to Closing Time or the relevant
Date of Delivery, as the case may be.
At Closing Time or each Date of Delivery, as the case may be, the
Company will pay, or cause to be paid, the commission payable at such time to
Merrill Lynch, Pierce, Fenner & Smith Incorporated on behalf of the
Underwriters under Section 2 hereof by wire transfer of immediately available
funds.
Section 3. COVENANTS OF THE OFFERORS.
Each of the Offerors jointly and severally covenants with each
Underwriter as follows:
(a) The Offerors will notify the Underwriters immediately, and
confirm the notice in writing of, (i) the effectiveness of any post-effective
amendment to the Registration Statement or the filing of any supplement or
amendment to the Prospectus, (ii) the receipt of any comments from the
Commission, (iii) any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any preliminary prospectus, or the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or the initiation or threatening of any proceedings for any such
purpose. The Offerors will promptly effect the filings necessary pursuant to
Rule 424 and will take such steps as it deems necessary to ascertain promptly
whether the Prospectus transmitted for filing under Rule 424 was received for
filing by the Commission and, in the event that it was not, they will promptly
file the Prospectus. The Offerors will make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) If at any time the Prospectus is required to be delivered in
connection with sales of Designated Securities, the Offerors will give the
Underwriters notice of their intention to file or prepare any amendment to the
Registration Statement (including any post-effective amendment) or any
amendment or supplement to the Prospectus (including any revised prospectus
which the Offerors propose for use by the Underwriters in connection with the
offering of the Designated Securities which differs from the prospectus on file
at the Commission at the time the Registration Statement becomes effective,
whether or not such revised prospectus is required to be filed pursuant to Rule
424(b) of the 1933 Act Regulations), whether pursuant to the 1933 Act, the 1934
Act or otherwise, will furnish the Underwriters with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which the Underwriters shall
reasonably object unless the Company shall conclude that such amendment or
supplement must be filed in accordance with applicable law. Subject to the
foregoing, the Offerors will promptly prepare a supplement to the Prospectus to
reflect
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<PAGE> 13
the terms of the Designated Securities and the terms of the Offering. The
Offerors will file the Prospectus as so supplemented pursuant to Rule 424(b)
under the Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Act.
(c) The Offerors will furnish to the Underwriters copies of the
Registration Statement, including all exhibits thereto, the Prospectus and all
amendments, and supplements to such documents, as the Underwriters may
reasonably request and the Offerors will furnish to each Underwriter from time
to time during the period in which a Prospectus is required to be delivered,
such number of copies of the Prospectus (as amended or supplemented) as the
Underwriters may reasonably request.
(d) If at any time, when the Prospectus is required to be
delivered in connection with sales of Designated Securities, any event shall
occur as a result of which it is necessary to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, the Offerors
will promptly amend or supplement the Prospectus in accordance with paragraph
(b) above so that, as so amended or supplemented, the Prospectus will not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading; and the Offerors will furnish to the Underwriters a reasonable
number of copies of such amendment or supplement.
(e) The Offerors will endeavor, in cooperation with the
Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions of the United
States as the Underwriters may designate; provided, however, that each of the
Offerors shall not be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified.
(f) The Company will make generally available to its security
holders as soon as practicable, an earnings statement (in form complying with
the provisions of Rule 158 of the 1933 Act Regulations) covering a twelve-month
period beginning not later than the first day of the Trust's fiscal quarter
next following the "effective date" (as defined in said Rule 158) of the
Registration Statement.
(g) The Offerors will use their reasonable efforts to effect the
listing of the Designated Securities on the New York Stock Exchange; if the
Designated Securities are exchanged for Convertible Debentures, the Company
will use its reasonable efforts to effect the listing of the Convertible
Debentures on the exchange on which the Designated Securities are then listed.
(h) During a period of 90 days from the date of the Pricing
Agreement, neither the Trust nor the Company will, without the Underwriters'
prior written consent, directly or indirectly, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of, any Preferred Securities, any
equity securities substantially similar to the Preferred Securities, any
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<PAGE> 14
Convertible Debentures or any debt securities substantially similar to the
Convertible Debentures, or any security convertible into or exchangeable or
exercisable for Preferred Securities, any equity securities substantially
similar to the Preferred Securities, Convertible Debentures or any Designated
Securities (except for Preferred Securities issued pursuant to this Agreement).
Section 4. PAYMENT OF EXPENSES.
The Company will pay all expenses incident to the performance of each
Offeror's obligations under this Agreement, including, but not limited to, (i)
the printing and filing of the Registration Statement as originally filed and
of each amendment thereto; (ii) the preparation of this Agreement and the
Pricing Agreement; (iii) the preparation and issuance of the certificates for
the Designated Securities to the Underwriters; (iv) the fees and disbursements
of the Company's and the Trust's counsel and accountants; (v) the qualification
of the Securities under securities laws in accordance with the provisions of
section 3(e) hereof, including filing fees; and the fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of any blue sky survey and any legal investment survey; (vii) the
printing and delivery to the Underwriters of copies of the Registration
Statement as originally filed and of each amendment thereto, of each
preliminary prospectus, and of the Prospectus and any amendments or supplements
thereto; (vii) the printing and delivery to the Underwriters of copies of any
blue sky survey and any legal investment survey; (viii) the fee of the National
Association of Securities Dealers, Inc.; (ix) the fees and expenses of the Debt
Trustee, including the fees and disbursements of counsel for the Debt Trustee
in connection with the Indenture and the Convertible Debentures; (x) the fees
and expenses of the Property Trustee and Delaware Trustee, including the fees
and disbursements of counsel for the Property Trustee and Delaware Trustee in
connection with the Declaration and the Certificate of Trust; (xi) any fees
payable in connection with the rating of the Preferred Securities and
Convertible Debentures; (xii) the fees and expenses incurred in connection with
the listing of the Designated Securities and, if applicable, the Convertible
Debentures on the New York Stock Exchange; (xiii) the cost and charges of any
transfer agent or registrar; and (xiv) the cost of qualifying the Designated
Securities with The Depository Trust Company.
If this Agreement is terminated by the Underwriters in accordance with
the provisions of Section 5 or Section 9 hereof, the Company shall reimburse
the Underwriters for all of their reasonable out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters, which
shall not exceed the amount set forth in the applicable Pricing Agreement.
Section 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.
The obligations of the Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Offerors herein
contained, to the performance by the Offerors of their obligations hereunder,
and to the following further conditions:
(a) The Registration Statement, including any Rule 462(b)
Registration Statement, has become effective under the 1933 Act and no stop
order suspending the effectiveness of the
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<PAGE> 15
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission, and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the Underwriters. A prospectus
containing information relating to the Securities, the specific method of
distribution and similar matters shall have been filed with the Commission in
accordance with Rule 424(b)(1), (2), (3), (4) or (5), as applicable (or any
required post-effective amendment providing such information shall have been
filed and declared effective in accordance with the requirements of Rule 430A).
(b) At Closing Time the Underwriters shall have received:
(1) The favorable opinion, dated as of Closing Time, of
Skadden, Arps, Slate, Meagher & Flom, counsel for the Offerors, in form and
substance reasonably satisfactory to counsel for the Underwriters,
substantially in the form set forth in Annex 1.
(2) The favorable opinion of Skadden, Arps, Slate,
Meagher & Flom, special tax counsel for the Offerors, in form and substance
reasonably satisfactory to counsel for the Underwriters, substantially in the
form set forth in Annex 2.
(3) The favorable opinion, dated as of Closing Time, of
Hubert Gentry, Jr., Esq., General Counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, substantially in the
form set forth in Annex 3.
(4) The favorable opinion, dated as of Closing Time, of
Emmet, Marvin & Martin, counsel of The Bank of New York, as Property Trustee
and Guarantee Trustee, in form and substance satisfactory to counsel for the
Underwriters, substantially in the form of Annex 4.
(5) The favorable opinion, dated as of Closing Time, of
Richards, Layton & Finger, counsel of The Bank of New York (Delaware), as
Delaware Trustee, in form and substance satisfactory to counsel for the
Underwriters, substantially in the form of Annex 5.
(6) The favorable opinion, dated as of Closing Time, of
Coudert Brothers, counsel for the Underwriters, in form and substance
satisfactory to the Underwriters.
(c) At the time of the execution of this Agreement, the
Underwriters shall have received from Coopers & Lybrand L.L.P. a letter dated
such date, in form and substance satisfactory to the Underwriters, to the
effect that:
(i) they are independent public accountants with respect
to the Company and its consolidated subsidiaries within the meaning of
the 1933 Act and the 1933 Act Regulations; and the Trust is and will
be treated as a consolidated subsidiary of the Company pursuant to
generally accepted accounting principles;
(ii) in their opinion, the consolidated financial
statements and any supplementary financial information and schedules
audited (and, if applicable, prospective financial statements and/or
pro forma financial information examined) by them and
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<PAGE> 16
included or incorporated by reference in the Registration Statement or
the Prospectus comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act or the 1934 Act and
the related published rules and regulations thereunder; and if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the consolidated interim financial statements, selected financial
data, statements and/or condensed financial statements derived from
audited financial statements of the Company for the periods specified
in such letter, as indicated in their reports thereon, copies of which
have been furnished to the Underwriters;
(iii) based upon limited procedures set forth in detail in
such letter, nothing has come to their attention which causes them to
believe that
(A) the unaudited consolidated financial
statements and supporting schedules of the Company included in the
Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act
and the 1933 Act Regulations or are not presented in conformity with
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in
the Registration Statement, or
(B) the unaudited amounts of revenues, net income
and net income per share set forth under "Selected Consolidated
Financial Data" in the Prospectus were not determined on a basis
substantially consistent with that used in determining the
corresponding amounts in the audited financial statements included in
the Registration Statement, or
(C) at a specified date not more than five days prior to the date
of this Agreement, there has been any change in the capital stock of
the Company and its subsidiaries or any increase in the consolidated
long- term debt of the Company and its subsidiaries or any decrease
in consolidated net current assets or net assets as compared with the
amounts shown on the date of the most recent consolidated balance
sheet included in or incorporated by reference in the Registration
Statement and the Prospectus or, during the period from the date of
the most recent consolidated balance sheet included in or incorporated
by reference in the Registration Statement and the Prospectus to a
specified date not more than five days prior to the date of this
Agreement, there were any decreases, as compared with the
corresponding period in the preceding year, in consolidated revenues,
net income or net income per share of the Company and its
subsidiaries, except in all instances for changes, increases or
decreases which the Registration Statement and the Prospectus disclose
have occurred or may occur; and
(iv) in addition to the examination referred to in their
opinions and the limited procedures referred to in clause (iii) above,
they have carried out certain specified procedures, not constituting
an audit, with respect to certain amounts, percentages and financial
information which are included in the Registration Statement and
Prospectus, or incorporated therein by reference, and which are
specified by the Underwriters, and have found such amounts,
percentages and financial information to be in agreement with
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<PAGE> 17
the relevant accounting, financial and other records of the Company
and its subsidiaries, identified in such letter.
(d) At Closing Time, the Underwriters shall have received from
Coopers & Lybrand L.L.P. a letter, dated as of Closing Time, to the effect that
they reaffirm the statements made in the letter furnished pursuant to
subsection (d) of this Section, except that the specified date referred to
shall be a date not more than three business days prior to Closing Time.
(e) At Closing Time, the Underwriters shall have received (i) a
certificate, dated as of Closing Time, of an officer of the Company, and (ii) a
certificate, dated as of Closing Time, of a Trustee of the Trust, in each case
in which such officers shall state that, to the best of their knowledge after
reasonable investigation, the representations and warranties of the Offerors in
this Agreement are true and correct, that the Offerors have complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Time, that no stop order
suspending the effectiveness of the Registration Statement is in effect and no
proceedings for that purpose are pending or are contemplated by the Commission
and that, subsequent to the date of the most recent financial statements in the
Prospectus, there has been no material adverse change in the financial position
or results of operations of the Company and any of its subsidiaries, taken as a
whole, except as set forth in or contemplated by the Prospectus.
(f) At Closing Time and each Date of Delivery, if any, counsel for
the Underwriters shall have been furnished with such documents and opinions as
are customary in connection with the closing of transactions of the type
contemplated by this Agreement for the purpose of enabling them to pass upon
the issuance and sale of the Securities as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Offerors, in connection with the issuance and
sale of the Securities as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
(g) In the event that the Underwriters exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the Option
Securities, the representations and warranties of the Offerors contained herein
and the statements in any certificates furnished by the Offerors hereunder
shall be true and correct as of each Date of Delivery and, at the relevant Date
of Delivery, the Underwriters shall have received:
(1) The certificates, each dated such Date of Delivery, of the
relevant officer of the respective Offerors confirming that the
respective certificates delivered at the Closing Time pursuant to
Section 5(e) hereof remains true and correct as of such Date of
Delivery.
(2) The favorable opinion of Skadden, Arps, Slate, Meagher & Flom,
counsel for the Offerors, in form and substance satisfactory to
counsel for the Underwriters, dated such Date of Delivery, relating to
the Option Securities to be purchased on such Date of Delivery, and
otherwise to the same effect as the opinion required by Section
5(b)(1).
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<PAGE> 18
(3) The favorable opinion of Skadden, Arps, Slate, Meagher & Flom,
special tax counsel for the Offerors, in form and substance reasonably
satisfactory to counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such
Date of Delivery, and otherwise to the same effect as the opinion
required by Section 5(b)(2).
(4) The favorable opinion of Hubert Gentry, Jr., Esq., General
Counsel, in form and substance satisfactory to counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(b)(3).
(5) The favorable opinion of Emmet, Marvin & Martin, counsel for
The Bank of New York, in form and substance satisfactory to counsel
for the Underwriters, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section
5(b)(4).
(6) The favorable opinion, dated as of Closing Time, of Richards,
Layton & Finger, counsel of The Bank of New York (Delaware), as
Delaware Trustee, in form and substance satisfactory to counsel for
the Underwriters, relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(b)(5).
(7) The favorable opinion of Coudert Brothers, counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(b)(6).
(8) A letter from Coopers & Lybrand L.L.P., in form and substance
satisfactory to the Underwriters and dated such Date of Delivery,
substantially the same in form and substance as the letter furnished
to the Underwriters pursuant to Section 5(d) hereof, except that the
"specified date" in the letter furnished pursuant to this Section
5(h)(6) shall be a date not more than three days prior to such Date of
Delivery.
(h) At the Closing Time, the Designated Securities shall have been
approved for listing on the New York Stock Exchange upon notice of issuance.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriters by notice to the Offerors at any time at or
prior to Closing Time, and such termination shall be without liability of any
party to any other party except as provided in Section 4 hereof.
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<PAGE> 19
Section 6. INDEMNIFICATION
(a) The Offerors agree to jointly and severally indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) or the omission or
the alleged omission therefrom of a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company; and
(iii) against any and all reasonable expenses as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements
of counsel chosen by the Underwriters), in investigating, preparing or
defending against any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Trust or the
Company by any Underwriter through the Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto); and PROVIDED,
FURTHER, that this indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, liabilities, claims, damages or expenses
purchased Securities, or any person controlling such Underwriter, if the
Offerors sustain the burden of proving that a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any such amendments
or supplement thereto), but excluding documents incorporated or deemed to be
incorporated by reference, was not sent or given by or on behalf of such
Underwriter to such person, if such is required by law, at or prior to the
written confirmation of the sale of such Securities to such person and if the
Prospectus (as so amended or supplemented, but excluding documents incorporated
or deemed to be incorporated by reference therein) would have corrected
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<PAGE> 20
the defect giving rise to such loss, liability, claim, damage or expense, it
being understood that this proviso shall have no application if such defect
shall have been corrected in a document which is incorporated or deemed to be
incorporated by reference in the Prospectus.
(b) The Company agrees to indemnify the Trust against all loss,
liability, claim, damage and expense whatsoever, as due from the Trust under
Section 6(a) hereunder.
(c) Each Underwriter severally agrees to indemnify and hold
harmless the Offerors, their directors, trustees, each of its officers who
signed the Registration Statement, and each person, if any, who controls the
Offerors within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Offerors by such Underwriter through
Merrill Lynch expressly for use in the Registration Statement (or any amendment
thereto) or such preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(d) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of any such action. If it so elects within a reasonable time
after receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume the defense of such
action with counsel satisfactory to such indemnifying party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), unless such indemnified parties reasonably object to such
assumption on the ground that there may be legal defenses available to them
which are different from or in addition to those available to such indemnifying
party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of counsel
for the indemnified parties incurred thereafter in connection with such action.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their
own counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. The indemnifying party or
parties shall not be liable under this Agreement with respect to any settlement
made by any indemnified party or parties without prior written consent by the
indemnifying party or parties to such settlement.
Section 7. CONTRIBUTION.
If the indemnification provided for in Section 6 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
- 20 -
<PAGE> 21
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Offerors on the one hand and the
Underwriters on the other hand from the offering of the Designated Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Offerors on the one hand and of the Underwriters on
the other hand in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Offerors on the one hand and the
Underwriters on the other hand in connection with the offering of the
Designated Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Designated Securities pursuant to this Agreement (before deducting expenses)
received by the Offerors and the total underwriting commissions received by the
Underwriters, in each case as set forth on the cover of the Prospectus.
The relative fault of the Offerors on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Offerors or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Offerors and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Designated Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same
- 21 -
<PAGE> 22
rights to contribution as such Underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement, each trustee
of the Trust and each person, if any, who controls an Offeror within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have
the same rights to contribution as the Offerors. The Underwriters' respective
obligations to contribute pursuant to this Section 7 are several in proportion
to the number of Initial Securities set forth opposite their respective names
in Schedule A hereto and not joint.
Section 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this
Agreement and the Pricing Agreements or contained in certificates of officers
or Trustees of the Offerors submitted pursuant hereto, shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or controlling person, or by or on behalf of the
Offerors and shall survive delivery of the Designated Securities to the
Underwriters.
Section 9. TERMINATION OF AGREEMENT.
(a) The Underwriters may terminate this Agreement, by notice to
the Offerors, at any time at or prior to Closing Time (i) if there has been,
since the date of this Agreement or since the respective dates as of which
information is given in the Registration Statement, any material adverse change
in the condition, financial or otherwise or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or internationally or any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political,
financial or economic conditions, in each case the effect of which is such as
to make it, in the judgment of the Underwriters, impracticable to market the
Designated Securities or to enforce contracts for the sale of the Designated
Securities, (iii) if trading in any securities of the Company has been
suspended or limited by the Commission or the New York Stock Exchange ("NYSE"),
or if trading generally on the American Stock Exchange, the NYSE or in the
Nasdaq National Market has been suspended or limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority, or
(iv) if a banking moratorium has been declared by either Federal, New York,
Arkansas, Louisiana or Texas authorities, or (v) if there has been any decrease
in the ratings of any of the debt securities of the Company or of the Preferred
Securities by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act) or such organization shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the debt securities of the Company
or of the Preferred Securities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except
as provided in Section 4 hereof and
- 22 -
<PAGE> 23
provided further that Sections 1, 6 and 7 hereof shall survive such termination
and remain in full force and effect.
Section 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS.
If one or more of the Underwriters shall fail at Closing Time to
purchase the Initial Securities that it or they are obligated to purchase under
this Agreement and the Pricing Agreement (the "Defaulted Securities"), Merrill
Lynch shall have the right, within 24 hours thereafter, to make arrangements
for one or more of the non-defaulting Underwriters, or any other Underwriters,
to purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
Merrill Lynch shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the number of Initial Securities, each of the non-defaulting Underwriters shall
be obligated, severally and not jointly, to purchase the full amount thereof in
the proportions that their respective underwriting obligations hereunder bear
to the underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Initial Securities, this Agreement shall terminate without liability
on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either Merrill Lynch or the Offerors shall have
the right to postpone Closing Time for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements.
Section 11. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by a standard
form of telecommunication. Notices to the Underwriters shall be directed to
Merrill Lynch & Co., Merrill Lynch, Pierce Fenner & Smith Incorporated, One
Houston Center, 1221 McKinney, Suite 2700, Houston, Texas 77010, attention:
Charles M. Davis, Jr.; notices to the Trust and the Company shall be directed
to them at 1600 Smith Street, 32nd Floor, Houston, Texas 77002, attention of
Hubert Gentry, Jr., Esq., General Counsel.
Section 12. PARTIES.
This Agreement and the Pricing Agreement shall each inure to the
benefit and be binding upon the Underwriters and the Trust and the Company and
their respective successors. Nothing expressed or mentioned in this Agreement
or the Pricing Agreement is intended or shall be
- 23 -
<PAGE> 24
construed to give any person, firm or corporation, other than the Underwriters
and the Trust and the Company and their respective successors and the
controlling persons and officers, directors and trustees referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or the
Pricing Agreement or any provision herein or therein contained. This Agreement
and the Pricing Agreement and all conditions and provisions hereof and thereof
are intended to be for the sole and exclusive benefit of the Underwriters and
the Trust and the Company and their respective successors, and said controlling
persons and officers, directors and trustees and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of Securities from any Underwriter shall be deemed to be a
successor by reason merely of such purchase.
Section 13. GOVERNING LAW AND TIME.
This Agreement and the Pricing Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State. Except as otherwise set
forth herein, specified times of day refer to New York City time.
- 24 -
<PAGE> 25
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Trust a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Trust and the Company in accordance with its
terms.
Very truly yours,
NORAM ENERGY CORP.
By:
-------------------------------------
Name:
Title:
NORAM FINANCING I
By:
-------------------------------------
Name:
Title: Trustee
By:
------------------------------------
Name:
Title: Trustee
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
SALOMON BROTHERS INC
SMITH BARNEY INC.
By: MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By:
--------------------------------------
Authorized Signatory
- 25 -
<PAGE> 26
SCHEDULE A
Number of
Name of Underwriter Securities
- ------------------- ----------
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Salomon Brothers Inc
Smith Barney Inc.
----------
Total . . . . . . . . . . . . . . . . . . . . ==========
Sch A-1
<PAGE> 27
EXHIBIT A
3,000,000 Preferred Securities
NORAM FINANCING I
(a Delaware business trust)
___% Convertible Trust Originated Preferred Securities
(Liquidation Amount of $50 Per Security)
guaranteed by and convertible into shares of
Common Stock of NorAm Energy Corp.
PRICING AGREEMENT
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
SALOMON BROTHERS INC
SMITH BARNEY INC.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Dear Sirs:
Reference is made to the Purchase Agreement, dated June __, 1996 (the
"Purchase Agreement"), relating to the several purchases by Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Salomon Brothers Inc and
Smith Barney Inc. (the "Underwriters"), of the above ___% Convertible Trust
Originated Preferred Securities (the "Preferred Securities"), of NORAM
FINANCING I, a Delaware business trust (the "Trust").
Pursuant to Section 2 of the Purchase Agreement, the Trust and NorAm
Energy Corp., a Delaware corporation (the "Company"), agree with each
Underwriter as follows:
1. The initial public offering price per security for
the Preferred Securities, determined as provided in said Section 2,
shall be $50.00.
<PAGE> 28
2. The purchase price per security for the Preferred
Securities to be paid by the several Underwriters shall be $50.00,
being an amount equal to the initial public offering price set forth
above; PROVIDED that this purchase price per Preferred Security for
any Option Securities (as defined in the Purchase Agreement) purchased
upon exercise of the over-allotment option described in Section 2(b)
of the Purchase Agreement shall be such initial public offering price
plus accrued distributions on such Option Securities from June __, 1996
reduced by an amount per share equal to any distribution declared by
the Trust and payable on the Initial Securities (as defined in the
Purchase Agreement) but not payable on the Option Securities.
3. The compensation per Preferred Security to be paid by
the Company to the several Underwriters in respect of their
commitments hereunder shall be $_______; provided, however, that the
compensation per Preferred Security for sales of _________ or more
Preferred Securities to a single purchaser shall be $________.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Trust a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Trust and the Company in accordance with its
terms.
Very truly yours,
NORAM ENERGY CORP.
By:
---------------------------
Name:
Title:
NORAM FINANCING I
By:
---------------------------
Name:
Title: Trustee
By:
---------------------------
Name:
Title: Trustee
2
<PAGE> 29
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
SALOMON BROTHERS INC
SMITH BARNEY INC.
By: MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
By:
--------------------------------------------------------
Authorized Signatory
3
<PAGE> 30
ANNEX 1
(a) At Closing Time, Skadden, Arps, Slate, Meagher &
Flom, counsel for the Company and the Trust, shall deliver a signed opinion,
dated as of Closing Time and as used in such opinion, (a) the term "Applicable
Laws" means only the Delaware Act and those laws, rules and regulations of the
State of Delaware, the State of New York and the United States of America
which, in our experience, are ordinarily applicable to transactions of the type
contemplated by this Agreement, (b) the term "Governmental Approval" means any
consent, approval, license, authorization or validation of, or filing,
qualification or registration with, any Governmental Authority pursuant to
applicable laws, and (c) the term "Governmental Authorities" means any
Delaware, New York or federal legislative, judicial, administrative or
regulatory body under Applicable Laws. Such opinion shall be to the effect
that:
(i) The Indenture has been duly authorized,
executed and delivered by the Company and, when duly
authorized, executed and delivered by the Debt Trustee, will
constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms,
except as enforceability thereof may be limited by Bankruptcy
Exceptions.
(ii) The Convertible Debentures have been duly
authorized by the Company and, when duly authenticated by the
Debt Trustee in accordance with the Indenture and paid for in
accordance with the Underwriting Agreement, will be duly
executed, issued and delivered by the Company and constitute
valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable against the Company
in accordance with their terms, except as enforceability
thereof may be limited by Bankruptcy Exceptions.
(iii) The Declaration has been duly authorized,
executed and delivered by the Company; and, assuming the due
authorization, execution and delivery of the Declaration by
The Bank of New York (Delaware), The Bank of New York and the
Regular Trustees, the Declaration constitutes a valid and
binding obligation of the Company and is enforceable against
the Company in accordance with its terms, except to the extent
enforceability thereof may be limited by Bankruptcy
Exceptions.
(iv) Each of the Guarantee Agreements has been
duly authorized, executed and delivered by the Company, and is
a valid and binding agreement of the Company.
(v) The Conversion Shares issuable upon
conversion of the Convertible Debentures have been duly
authorized and reserved for issuance by the Company upon
conversion of the Convertible Debentures and, if and when
issued upon conversion of the Convertible Debentures in
accordance with the Indenture at conversion prices at or in
excess of the par value of such Conversion Shares, such
Conversion Shares will be validly issued, fully paid and
nonassessable; and no
<PAGE> 31
holder thereof will be subject to personal liability by reason
of being such a holder.
(vi) The Underwriting Agreement has been duly
authorized, executed and delivered by each of the Company and
the Trust.
(vii) The holders of outstanding shares of capital
stock of the Company are not entitled to any preemptive rights
under the Certificate of Incorporation or By-laws of the
Company or any Applicable Law of the State of Delaware to
subscribe for the Preferred Securities, the Convertible
Debentures or the Conversion Shares issuable upon conversion
thereof.
(viii) No Governmental Approval has not been
obtained or made that is required for the issuance and sale of
the Preferred Securities by the Trust to the Underwriters or
the performance by the Trust and the Company of their
respective obligations in this Agreement, the Indenture, the
Convertible Debentures, the Guarantees, the Declaration and
the Preferred Securities. We express no opinion in this
paragraph (viii), however, as to any Governmental Approval
which may be required under state securities (blue sky) laws
and the rules and regulations of the NASD.
(ix) The statements made in the Prospectus under
the captions "Description of the Convertible Preferred
Securities" (except under the subsection "Book-Entry Only
Issuance -- The Depositary Trust Company"), "Description of the
Guarantee", "Description of the Convertible Debentures",
"Effect of Obligations Under the Convertible Debentures and the
Guarantee", and in the Base Prospectus under the captions
"Description of the Preferred Securities", "Description of the
Preferred Securities Guarantees" and "Description of the
Subordinated Debt Securities", to the extent that such
statements constitute matters of law or legal conclusions, have
been reviewed by such counsel and are accurate and fairly
present the information required to be disclosed therein in all
material respects.
(x) The execution and delivery by the Trust of, or
the performance by the Trust under this Agreement, or the
issuance and sale of the Designated Securities by the Trust in
accordance with the terms of this Agreement and the
consummation of the other transactions contemplated thereby
will not (a) violate any Applicable Laws, (b) to such counsel's
knowledge, without independent investigation, conflict with or
result in a breach of, or violation of any of the provisions
of, or constitute a default under any agreement or instrument
set forth on Exhibit A to such counsel's opinion or (c) violate
those judgments, orders or decrees applicable to the Trust set
forth on Exhibit A to such counsel's opinion, except such
counsel expresses no opinion in this paragraph (x) with respect
to (i) the rights to indemnity and contribution contained in
this Agreement which may be limited by federal or state
securities laws or the public policy underlying such laws, (ii)
any state securities (blue sky) laws and the rules and
regulations of the NASD or (iii) the information contained in
or the accuracy, completeness or correctness of, the Prospectus
or the Registration Statement or the responsiveness of the
Prospectus or the Registration Statement to the requirements of
the Act,
2
<PAGE> 32
which matters are dealt with in paragraph (ix) above and the
second paragraph following paragraph (xv) below.
(xi) Neither the Company nor the Trust is required
to be registered under the Investment Company Act of 1940, as
amended.
(xii) The Trust has been duly created and is
validly existing in good standing as a business trust under
the Delaware Act.
(xiii) The Trust has the power and authority to (a)
execute, deliver and perform its obligations under this
Agreement, (b) issue and perform its obligations under the
Designated Securities and the Common Securities and (c)
purchase and hold the Convertible Debentures.
(xiv) The Designated Securities have been duly
authorized by the Declaration and when executed in accordance
with the Declaration, and when issued, delivered and paid for
in accordance with this Agreement, will represent validly
issued, fully paid and non-assessable undivided beneficial
interests in the assets of the Trust; and the holders of the
Designated Securities will be entitled to the same limitation
of personal liability extended to stockholders of private
corporations for profit organized under the General
Corporation Law of the State of Delaware. We bring to your
attention, however, that holders of Designated Securities may
be obligated pursuant to the Declaration, to (i) provide
indemnity and/or security in connection with and pay taxes or
governmental changes arising from transfer of Designated
Securities and the issuance of replacement Designated
Securities, and (ii) provide security and indemnity in
connection with requests of or directions to the Property to
exercise rights under the Declaration.
(xv) Under the Delaware Act and the Declaration,
the issuance of the Designated Securities and Common
Securities is not subject to preemptive rights.
Such opinion shall be to such further effect with respect to other
legal matters relating to this Agreement and the Securities as counsel for the
Underwriters may reasonably request. In giving such opinion, such counsel may
state that, insofar as such opinion involved factual matters, they have relied,
to the extent they deem proper, upon certificates of officers of the Company
and its subsidiaries, certificates of the trustees of the Trust and
certificates of public officials; provided that such certificates have been
delivered to the Underwriters.
3
<PAGE> 33
ANNEX 2
(a) At Closing Time, Skadden, Arps, Slate, Meagher & Flom, counsel
for the Company and the Trust, shall deliver a signed opinion, dated as of the
Closing Date, to the effect that:
We are of the opinion that, under current United States
federal income tax law:
(1) The Trust will be classified as a grantor trust and not as an
association taxable as a corporation for United States federal
income tax purposes.
(2) Although the discussion set forth in the Prospectus Supplement
under the heading "United States Federal Income Taxation" does
not purport to discuss all possible United States federal
income tax consequences of the purchase, ownership and
disposition of Preferred Securities, such discussion
constitutes, in all material respects, a fair and accurate
summary of United States federal income tax consequences of
the purchase, ownership and disposition of Preferred
Securities.
<PAGE> 34
ANNEX 3
(a) At Closing Time, Hubert Gentry, Jr., General Counsel of the
Company shall deliver a signed opinion, dated as of Closing Time, to the effect
that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
(ii) The Company has full corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus, and to enter into and perform its
obligations under the Underwriting Agreement and the Pricing
Agreement.
(iii) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a
material adverse effect on the Company.
(iv) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus under
"Capitalization" (except for issuances, if any, subsequent to the date
of the Prospectus pursuant to the Company's Direct Stock Purchase and
Dividend Reinvestment Plan, employee benefit plans or executive
compensation arrangements or the exercise of convertible securities
referred to in the Prospectus), and the shares of issued and
outstanding Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable.
(v) The Designated Securities to be purchased by the
Underwriters from the Company have been duly authorized by the
Declaration for issuance and sale to the Underwriters pursuant to the
Underwriting Agreement and, when issued and delivered by the Company
pursuant to the Underwriting Agreement against payment of the
consideration set forth in the Pricing Agreement, such Designated
Securities will be validly issued and fully paid and non-assessable
undivided beneficial interests in the assets of the Trust; the
issuance of the Designated Securities is not subject to the preemptive
or other similar rights; and holders of Designated Securities will be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit incorporated under the
General Corporation Law of the State of Delaware.
(vi) The issuance of the Designated Securities is not
subject to preemptive rights or other similar rights arising by
operation of law, under the charter or by-laws of the Company or, to
the best knowledge of such counsel, otherwise.
<PAGE> 35
(vii) Each of Each of Mississippi River Transmission
Corporation, NorAm Gas Transmission Company, NorAm Energy Services,
Inc., NorAm Field Services Corp. and NorAm Energy Management, Inc.
(the "Significant Subsidiaries") is duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority
to own, lease and operate its properties and to conduct its business
as described in the Registration Statement, and is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or lease of property or the conduct of business, except
where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on the condition, financial
or otherwise, or the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise; all
of the issued and outstanding shares of capital stock of each of the
Significant Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable and (except as otherwise stated or
reflected in the Registration Statement) are owned by the Company,
directly or indirectly, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
(viii) The Underwriting Agreement and the Pricing Agreement
each have been duly authorized, executed and delivered by the Company.
(ix) The Registration Statement has become effective under
the 1933 Act; any required filing of the Prospectus or any supplement
thereto pursuant to Rule 424(b) of the 1933 Act Regulations has been
made in the manner and within the time period required by such Rule
424(b); and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission.
(x) At the time the Registration Statement became
effective and at the Representation Date, the Registration Statement
(other than the financial statements and supporting schedules included
therein, as to which no opinion need be rendered) complied as to form
in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations.
(xi) There is no action, suit or proceeding before or by
any court or government agency or body, domestic or foreign, now
pending or, to the knowledge of such counsel, threatened against or
affecting the Company or any of its subsidiaries, that is required to
be disclosed in the Registration Statement, other than those disclosed
therein (or in a document incorporated by reference or deemed to be
incorporated by reference therein).
(xii) There are no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or the
documents incorporated by reference therein or to
2
<PAGE> 36
be filed as exhibits thereto other than those described or referred to
therein or filed or incorporated by reference as exhibits thereto; the
descriptions thereof or references thereto are correct; and no default
exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument so described, referred to, or filed or incorporated by
reference.
(xiii) No authorization, approval or consent of, or filing
with or order of, any court or governmental authority or agency is
necessary or required in connection with the sale of the Designated
Securities to the Underwriters hereunder, except such as may be
required under the 1933 Act, the 1933 Act Regulations, the 1934 Act or
the 1934 Act Regulations or state securities law; and the execution,
delivery and performance of the Underwriting Agreement and the Pricing
Agreement and the consummation of the transactions contemplated herein
and therein and compliance by the Company with its obligations
hereunder and thereunder will not conflict with or constitute a breach
of, or default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company
or any of the Significant Subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company or any of the Significant Subsidiaries is a party
or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of the Significant
Subsidiaries is subject, nor will such action result in any violation
of the provisions of the charter or by-laws of the Company, or any
applicable law, administrative regulation or administrative or court
decree.
(xiv) There are no persons with registration or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under
the 1933 Act.
(xv) As of the date they were filed with the Commission,
each document filed pursuant to the 1934 Act (other than the financial
statements and supporting schedules included therein, as to which no
opinion need be rendered) and incorporated or deemed to be
incorporated by reference in the Registration Statement complied as to
form in all material respects with the 1934 Act and the 1934 Act
Regulations.
(xvi) The Company is not a "holding company" or a
"subsidiary company" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(xvii) The Company has franchises or permits for gas
operations in all communities now served, except as set forth in the
Registration Statement and except where the failure to be so
authorized by franchise or permit does not, in the opinion of such
counsel, materially affect the right of the Company to the use of its
properties or the conduct of its business; and the franchises of the
Company
3
<PAGE> 37
referred to in the Registration Statement are good and valid except
for and subject only to such defects as may be set forth or referred
to in the Registration Statement, and such others as do not, in the
opinion of such counsel, materially affect the right of the Company to
the use of its properties or the conduct of its business, and said
franchises impose no materially burdensome restrictions.
(xviii) All of the issued and outstanding Common Securities
of the Trust are directly owned by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equitable right.
(xix) The Declaration has been duly qualified under the
1939 Act.
(xx) Each of the Guarantee Agreements has been duly
authorized, executed and delivered by the Company; the Preferred
Securities Guarantee Agreement, assuming due authorization, execution,
and delivery by the Guarantee Trustee, constitutes a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a
proceeding in equity or at law); and the Preferred Securities
Guarantee Agreement has been duly qualified under the 1939 Act.
(xxi) The Indenture has been duly executed and delivered by
the Company and, assuming due authorization, execution, and delivery
thereof by the Debt Trustee, is a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at
law); and the Indenture has been duly qualified under the 1939 Act.
(xxii) The Convertible Debentures are in the form
contemplated by the Indenture, have been duly authorized, executed and
delivered by the Company and, when authenticated by the Debt Trustee
in the manner provided for in the Indenture and delivered against
payment therefor, will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law).
4
<PAGE> 38
(xxiii) The Convertible Debentures are subordinate and junior in
right of payment to all "senior indebtedness" (as defined in the
Supplemental Indenture) of the Company. The Company's obligations
under the Preferred Securities Guarantee and the Common Securities
Guarantee are subordinate and junior in right of payment to all
liabilities of the Company and are pari passu with the most senior
preferred stock issued by the Company.
(3) In giving his opinion, Hubert Gentry, Jr. shall
additionally state that nothing has come to his attention that would lead him
to believe that the Registration Statement (except for financial statements and
schedules and other financial or statistical data included or incorporated by
reference therein, as to which such counsel need make no statement), at the
time it became effective or at the Representation Date, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus (except for financial statements and schedules and other
financial data included or incorporated by reference therein, as to which such
counsel need make no statement), at the Representation Date (unless the term
"Prospectus" refers to a prospectus which has been provided to the Underwriters
by the Company for use in connection with the offering of the Securities which
differs from the Prospectus on file at the Commission at the Representation
Date, in which case at the time it is first provided to the Underwriters for
such use) or at Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
5
<PAGE> 39
ANNEX 4
(a) At Closing Time, Emmet, Marvin & Martin, LLP, counsel
to the trustee, shall deliver a signed opinion, dated as of the Closing Time,
to the effect that:
(i) The Trustee is a banking corporation
organized and validly existing and in good standing under the
laws of the State of New York and is authorized and qualified,
to accept the trusts imposed by, and perform its obligations
under the, Declaration, the Indenture and Guarantee Agreement.
(ii) The execution, delivery and performance by
the Property Trustee of the Declaration, the execution,
delivery and performance by the Trustee of the Indenture and
the execution, delivery and performance by the Guarantee
Trustee of the Preferred Securities Guarantee Agreement have
been duly authorized by all necessary corporate action on the
part of the Property Trustee, the Trustee and the Guarantee
Trustee, respectively. The Declaration, the Indenture and the
Preferred Securities Guarantee Agreement have been duly
executed and delivered by the Property Trustee, the Trustee
and the Guarantee Trustee, respectively, and constitute the
legal, valid and binding obligations of the Property Trustee,
the Trustee and the Guarantee Trustee, respectively,
enforceable against the Property Trustee, the Trustee and the
Guarantee Trustee, respectively, in accordance with their
terms, except as enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to the enforcement of creditors'
rights generally, and by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(iii) The execution, delivery and performance of
the Declaration, the Indenture and the Guarantee Agreement by
the Property Trustee, the Trustee and the Preferred Securities
Guarantee Trustee, respectively, do not conflict with or
constitute a breach of the Organization Certificate or By-laws
of the Property Trustee, the Trustee and the Guarantee
Trustee, respectively[, or the terms of any indenture or other
agreement or instrument known to us and to which the Property
Trustee, the Trustee or the Guarantee Trustee, respectively,
is a party or is bound or any judgment, order or decree known
to us to be applicable to the Property Trustee, the Trustee or
the Guarantee Trustee, respectively, of any court, regulatory
body, administrative agency, governmental body or arbitrator
having jurisdiction over the Property Trustee, the Trustee or
the Guarantee Trustee, respectively].
(iv) No consent, approval or authorization of, or
registration with or notice to, any Federal or New York State
banking authority is required for the execution, delivery of
performance by the Property Trustee, the Trustee and the
Guarantee Trustee of the Declaration, the Indenture and
Guarantee Agreement, respectively.
<PAGE> 40
ANNEX 5
(a) At Closing Time, Richards, Layton & Finger, counsel
to the Delaware Trustee, shall deliver a signed opinion, dated as of the
Closing Time, to the effect that:
(i) The Bank of New York (Delaware), a Delaware
banking corporation, has been duly incorporated and is validly
existing and in good standing as a banking corporation under
the laws of the State of Delaware and has the corporate power
to act as Trustee of a Delaware business trust under the laws
of the State of Delaware, 12 Del. C. Section 3801 et seq.
<PAGE> 1
EXHIBIT 1.02
10,000,000 Shares
NORAM ENERGY CORP.
Common Stock
(Par Value $.625 Per Share)
PURCHASE AGREEMENT
June __, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Dear Sirs:
NorAm Energy Corp., a Delaware corporation (the "Company"), confirms
its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation and Dean
Witter Reynolds Inc. and each of the other Underwriters named in Schedule A
hereto (collectively, the "Underwriters", which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for whom
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation, Dean Witter Reynolds Inc.
are acting as representatives (in such capacity, the "Representatives"), with
respect to (i) the sale by the Company and the purchase by the Underwriters,
acting severally and not jointly, of the respective numbers of shares of common
stock, par value $.625 per share, of the Company ("Common Stock") set forth in
said Schedule A and (ii) the grant by the Company to the Underwriters, acting
severally and not jointly, of the option described in Section 2(b) hereof to
purchase all or any part of the Underwriters' pro rata portion of 1,500,000
additional shares of Common Stock to cover over-allotments, in each case except
as may otherwise be provided in the Pricing Agreement, as
<PAGE> 2
hereinafter defined. The 10,000,000 shares of Common Stock (the "Initial
Securities") and all or any part of the Underwriters' pro rata portion of the
1,500,000 shares of Common Stock subject to the option described in Section
2(b) hereof (the "Option Securities") to be purchased by the Underwriters are
collectively hereinafter called the "Securities".
Prior to the purchase and public offering of the Securities by the
several Underwriters, the Company and the Representatives, acting on behalf of
the several Underwriters, shall enter into an agreement substantially in the
form of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may
take the form of an exchange of any standard form of written telecommunication
between the Company and the Representatives and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the
Securities will be governed by this Agreement, as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the
Pricing Agreement, this Agreement shall be deemed to incorporate the Pricing
Agreement.
The Company has prepared and filed with the United States Securities
and Exchange Commission (the "Commission"), and the Commission has declared
effective, a registration statement on Form S-3 (No. 33-64001), and Post-
Effective Amendments to Registration Statements No. 33-52853 and 33-48750 as
amended by Amendment No. 1 and Post- Effective Amendment No. 2 thereto filed
with the Commission on January 22, 1996 and as further amended by Amendment No.
2 and Post-Effective Amendment No. 3 thereto filed with the Commission on March
7, 1996, covering the registration of the Common Stock and certain other
securities under the Securities Act of 1933, as amended (the "1933 Act"), and
the offering thereof from time to time in accordance with Rule 415 of the rules
and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations"), including the related preliminary prospectus for the
registration of the Securities under the 1933 Act, has filed such amendments
thereto, if any, and such amended preliminary prospectuses as may have been
required to the date hereof, and will file such additional amendments thereto,
and such amended prospectuses as may hereafter be required. Such registration
statements (as so amended) and the prospectuses constituting a part thereof, as
from time to time amended or supplemented pursuant to the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), or otherwise, are
collectively hereinafter referred to as the "Registration Statement" and the
"Prospectus"; provided, however, that all references to the "Registration
Statement" and the "Prospectus" shall be deemed to include all documents
incorporated therein by reference pursuant to the 1934 Act, prior to the
execution of the Pricing Agreement; provided, further, that if the Company
files a registration statement with the Commission pursuant to Rule 462(b) of
the 1933 Act Regulations (the "Rule 462(b) Registration Statement"), then,
after such filing, all references to Registration Statement shall be deemed to
include the Rule 462(b) Registration Statement. A "preliminary prospectus"
shall be deemed to refer to any prospectus used before the registration
statement became effective and any prospectus that omitted any information to
be included upon pricing in a form of prospectus filed with the Commission
pursuant to Rule 424(b) of the 1933 Act Regulations, that was used after such
effectiveness and prior to the execution and delivery of the Pricing Agreement.
For purposes of this Agreement, all references to the Registration Statement,
Prospectus or preliminary prospectus or to any amendment or supplement to any
of the foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR"). All references in this
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<PAGE> 3
Agreement to financial statements and schedules and other information which is
"contained", "included" or "stated" (and all other references of like import)
in the Registration Statement, Prospectus or preliminary prospectus shall be
deemed to mean and include all such financial statements and schedules and
other information which is or is deemed to be incorporated by reference in the
Registration Statement, Prospectus or preliminary prospectus, as the case may
be; and all references in this Agreement to amendments or supplements to the
Registration Statement, Prospectus or preliminary prospectus shall be deemed to
mean and include the filing of any document under the 1934 Act which is or is
deemed to be incorporated by reference in the Registration Statement,
Prospectus or preliminary prospectus, as the case may be.
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
the Registration Statement becomes effective and the Pricing Agreement has been
executed and delivered.
SECTION 1. Representations and Warranties. (a) The Company represents
and warrants to each of the Underwriters as of the date hereof and as of the
date of the Pricing Agreement (such latter date being hereinafter referred to
as the "Representation Date") as follows:
(i) The Company meets the requirements for use of Form
S-3 under the 1933 Act. Each of the Registration Statement and any
Rule 462(b) Registration Statement has become effective under the 1933
Act and no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued
under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with. At the
respective times the Registration Statement and any post-effective
amendments thereto became effective and at each Representation Date,
the Registration Statement, any Rule 462(b) Registration Statement and
any amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations and did not and will not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. At the date of the Prospectus, at the Closing Time (as
defined below) and at each Date of Delivery (as defined below), if
any, the Prospectus and any amendments and supplements thereto did not
and will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties
in this subsection shall not apply to statements in or omissions from
the Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by the
Underwriters through the Representatives expressly for use in the
Registration Statement or the Prospectus.
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<PAGE> 4
(ii) Coopers & Lybrand, who certified the financial
statements and supporting schedules incorporated by reference in the
Registration Statement, are independent public accountants with
respect to the Company and its subsidiaries as required by the 1933
Act and the 1933 Act Regulations.
(iii) The consolidated financial statements, including the
notes thereto and supporting schedules, included in the Registration
Statement or incorporated by reference therein present fairly, in all
material respects, the financial position of the Company and its
consolidated subsidiaries as at the dates indicated and the results of
their operations for the periods specified; except as otherwise stated
in the Registration Statement, said financial statements have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis; and the supporting schedules
incorporated by reference in the Registration Statement present
fairly, in all material respects, the information required to be
stated therein. The selected financial data included in the
Registration Statement presents fairly, in all material respects, the
information shown therein and has been compiled on a basis consistent
with that of the audited consolidated financial statements from which
it was derived.
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein or contemplated thereby, there has been no:
(A) material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or
not arising in the ordinary course of business; (B) transaction
entered into by the Company or any of its subsidiaries, other than
those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one
enterprise; and (C) except for regular quarterly cash dividends on
Common Stock and the Company's $3.00 Convertible Exchangeable
Preferred Stock, Series A, there has been no dividend or distribution
of any kind declared, paid or made by the Company on any class of its
capital stock.
(v) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state
of Delaware with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement and the Pricing Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify would not,
individually or in the aggregate, have a material adverse effect on
the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
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<PAGE> 5
(vi) Each of Mississippi River Transmission Corporation,
NorAm Gas Transmission Company, NorAm Energy Services, Inc., NorAm
Field Services Corp. and NorAm Energy Management, Inc. (the
"Significant Subsidiaries") is duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement, and is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to be so qualified or be
in good standing would not, individually or in the aggregate, have a
material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company
and the Significant Subsidiaries considered as one enterprise; except
as disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each of the Company's subsidiaries has
been duly authorized and validly issued, are fully paid and
nonassessable and (except as otherwise stated or reflected in the
Registration Statement) are owned by, the Company, directly or
indirectly, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
(vii) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus under
"Capitalization" (except for subsequent issuances, if any, pursuant to
employee benefit plans or pursuant to executive compensation
arrangements or the exercise of convertible securities referred to in
the Prospectus); the shares of issued and outstanding Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable; the Securities to be purchased by the Underwriters from
the Company have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and delivered
by the Company pursuant to this Agreement against payment of the
consideration set forth in the Pricing Agreement, will be validly
issued and fully paid and nonassessable; the Common Stock conforms to
all statements relating thereto as set forth in the Prospectus under
"Description of Capital Stock"; and the issuance of the Securities is
not subject to preemptive or other similar rights arising by operation
of law, under the charter or by-laws of the Company or otherwise.
(viii) Neither the Company nor any of the Significant
Subsidiaries is in violation of its charter or by-laws or in default
in the performance or observance of any material obligation,
agreement, covenant or condition contained in any material contract,
indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company or any of the Significant Subsidiaries is a party
or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of the Significant
Subsidiaries is subject except for such violations or defaults that
would not have a material adverse effect on the condition (financial
or otherwise), earnings, business affairs or business prospects
- 5 -
<PAGE> 6
of the Company and its subsidiaries, considered as one enterprise; and
the execution, delivery and performance of this Agreement and the
Pricing Agreement and the consummation of the transactions
contemplated herein and therein and compliance by the Company with its
obligations hereunder and thereunder, have been duly authorized by all
necessary corporate action and will not conflict with or constitute a
breach of, or default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any of the Significant Subsidiaries pursuant to any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or any of the Significant Subsidiaries
is a party or by which it or any of them may be bound, or to which any
of the property or assets of the Company or any of the Significant
Subsidiaries is subject, except for such conflicts, breaches or
encumbrances that would not have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its subsidiaries, considered as
one enterprise, nor will such action result in any breach or violation
of the provisions of the charter or by-laws of the Company or any
applicable law, administrative regulation or administrative or court
decree.
(ix) No material labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the knowledge of the
Company, is imminent; and the Company, having conducted no independent
investigation, is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers,
manufacturers or contractors which would be expected to result in any
material adverse effect on the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise.
(x) Except as set forth in the Registration Statement,
there is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened against or affecting the
Company or any of its subsidiaries, that is required to be disclosed
in the Registration Statement (other than as disclosed therein), or
that would, individually or in the aggregate, have a material adverse
effect on the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, or which would materially
and adversely affect the properties or assets thereof or which might
be expected to materially and adversely affect the consummation of
this Agreement; and there are no contracts or documents of the Company
or any of its subsidiaries that are required to be filed as exhibits
to the Registration Statement by the 1933 Act or by the 1933 Act
Regulations or which are required to be filed as exhibits to a
document incorporated by reference in the Registration Statement,
which in either such case have not been so filed.
(xi) The Company and its subsidiaries own or possess, or
can acquire on reasonable terms, the patents, patent rights, licenses,
inventions, copyrights,
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<PAGE> 7
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (collectively,
"patent and proprietary rights") presently employed by them in
connection with the business now operated by them, and neither the
Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with
respect to any patent or proprietary rights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding would result in any material adverse effect on the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise.
(xii) No authorization, approval or consent of, or filing
with or order of, any court or governmental authority or agency is
necessary or required in connection with the sale of the Securities
hereunder, except such as may be required under the 1933 Act, the 1933
Act Regulations or state securities laws and which have been obtained
or made or will have been obtained or made prior to the Closing Time
and are or will be in full force and effect.
(xiii) Except as set forth in the Registration Statement,
the Company and the Significant Subsidiaries possess such
certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct
the business now operated by them, and neither the Company nor any of
the Significant Subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authority or permit which, singly or in the aggregate, if the subject
of an unfavorable decision ruling or finding, would have a material
adverse affect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise.
(xiv) None of the Company, its directors or officers or any
person who controls the Company within the meaning of Section 15 of
the 1933 Act has taken, directly or indirectly, any action designed to
cause or result in, or which has constituted or resulted in,
stabilization or manipulation of the price of any security of the
Company in order to facilitate the sale or resale of the Securities.
(xv) Except as may be set forth in the Registration
Statement, there are no persons with registration or other similar
rights to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the 1933 Act.
(xvi) The documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the
Prospectus, at the time they were filed with the Commission, complied
in all material respects with the requirements of the 1934 Act and the
1934 Act Regulations and, when read together with the other
information in the Prospectus, at the date of the
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<PAGE> 8
Prospectus, at the Closing Time and at each Date of Delivery, if any,
did not and will not include an untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties
in this subsection shall not apply (A) to statements in or omissions
from the Registration Statement or Prospectus made in reliance upon
and in conformity with information furnished to the Offerors in
writing by any Underwriter through Merrill Lynch expressly for use in
the Registration Statement or Prospectus or (B) to that part of the
Registration Statement that constitutes the Statement of Eligibility
and Qualification (Form T-1) under the Trust Indenture Act, of the
Trustee.
.
(b) Any certificate signed by any officer of the Company
and delivered to the Representatives or to counsel for the Underwriters
pursuant to the terms of this Agreement or at the closing contemplated hereby
shall be deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing. (a) On the
basis of the representations and warranties herein contained and subject to the
terms and conditions herein set forth, the Company agrees to sell to each
Underwriter, and each Underwriter, severally and not jointly, agrees to
purchase from the Company, at the price per share set forth in the Pricing
Agreement, the number of Initial Securities set forth in Schedule A opposite
the name of such Underwriter (except as otherwise provided in the Pricing
Agreement), plus such additional number of Initial Securities that such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriters, severally and
not jointly, to purchase, up to an additional 1,500,000 shares of Common Stock
at the price per share set forth in the Pricing Agreement. The option hereby
granted will expire 30 days after the date of the Pricing Agreement, and may be
exercised in whole or in part from time to time only for the purpose of
covering over-allotments which may be made in connection with this offering and
distribution of the Initial Securities upon notice by the Representatives to
the Company setting forth the number of Option Securities as to which the
several Underwriters are exercising the option and the time and date of payment
for and delivery of such Option Securities. Such time and date of delivery for
the Option Securities (the "Date of Delivery") shall be determined by the
Representatives, but shall not be, unless otherwise agreed upon by the
Representatives and the Company, later than seven full business days after the
exercise of said option, and in no event prior to Closing Time, as hereinafter
defined. If the option is exercised as to all or any portion of the Option
Securities, each of the Underwriters, acting severally and not jointly, will
purchase from the Company that proportion of the number of Option Securities
that the number of Initial Securities set forth in Schedule A opposite the name
of such Underwriter (plus any additional number of Initial Securities which
such Underwriter may become obligated to purchase pursuant to the provisions of
Section 10), bears to the total number of Initial Securities, subject to such
adjustments as the
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<PAGE> 9
Underwriters in their sole discretion shall make to eliminate sales or
purchases of a fractional number of Option Securities.
(c) Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the office of the
Company, 1600 Smith Street, Houston, Texas 77002, or at such other place as
shall be agreed upon by the Representatives and the Company, at 10:00 A.M. on
the third business day or fourth business day (as permitted by Rule 15c6-1 of
the 1934 Act)(unless postponed in accordance with the provisions of Section 10)
following the date of the execution of the Pricing Agreement or such other time
not later than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called "Closing Time").
In addition, in the event that any or all of the Option
Securities are purchased by the Underwriters, payment of the purchase price,
and delivery of the certificates, for such Option Securities shall be made at
the above- mentioned offices of the Company, or at such other place as shall be
agreed upon by the Representatives and the Company, on the Date of Delivery as
specified in the notice from the Representatives to the Company.
Payment shall be made to the Company by wire transfer of
immediately available funds to a bank account designated by the Company,
against delivery to the Representatives for the respective accounts of the
Underwriters of certificates for such Initial Securities and Option Securities
to be purchased by them. It is understood that each Underwriter has authorized
the Representatives, for its account, to accept delivery of, receipt for, and
make payment of the purchase price for, the Initial Securities and Option
Securities, if any, which it has agreed to purchase. The Representatives,
individually and not as representatives of the Underwriters, may (but shall not
be obligated to) make payment of the purchase price for the Securities to be
purchased by any Underwriter whose funds have not been received by Closing Time
or the Date of Delivery, as the case may be, but such payment shall not relieve
such Underwriter from its obligations hereunder.
(d) Certificates for the Initial Securities and Option
Securities shall be in such denominations and registered in such names as the
Representatives may request in writing at least one full business day before
Closing Time or the Date of Delivery, as the case may be. The certificates for
the Initial Securities and the Option Securities, if any, will be made
available for examination and packaging by the Representatives in the City of
New York not later than 10:00 A.M. (Eastern time) on the business day prior to
Closing Time or the Date of Delivery, as the case may be, at the offices of
First Chicago Trust Company of New York, 525 Washington Boulevard, Jersey City,
New Jersey 07303.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) The Company will comply in all material respects with
the requirements of the 1933 Act Regulations and will notify the
Representatives immediately, and confirm the notice in writing of (i) the
effectiveness of any post-effective amendment to the Registration Statement or
the filing of any supplement or amendment to the Prospectus, (ii) the receipt
of
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<PAGE> 10
any comments from the Commission, (iii) any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus or for additional information, and (iv) the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or the initiation or threatening of any
proceedings for any such purpose. The Company will promptly effect the filings
necessary pursuant to Rule 424 and will take such steps as it deems necessary
to ascertain promptly whether the Prospectus transmitted for filing under Rule
424 was received for filing by the Commission and, in the event that it was
not, it will promptly file the Prospectus. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
(b) If at any time the Prospectus is required to be
delivered in connection with sales of Securities, the Company will give the
Representatives notice of its intention to file or prepare any amendment to the
Registration Statement (including any post-effective amendment) or any
amendment or supplement to the Prospectus (including any revised prospectus
that the Company proposes for use by the Underwriters in connection with the
offering of the Securities which differs from the prospectus on file at the
Commission at the time the Registration Statement became effective, whether or
not such revised prospectus is required to be filed pursuant to Rule 424(b) of
the 1933 Act Regulations), whether pursuant to the 1933 Act, the 1934 Act or
otherwise, will furnish the Representatives with copies of any such amendment
or supplement a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file any such amendment or supplement or use
any such prospectus to which the Representatives or counsel for the
Underwriters shall reasonably object.
(c) The Company will deliver to the Representatives as
many signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) as the Representatives or counsel for the Underwriters shall
reasonably request and will also deliver to the Representatives a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) for each of the Underwriters.
(d) The Company will furnish to each Underwriter from
time to time until the effective date of the Registration Statement, such
number of copies of the preliminary Prospectus as such Underwriter may
reasonably request. The Company will furnish to each Underwriter, from time to
time during the period when the Prospectus is required to be delivered under
the 1933 Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request for the purposes
contemplated by the 1933 Act, the 1933 Act Regulations, the 1934 Act or the
1934 Act Regulations.
(e) If at any time, when the Prospectus is required to be
delivered in connection with sales of Securities, any event shall occur as a
result of which it is necessary, in the opinion of counsel for the
Underwriters, to amend or supplement the Prospectus in order to make the
Prospectus not misleading in the light of the circumstances existing at the
time it
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<PAGE> 11
is delivered to a purchaser, or if for any other reason it shall be necessary
to amend or supplement the Prospectus in order to comply with the 1933 Act and
the 1933 Act Regulations, the Company will promptly amend or supplement the
Prospectus (in form and substance satisfactory in the reasonable opinion of
counsel for the Underwriters) so that, as so amended or supplemented, the
Prospectus will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a purchaser,
not misleading, and the Company will furnish to the Underwriters a reasonable
number of copies of such amendment or supplement.
(f) The Company will endeavor, in cooperation with the
Underwriters and their counsel, to qualify the Securities for offering and sale
under the applicable securities laws of such states and other jurisdictions of
the United States as the Representatives may designate; provided, however, that
the Company shall not be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified, other than the State of New York,
or to take any action that would subject the Company to general service of
process in any jurisdiction where it is not so subject at the date of this
Agreement. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the effective date of the Registration
Statement.
(g) The Company generally will make available to its
security holders as soon as practicable, but not later than (60) days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 of the 1933 Act Regulations) covering a twelve
month period beginning not later than the first day of the Company's fiscal
quarter next following the "effective date" (as defined in said Rule 158) of
the Registration Statement.
(h) The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds".
(i) The Company, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, will file all
documents required to be filed with the Commission pursuant to Section 13, 14
or 15 of the 1934 Act within the time periods required by the 1934 Act and the
1934 Act Regulations.
(j) The Company will file with the New York Stock
Exchange all documents and notices required by the New York Stock Exchange of
companies that have securities listed on such exchange and will use every
reasonable effort to maintain the listing of the Securities on the New York
Stock Exchange.
(k) During a period of 120 days from the Representation
Date, the Company will not, without the Representatives' prior written consent,
directly or indirectly, offer to sell, sell, grant any option for the sale of,
or otherwise dispose of any shares of Common Stock or securities convertible
into or exchangeable or exercisable for, or any rights to purchase or acquire,
any shares of Common Stock, except for subsequent issuances pursuant to the
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<PAGE> 12
Company's Direct Stock Purchase and Dividend Reinvestment Plan, the Company's
employee benefit plans or pursuant to executive compensation arrangements or
upon conversion of convertible securities outstanding on the Representation
Date.
(l) For a period of five years after the Closing Time,
the Company will furnish to the Representatives and to each Underwriter that so
requests copies of all annual reports, quarterly reports and current reports
filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar
forms as may be designated by the Commission, and such other documents, reports
and information relating to the Company's business or finance as shall be
furnished by the Company to its stockholders generally.
(m) The Company has complied, and will comply, with all
provisions of Florida H.B. 1771, as codified in section 215.075, Florida
Statutes, 1987, as amended, and all regulations promulgated thereunder relating
to issuers or their affiliates doing business with the government of Cuba or
with any person or affiliates located in Cuba.
(n) The Company will use every reasonable effort to
effect the listing of the Securities on the New York Stock Exchange on the date
of the Pricing Agreement.
SECTION 4. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement, including
(i) the printing and filing of the Registration Statement as originally filed
and of each amendment thereto, (ii) the preparation and copying of this
Agreement and the Pricing Agreement (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
the payment of any stock transfer taxes, stamp duties and similar taxes, if
any, payable upon the issuance of any of the Securities, the sale of the
Securities to the Underwriters, (iv) the fees and disbursements of the
Company's counsel and accountants, (v) the expenses in connection with the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of the Blue Sky Survey and any
supplement thereto, (vi) the printing and delivery to the Underwriters of
copies of the Registration Statement as originally filed and of the amendment
thereto, of the preliminary prospectus, and of the Prospectus and any
amendments or supplements thereto, (vii) the printing and delivery to the
Underwriters of copies of the Blue Sky Survey, (viii) the fees and expenses
incurred in connection with any filing required to be made by the Underwriters
with the National Association of Securities Dealers, Inc., (ix) the fees and
expenses incurred in connection with listing the Securities on the New York
Stock Exchange, and (x) the fees and expenses of the transfer agent.
If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 5, Section 9(a)(i) or Section 11, the Company
shall reimburse the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the
Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations
of the Underwriters hereunder are subject to the accuracy of the
representations and warranties of the
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<PAGE> 13
Company herein contained, to the performance by the Company of its obligations
hereunder, and to the following further conditions:
(a) The Registration Statement, including any Rule 462(b)
Registration Statement, has become effective under the 1933 Act and no stop
order suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or threatened
by the Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Underwriters. A prospectus containing information relating to
the Common Stock, the specific method of distribution and similar matters
shall have been filed with the Commission in accordance with Rule 424(b)(1),
(2), (3), (4) or (5), as applicable (or any required post-effective amendment
providing such information shall have been filed and declared effective in
accordance with the requirements of Rule 430A).
(b) At Closing Time, the Representatives shall have
received:
(1) The favorable opinion, dated as of Closing Time, of
Hubert Gentry, Jr., Senior Vice President and General Counsel for the Company,
in form and substance satisfactory to counsel for the Underwriters, to the
effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
(ii) The Company has full corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus, and to enter into and perform its
obligations under this Agreement and the Pricing Agreement.
(iii) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a
material adverse effect on the Company.
(iv) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus under
"Capitalization" (except for issuances, if any, subsequent to the date
of the Prospectus pursuant to employee benefit plans or executive
compensation arrangements or the exercise of convertible securities
referred to in the Prospectus), and the shares of issued and
outstanding Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable.
(v) The Securities to be purchased by the Underwriters
from the Company have been duly authorized for issuance and sale to
the Underwriters pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement against payment of
the consideration set forth in the
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<PAGE> 14
Pricing Agreement, such shares of Common Stock will be validly issued
and fully paid and non- assessable.
(vi) The issuance of the Securities is not subject to
preemptive rights or other similar rights arising by operation of law,
under the charter or by-laws of the Company or, to the best knowledge
of such counsel, otherwise.
(vii) Each of Mississippi River Transmission Corporation,
NorAm Gas Transmission Company, NorAm Energy Services, Inc., NorAm
Field Services Corp. and NorAm Energy Management, Inc. (the
"Significant Subsidiaries") is duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority
to own, lease and operate its properties and to conduct its business
as described in the Registration Statement, and is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or lease of property or the conduct of business, except
where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on the condition, financial
or otherwise, or the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise; all
of the issued and outstanding capital stock of each of the Significant
Subsidiaries has been duly authorized and validly issued, are fully
paid and nonassessable and (except as otherwise stated or reflected in
the Registration Statement) are owned by the Company, directly or
indirectly, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
(viii) This Agreement and the Pricing Agreement each have
been duly authorized, executed and delivered by the Company.
(ix) The Registration Statement has become effective under
the 1933 Act; any required filing of the Prospectus or any supplement
thereto pursuant to Rule 424(b) of the 1933 Act Regulations has been
made in the manner and within the time period required by such Rule
424(b); and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission.
(x) At the time the Registration Statement became
effective and at the Representation Date, the Registration Statement
(other than the financial statements and supporting schedules included
therein, as to which no opinion need be rendered) complied as to form
in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations.
(xi) The Common Stock conforms as to legal matters in all
material respects to the description thereof contained in the
Prospectus, and the form of
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<PAGE> 15
certificate used to evidence the Common Stock is in due and proper
form and complies with all applicable statutory requirements.
(xii) There is no action, suit or proceeding before or by
any court or government agency or body, domestic or foreign, now
pending or, to the knowledge of such counsel, threatened against or
affecting the Company or any of its subsidiaries, that is required to
be disclosed in the Registration Statement, other than those disclosed
therein (or in a document incorporated by reference or deemed to be
incorporated by reference therein).
(xiii) There are no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or the
documents incorporated by reference therein or to be filed as exhibits
thereto other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto; the descriptions
thereof or references thereto are correct; and no default exists in
the due performance or observance of any material obligation,
agreement, covenant or condition contained in any material contract,
indenture, mortgage, loan agreement, note, lease or other instrument
so described, referred to, or filed or incorporated by reference.
(xiv) No authorization, approval or consent of, or filing
with or order of, any court or governmental authority or agency is
necessary or required in connection with the sale of the Securities to
the Underwriters hereunder, except such as may be required under the
1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act
Regulations or state securities law; and the execution, delivery and
performance of this Agreement and the Pricing Agreement and the
consummation of the transactions contemplated herein and therein and
compliance by the Company with its obligations hereunder and
thereunder will not conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which the
Company or any the Significant Subsidiaries is a party or by which it
or any of them may be bound, or to which any of the property or assets
of the Company or any of Significant Subsidiaries is subject, nor will
such action result in any violation of the provisions of the charter
or by-laws of the Company, or any applicable law, administrative
regulation or administrative or court decree.
(xv) There are no persons with registration or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under
the 1933 Act.
(xvi) As of the date they were filed with the Commission,
each document filed pursuant to the 1934 Act (other than the financial
statements and supporting schedules included therein, as to which no
opinion need be rendered) and incorporated or deemed to be
incorporated by reference in the Registration
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<PAGE> 16
Statement complied as to form in all material respects with the 1934
Act and the 1934 Act Regulations.
(xvii) The Company is not a "holding company" or a
"subsidiary company" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(xviii) The Company has franchises or permits for gas
operations in all communities now served, except as set forth in the
Registration Statement and except where the failure to be so
authorized by franchise or permit does not, in the opinion of such
counsel, materially affect the right of the Company to the use of its
properties or the conduct of its business; and the franchises of the
Company referred to in the Registration Statement are good and valid
except for and subject only to such defects as may be set forth or
referred to in the Registration Statement, and such others as do not,
in the opinion of such counsel, materially affect the right of the
Company to the use of its properties or the conduct of its business,
and said franchises impose no materially burdensome restrictions.
(2) The favorable opinion, dated as of Closing Time, of
Coudert Brothers, counsel for the Underwriters, with respect to the matters set
forth in (i), (v),(vi) (solely as to preemptive rights arising by operation of
law or under the charter or by-laws of the Company), (viii) through (x), and
(xi) (solely as to the Common Stock conforming as to legal matters to the
description thereof contained in the Prospectus). In rendering such opinion,
Coudert Brothers may rely as to all matters relating to state regulatory
approvals upon the opinion of Hubert Gentry, Jr.
(3) In giving their opinions required by subsections
(b)(1) and (b)(2), respectively, of this Section, Hubert Gentry, Jr. and
Coudert Brothers shall each additionally state that nothing has come to their
attention that would lead them to believe that the Registration Statement
(except for financial statements and schedules and other financial or
statistical data included or incorporated by reference therein, as to which
each such counsel need make no statement), at the time it became effective or
at the Representation Date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus (except for
financial statements and schedules and other financial or statistical data
included or incorporated by reference therein, as to which each such counsel
need make no statement), at the Representation Date (unless the term
"Prospectus" refers to a prospectus which has been provided to the Underwriters
by the Company for use in connection with the offering of the Securities which
differs from the Prospectus on file at the Commission at the Representation
Date, in which case at the time it is first provided to the Underwriters for
such use) or at Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(c) At Closing Time, there shall not have been, since the
date hereof or since the respective dates as of which information is given in
the Registration Statement and the
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<PAGE> 17
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representatives shall have
received a certificate of the President or a Vice President of the Company and
of the chief financial or chief accounting officer of the Company, dated as of
Closing Time, to the effect that (1) there has been no such material adverse
change, (2) the representations and warranties in Section l(a) hereof are true
and correct with the same force and effect as though expressly made at and as
of Closing Time, (3) the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to Closing
Time, and (4) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or threatened by the Commission. As used in this Section 5(c), the
term "Prospectus" means the Prospectus in the form first used to confirm sales
of the Securities.
(d) At the time of the execution of this Agreement, the
Representatives shall have received from Coopers & Lybrand, a letter, dated
such date, in form and substance satisfactory to the Representatives, to the
effect that:
(i) they are independent public accountants with respect
to the Company and its subsidiaries within the meaning of the 1933 Act
and the 1933 Act Regulations;
(ii) in their opinion the financial statements and
supporting schedules incorporated by reference in the Registration
Statement and covered by their opinions therein comply as to form in
all material respects with the applicable accounting requirements of
the 1933 Act and the 1933 Act Regulations;
(iii) on the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of a
reading of the latest available unaudited interim financial statements
of the Company, a reading of the minutes of all meetings of the
stockholders and directors of the Company and its subsidiaries and
each committee of the Company's and the subsidiaries' Board of
Directors since December 31, 1995, inquiries of certain officials of
the Company and its subsidiaries responsible for financial and
accounting matters, and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) at a specified date not more than five days
prior to the date of this Agreement, there has been any change
in the capital stock of the Company or any increase in
short-term indebtedness or long-term indebtedness of the
Company and consolidated subsidiaries or, any decrease in
consolidated net assets or increase in consolidated net
current liabilities, as compared with the amounts shown in the
latest balance sheet included in the Registration Statement,
except in each case for
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<PAGE> 18
changes, decreases or increases that the Registration Statement
discloses have occurred or may occur;
(B) for the period from April 1, 1996, to a
specified date not more than five days prior to the date of
this Agreement, there were any decreases, as compared with the
corresponding period in the preceding year in consolidated
operating revenues, net operating income, net income, or net
income per share of the Company, except in all instances for
changes, increases or decreases which the Registration
Statement discloses have occurred or may occur; and
(iv) based on the procedures set forth in Clause (iii)
above and a reading of the Selected Consolidated Financial Data
included in the Registration Statement, nothing has come to their
attention that gives them reason to believe that the Selected
Consolidated Financial Data included in the Registration Statement do
not comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act Regulations
or that the information set forth therein is not fairly stated in
relation to the financial statements from which it was derived;
(v) in addition to the procedures referred to in clause
(iii) above they have performed other specified procedures, not
constituting an audit, with respect to certain amounts, percentages,
numerical data and financial information appearing in the Registration
Statement and the Prospectus, which have previously been specified by
the Representatives and which shall be specified in such letter, and
have compared certain of such items with, and have found such items to
be in agreement with, the accounting and financial records of the
Company and its consolidated subsidiaries.
(e) At Closing Time, the Representatives shall have
received from Coopers & Lybrand, a letter, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (d) of this Section, except that the specified date referred to
shall be a date not more than three business days prior to Closing Time.
(f) In the event the Underwriters exercise the option
granted in Section 2(b) hereof to purchase all or any portion of the Option
Securities, the representations and warranties of the Company contained herein
and the statements in any certificates furnished by the Company hereunder shall
be true and correct as of the Date of Delivery, and the Representatives shall
have received:
(1) A certificate, dated the Date of Delivery, of the
President or a Vice President of the Company and of the chief financial or
chief accounting officer of the Company confirming that the certificate
delivered at Closing Time pursuant to Section 5(c) remains true as of the Date
of Delivery.
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<PAGE> 19
(2) The favorable opinion of Hubert Gentry, Jr., Senior
Vice President and General Counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, dated the Date of Delivery,
relating to the Option Securities and otherwise to the same effect as the
opinion required by Section 5(b)(l).
(3) The favorable opinion of Coudert Brothers, counsel
for the Underwriters, dated the Date of Delivery, relating to the Option
Securities and otherwise to the same effect as the opinion required by Section
5(b)(2).
(4) A letter from Coopers & Lybrand, in form and
substance satisfactory to the Underwriters and dated the Date of Delivery,
substantially the same in scope and substance as the letter furnished to the
Representatives pursuant to Section 5(e) except that the "specified date" in
the letter furnished pursuant to this Section 5(f)(4) shall be a date not more
than five days prior to the Date of Delivery.
(g) At Closing Time and at the Date of Delivery, if any,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as contemplated herein and related
proceedings, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the agreements or conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Securities as herein or therein contemplated shall
be satisfactory in form and substance to the Representatives and counsel for
the Underwriters.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representatives by notice to the Company at any time at or
prior to Closing Time or the applicable Date of Delivery, and such termination
shall be without liability of any party to any other party except as provided
in Section 4 and, provided further that Sections 6 and 7 hereof shall survive
such termination.
SECTION 6. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act to the extent and
in the manner set forth below:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
- 19 -
<PAGE> 20
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 6(d) below), any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Representatives), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any
such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(b) Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, each of its officers
who signed the Registration Statement, and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act against any and
all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendment thereto) or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through the Representatives expressly for
use in the Registration Statement (or any amendment thereto), or such
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) Each indemnified party shall give notice as promptly
as reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which
it may have otherwise than on account of this indemnity agreement. In the case
of parties indemnified pursuant to Section 6(a) above, counsel to the
indemnified parties shall be selected by Merrill Lynch, and, in the case of
parties indemnified pursuant to Section 6(b) above, counsel to the indemnified
parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel
- 20 -
<PAGE> 21
to the indemnified party. In no event shall the indemnifying parties be liable
for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company on the one hand and
of the Underwriters on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters,
in each case as set forth on the cover of the Prospectus.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 7.
- 21 -
<PAGE> 22
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of officers
of the Company submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement. (a) The Representatives may
terminate this Agreement, by notice to the Company, at any time at or prior to
Closing Time (i) if there has been, since the date of this Agreement or since
the respective dates as of which information is given in the Registration
Statement, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or
internationally or any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representatives, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, (iii) if trading in any securities of the
Company has been suspended or limited by the Commission or the New York Stock
Exchange
- 22 -
<PAGE> 23
(the "NYSE"), or if trading generally on either the American Stock Exchange or
the NYSE or in the Nasdaq National Market has been suspended or limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc.
or any other governmental authority, or (iv) if a banking moratorium has been
declared by Federal, New York, Arkansas, Louisiana or Texas authorities.
(b) If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that
Sections 1, 6 and 7 hereof shall survive such termination and remain in full
force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or
more of the Underwriters shall fail at Closing Time to purchase the Initial
Securities which it or they are obligated to purchase under this Agreement and
the Pricing Agreement (the "Defaulted Securities"), the Representatives shall
have the right, within 24 hours thereafter, to make arrangements for one or
more of the non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth. If, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed
10% of the Initial Securities, the non- defaulting Underwriters shall be
obligated, severally and not jointly, to purchase the full amount thereof in
the proportions that their respective underwriting obligations hereunder bear
to the underwriting obligations of all non- defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of
the Initial Securities, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Company shall
have the right to postpone Closing Time for a period not exceeding seven days
in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements.
The Underwriters shall also have the right to amend Schedule A hereto
by making such substitutions or corrections as indicated in the Pricing
Agreement.
SECTION 11. Default by the Company. If the Company shall fail at the
Closing Time or at the Date of Delivery to sell and deliver the number of
Securities that it is obligated to sell hereunder, then this Agreement shall
terminate without any liability on the part of any non-defaulting party except
to the extent provided in Section 4 and except that the provisions of Sections
6 and 7 shall remain in effect. No action taken pursuant to this Section shall
relieve the Company from liability, if any, in respect of its default.
- 23 -
<PAGE> 24
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives c/o Merrill Lynch & Co.,
Merrill Lynch, Pierce Fenner & Smith Incorporated, One Houston Center, 1221
McKinney, Suite 2700, Houston, Texas 77010, attention: Charles M. Davis, Jr.;
and notices to the Company shall be directed to it at 1600 Smith Street, 11th
Floor, Houston, Texas 77002, attention: Treasurer.
SECTION 13. Parties. This Agreement and the Pricing Agreement shall
each inure to the benefit of and be binding upon the Underwriters and the
Company and their respective successors. Nothing expressed or mentioned in
this Agreement or the Pricing Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters and the
Company and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
in respect of this Agreement or the Pricing Agreement or any provision herein
or therein contained. This Agreement and the Pricing Agreement and all
conditions and provisions hereof and thereof are intended to be for the sole
and exclusive benefit of the Underwriters and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm
or corporation. No purchaser of Securities from any Underwriter shall be
deemed to be a successor by reason merely of such purchase.
SECTION 14. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Specified times of day refer to New York City time.
- 24 -
<PAGE> 25
If the foregoing is in accordance with your understanding of our
agreement,, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its
terms.
Very truly yours,
NORAM ENERGY CORP.
By:
-----------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED
as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
By: MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By:
---------------------------------------------
Authorized Signatory
For themselves and as Representatives of the
other Underwriters named in Schedule A hereto.
- 25 -
<PAGE> 26
SCHEDULE A
<TABLE>
<CAPTION>
Number of Initial
Securities
Name of Underwriter to be Purchased
- ------------------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated . . . . . . . . . . . . . . . . 1,900,000
Donaldson, Lufkin & Jenrette Securities Corporation . . . . . . . . . . . . . . . . 1,900,000
Dean Witter Reynolds Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,900,000
Bear, Stearns & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
CS First Boston Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Dillon, Read & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
A.G. Edwards & Sons, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Howard, Weil, Labouisse, Friedrichs Incorporated . . . . . . . . . . . . . . . . . 200,000
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
J.P. Morgan Securities Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Nesbitt Burns Securities Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Oppenheimer & Co., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Prudential Securities Incorporated . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Solomon Brothers Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Smith Barney Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
UBS Securities LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
CIBC Wood Gundy Securities Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
The Chicago Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
D.A. Davidson & Co. Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Gerard Klauer Mattison & Co. LLC . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Jefferies & Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
McDonald & Company Securities, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Petrie Parkman & Co., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Piper Jaffray Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Principal Financial Securities, Inc. . . . . . . . . . . . . . . . . . . . . . . . 100,000
Rauscher Pierce Refsnes, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Rodman & Renshaw, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Sterne, Agee & Leach, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000
==========
</TABLE>
Sch A-1
<PAGE> 27
Exhibit A
10,000,000 Shares
NORAM ENERGY CORP.
Common Stock
(Par Value $.625 Per Share)
PRICING AGREEMENT
June __, 1996
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
Dean Witter Reynolds Inc.
as Representatives of the several Underwriters
named in the within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Dear Sirs:
Reference is made to the Purchase Agreement, dated June __, 1996 (the
"Purchase Agreement"), between NorAm Energy Corp., (the "Company") and the
several Underwriters named in Schedule A thereto or hereto (the
"Underwriters"), for whom Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation and
Dean Witter Reynolds Inc. are acting as representatives (the
"Representatives"). The Purchase Agreement provides for the purchase by the
Underwriters from the Company, subject to the terms and conditions set forth
therein, of an aggregate of 10,000,000 shares (the "Initial Securities"), of
the Company's Common Stock, par value $.625 per share. This Agreement is the
Pricing Agreement referred to in the Purchase Agreement.
Pursuant to Section 2 of the Purchase Agreement, the Company agrees
with the Representatives as follows:
1. The initial public offering price per share for the Initial
Securities shall be $_________________.
1
<PAGE> 28
2 . The purchase price per share for the Initial Securities to be
paid by the several Underwriters shall be $_______________ representing an
amount equal to the initial public offering price set forth above, less $____
________ per share.
The Company represents and warrants to each of the Underwriters that
the representations and warranties of the Company set forth in Section 1(a) of
the Purchase Agreement are accurate as though made at and as of the date
hereof.
This Agreement shall be governed by the laws of the State of New York.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its
terms.
Very truly yours,
NORAM ENERGY CORP.
By:
-----------------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
By: MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By:
--------------------------------------------
Authorized Signatory
For themselves and as Representatives of the
other Underwriters named in Schedule A to the
Purchase Agreement.
2
<PAGE> 1
EXHIBIT 4.01
====================================
FIRST SUPPLEMENTAL INDENTURE
between
NorAm Energy Corp.
and
The Bank of New York, as Trustee
Dated as of June __, 1996
=====================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.1. Definition of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE CONVERTIBLE DEBENTURES
SECTION 2.1. Designation and Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.2. Maturity and Option to Extend Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.3. Form and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.4. Global Debenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.5. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
REDEMPTION OF THE CONVERTIBLE DEBENTURES
SECTION 3.1. Tax Event Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.2. Optional Redemption by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.3. No Sinking Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.2. Notice of Extension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.3. Limitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V
EXPENSES
SECTION 5.1. Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.2. Payment Upon Resignation or Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI
COVENANT TO LIST ON EXCHANGE
SECTION 6.1. Listing on an Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
ARTICLE VII
CONVERSION OF CONVERTIBLE DEBENTURES
<S> <C> <C>
SECTION 7.1. Conversion Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.2. Conversion Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7.3. Conversion Price Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 7.4. Reclassification, Consolidation, Merger or Sale of Assets . . . . . . . . . . . . . . . . . 22
SECTION 7.5. Notice of Adjustments of Conversion Price. 23
SECTION 7.6. Prior Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7.7. Dividend or Interest Reinvestment Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 7.8. Certain Additional Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 7.9. Trustee Not Responsible for Determining Conversion Price or Adjustments . . . . . . . . . . 26
ARTICLE VIII
FORM OF CONVERTIBLE DEBENTURE
SECTION 8.1. Form of Convertible Debenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IX
ORIGINAL ISSUE OF CONVERTIBLE DEBENTURES
SECTION 9.1. Original Issue of Convertible Debentures . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Ratification of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 10.2. Trustee Not Responsible for Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 10.3. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 10.4. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 10.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
ii
<PAGE> 4
FIRST SUPPLEMENTAL INDENTURE, dated as of June __, 1996 (the
"First Supplemental Indenture"), between NorAm Energy Corp., a Delaware
corporation (the "Company"), and The Bank of New York, as trustee (the
"Trustee") under the Indenture dated as of June __, 1996 between the Company
and the Trustee (the "Indenture").
WHEREAS, the Company executed and delivered the Indenture to
the Trustee to provide for the future issuance of the Company's unsecured
junior subordinated debt securities to be issued from time to time in one or
more series as may be determined by the Company under the Indenture, in an
unlimited aggregate principal amount which may be authenticated and delivered
as provided in the Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Company
desires to provide for the establishment of a new series of its Securities to
be known as its "___% Convertible Junior Subordinated Debentures" which shall
mature on June __, 2026 (unless the Scheduled Maturity Date is extended at the
election of the Company to a date not later than June __, 2045 upon
satisfaction by the Company of the requirements and conditions described
herein), the form and substance of such Convertible Debentures and the terms,
provisions and conditions thereof to be set forth as provided in the Indenture
and this First Supplemental Indenture;
WHEREAS, NorAm Financing I, a Delaware statutory business
trust ( the "Trust"), has offered to the public $150,000,000 aggregate
liquidation amount of its ___% Convertible Trust Originated Preferred
Securities (the "Convertible Preferred Securities"), representing undivided
beneficial interests in the assets of the Trust and proposes to invest the
proceeds from such offering, together with the proceeds of the issuance and
sale by the Trust to the Company of $___ aggregate liquidation amount of its
___% Convertible Trust Originated Common Securities, in $____ million aggregate
principal amount of the Convertible Debentures; and
WHEREAS, the Company has requested that the Trustee execute
and deliver this First Supplemental Indenture and all requirements necessary to
make this First Supplemental Indenture a valid instrument in accordance with
its terms, and to make the Convertible Debentures, when executed by the Company
and authen-
<PAGE> 5
ticated and delivered by the Trustee, the valid obligations of the Company,
have been performed, and the execution and delivery of this First Supplemental
Indenture has been duly authorized in all respects:
NOW THEREFORE, in consideration of the purchase and acceptance
of the Convertible Debentures by the Holders thereof, and for the purpose of
setting forth, as provided in the Indenture, the form and substance of the
Convertible Debentures and the terms, provisions and conditions thereof, the
Company covenants and agrees with the Trustee as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definition of Terms.
Unless the context otherwise requires:
(a) a term defined in the Indenture has the same meaning
when used in this First Supplemental Indenture;
(b) a term defined anywhere in this First Supplemental
Indenture has the same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section
or Article of this First Supplemental Indenture;
(e) headings are for convenience of reference only and do
not affect interpretation;
(f) the following terms have the meanings given to them
in the Declaration: (i) Business Day; (ii) Clearing Agency; (iii) Delaware
Trustee; (iv) Depositary; (v) Dissolution Tax Opinion; (vi) No-Recognition
Opinion; (vii) Convertible Preferred Security Certificate; (viii) Pricing
Agreement; (ix) Property Trustee; (x) Regular Trustees; (xi) Tax Event; and
(xii) Underwriting Agreement;
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(g) the following terms have the meanings given to them
in this Section 1.1(g):
"Additional Interest" shall have the meaning set forth in
Section 2.5.
"Compounded Interest" shall have the meaning set forth in
Section 4.1.
"Convertible Debentures" shall have the meaning set forth in
Section 2.1.
"Convertible Preferred Securities" has the meaning set forth in
the recitals to this First Supplemental Indenture.
"Current Market Price" means for any day the reported last
sale price of NorAm Common Stock, regular way, on such day, or, if no sale
takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the NYSE
Composite Tape, or, if the NorAm Common Stock is not listed or admitted to
trading on the NYSE, on the principal national securities exchange on which the
NorAm Common Stock is listed or admitted to trading, or if the NorAm Common
Stock is not listed or admitted to trading on a national securities exchange,
on the National Market System of the National Association of Securities
Dealers, Inc., or, if the NorAm Common Stock is not quoted or admitted to
trading on such quotation system, on the principal quotation system on which
the NorAm Common Stock is listed or admitted to trading or quoted, or, if not
listed or admitted to trading or quoted on any national securities exchange or
quotation system, the average of the closing bid and asked prices of the NorAm
Common Stock in the over-the-counter market on the day in question as reported
by the National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or, if not so available in such manner, as furnished by any
New York Stock Exchange member firm selected from time to time by the Board of
Directors of NorAm for that purpose or, if not so available in such manner, as
otherwise determined in good faith by such Board of Directors.
"Declaration" means the Amended and Restated Declaration of
Trust of NorAm Financing I, a Delaware statutory business trust, dated as of
June __, 1996.
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<PAGE> 7
"Deferred Interest" shall have the meaning set forth in
Section 4.1.
"Dissolution Event" means that, as a result of the occurrence
and continuation of a Tax Event, the Trust is to be dissolved in accordance
with the Declaration, and the Convertible Debentures held by the Property
Trustee are to be distributed to the holders of the Trust Securities issued by
the Trust pro rata in accordance with the Declaration.
"Extended Interest Payment Period" shall have the meaning set
forth in Section 4.1.
"Extended Maturity Date" means, if the Company elects to
extend the Maturity Date in accordance with Section 2.2(b), the date selected
by the Company which is after the Scheduled Maturity Date but before June __,
2045.
"Global Debenture" shall have the meaning set forth in Section
2.4.
"Maturity Date" means the date on which the Convertible
Debentures mature and on which the principal shall be due and payable together
with all accrued and unpaid interest thereon including Compounded Interest and
Additional Interest, if any.
"Non Book-Entry Convertible Preferred Securities" shall have
the meaning set forth in Section 2.4.
"NorAm Common Stock" shall have the meaning set forth in the
Indenture.
"Optional Redemption Price" shall have the meaning set forth
in Section 3.2.
"Scheduled Maturity Date" means June __, 2026.
"Senior Indebtedness" means, with respect to the Company, (i)
the principal, premium, if any, and interest in respect of (A) indebtedness of
such obligor for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor,
including, without limitation, in the case of the Company, all obligations
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<PAGE> 8
under the indenture, dated as of March 7, 1987, between the Company and The
Chase Manhattan Bank (National Association), as trustee; (ii) all capital lease
obligations of such obligor; (iii) all obligations of such obligor issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of such obligor and all obligations of such obligor under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations of such obligor for the
reimbursement on any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction; (v) all obligations of the type
referred to in clauses (i) through (iv) of other Persons for the payment of
which such obligor is responsible or liable as obligor, guarantor or otherwise;
and (vi) all obligations of the type referred to in clauses (i) through (v) of
other Persons secured by any lien on any property or asset of such obligor
(whether or not such obligation is assumed by such obligor), except for (1) any
such indebtedness that is by its terms subordinated to or pari passu with the
Convertible Debentures, and (2) any indebtedness between or among the Company
and its Affiliates, including all other debt securities and guarantees in
respect of those debt securities, issued to (y) any other Noram Capital
Financing Trust and (z) any other trust, or a trustee of such trust,
partnership or other entity affiliated with the Company that is a financing
vehicle of the Company (a "Financing Entity") in connection with the issuance
by such Financing Entity of Convertible Preferred Securities or other
securities similar to the Convertible Preferred Securities.
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE CONVERTIBLE DEBENTURES
SECTION 2.1. Designation and Principal Amount.
There is hereby authorized a series of Securities designated
the "___% Convertible Junior Subordinated Debentures" (the "Convertible
Debentures") which shall mature on June __, 2026 (unless the Scheduled Maturity
Date is extended at the election of the Company to a date not later than June
__, 2045 upon satisfaction by the Company of the requirements and conditions
described herein), limited in aggregate principal amount to $150,000,000, which
amount shall be as set forth in any written
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<PAGE> 9
order of the Company for the authentication and delivery of Convertible
Debentures pursuant to Section 2.4 of the Indenture.
SECTION 2.2. Maturity and Option to Extend Maturity Date.
(a) The Maturity Date will be either (i) the Scheduled
Maturity Date or (ii) if the Company elects to extend the Maturity Date beyond
the Scheduled Maturity Date in accordance with Section 2.2(b), the Extended
Maturity Date.
(b) The Company may, within 180 days prior to the Scheduled
Maturity Date, elect to extend such maturity date no more than one time, for up
to an additional 19 years from the Scheduled Maturity Date, provided that (a)
the Company is not in bankruptcy or otherwise insolvent, (b) the Company is not
in default on the Convertible Debentures, (c) the Company has made timely
payments on the Convertible Debentures for the immediately preceding six
quarters without deferrals, (d) the Trust is not in arrears on payments of
distributions on the Convertible Preferred Securities, and (e) the Convertible
Debentures are rated in one of the four highest rating categories by either
Standard & Poor's Corporation, Moody's Investors Service, Inc., Fitch Investor
Services, Inc., Duff & Phelps Credit Rating Company or any other nationally
recognized statistical rating organization.
(c) If the Company elects to extend the Maturity Date in
accordance with Section 2.2(b), the Company shall give written notice to
registered holders of the Convertible Debentures, the Property Trustee and the
Trust of the extension of the Maturity Date and the Extended Maturity Date at
least 90 days before the Scheduled Maturity Date.
SECTION 2.3. Form and Payment.
Except as provided in Section 2.4, the Convertible Debentures
shall be issued in fully registered certificated form without interest coupons.
Principal and interest on the Convertible Debentures issued in certificated
form will be payable, the transfer of such Convertible Debentures will be
registrable and such Convertible Debentures will be exchangeable for
Convertible Debentures bearing identical terms and provisions at the office or
agency of the Trustee; provided, however, that payment of interest may be made
at the option of the Company by check
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<PAGE> 10
mailed to the Holder at such address as shall appear in the Security Register.
Notwithstanding the foregoing, so long as the Holder of any Convertible
Debentures is the Institutional Trustee, the payment of the principal of and
interest (including Compounded Interest and Additional Interest, if any) on
such Convertible Debentures held by the Institutional Trustee will be made at
such place and to such account as may be designated by the Institutional
Trustee.
SECTION 2.4. Global Debenture.
(a) In connection with a Dissolution Event,
(i) the Convertible Debentures in certificated
form may be presented to the Trustee by the Institutional Trustee in
exchange for a global Debenture in an aggregate principal amount equal
to the aggregate principal amount of all outstanding Convertible
Debentures (a "Global Debenture"), to be registered in the name of the
Depositary, or its nominee, and delivered by the Trustee to the
Depositary for crediting to the accounts of its participants pursuant
to the instructions of the Regular Trustees. The Company upon any
such presentation shall execute a Global Debenture in such aggregate
principal amount and deliver the same to the Trustee for
authentication and delivery in accordance with the Indenture and this
First Supplemental Indenture. Payments on the Convertible Debentures
issued as a Global Debenture will be made to the Depositary; and
(ii) if any Convertible Preferred Securities are
held in non book-entry certificated form, the Convertible Debentures
in certificated form may be presented to the Trustee by the
Institutional Trustee and any Convertible Preferred Security
Certificate which represents Convertible Preferred Securities other
than Convertible Preferred Securities held by the Clearing Agency or
its nominee ("Non Book-Entry Convertible Preferred Securities") will
be deemed to represent beneficial interests in Convertible Debentures
presented to the Trustee by the Institutional Trustee having an
aggregate principal amount equal to the aggregate liqui- dation amount
of the Non Book-Entry Convertible Preferred Securities until such
Convertible Preferred Security Certificates are presented to the
Security Registrar for transfer
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<PAGE> 11
or reissuance at which time such Convertible Preferred Security
Certificates will be cancelled and a Debenture, registered in the name
of the holder of the Convertible Preferred Security Certificate or the
transferee of the holder of such Convertible Preferred Security
Certificate, as the case may be, with an aggregate principal amount
equal to the aggregate liquidation amount of the Convertible Preferred
Security Certificate cancelled, will be executed by the Company and
delivered to the Trustee for authentication and delivery in accordance
with the Indenture and this First Supplemental Indenture. On issue of
such Convertible Debentures, Convertible Debentures with an equivalent
aggregate principal amount that were presented by the Institutional
Trustee to the Trustee will be deemed to have been cancelled.
(b) A Global Debenture may be transferred, in whole but
not in part, only to another nominee of the Depositary, or to a successor
Depositary selected or approved by the Company or to a nominee of such
successor Depositary.
(c) If at any time the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary or if at any time the
Depositary for such series shall no longer be registered or in good standing
under the Securities Exchange Act of 1934, as amended, or other applicable
statute or regulation, and a successor Depositary for such series is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such condition, as the case may be, the Company will
execute, and, subject to Article Two of the Indenture, the Trustee, upon
written notice from the Company, will authenticate and deliver the Convertible
Debentures in definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Debenture in exchange for such Global Debenture. In
addition, the Company may at any time determine that the Convertible Debentures
shall no longer be represented by a Global Debenture. In such event the
Company will execute, and subject to Section 2.4 of the Indenture, the Trustee,
upon receipt of an Officers Certificate evidencing such determination by the
Company, will authenticate and deliver the Convertible Debentures in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the
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<PAGE> 12
principal amount of the Global Debenture in exchange for such Global Debenture.
Upon the exchange of the Global Debenture for such Convertible Debentures in
definitive registered form without coupons, in authorized denominations, the
Global Debenture shall be cancelled by the Trustee. Such Convertible
Debentures in definitive registered form issued in exchange for the Global
Debenture shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall, in writing, instruct the Trustee.
The Trustee shall deliver such Securities to the Depositary for delivery to the
Persons in whose names such Securities are so registered.
SECTION 2.5. Interest.
(a) Each Convertible Debenture will bear interest at the
rate of ___% per annum (the "Coupon Rate") from the original date of issuance
until the principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the Coupon Rate,
compounded quarterly, payable (subject to the provisions of Article Four)
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year (each, an "Interest Payment Date," commencing on September 30, 1996), to
the Person in whose name such Convertible Debenture or any predecessor
Convertible Debenture is registered, at the close of business on the regular
record date for such interest installment, which, in respect of (i) Convertible
Debentures of which the Institutional Trustee is the Holder and the Convertible
Preferred Securities are in book-entry only form or (ii) a Global Debenture,
shall be the close of business on the Business Day next preceding that Interest
Payment Date. Notwithstanding the foregoing sentence, if (i) the Convertible
Debentures are held by the Institutional Trustee and the Convertible Preferred
Securities are no longer in book-entry only form or (ii) the Convertible
Debentures are not represented by a Global Debenture, the Company may select a
regular record date for such interest installment which shall be any date at
least one Business Day before an Interest Payment Date.
(b) The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months. Except as
provided in the following sentence, the amount
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<PAGE> 13
of interest payable for any period shorter than a full quarterly period for
which interest is computed, will be computed on the basis of the actual number
of days elapsed in such a 30-day period. In the event that any date on which
interest is payable on the Convertible Debentures is not a Business Day, then
payment of interest payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
(c) If, at any time while the Institutional Trustee is
the Holder of any Convertible Debentures, the Trust or the Institutional
Trustee is required to pay any taxes, duties, assessments or governmental
charges of whatever nature (other than withholding taxes) imposed by the United
States, or any other taxing authority, then, in any case, the Company will pay
as additional interest ("Additional Interest") on the Convertible Debentures
held by the Institutional Trustee, such additional amounts as shall be required
so that the net amounts received and retained by the Trust and the
Institutional Trustee after paying such taxes, duties, assessments or other
governmental charges will be equal to the amounts the Trust and the
Institutional Trustee would have received had no such taxes, duties,
assessments or other government charges been imposed.
ARTICLE III
REDEMPTION OF THE CONVERTIBLE DEBENTURES
SECTION 3.1. Tax Event Redemption.
If a Tax Event has occurred and is continuing and:
(a) the Company has received a Redemption Tax Opinion; or
(b) after receiving a Dissolution Tax Opinion, the
Regular Trustees shall have been informed by tax counsel rendering the
Dissolution Tax Opinion that a No-Recognition Opinion cannot be
delivered to the Trust,
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<PAGE> 14
then, notwithstanding Section 3.2(a) but subject to Section 3.2(b),
the Company shall have the right upon not less than 30 days nor more
than 60 days notice to the Holders of the Convertible Debentures to
redeem the Convertible Debentures, in whole or in part, for cash
within 90 days following the occurrence of such Tax Event (the "90-Day
Period") at a redemption price equal to 100% of the principal amount
to be redeemed plus any accrued and unpaid interest thereon to the
date of such redemption (the "Redemption Price"), provided that if at
the time there is available to the Company or the Trust the
opportunity to eliminate, within the 90-Day Period, the Tax Event by
taking some ministerial action ("Ministerial Action"), such as filing
a form or making an election, or pursuing some other similar
reasonable measure which has no adverse effect on the Company, the
Trust or the Holders of the Trust Securities issued by the Trust, the
Company shall pursue such Ministerial Action in lieu of redemption,
and, provided, further, that the Company shall have no right to redeem
the Convertible Debentures while the Trust is pursuing any Ministerial
Action pursuant to its obligations under the Declaration. The
Redemption Price shall be paid prior to 12:00 noon, New York time, on
the date of such redemption or such earlier time as the Company
determines, provided that the Company shall deposit with the Trustee
an amount sufficient to pay the Redemption Price by 10:00 a.m., New
York time, on the date such Redemption Price is to be paid.
SECTION 3.2. Optional Redemption by Company.
(a) Subject to the provisions of Section 3.2(b) and to
the provisions of Article III of the Indenture, except as otherwise may be
specified in this First Supplemental Indenture, the Company shall have the
right to redeem the Convertible Debentures, in whole or in part, from time to
time, (i) on or after June __, 2000, if and only if for 20 trading days within
any period of 30 consecutive trading days, including the last trading day of
such period, the Current Market Price of NorAm Common Stock equals or exceeds
125% of the then applicable conversion price of the Convertible Debentures, or
(ii) at any time in certain circumstances upon the occurrence of a Tax Event,
upon not less than 30 nor more than 60 days notice, at a redemption price equal
to 100% of the principal amount to be redeemed plus any accrued and unpaid
interest, including Additional Interest, if any, to the redemption date (the
"Optional Redemption Price").
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<PAGE> 15
If a partial redemption of the Convertible Preferred Securities resulting from
a partial redemption of the Convertible Debentures would result in the
delisting of the Convertible Preferred Securities, NorAm may only redeem the
Convertible Debentures in whole. Any redemption pursuant to this paragraph
will be made upon not less than 30 days nor more than 60 days notice to the
Holder of the Convertible Debentures, at the Optional Redemption Price. If the
Convertible Debentures are only partially redeemed pursuant to this Section
3.2, the Convertible Debentures will be redeemed pro rata or by lot or by any
other method utilized by the Trustee; provided, that if at the time of
redemption the Convertible Debentures are registered as a Global Debenture, the
Depositary shall determine, in accordance with its procedures, the principal
amount of such Convertible Debentures held by each Holder of Convertible
Debentures to be redeemed. The Optional Redemption Price shall be paid prior
to 12:00 noon, New York time, on the date of such redemption or at such earlier
time as the Company determines provided that the Company shall deposit with the
Trustee an amount sufficient to pay the Optional Redemption Price by 10:00
a.m., New York time, on the date such Optional Redemption Price is to be paid.
(b) If a partial redemption of the Convertible Debentures
would result in the delisting of the Convertible Preferred Securities issued by
the Trust from any national securities exchange or other organization on which
the Convertible Preferred Securities are then listed, the Company shall not be
permitted to effect such partial redemption and may only redeem the Convertible
Debentures in whole.
SECTION 3.3. No Sinking Fund.
The Convertible Debentures are not entitled to the benefit of
any sinking fund.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period.
The Company shall have the right, at any time and from time to
time during the term of the Convertible Debentures, to
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<PAGE> 16
defer payments of interest by extending the interest payment period of such
Convertible Debentures for a period not exceeding 20 consecutive quarters (the
"Extended Interest Payment Period"), during which Extended Interest Payment
Period no interest shall be due and payable; provided that no Extended Interest
Payment Period may extend beyond the Maturity Date. To the extent permitted by
applicable law, interest, the payment of which has been deferred because of the
extension of the interest payment period pursuant to this Section 4.1, will
bear interest thereon at the Coupon Rate compounded quarterly for each quarter
of the Extended Interest Payment Period ("Compounded Interest"). At the end of
the Extended Interest Payment Period, the Company shall pay all interest
accrued and unpaid on the Convertible Deben- tures, including any Additional
Interest and Compounded Interest (to the extent permitted by applicable law)
(together, "Deferred Interest") that shall be payable to the Holders of the
Convertible Debentures in whose names the Convertible Debentures are registered
in the Security Register on the first record date after the end of the Extended
Interest Payment Period; provided, that during any such Extension Period, (a)
the Company shall not declare or pay dividends on, make any distribution with
respect to, or redeem, purchase acquire 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 the
Company of its obligations under any employee benefit plans or the satisfaction
by the Company of its obligations pursuant to any contract or security
requiring the Company to purchase shares of the Company's capital stock, (ii)
as a result of a reclassification of the Company's capital stock or the
exchange or conversion of one class or series of the Company's capital stock
for another class or series of the Company's capital stock, (iii) the payment
of dividends or distributions in shares of its capital stock of the same class
on which such dividends or distributions are being paid, or (iv) the purchase
of fractional interests in shares of the Company's capital stock pursuant to
the conversion or exchange provisions of the Company's 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 issued by the Company that rank pari passu with or junior to
the Convertible Debentures. Prior to the termination of any Extended Interest
Payment Period, the
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<PAGE> 17
Company may further extend such period, provided that such period together with
all such further extensions thereof shall not exceed 20 consecutive quarters,
or extend beyond the maturity date of the Convertible Debentures. Upon the
termination of any Extended Interest Payment Period and upon the payment of all
Deferred Interest then due, the Company may commence a new Extended Interest
Payment Period, subject to the foregoing requirements. No interest shall be
due and payable during an Extended Interest Payment Period, except at the end
thereof, but the Company may prepay at any time all or any portion of the
interest accrued during an Extended Interest Payment Period.
SECTION 4.2. Notice of Extension.
(a) If the Institutional Trustee is the only registered
Holder of the Convertible Debentures at the time the Company selects an
Extended Interest Payment Period, the Company shall give written notice to the
Regular Trustees, the Institutional Trustee and the Trustee of its selection of
such Extended Interest Payment Period one Business Day before the earlier of
(i) the next succeeding date on which Distributions on the Trust Securities
issued by the Trust are payable, or (ii) the date the Trust is required to give
notice of the record date, or the date such Distributions are payable, to the
New York Stock Exchange or other applicable self-regulatory organization or to
holders of the Convertible Preferred Securities issued by the Trust, but in any
event at least one Business Day before such record date.
(b) If the Institutional Trustee is not the only Holder
of the Convertible Debentures at the time the Company selects an Extended
Interest Payment Period, the Company shall give the Holders of the Convertible
Debentures and the Trustee written notice of its selection of such Extended
Interest Payment Period at least 10 Business Days before the earlier of (i) the
next succeeding Interest Payment Date, or (ii) the date the Company is required
to give notice of the record or payment date of such interest payment to the
New York Stock Exchange or other applicable self-regulatory organization or to
Holders of the Convertible Debentures.
(c) The quarter in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 4.2 shall be counted as
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one of the 20 quarters permitted in the maximum Extended Interest Payment
Period permitted under Section 4.1.
SECTION 4.3. Limitation of Transactions.
If (i) there shall have occurred any event that would
constitute an Event of Default, (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, or (iii) the Company shall
have given notice of its election to defer payments of interest on such
securities by extending the interest payment period or 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, acquire or make a liquidation payment with respect to, any of its
capital stock (other than (i) purchases or acquisitions of shares of its common
stock in connection with the satisfaction by the Company of its obligations
under any employee benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security requiring the Company to
purchase shares of its common stock, (ii) as a result of a reclassification of
its capital stock or the exchange or conversion of one class or series of its
capital stock for another class or series of its capital stock, (iii) the
payment of dividends or distributions in shares of its capital stock of the
same class on which such dividends or distributions are being paid, or (iv) the
purchase of fractional interests in shares of its capital stock pursuant to the
conversion or exchange provisions of such capital stock or security being
converted or exchanged) or make any guarantee payment with respect thereto 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 issued by the
Company which rank pari passu with or junior to the Convertible Debentures.
ARTICLE V
EXPENSES
SECTION 5.1. Payment of Expenses.
In connection with the offering, sale and issuance of the
Convertible Debentures to the Institutional Trustee and in connection with the
sale of the Trust Securities by the Trust,
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the Company, in its capacity as borrower with respect to the Convertible
Debentures, shall:
(a) pay all costs and expenses relating to the offering,
sale and issuance of the Convertible Debentures, including commissions to the
underwriters payable pursuant to the Underwriting Agreement and the Pricing
Agreement and compensation of the Trustee under the Indenture in accordance
with the provisions of Section 7.6 of the Indenture;
(b) pay all costs and expenses of the Trust (including,
but not limited to, costs and expenses relating to the organization of the
Trust, the fees and expenses of the Institutional Trustee and the Delaware
Trustee, the costs and expenses relating to the operation of the Trust,
including without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s), transfer
agent(s), duplicating, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the acquisition,
financing, and disposition of Trust assets);
(c) be primarily liable for any indemnification
obligations arising with respect to the Declaration; and
(d) pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust.
Section 5.2. Payment Upon Resignation or Removal.
Upon termination of this First Supplemental Indenture or the
Indenture or the removal or resignation of the Trustee pursuant to this Section
7.10, the Company shall pay to the Trustee all amounts accrued to the date of
such termination, removal or resignation. Upon termination of the Declaration
or the removal or resignation of the Delaware Trustee or the Institutional
Trustee, as the case may be, pursuant to Section 5.6 of the Declaration, the
Company shall pay to the Delaware Trustee or the Institutional Trustee, as the
case may be, all amounts accrued to the date of such termination, removal or
resignation.
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ARTICLE VI
COVENANT TO LIST ON EXCHANGE
SECTION 6.1. Listing on an Exchange.
If the Convertible Debentures are to be issued as a Global
Debenture in connection with the distribution of the Convertible Debentures to
the holders of the Convertible Preferred Securities issued by the Trust upon a
Dissolution Event, the Company will use its best efforts to list such
Convertible Debentures on the New York Stock Exchange, Inc. or on such other
exchange as the Convertible Preferred Securities are then listed.
ARTICLE VII
CONVERSION OF CONVERTIBLE DEBENTURES
SECTION 7.1. Conversion Rights.
Subject to and upon compliance with the provisions of this
Article, the Convertible Debentures are convertible, at the option of the
Holder, at any time on or before redemption as provided below or the close of
business at their Maturity Date, into fully paid and nonassessable shares of
NorAm Common Stock of the Company at an initial conversion rate of _______
shares of Common Stock for each $__ in aggregate principal amount of
Convertible Debentures (equal to a conversion price of $_____ per share of
Common Stock), subject to adjustment as described in this Article Eight. A
Holder of Convertible Debentures may convert any portion of the principal
amount of the Convertible Debentures into that number of fully paid and
nonassessable shares of Common Stock (calculated as to each conversion to the
nearest 1/100th of a share) obtained by dividing the principal amount of the
Convertible Debentures to be converted by such conversion price. In case a
Convertible Debenture or portion thereof is called for redemption, such
conversion right in respect of the Convertible Debenture or portion so called
shall expire at the close of business on the Business Day next preceding the
corresponding Redemption Date, unless the Company defaults in making the
payment due upon redemption.
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SECTION 7.2. Conversion Procedures.
(i) In order to convert all or a portion of the
Convertible Debentures, the Holder thereof shall deliver to the Conversion
Agent an irrevocable Notice of Conversion setting forth the principal amount of
Convertible Debentures to be converted, together with the name or names, if
other than the Holder, in which the shares of Common Stock should be issued
upon conversion and, if such Convertible Debentures are definitive Convertible
Debentures, surrender to the Conversion Agent the Convertible Debentures to be
converted, duly endorsed or assigned to the Company or in blank. In addition,
a holder of Convertible Preferred Securities may exercise its right under the
Declaration to convert such Convertible Preferred Securities into Common Stock
by delivering to the Conversion Agent an irrevocable Notice of Conversion
setting forth the information called for by the preceding sentence and
directing the Conversion Agent (i) to exchange such Convertible Preferred
Security for a portion of the Convertible Debentures held by the Trust (at an
exchange rate of $__ principal amount of Convertible Debentures for each
Convertible Preferred Security) and (ii) to immediately convert such
Convertible Debentures, on behalf of such holder, into Common Stock of the
Company pursuant to this Article Eight and, if such Convertible Preferred
Securities are in definitive form, surrendering such Convertible Preferred
Securities, duly endorsed or assigned to the Company or in blank. So long as
any Convertible Preferred Securities are outstanding, the Trust shall not
convert any Convertible Debentures except pursuant to a Notice of Conversion
delivered to the Conversion Agent by a holder of Convertible Preferred
Securities.
If a Notice of Conversion is delivered on or after the Regular
Record Date and prior to the subsequent Interest Payment Date, the Holder will
be entitled to receive the interest payable on the subsequent Interest Payment
Date on the portion of Convertible Debentures to be converted notwithstanding
the conversion thereof prior to such Interest Payment Date. Except as
otherwise provided in the immediately preceding sentence, in the case of any
Convertible Debenture which is converted, interest whose Maturity Date is after
the date of conversion of such Convertible Debenture shall not be payable, and
the Company shall not make nor be required to make any other payment,
adjustment or allowance with respect to accrued but unpaid interest on the
Convert-
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ible Debentures being converted, which shall be deemed to be paid in full.
Each conversion shall be deemed to have been effected immediately prior to the
close of business on the day on which the Notice of Conversion was received
(the "Conversion Date") by the Conversion Agent from the Holder or from a
holder of the Convertible Preferred Securities effecting a conversion thereof
pursuant to its conversion rights under the Declaration, as the case may be.
The Person or Persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such Common Stock as of the Conversion Date. As promptly as practicable on or
after the Conversion Date, the Company shall issue and deliver at the office of
the Conversion Agent, unless otherwise directed by the Holder in the Notice of
Conversion, a certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion, together with the cash payment, if
any, in lieu of any fraction of any share to the Person or Persons entitled to
receive the same. The Conversion Agent shall deliver such certificate or
certificates to such Person or Persons.
(ii) The Company's delivery upon conversion of the fixed
number of shares of Common Stock into which the Convertible Debentures are
convertible (together with the cash payment, if any, in lieu of fractional
shares) shall be deemed to satisfy the Company's obligation to pay the
principal amount at Maturity of the portion of Convertible Debentures so
converted and any unpaid interest (including Compounded Interest and Additional
Interest) accrued on such Convertible Debentures at the time of such
conversion.
(iii) No fractional shares of Common Stock will be issued
as a result of conversion, but in lieu thereof, the Company shall pay to the
Conversion Agent a cash adjustment in an amount equal to the same fraction of
the current market price of such fractional interest on the date on which the
Convertible Debentures or Convertible Preferred Securities, as the case may be,
were duly surrendered to the Conversion Agent for conversion, or, if such day
is not a Trading Day, on the next Trading Day, and the Conversion Agent in turn
will make such payment, if any, to the Holder of the Convertible Debentures or
the holder of the Convertible Preferred Securities so converted.
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(iv) In the event of the conversion of any Convertible
Debenture in part only, a new Convertible Debenture or Convertible Debentures
for the unconverted portion thereof will be issued in the name of the Holder
thereof upon the cancellation thereof in accordance with Section 2.8 of the
Indenture.
(v) In effecting the conversion transactions described in
this Section, the Conversion Agent is acting as agent of the holders of
Convertible Preferred Securities (in the exchange of Convertible Preferred
Securities for Convertible Debentures) and as agent of the Holders of
Convertible Debentures (in the conversion of Convertible Debentures into Common
Stock), as the case may be, directing it to effect such conversion
transactions. The Conversion Agent is hereby authorized (i) to exchange
Convertible Debentures held by the Trust from time to time for Convertible
Preferred Securities in connection with the conversion of such Convertible
Preferred Securities in accordance with this Article Eight and (ii) to convert
all or a portion of the Convertible Debentures into Common Stock and thereupon
to deliver such shares of Common Stock in accordance with the provisions of
this Article Eight and to deliver to the Trust a new Convertible Debenture or
Convertible Debentures for any resulting unconverted principal amount.
SECTION 7.3. Conversion Price Adjustments.
The Conversion Price shall be adjusted from time to time as follows:
(a) In case the Company shall, while any of the
Convertible Debentures are outstanding, (i) pay a dividend or make a
distribution with respect to its Common Stock in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares or (iv) issue by
reclassification of its shares of Common Stock any shares of capital stock of
the Company, the conversion privilege and the Conversion Price for each series
of Convertible Debentures in effect immediately prior to such action shall be
adjusted so that the Holder of any Convertible Debenture thereafter surrendered
for conversion shall be entitled to receive the number of shares of capital
stock of the Company which he would have owned immediately following such
action had such Convertible Debenture been converted immediately
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prior thereto. An adjustment made pursuant to this subsection (a) shall become
effective immediately after the record date in the case of a dividend or other
distribution and shall become effective immediately after the effective date in
case of a subdivision, combination or reclassification (or immediately after
the record date if a record date shall have been established for such event).
If, as a result of an adjustment made pursuant to this subsection (a), the
Holder of any Convertible Debenture thereafter surrendered for conversion shall
become entitled to receive shares of two or more classes or series of capital
stock of the Company, the Board of Directors (whose determination shall be
conclusive and shall be described in a Board Resolution filed with the Trustee)
shall determine the allocation of the adjusted Conversion Price for each series
of Convertible Debentures between or among shares of such classes or series of
capital stock.
(b) In case the Company shall, while any of the
Convertible Debentures are outstanding, issue rights or warrants to all holders
of its Common Stock entitling them (for a period expiring within 45 days after
the record date mentioned below) to subscribe for or purchase shares of Common
Stock at a price per share less than the current market price per share of
Common Stock (as determined pursuant to subsection (f) below) on the record
date mentioned below, the Conversion Price for the Convertible Debentures shall
be adjusted so that the same shall equal the price determined by multiplying
the Conversion Price in effect immediately prior to the date of issuance of
such rights or warrants by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding on the date of issuance of such
rights or warrants plus the number of shares which the aggregate offering price
of the total number of shares so offered for subscription or purchase would
purchase at such current market price, and of which the denominator shall be
the number of shares of Common Stock outstanding on the date of issuance of
such rights or warrants plus the number of additional shares of Common Stock
offered for subscription or purchase. Such adjustment shall become effective
immediately after the record date for the determination of stockholders
entitled to receive such rights or warrants. To the extent that shares of
Common Stock are not so delivered after the expiration of such rights or
warrants, the Conversion Price shall be readjusted to the Conversion Price
which would then be in effect if such date
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fixed for the determination of stockholders entitled to receive such rights or
warrants had not been fixed. For the purposes of this subsection, the number
of shares of Common Stock at any time outstanding shall not include shares held
in the treasury of the Company. The Company shall not issue any rights or
warrants in respect of shares of Common Stock held in the treasury of the
Company. In case any rights or warrants referred to in this subsection in
respect of which an adjustment shall have been made shall expire unexercised
within 45 days after the same shall have been distributed or issued by the
Company, the Conversion Price shall be readjusted at the time of such
expiration to the Conversion Price that would have been in effect if no
adjustment had been made on account of the distribution or issuance of such
expired rights or warrants.
(c) Subject to the last sentence of this subparagraph, in
case the Company shall, by dividend or otherwise, distribute to all holders of
its Common Stock evidences of its indebtedness, shares of any class or series
of capital stock, cash or assets (including securities, but excluding any
rights or warrants referred to in subparagraph (b), any dividend or
distribution paid exclusively in cash and any dividend or distribution referred
to in subparagraph (a) of this Section 7.3), the conversion price shall be
reduced so that the same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the effectiveness of the
conversion price reduction contemplated by this subparagraph (c) by a fraction
of which the numerator shall be the current market price per share (determined
as provided in subparagraph (f)) of the Common Stock on the date fixed for the
payment of such distribution (the "Reference Date") less the fair market value
(as determined in good faith by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors),
on the Reference Date, of the portion of the evidences of indebtedness, shares
of capital stock, cash and assets so distributed applicable to one share of
Common Stock and the denominator shall be such current market price per share
of the Common Stock, such reduction to become effective immediately prior to
the opening of business on the day following the Reference Date. In the event
that such dividend or distribution is not so paid or made, the conversion price
shall again be adjusted to be the conversion price which would then be in
effect if such dividend or distribution had not occurred. If the Board of
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Directors determines the fair market value of any distribution for purposes of
this subparagraph (c) by reference to the actual or when issued trading market
for any securities comprising such distribution, it must in doing so consider
the prices in such market over the same period used in computing the current
market price per share of Common Stock (determined as provided in subparagraph
(f)). For purposes of this subparagraph (c), any dividend or distribution that
includes shares of Common Stock or rights or warrants to subscribe for or
purchase shares of Common Stock shall be deemed instead to be (1) a dividend or
distribution of the evidences of indebtedness, shares of capital stock, cash or
assets other than such shares of Common Stock or such rights or warrants
(making any conversion price reduction required by this subparagraph (c))
immediately followed by (2) a dividend or distribution of such shares of Common
Stock or such rights or warrants (making any further conversion price reduction
required by subparagraph (a) or (b)), except (A) the Reference Date of such
dividend or distribution as defined in this subparagraph shall be substituted
as (a) "the record date in the case of a dividend or other distribution," and
(b) "the record date for the determination of stockholders entitled to receive
such rights or warrants" and (c) "the date fixed for such determination" within
the meaning of subparagraphs (a) and (b) and (B) any shares of Common Stock
included in such dividend or distribution shall not be deemed outstanding for
purposes of computing any adjustment of the conversion price in subparagraph
(a).
(d) In case the Company shall pay or make a dividend or
other distribution on its Common Stock exclusively in cash (excluding all
regular cash dividends if the annualized amount thereof per share of Common
Stock does not exceed 15% of the current market price per share determined as
provided in subparagraph (f)) of the Common Stock on the Trading Day next
preceding the date of declaration of such dividend, the conversion price shall
be reduced so that the same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the effectiveness of the
conversion price reduction contemplated by this subparagraph by a fraction of
which the numerator shall be the current market price per share (determined as
provided in subparagraph (f)) of the Common Stock on the date fixed for the
payment of such distribution less the amount of cash so distributed and not
excluded as provided above applicable to one share of Common Stock and the
denominator shall be such
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current market price per share of the Common Stock, such reduction to become
effective immediately prior to the opening of business on the day following the
date fixed for the payment of such distribution; provided, however, that in the
event the portion of the cash so distributed applicable to one share of Common
Stock is equal to or greater than the current market price per share (as
defined in subparagraph (f)) of the Common Stock on the record date mentioned
above, in lieu of the foregoing adjustment, adequate provision shall be made so
that each Holder of shares of Convertible Debentures shall have the right to
receive upon conversion the amount of cash such Holder would have received had
such Holder converted each of the Convertible Debentures immediately prior to
the record date for the distribution of the cash. In the event that such
dividend or distribution is not so paid or made, the conversion price shall
again be adjusted to be the conversion price which would then be in effect if
such record date had not been fixed.
(e) In case a tender or exchange offer (other than an
odd-lot offer) made by the Company or any Subsidiary of the Company for all or
any portion of the Company's Common Stock shall expire and such tender or
exchange offer shall involve the payment by the Company or such Subsidiary of
consideration per share of Common Stock having a fair market value (as
determined in good faith by the Board of Directors, whose determination shall
be conclusive and described in a resolution of the Board of Directors) at the
last time (the "Expiration Time") tenders or exchanges may be made pursuant to
such tender or exchange offer (as it shall have been amended) that exceeds 110%
of the current market price per share (determined as provided in subparagraph
(f)) of the Common Stock on the Trading Day next succeeding the Expiration
Time, the conversion price shall be reduced so that the same shall equal the
price determined by multiplying the conversion price in effect immediately
prior to the effectiveness of the conversion price reduction contemplated by
this subparagraph (e) by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding (including any tendered or exchanged
shares) at the Expiration Time multiplied by the current market price per share
(determined as provided in subparagraph (f)) of the Common Stock on the Trading
Day next succeeding the Expiration Time and the denominator shall be the sum of
(x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the
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acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares") and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) at the
Expiration Time and the current market price per share (determined as provided
in subparagraph (f)) of the Common Stock on the Trading Day next succeeding the
Expiration Time, such reduction to become effective immediately prior to the
opening of business on the day following the Expiration Time.
(f) For the purpose of any computation under
subparagraphs (b), (c), (d) or (e), the current market price per share of
Common Stock on any date in question shall be deemed to be the average of the
daily Closing Prices for the five consecutive Trading Days selected by the
Company commencing not more than 20 Trading Days before, and ending not later
than, the earlier of the day in question and, if applicable, the day before the
"ex" date with respect to the issuance or distribution requiring such
computation; provided, however, that if another event occurs that would require
an adjustment pursuant to subparagraph (a) through (e), inclusive, the Board of
Directors may make such adjustments to the Closing Prices during such five
Trading Day period as it deems appropriate to effectuate the intent of the
adjustments in this Section 7.3, in which case any such determination by the
Board of Directors shall be set forth in a Board Resolution and shall be
conclusive. For purposes of this paragraph, the term "ex" date, (1) when used
with respect to any issuance or distribution, means the first date on which the
Common Stock trades regular way on the New York Stock Exchange or on such
successor securities exchange as the Common Stock may be listed or in the
relevant market from which the Closing Prices were obtained without the right
to receive such issuance or distribution, and (2) when used with respect to any
tender or exchange offer means the first date on which the Common Stock trades
regular way on such securities exchange or in such market after the Expiration
Time of such offer.
(g) The Company may make such reductions in the
conversion price, in addition to those required by subparagraphs (a) through
(e), as it considers to be advisable to avoid or diminish any income tax to
holders of Common Stock or rights to purchase
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Common Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for income tax purposes. The
Company from time to time may reduce the conversion price by any amount for any
period of time if the period is at least twenty (20) days, the reduction is
irrevocable during the period, and the Board of Directors of the Company shall
have made a determination that such reduction would be in the best interest of
the Company, which determination shall be conclusive. Whenever the conversion
price is reduced pursuant to the preceding sentence, the Company shall mail to
holders of record of the Convertible Debentures a notice of the reduction at
least fifteen (15) days prior to the date the reduced conversion price takes
effect, and such notice shall state the reduced conversion price and the period
it will be in effect.
(h) No adjustment in the conversion price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the conversion price; provided, however, that any adjustments which by reason
of this subparagraph are not required to be made shall be carried forward and
taken into account in determining whether any subsequent adjustment shall be
required.
(i) If any action would require adjustment of the conversion
price pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value to the Holder of the Convertible
Debentures.
SECTION 7.4. Reclassification, Consolidation, Merger or Sale of Assets.
In the event that the Company shall be a party to any
transaction (including without limitation (a) any recapitalization or
reclassification of the Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination of the Common Stock), (b) any consolidation of the
Company with, or merger of the Company into, any other Person, any merger of
another Person into the Company (other than a merger which does not result in a
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company), (c) any sale or transfer of all or substantially
all of the
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assets of the Company or (d) any compulsory share exchange) pursuant to which
the Common Stock is converted into the right to receive other securities, cash
or other property, then lawful provision shall be made as part of the terms of
such transaction whereby the Holder of each Convertible Debenture then
outstanding shall have the right thereafter to convert such Convertible
Debenture only into the kind and amount of securities, cash and other property
receivable upon consummation of such transaction by a holder of the number of
shares of Common Stock of the Company into which such Convertible Debenture
could have been converted immediately prior to such transaction.
The Company or the Person formed by such consolidation or
resulting from such merger or which acquired such assets or which acquires the
Company's shares, as the case may be, shall make provision in its certificate
or articles of incorporation or other constituent document to establish such
right. Such certificate or articles of incorporation or other constituent
document shall provide for adjustments which, for events subsequent to the
effective date of such certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Article Seven. The above provisions shall
similarly apply to successive transactions of the foregoing type.
SECTION 7.5. Notice of Adjustments of Conversion Price.
Whenever the conversion price is adjusted as herein provided:
(i) the Company shall compute the adjusted conversion
price and shall prepare a certificate signed by the Chief Financial Officer or
the Treasurer of the Company setting forth the adjusted conversion price and
showing in reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed with the Trustee and the transfer
agent for the Convertible Preferred Securities and the Convertible Debentures;
and
(ii) a notice stating the conversion price has been
adjusted and setting forth the adjusted conversion price shall as soon as
practicable be mailed by the Company to all record holders of Convertible
Preferred Securities and the Convertible
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Debentures at their last addresses as they appear upon the stock transfer books
of the Company and the Trust.
SECTION 7.6. Prior Notice of Certain Events.
In case:
(a) the Company shall (1) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in shares
of Common Stock or (B) a dividend payable in cash that would not require an
adjustment pursuant to Section 7.3(c) or (d) or (2) authorize a tender or
exchange offer that would require an adjustment pursuant to Section 7.3(e);
(b) the Company shall authorize the granting to all holders
of Common Stock of rights or warrants to subscribe for or purchase any shares
of stock of any class or series or of any other rights or warrants;
(c) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change in par
value, or from par value to no par value, or from no par value to par value),
or of any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company shall be required, or of the sale
or transfer of all or substantially all of the assets of the Company or of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall (a) if any Convertible Preferred Securities are
outstanding, cause to be filed with the transfer agent for the Convertible
Preferred Securities, and shall cause to be mailed to the holders of record of
the Convertible Preferred Securities, at their last addresses as they shall
appear upon the stock transfer books the Trust or (b) shall cause to be mailed
to all Holders at their last addresses as they shall appear in the Security
Register, at least fifteen days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record (if
any) is to be taken for the
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purpose of such dividend, distribution, rights or warrants or, if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
SECTION 7.7. Dividend or Interest Reinvestment Plans.
Notwithstanding the foregoing provisions, the issuance of any
shares of Common Stock pursuant to any plan providing for the reinvestment of
dividends or interest payable on securities of the Company and the investment
of additional optional amounts in shares of Common Stock under any such plan,
and the issuance of any shares of Common Stock or options or rights to purchase
such shares pursuant to any employee benefit plan or program of the Company or
pursuant to any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of the date the Convertible Debentures were
first issued, shall not be deemed to constitute an issuance of Common Stock or
exercisable, exchangeable or convertible securities by the Company to which any
of the adjustment provisions described above applies. There shall also be no
adjustment of the conversion price in case of the issuance of any stock (or
securities convertible into or exchangeable for stock) of the Company except as
specifically described in this Article Seven.
SECTION 7.8. Certain Additional Rights.
In case the Company shall, by dividend or otherwise, declare
or make a distribution on its Common Stock referred to in Section 7.3 (c) or
7.3(d) (including, without limitation, dividends or distributions referred to
in the last sentence of Section 7.3(d)), the Holder of the Convertible
Debentures, upon
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the conversion thereof subsequent to the close of business on the date fixed
for the determination of stockholders entitled to receive such distribution and
prior to the effectiveness of the conversion price adjustment in respect of
such distribution, shall also be entitled to receive for each share of Common
Stock into which the Convertible Debentures are converted, the portion of the
shares of Common Stock, rights, warrants, evidences of indebtedness, shares of
capital stock, cash and assets so distributed applicable to one share of Common
Stock; provided, however, that, at the election of the Company (whose election
shall be evidenced by a resolution of the Board of Directors) with respect to
all Holders so converting, the Company may, in lieu of distributing to such
Holder any portion of such distribution not consisting of cash or securities of
the Company, pay such Holder an amount in cash equal to the fair market value
thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors). If any conversion of Convertible Debentures described in the
immediately preceding sentence occurs prior to the payment date for a
distribution to holders of Common Stock which the Holder of Convertible
Debentures so converted is entitled to receive in accordance with the
immediately preceding sentence, the Company may elect (such election to be
evidenced by a resolution of the Board of Directors) to distribute to such
Holder a due bill for the shares of Common Stock, rights, warrants, evidences
of indebtedness, shares of capital stock, cash or assets to which such Holder
is so entitled, provided, that such due bill (i) meets any applicable
requirements of the principal national securities exchange or other market on
which the Common Stock is then traded and (ii) requires payment or delivery of
such shares of Common Stock, rights, warrants, evidences of indebtedness,
shares of capital stock, cash or assets no later than the date of payment or
delivery thereof to holders of shares of Common Stock receiving such
distribution.
SECTION 7.9. Trustee Not Responsible for Determining Conversion Price or
Adjustments.
Neither the Trustee nor any Conversion Agent shall at any time
be under any duty or responsibility to any Holder of any Convertible Debenture
to determine whether any facts exist which may require any adjustment of the
conversion price, or with respect to the nature or extent of any such
adjustment when made,
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or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. Neither the Trustee nor
any Conversion Agent shall be accountable with respect to the validity or value
(or the kind of account) of any shares of Common Stock or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Convertible Debenture; and neither the Trustee nor any Conversion Agent
makes any representation with respect thereto. Neither the Trustee nor any
Conversion Agent shall be responsible for any failure of the Company to make
any cash payment or to issue, transfer or deliver any shares of Common Stock or
stock certificates or other securities or property upon the surrender of any
Convertible Debenture for the purpose of conversion.
ARTICLE VIII
FORM OF CONVERTIBLE DEBENTURE
SECTION 8.1. Form of Convertible Debenture.
The Convertible Debentures and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the following
forms:
(FORM OF FACE OF Convertible Debenture)
This Debenture is a Global Debenture within the meaning of the
Indenture hereinafter referred to and is registered in the name of a Depositary
or a nominee of a Depositary. This Debenture is exchangeable for Convertible
Debentures registered in the name of a person other than the Depositary or its
nominee only in the limited circumstances described in the Indenture, and no
transfer of this Debenture (other than a transfer of this Debenture as a whole
by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may be
registered except in limited circumstances.
Unless this Debenture is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any Debenture issued is registered in the name of Cede & Co. or
such other name as re-
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quested by an authorized representative of The Depository Trust Company and any
payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.
No. ______________________________
NORAM ENERGY CORP.
___% CONVERTIBLE JUNIOR SUBORDINATED DEBENTURE
NorAm Energy Corp., a Delaware corporation (the "Company"),
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to, ______________ or
registered assigns, the principal sum of _____________ Dollars ($___________)
on _________, 2026 (unless the maturity date is extended at the election of the
Company to a date not later than June __, 2045 upon satisfaction by the Company
of the requirements and conditions set forth in the First Supplemental
Indenture), and to pay interest on said principal sum from the date of original
issuance, or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
quarterly (subject to deferral as set forth herein) in arrears on March 31,
June 30, September 30 and December 31 of each year commencing September 30,
1996, at the rate of ___% per annum until the principal hereof shall have
become due and payable, and on any overdue principal and premium, if any, and
(without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
same rate per annum compounded quarterly. The amount of interest payable on
any Interest Payment Date shall be computed on the basis of a 360-day year of
twelve 30-day months. In the event that any date on which interest is payable
on this Convertible Debenture is not a Business Day, then payment of interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and
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<PAGE> 36
effect as if made on such date. The interest installment so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the person in whose name this Convertible
Debenture (or one or more Predecessor Securities, as defined in said Indenture)
is registered at the close of business on the regular record date for such
interest installment which shall be the close of business on the business day
next preceding such Interest Payment Date unless otherwise provided in the
Indenture. Any such interest installment not punctually paid or duly provided
for shall forthwith cease to be payable to the registered Holders on such
regular record date and may be paid to the Person in whose name this
Convertible Debenture (or one or more Predecessor Securities) is registered at
the close of business on a special record date to be fixed by the Trustee for
the payment of such defaulted interest, notice whereof shall be given to the
registered Holders of this series of Convertible Debentures not less than 10
days prior to such special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Convertible Debentures may be listed, and upon such notice as may
be required by such exchange, all as more fully provided in the Indenture. The
principal of (and premium, if any) and the interest on this Convertible
Debenture shall be payable at the office or agency of the Trustee maintained
for that purpose in any coin or currency of the United States of America that
at the time of payment is legal tender for payment of public and private debts;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the registered Holder at such address as shall
appear in the Security Register. Notwithstanding the foregoing, so long as the
Holder of this Convertible Debenture is the Institutional Trustee, the payment
of the principal of (and premium, if any) and interest on this Convertible
Debenture will be made at such place and to such account as may be designated
by the Institutional Trustee.
The indebtedness evidenced by this Convertible Debenture is,
to the extent provided in the Indenture, subordinate and junior in right of
payment to the prior payment in full of all Senior Indebtedness, and this
Convertible Debenture is issued subject to the provisions of the Indenture with
respect thereto. Each Holder of this Convertible Debenture, by accepting the
same, (a) agrees to and shall be bound by such provisions, (b) autho-
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<PAGE> 37
rizes and directs the Trustee on his or her behalf to take such action as may
be necessary or appropriate to acknowledge or effectuate the subordination so
provided and (c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each Holder hereof, by his or her acceptance hereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.
This Convertible Debenture shall not be entitled to any
benefit under the Indenture hereinafter referred to, be valid or become
obligatory for any purpose until the Certificate of Authentication hereon shall
have been signed by or on behalf of the Trustee.
The provisions of this Convertible Debenture are continued on
the reverse side hereof and such continued provisions shall for all purposes
have the same effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to
be executed.
Dated June __, 1996
NORAM ENERGY CORP.
By:
-----------------------------------
Name:
Title:
Attest:
By:
-----------------------------------
Name:
Title:
34
<PAGE> 38
FORM OF CERTIFICATE OF AUTHENTICATION
CERTIFICATE OF AUTHENTICATION
This is one of the Convertible Debentures of the series of
Convertible Debentures described in the within-mentioned Indenture.
The Bank of New York, or as Authentication Agent
as Trustee
By By
------------------------------ ------------------------------
Authorized Signatory Authorized Signatory
FORM OF REVERSE OF DEBENTURE
This Convertible Debenture is one of a duly authorized series
of Convertible Debentures of the Company (herein sometimes referred to as the
"Convertible Debentures"), specified in the Indenture, all issued or to be
issued in one or more series under and pursuant to an Indenture dated as of
June __, 1996, duly executed and delivered between the Company and The Bank of
New York, as Trustee (the "Trustee"), as supplemented by the First
Supplemental Indenture dated as of June __, 1996, between the Company and the
Trustee (the Indenture as so supplemented, the "Indenture"), to which Indenture
and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the Holders of the
Convertible Debentures. By the terms of the Indenture, the Convertible
Debentures are issuable in series that may vary as to amount, date of maturity,
rate of interest and in other respects as provided in the Indenture. This
series of Convertible Debentures is limited in aggregate principal amount as
specified in said First Supplemental Indenture.
Because of the occurrence and continuation of a Tax Event, in
certain circumstances, this Convertible Debenture may become due and payable at
the principal amount together with any interest accrued thereon (the
"Redemption Price"). The Redemption Price shall be paid prior to 12:00 noon,
New York time, on
35
<PAGE> 39
the date of such redemption or at such earlier time as the Company determines.
The Company shall have the right to redeem this Convertible Debenture at the
option of the Company, without premium or penalty, in whole or in part, from
time to time, (i) on or after June __, 2000, if and only if for 20 trading days
within any period of 30 consecutive trading days, including the last trading
day of such period, the Current Market Price of NorAm Common Stock equals or
exceeds 125% of the then applicable conversion price of the Convertible
Debentures, or (ii) at any time in certain circumstances upon the occurrence of
a Tax Event, upon not less than 30 nor more than 60 days notice, at a
redemption price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest, including Additional Interest, if any, to the
redemption date (the "Optional Redemption Price"). If a partial redemption of
the Convertible Preferred Securities resulting from a partial redemption of the
Convertible Debentures would result in the delisting of the Convertible
Preferred Securities, NorAm may only redeem the Convertible Debentures in
whole. If the Convertible Debentures are only partially redeemed by the
Company pursuant to an Optional Redemption, the Convertible Debentures will be
redeemed pro rata or by lot or by any other method utilized by the Trustee;
provided that if, at the time of redemption, the Convertible Debentures are
registered as a Global Debenture, the Depositary shall determine the principal
amount of such Convertible Debentures held by each Debentureholder to be
redeemed in accordance with its procedures.
In the event of redemption of this Convertible Debenture in
part only, a new Convertible Debenture or Convertible Debentures of this series
for the unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal of all of the Convertible
Debentures may be declared, and upon such declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions provided
in the Indenture.
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Convertible Debentures of each series
affected at the time outstanding, as
36
<PAGE> 40
defined in the Indenture, to execute supplemental indentures for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Holders of the Convertible Debentures; provided,
however, that no such supplemental indenture shall (i) extend the Maturity Date
or the Scheduled Maturity Date of any Convertible Debentures 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 Convertible Debenture so
affected, or (ii) reduce the aforesaid percentage of Convertible Debentures,
the Holders of which are required to consent to any such supplemental
indenture, without the consent of the Holders of each Convertible Debenture
then out- standing and affected thereby. The Indenture also contains
provisions permitting the Holders of a majority in aggregate principal amount
of the Convertible Debentures of any series at the time outstanding affected
thereby, on behalf of all of the Holders of the Convertible Debentures of such
series, to waive any past default in the performance of any of the covenants
contained in the Indenture, or established pursuant to the Indenture with
respect to such series, and its consequences, except a default in the payment
of the principal of or premium, if any, or interest on any of the Convertible
Debentures of such series. Any such consent or waiver by the registered Holder
of this Convertible Debenture (unless revoked as provided in the Indenture)
shall be conclusive and binding upon such Holder and upon all future Holders
and owners of this Convertible Debenture and of any Convertible Debenture
issued in exchange herefor or in place hereof (whether by registration of
transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Convertible Debenture.
No reference herein to the Indenture and no provision of this
Convertible Debenture or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of
and premium, if any, and interest on this Convertible Debenture at the time and
place and at the rate and in the money herein prescribed.
The Company shall have the right at any time during the term
of the Convertible Debentures and from time to time to extend the interest
payment period of such Convertible Debentures
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<PAGE> 41
for up to 20 consecutive quarters (an "Extended Interest Payment Period"), at
the end of which period the Company shall pay all interest then accrued and
unpaid (together with interest thereon at the rate specified for the
Convertible Debentures to the extent that payment of such interest is
enforceable under applicable law). Before the termination of any such Extended
Interest Payment Period, the Company may further extend such Extended Interest
Payment Period, provided that such Extended Interest Payment Period together
with all such further extensions thereof shall not exceed 20 consecutive
quarters or extend beyond the maturity date of the Convertible Debentures. At
the termination of any such Extended Interest Payment Period and upon the
payment of all accrued and unpaid interest and any additional amounts then due,
the Company may commence a new Extended Interest Payment Period.
As provided in the Indenture and subject to certain
limitations therein set forth, this Convertible Debenture is transferable by
the registered Holder hereof on the Security Register of the Company, upon
surrender of this Convertible Debenture for registration of transfer at the
office or agency of the Trustee in the City and State of New York accompanied
by a written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the registered Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Convertible
Debentures of authorized denominations and for the same aggregate principal
amount and series will be issued to the designated transferee or transferees.
No service charge will be made for any such transfer, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Convertible Debenture, the Company, the Trustee, any paying agent and the
Security Registrar may deem and treat the registered holder hereof as the
absolute owner hereof (whether or not this Convertible Debenture shall be
overdue and notwithstanding any notice of ownership or writing hereon made by
anyone other than the Security Registrar) for the purpose of receiving payment
of or on account of the principal hereof and premium, if any, and interest due
hereon and for all other purposes, and neither the Company nor the Trustee nor
any paying agent nor any
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<PAGE> 42
Security Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of
or the interest on this Convertible Debenture, or for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released.
The Holder of any Convertible Debenture has the right,
exercisable at any time prior to the close of business (New York time) on the
Convertible Debentures' Maturity Date, to convert the principal amount thereof
(or any portion thereof that is an integral multiple of $__) into shares of
NorAm Common Stock at the initial conversion price _______ shares of NorAm
Common Stock for each Convertible Debenture (equivalent to a conversion price
of $______ per share of NorAm Common Stock), subject to adjustment under
certain circumstances, except that if a Convertible Debenture is called for
redemption, the conversion right will terminate at the close of business on the
Business Day next preceding the Redemption Date.
To convert a Convertible Debenture, a Holder must (1) complete
and sign a conversion notice substantially in the form attached hereto, (2)
surrender the Convertible Debenture to a Conversion Agent, (3) furnish
appropriate endorsements or transfer documents if required by the Conversion
Agent and (4) pay any transfer or similar tax, if required. Upon conversion,
no adjustment or payment will be made for interest or dividends, but if any
Holder surrenders a Convertible Debenture for conversion after the close of
business on the Regular Record Date for the payment of an installment of
interest and prior to the opening of business on the next Interest Payment
Date, then, notwithstanding such conversion, the interest payable on such
Interest Payment Date will be paid to the registered Holder of such Convertible
Debenture on such Regular Record Date. In such event, such Convertible
Debenture, when surrendered for conversion, need not be accompanied by payment
of an amount equal to the interest payable on such Interest Payment Date on the
portion so converted. The
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<PAGE> 43
number of shares issuable upon conversion of a Convertible Debenture is
determined by dividing the principal amount of the Convertible Debenture
converted by the conversion price in effect on the Conversion Date. No
fractional shares will be issued upon conversion but a cash adjustment will be
made for any fractional interest. The outstanding principal amount of any
Security shall be reduced by the portion of the principal amount thereof
converted into shares of Common Stock.
This Global Debenture is exchangeable for Convertible
Debentures in definitive form only under certain limited circumstances set
forth in the Indenture. Convertible Debentures of this series so issued are
issuable only in registered form without coupons in denominations of $50 and
any integral multiple thereof. As provided in the Indenture and subject to
certain limitations herein and therein set forth, Convertible Debentures of
this series so issued are exchangeable for a like aggregate principal amount of
Convertible Debentures of this series of a different authorized denomination,
as requested by the Holder surrendering the same.
All terms used in this Convertible Debenture that are defined
in the Indenture shall have the meanings assigned to them in the Indenture.
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<PAGE> 44
[FORM OF ELECTION TO CONVERT]
To: NorAm Energy Corp.
The undersigned owner of this Convertible Debenture hereby
irrevocably exercises the option to convert this Convertible Debenture, or the
portion below designated, into Common Stock of NORAM ENERGY CORP. in accordance
with the terms of the Indenture referred to in this Convertible Debenture, and
directs that the shares issuable and deliverable upon conversion, together with
any check in payment for fractional shares, be issued in the name of and
delivered to the undersigned, unless a different name has been indicated in the
assignment below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
Date:
------------, ----
in whole
--- Portions of Security to be converted
($50 or integral multiples
thereof): $
---------------------------
---------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other Identifying
Number
--------------------------------------
--------------------------------------
--------------------------------------
Signature Guarantee:
------------------
- ------------------
41
<PAGE> 45
(Signature must be guaranteed by an "eligible guarantor institution" that is, a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
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<PAGE> 46
ARTICLE IX
ORIGINAL ISSUE OF CONVERTIBLE DEBENTURES
SECTION 9.1. Original Issue of Convertible Debentures.
Convertible Debentures in the aggregate principal amount of
$___________ may, upon execution of this First Supplemental Indenture, be
executed by the Company and delivered to the Trustee for authentication, and
the Trustee shall thereupon authenticate and deliver said Convertible
Debentures to or upon the written order of the Company, signed by its Chairman,
its Vice Chairman, its President, or any Vice President and its Treasurer or an
Assistant Treasurer, without any further action by the Company.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Ratification of Indenture.
The Indenture, as supplemented by this First Supplemental
Indenture, is in all respects ratified and confirmed, and this First
Supplemental Indenture shall be deemed part of the Indenture in the manner and
to the extent herein and therein provided.
SECTION 10.2. Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Company and not
by the Trustee, and the Trustee assumes no responsibility for the correctness
thereof. The Trustee makes no representation as to the validity or sufficiency
of this First Supplemental Indenture.
SECTION 10.3. Governing Law.
This First Supplemental Indenture and each Convertible
Debenture shall be deemed to be a contract made under the internal laws of the
State of New York, and for all purposes shall be
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<PAGE> 47
construed in accordance with the laws of said State without regard to its
principles of conflict of laws.
SECTION 10.4. Separability.
In case any one or more of the provisions contained in this
First Supplemental Indenture or in the Convertible Debentures shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this First Supplemental Indenture or of the Convertible
Debentures, but this First Supplemental Indenture and the Convertible
Debentures shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein or therein.
SECTION 10.5. Counterparts.
This First Supplemental Indenture may be executed in any
number of counterparts each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
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<PAGE> 48
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, on the date or dates indicated in
the acknowledgements and as of the day and year first above written.
NORAM ENERGY CORP.
By
--------------------------------------
Name:
Title:
[Seal]
Attest:
By:
----------------------
THE BANK OF NEW YORK
as Trustee
By
--------------------------------------
Name:
Title:
Attest:
By:
----------------------
- ------------------------------
45
<PAGE> 1
EXHIBIT 4.03
====================================
AMENDED AND RESTATED DECLARATION
OF TRUST
NORAM FINANCING I
Dated as of June __, 1996
====================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.3 Reports by the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.4 Periodic Reports to Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III
ORGANIZATION
SECTION 3.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.5 Title to Property of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.6 Powers and Duties of the Regular Trustees . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees . . . . . . . . . . . . . . . . . . . 17
SECTION 3.8 Powers and Duties of the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee . . . . . . . . . . . . . . . . 20
SECTION 3.10 Certain Rights of Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.11 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.12 Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . 25
SECTION 3.14 Duration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.15 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.2 Responsibilities of the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
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ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.2 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.3 Property Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.4 Certain Qualifications of Regular Trustees and Delaware Trustee Generally . . . . . . . . . 30
SECTION 5.5 Regular Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.6 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.7 Appointment, Removal and Resignation of Trustees . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.8 Vacancies among Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.9 Effect of Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.10 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.11 Delegation of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.12 Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . 34
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 7.2 Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.2 Transfer of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.3 Deemed Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.4 Book Entry Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.5 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.6 Appointment of Successor Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.7 Definitive Convertible Preferred Security Certificates . . . . . . . . . . . . . . . . . . 39
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.2 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.3 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 10.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.5 Outside Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 11.2 Certain Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 11.3 Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 11.4 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent . . . . . . . . . . . . . 50
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee . . . . . . . . . . . . . . . . . . . . 52
SECTION 13.2 Representations and Warranties of Delaware Trustee . . . . . . . . . . . . . . . . . . . . 53
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 14.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 14.3 Intention of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 14.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 14.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 14.6 Partial Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 14.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ANNEX I TERMS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT A-1 FORM OF CONVERTIBLE PREFERRED SECURITY
CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . A2-1
EXHIBIT B SPECIMEN OF CONVERTIBLE DEBENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C UNDERWRITING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
iv
<PAGE> 6
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
<S> <C>
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3(a)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annex I
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6(e)
</TABLE>
- ---------------
* This Cross-Reference Table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
v
<PAGE> 7
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
NORAM FINANCING I
June ___, 1996
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of June __, 1996, by the Trustees (as defined herein),
the Sponsor (as defined herein) and by the holders, from time to time, of
undivided beneficial interests in the Trust to be issued pursuant to this
Declaration;
WHEREAS, the Trustees and the Sponsor established NorAm
Capital Financing I (the "Trust"), a trust under the Delaware Business Trust
Act pursuant to a Declaration of Trust dated as of November 2, 1995, (the
"Original Declaration") and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on November 2, 1995, for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
certain Convertible Debentures (as defined herein) of the Convertible Debenture
Issuer (as defined herein);
WHEREAS, as of the date hereof, no interests in the Trust have
been issued;
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the
Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
<PAGE> 8
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration 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 Declaration has the
same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration as modified, supplemented or
amended from time to time;
(d) all references in this Declaration to Articles and
Sections and Annexes and Exhibits are to Articles and Sections of and
Annexes and Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Declaration unless otherwise defined in
this Declaration 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 or any successor rule thereunder.
"Agent" means any Paying Agent or Conversion Agent.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than Saturday, Sunday or
any day on which banking institutions in New York City (in the State of New
York) are authorized or required by any applicable law to close.
2
<PAGE> 9
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time, or any successor legislation.
"Certificate" means a Common Security Certificate or a
Convertible Preferred Security Certificate.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Convertible Preferred Securities and in whose name or in the
name of a nominee of that organization shall be registered a Global Certificate
and which shall undertake to effect book entry transfers and pledges of the
Convertible Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Date" means the "Closing Time" and each "Date of
Delivery" under the Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Securities" has the meaning specified in Section
7.1(a).
"Common Securities Guarantee" means the guarantee agreement
dated as of June __, 1996 of the Sponsor in respect of the Common Securities.
"Common Security" has the meaning specified in Section 7.1.
"Common Security Certificate" means a definitive certificate
in fully registered form representing a Common Security substantially in the
form of Exhibit A-2.
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any officer, employee or agent of the Trust or its
Affiliates.
"Conversion Agent" has the meaning specified in Section 7.2.
3
<PAGE> 10
"Convertible Debentures" means the series of Convertible
Debentures to be issued by the Convertible Debenture Issuer under the Indenture
to be held by the Property Trustee, a specimen certificate for such series of
Convertible Debentures being Exhibit B.
"Convertible Debenture Issuer" means NorAm Energy Corp. in its
capacity as issuer of the Convertible Debentures under the Indenture.
"Convertible Debenture Trustee" means The Bank of New York as
trustee under the Indenture until a successor is appointed thereunder, and
thereafter means such successor trustee.
"Convertible Preferred Securities Guarantee" means the
guarantee agreement dated as of June ___, 1996, of the Sponsor in respect of
the Preferred Securities.
"Convertible Preferred Security" has the meaning specified in
Section 7.1.
"Convertible Preferred Security Beneficial Owner" means, with
respect to a Book Entry Interest, a Person who is the beneficial owner of such
Book Entry Interest, as reflected on the books of the Clearing Agency, or on
the books of a Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency Participant or as an indirect participant, in
each case in accordance with the rules of such Clearing Agency).
"Convertible Preferred Security Certificate" means a
certificate representing a Preferred Security substantially in the form of
Exhibit A-1.
"Corporate Trust Office" means the office of the Property
Trustee at which the corporate trust business of the Convertible Preferred
Guarantee Trustee shall, at any particular time, be principally administered,
which office at the date of execution of this Agreement is located at 101
Barclay Street, Floor 21 West, New York, New York 10286.
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of (i) the
Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Definitive Convertible Preferred Security Certificates" has
the meaning set forth in Section 9.4.
4
<PAGE> 11
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event
of Default (as defined in the Indenture) has occurred and is continuing in
respect of the Convertible Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate
representing a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of June ___, 1996,
among the Convertible Debenture Issuer and the Convertible Debenture Trustee,
and any indenture supplemental thereto pursuant to which the Convertible
Debentures are to be issued.
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex
I hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Liquidation" has the meaning set forth in Annex I hereto.
"Majority in liquidation amount of the Securities" means,
except as provided in the terms of the Convertible Preferred Securities or by
the Trust Indenture Act, Holder(s) of outstanding Securities voting together as
a single class or, as the context may require, Holders of outstanding
Convertible Preferred
5
<PAGE> 12
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate 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 outstanding Securities
of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of
the Securities as set forth in Annex I.
"NorAm Common Stock" has the meaning set forth in the
Indenture.
"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 Declaration shall include:
(a) a statement that each officer signing the Certificate
has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the 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.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Pricing Agreement" means the pricing agreement between the
Trust, the Convertible Debenture Issuer, and the underwriters designated by the
Regular Trustees with respect to the offer and sale of the Convertible
Preferred Securities.
6
<PAGE> 13
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in
Section 3.8(c).
"Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both of them.
"Regular Trustee" has the meaning set forth in Section 5.1.
"Related Party" means, with respect to the Sponsor, any direct
or indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property
Trustee, any officer within the Corporate Trust Office of the Property 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 Property 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.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Scheduled Maturity Date" has the meaning set forth in the
First Supplemental Indenture, dated June __, 1996, between the Convertible
Debenture Issuer and The Bank of New York, as trustee.
"Securities" means the Common Securities and the Convertible
Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time or any successor legislation.
"Sponsor" means NorAm Energy Corp., a Delaware corporation, or
any successor entity in a merger, consolidation or amalgamation, in its
capacity as sponsor of the Trust.
"Super-Majority" has the meaning set forth in Section
2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
7
<PAGE> 14
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Convertible Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a single
class or, as the context may require, Holders of outstanding Convertible
Preferred Securities or Holders of outstanding Common Securities voting
separately as a class, who are the record owners of 10% or more of the
aggregate 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 outstanding
Securities of the relevant class.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
"Underwriting Agreement" means the purchase agreement for the
offering and sale of Convertible Preferred Securities in the form of Exhibit C.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of
the Trust Indenture Act that are required to be part of this Declaration and
shall, to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee
which is a Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties
8
<PAGE> 15
imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on
behalf of the Trust shall provide the Property Trustee (i) within 14 days after
each record date for payment of Distributions, a list, in such form as the
Property Trustee may reasonably require, of the names and addresses of the
Holders of the Securities ("List of Holders") as of such record date, provided
that neither the Sponsor nor the Regular Trustees on behalf of the Trust shall
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 Property
Trustee by the Sponsor and the Regular Trustees on behalf of the Trust, and
(ii) at any other time, within 30 days of receipt by the Trust 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 Property Trustee. The Property Trustee shall
preserve, in as current a form as is reasonably practicable, all information
contained in Lists of Holders given to it or which it receives in the capacity
as Paying Agent (if acting in such capacity); provided that, the Property
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Property Trustee shall comply with its
obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture
Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after July 15 of each year, the Property
Trustee shall provide to the Holders of the Convertible 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 Property Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide to the Property 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
9
<PAGE> 16
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.
Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Declaration 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.
(a) The Holders of a Majority in liquidation amount of
Convertible Preferred Securities may, by vote, on behalf of the Holders of all
of the Convertible Preferred Securities, waive any past Event of Default in
respect of the Convertible Preferred Securities and its consequences, provided
that, if the underlying Event of Default under the Indenture:
(i) is not waivable under the Indenture, the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a
majority in principal amount of the holders of the Convertible
Debentures (a "Super-Majority") to be waived under the Indenture, the
Event of Default under the Declaration may only be waived by the vote
of the Holders of at least the proportion in liquidation amount of the
Convertible Preferred Securities that the relevant Super-Majority
represents of the aggregate principal amount of the Convertible
Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Event of Default with respect to the
Convertible Preferred Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend
to any subsequent or other default or an Event of Default with respect to the
Convertible Preferred Securities or impair any right consequent thereon. Any
waiver by the Holders of the Convertible Preferred Securities of an Event of
Default with respect to the Convertible Preferred Securities shall also be
deemed to constitute a waiver by the Holders of the Common Securities of any
such Event of Default with respect to
10
<PAGE> 17
the Common Securities for all purposes of this Declaration without any further
act, vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of
the Common Securities may, by vote, on behalf of the Holders of all of the
Common Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where
the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration shall also
not be waivable; or
(ii) requires the consent or vote of a Super-Majority to
be waived, except where the Holders of the Common Securities are
deemed to have waived such Event of Default under the Declaration as
provided below in this Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in liquidation amount of the Common Securities that the
relevant Super- Majority represents of the aggregate principal amount
of the Convertible Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Convertible Preferred Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely
on behalf of the Holders of the Convertible Preferred Securities and only the
Holders of the Convertible Preferred Securities will have the right to direct
the Property Trustee in accordance with the terms of the Securities. The
foregoing provisions of this Section 2.6(b) shall be in lieu of Sections
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such Sections
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act. Subject to the foregoing provisions of this Section 2.6(b),
upon such waiver, any such default shall cease to exist and any Event of
Default with respect to the Common Securities arising therefrom shall be deemed
to have been cured for every purpose of this Declaration, but no such waiver
shall extend to any subsequent or other default or Event of Default with
respect to the Common Securities or impair any right consequent thereon.
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(c) A waiver of an Event of Default under the Indenture
by the Property Trustee at the direction of the Holders of the Convertible
Preferred Securities, constitutes a waiver of the corresponding Event of
Default under this Declaration. The foregoing provisions of this Section
2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and
such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Property 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 Securities, notices of all defaults with respect
to the Securities actually known to a Responsible Officer of the Property
Trustee, unless such defaults have been cured before the giving of such notice
(the term "defaults" for the purposes of this Section 2.7(a) being hereby
defined to be an Event of Default as defined in the Indenture, not including
any periods of grace provided for therein and irrespective of the giving of any
notice provided therein); provided that, except for a default in the payment of
principal of (or premium, if any) or interest on any of the Convertible
Debentures or in the payment of any sinking fund installment established for
the Convertible Debentures, the Property Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Property
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of the Securities. Such notice shall state that an
event of default under the Indenture constitutes an Event of Default.
(b) The Property Trustee shall not be deemed to have
knowledge of any default except:
(i) a default under Sections 6.1(1) and 6.1(2) of the
Indenture; or
(ii) any default as to which the Property Trustee shall
have received written notice or of which a Responsible Officer of the
Property Trustee charged with the administration of the Declaration
shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "NorAm Financing I" as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders of Securities. The Trust's activities
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may be conducted under the name of the Trust or any other name deemed advisable
by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o NorAm
Energy Corp., 1600 Smith Street, 32nd Floor, Houston, Texas 77002. On ten
Business Days written notice to the Holders of Securities, the Regular Trustees
may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Convertible Debentures, and (b) except as otherwise limited herein, to engage
in only those other activities necessary, or incidental thereto. The Trust
shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to
the specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the
Convertible Debentures and the Property Trustee Account or as otherwise
provided in this Declaration, legal title to all assets of the Trust shall be
vested in the Trust. The Holders shall not have legal title to any part of the
assets of the Trust, but shall have an undivided beneficial interest in the
assets of the Trust.
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SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Convertible Preferred
Securities and the Common Securities in accordance with this
Declaration; provided, however, that the Trust may issue no more than
one series of Convertible Preferred Securities and no more than one
series of Common Securities, and, provided further, that there shall
be no interests in the Trust other than the Securities, and the
issuance of Securities shall be limited to a simultaneous issuance of
both Convertible Preferred Securities and Common Securities on the
Closing Date and any other date Convertible Preferred Securities and
Common Securities are sold pursuant to the over-allotment option
granted in the Underwriting Agreement;
(b) in connection with the issue and sale of the
Convertible Preferred Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the
registration statement on Form S-3 prepared by the Sponsor,
including any amendments thereto, pertaining to the
Convertible Preferred Securities;
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by the Sponsor to
be necessary in order to qualify or register all or part of
the Convertible Preferred Securities in any State in which the
Sponsor has determined to qualify or register such Convertible
Preferred Securities for sale;
(iii) execute and file an application, prepared
by the Sponsor, to the New York Stock Exchange, Inc. or any
other national stock exchange or the Nasdaq Stock Market's
National Market for listing upon notice of issuance of any
Convertible Preferred Securities;
(iv) execute and file with the Commission a
registration statement on Form 8-A, including any amendments
thereto, prepared by the Sponsor, relating to the registration
of the Convertible Preferred Securities under Section 12(b) of
the Exchange Act; and
(v) execute and enter into the Underwriting
Agreement and Pricing Agreement providing for the sale of the
Convertible Preferred Securities;
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(c) to acquire the Convertible Debentures with the
proceeds of the sale of the Convertible Preferred Securities and the
Common Securities; provided, however, that the Regular Trustees shall
cause legal title to the Convertible Debentures to be held of record
in the name of the Property Trustee for the benefit of the Holders of
the Convertible Preferred Securities and the Holders of Common
Securities;
(d) to give the Sponsor and the Property Trustee prompt
written notice of the occurrence of a Tax Event; provided that the
Regular Trustees shall consult with the Sponsor and the Property
Trustee before taking or refraining from taking any Ministerial Action
in relation to a Tax Event;
(e) to establish a record date with respect to all
actions to be taken hereunder that require a record date be
established, including and with respect to, for the purposes of
Section 316(c) of the Trust Indenture Act, Distributions, voting
rights, redemptions and exchanges, and to issue relevant notices to
the Holders of Convertible Preferred Securities and Holders of Common
Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may
be required of the Regular Trustees pursuant to the terms of the
Securities;
(g) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or
demands of or against the Trust ("Legal Action"), unless pursuant to
Section 3.8(e), the Property Trustee has the exclusive power to bring
such Legal Action;
(h) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers,
contractors, advisors, and consultants and pay reasonable compensation
from time to time for such services;
(i) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(j) to give the certificate required by Section
314(a)(4) of the Trust Indenture Act to the Property Trustee, which
certificate may be executed by any Regular Trustee;
(k) to incur expenses that are necessary or incidental
to carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as,
registrar and transfer agent for the Securities;
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(m) to give prompt written notice to the Holders of the
Securities of any notice received from the Convertible Debenture
Issuer of its election to defer payments of interest on the
Convertible Debentures by extending the interest payment period under
the Indenture;
(n) to execute all documents or instruments, perform
all duties and powers, and do all things for and on behalf of the
Trust in all matters necessary or incidental to the foregoing;
(o) to take all action that may be necessary or
appropriate for the preservation and the continuation of the Trust's
valid existence, rights, franchises and privileges as a statutory
business trust under the laws of the State of Delaware and of each
other jurisdiction in which such existence is necessary to protect the
limited liability of the Holders of the Convertible Preferred
Securities or to enable the Trust to effect the purposes for which the
Trust was created;
(p) to take any action, not inconsistent with this
Declaration or with applicable law, that the Regular Trustees
determine in their discretion to be necessary or desirable in carrying
out the activities of the Trust as set out in this Section 3.6,
including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(ii) causing the Trust to be classified for
United States federal income tax purposes as a grantor trust;
and
(iii) cooperating with the Convertible Debenture
Issuer to ensure that the Convertible Debentures will be
treated as indebtedness of the Convertible Debenture Issuer
for United States federal income tax purposes,
provided that such action does not adversely affect the interests of
Holders; and
(q) to take all action necessary to cause all
applicable tax returns and tax information reports that are required
to be filed with respect to the Trust to be duly prepared and filed by
the Regular Trustees, on behalf of the Trust.
The Regular Trustees must exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the
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purposes and functions of the Trust set out in Section 3.3, and the Regular
Trustees shall not take any action that is inconsistent with the purposes and
functions of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have
none of the powers or the authority of the Property Trustee set forth in
Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Convertible Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including
the Property Trustee) shall not, engage in any activity other than as required
or authorized by this Declaration. In particular, the Trust shall not and the
Trustees (including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from
holding the Convertible Debentures, but shall distribute all such
proceeds to Holders of Securities pursuant to the terms of this
Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust
purpose;
(iv) make any loans or incur any indebtedness other than
loans represented by the Convertible Debentures;
(v) possess any power or otherwise act in such a way as
to vary the Trust assets or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of
beneficial ownership of, or beneficial interest in, the Trust other
than the Securities; or
(vii) other than as provided in this Amended and Restated
Declaration or Annex I, (A) direct the time, method and place of exercising any
trust or power conferred upon the Convertible Debenture Trustee with respect to
the Convertible Debentures, (B) waive any past default that is waivable under
the Indenture, (C) exercise any right to rescind or annul any declaration that
the principal of all the Convertible Debentures shall be due and payable, or
(D) consent to any amendment, modification
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or termination of the Indenture or the Convertible Debentures where such
consent shall be required unless the Trust shall have received an opinion of
counsel to the effect that such modification will not cause more than an
insubstantial risk that for United States federal income tax purposes the Trust
will not be classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Convertible Debentures shall
be owned by and held of record in the name of the Property Trustee in trust for
the benefit of the Holders of the Securities. The right, title and interest of
the Property Trustee to the Convertible Debentures shall vest automatically in
each Person who may hereafter be appointed as Property Trustee in accordance
with Section 5.6. Such vesting and cessation of title shall be effective
whether or not conveyancing documents with regard to the Convertible Debentures
have been executed and delivered.
(b) The Property Trustee shall not transfer its right,
title and interest in the Convertible Debentures to the Regular Trustees or to
the Delaware Trustee (if the Property Trustee does not also act as Delaware
Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Property Trustee Account") in the name of
and under the exclusive control of the Property Trustee on behalf of
the Holders of the Securities and, upon the receipt of payments of
funds made in respect of the Convertible Debentures held by the
Property Trustee, deposit such funds into the Property Trustee Account
and make payments to the Holders of the Convertible Preferred
Securities and Holders of the Common Securities from the Property
Trustee Account in accordance with Section 6.1. Funds in the Property
Trustee Account shall be held uninvested until disbursed in accordance
with this Declaration. The Property Trustee Account shall be an
account that is maintained with a banking institution the rating on
whose long-term unsecured indebtedness is at least equal to the rating
assigned to the Convertible Preferred Securities by a "nationally
recognized statistical rating organization", as that term is defined
for purposes of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as so
directed and as shall be necessary or appropriate to effect the
redemption of the Convertible Preferred Securities and the Common
Securities to the extent the Convertible Debentures are redeemed or
mature; and
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(iii) upon written notice of distribution issued by the
Regular Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as shall be necessary or
appropriate to effect the distribution of the Convertible Debentures
to Holders of Securities upon the occurrence of certain special events
(as may be defined in the terms of the Securities) arising from a
change in law or a change in legal interpretation or other specified
circumstances pursuant to the terms of the Securities.
(d) The Property Trustee shall take all actions and
perform such duties as may be specifically required of the Property Trustee
pursuant to the terms of the Securities.
(e) The Property Trustee shall take any Legal Action
which arises out of or in connection with an Event of Default of which a
Responsible Officer of the Property Trustee has actual knowledge or the
Property Trustee's duties and obligations under this Declaration or the Trust
Indenture Act.
(f) The Property Trustee shall not resign as a Trustee
unless either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of Securities
pursuant to the terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and
has accepted that appointment in accordance with Section 5.6.
(g) The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of Convertible
Debentures under the Indenture and, if an Event of Default actually known to a
Responsible Officer of the Property Trustee occurs and is continuing, the
Property Trustee shall, for the benefit of Holders of the Securities, enforce
its rights as holder of the Convertible Debentures subject to the rights of the
Holders pursuant to the terms of such Securities.
(h) The Property Trustee may authorize one or more
Persons (each, a "Paying Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all securities and
any such Paying Agent shall comply with Section 317(b) of the Trust Indenture
Act. Any Paying Agent may be removed by the Property Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Property Trustee.
(i) Subject to this Section 3.8, the Property Trustee
shall have none of the duties, liabilities, powers or the authority of the
Regular Trustees set forth in Section 3.6.
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The Property Trustee must exercise the powers set forth in
this Section 3.8 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Property Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust
set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property 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 Declaration and no implied covenants shall be read into this
Declaration against the Property Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Property Trustee has actual knowledge, the Property
Trustee shall exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) No provision of this Declaration shall be construed
to relieve the Property Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions
of this Declaration and the Property Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Declaration,
and no implied covenants or obligations shall be read into
this Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of
the Property Trustee, the Property 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 Property Trustee and conforming to
the requirements of this Declaration; but in the case of any
such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Property Trustee,
the Property Trustee shall be under a duty to examine
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the same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it shall be proved that the Property Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Property 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 written direction of the Holders of not less
than a Majority in liquidation amount of the Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to
it;
(v) the Property Trustee's sole duty with respect to
the custody, safe keeping and physical preservation of the Convertible
Debentures and the Property Trustee Account shall be to deal with such
property in a similar manner as the Property Trustee deals with
similar property for its own account, subject to the protections and
limitations on liability afforded to the Property Trustee under this
Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or
liability for or with respect to the value, genuineness, existence or
sufficiency of the Convertible Debentures or the payment of any taxes
or assessments levied thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
in writing with the Sponsor. Money held by the Property Trustee need
not be segregated from other funds held by it except in relation to
the Property Trustee Account maintained by the Property Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise
required by law; and
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(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the Property
Trustee be liable for any default or misconduct of the Regular
Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property 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 Sponsor or the Regular
Trustees contemplated by this Declaration shall be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration,
the Property Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omitting any action
hereunder, the Property 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
Sponsor or the Regular Trustees;
(iv) the Property Trustee shall have no duty to see to
any recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel of
its choice or other experts and the advice or opinion of such counsel
and experts with respect to legal matters or advice within the scope
of such experts' area of expertise 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 Sponsor or any
of its Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
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(vi) the Property Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this
Declaration at the request or direction of any Holder, unless such
Holder shall have provided to the Property Trustee security and
indemnity, reasonably satisfactory to the Property Trustee, against
the costs, expenses (including attorneys' fees and expenses and the
expenses of the Property 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 Property Trustee provided, that, nothing contained in
this Section 3.10(a)(vi) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Declaration;
(vii) the Property 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 Property Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, custodians, nominees or attorneys and the Property
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 Property Trustee or its
agents hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Property Trustee or its agents
alone shall be sufficient and effective to perform any such action and
no third party shall be required to inquire as to the authority of the
Property Trustee to so act or as to its compliance with any of the
terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its agent's taking
such action;
(x) whenever in the administration of this Declaration
the Property Trustee shall deem it desirable to receive written
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Property Trustee (i) may request
written instructions from the Holders of the Securities which written
instructions may only be given by the Holders of the same proportion
in liquidation amount of the Securities outstanding as would be
entitled to
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direct the Property Trustee under the terms of the Securities in
respect of such remedy, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
written instructions are received, and (iii) shall be protected in
conclusively relying on or acting in or accordance with such written
instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Declaration; and
(xii) the Property Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to
impose any duty or obligation on the Property 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 Property
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 Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other
than Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Regular Trustees or the Property Trustee described in
this Declaration. Except as set forth in Section 5.2, the Delaware Trustee
shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act, a majority of or, if
there are only two, any Regular Trustee or, if there is only one, such Regular
Trustee is authorized to execute on behalf of the Trust any documents that the
Regular Trustees have the power and authority to execute pursuant to Section
3.6; provided that, the registration statement referred to in Section
3.6(b)(i), including any amendments thereto, shall be signed by all of the
Regular Trustees; provided further that, any Certificate
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bearing a facsimile signature of a Regular Trustee shall be authenticated by
the Property Trustee.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall have existence for fifty (50) years from the Closing
Date.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge
with or into, or be replaced by, or convey, transfer or lease its properties
and assets substantially as an entirety to any corporation or other body,
except as described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular
Trustees or, if there are more than two, a majority of the Regular Trustees and
without the consent of the Holders of the Securities, the Delaware Trustee or
the Property Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided
that:
(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations
of the Trust under the Securities; or
(B) substitutes for the Securities other
securities having substantially the same terms as the
Convertible Preferred Securities (the "Successor Securities")
so long as the Successor Securities rank the same as the
Convertible Preferred Securities rank with respect to
Distributions and payments upon liquidation, redemption and
otherwise;
(ii) the Convertible Debenture Issuer expressly
acknowledges a trustee of the Successor Entity that possesses
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the same powers and duties as the Property Trustee as the Holder of
the Convertible Debentures;
(iii) the Convertible Preferred Securities or any
Successor Securities are listed, or any Successor Securities will be
listed upon notification of issuance, on any national securities
exchange or with an other organization on which the Convertible
Preferred Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Convertible Preferred Securities
(including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Securities (including any Successor
Securities) in any material respect (other than with respect to any
dilution of such Holders' interests in the Convertible Preferred
Securities as a result of such merger, consolidation, amalgamation or
replacement);
(vi) such Successor Entity has a purpose identical to
that of the Trust;
(vii) prior to such merger, consolidation, amalgamation
or replacement, the Sponsor has received an opinion of a nationally
recognized independent counsel to the Trust experienced in such
matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences
and privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with
respect to any dilution of the Holders' interest in the new
entity); and
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an Investment
Company;
(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the Successor
Entity) will continue to be classified as a grantor trust for
United States federal income tax purposes; and
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(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to the extent
provided by the Convertible Preferred Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall
not, except with the consent of Holders of 100% in liquidation amount of the
Securities outstanding, consolidate, amalgamate, merge with or into, or be
replaced by any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger or replacement would cause the Trust or Successor Entity
to be classified as other than a grantor trust for United States federal income
tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date the Sponsor will purchase all of the
Common Securities issued by the Trust, in an amount at least equal to 3% of the
capital of the Trust, at the same time as the Convertible Preferred Securities
are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Convertible
Preferred Securities, the Sponsor shall have the exclusive right and
responsibility to engage in the following activities:
(a) to prepare for filing by the Trust with the
Commission a registration statement on Form S-3 in relation to the
Convertible Preferred Securities, including any amendments thereto;
(b) to determine the States in which to take
appropriate action to qualify or register for sale all or part of the
Convertible Preferred Securities and to do any and all such acts,
other than actions which must be taken by the Trust, and advise the
Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable
laws of any such States;
(c) to prepare for filing by the Trust an application
to the New York Stock Exchange or any other national stock exchange or
the Nasdaq National Market for listing upon notice of issuance of any
Convertible Preferred Securities;
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(d) to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A relating to the
registration of the Convertible Preferred Securities under Section
12(b) of the Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of the Underwriting
Agreement and Pricing Agreement providing for the sale of the
Convertible Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees initially shall be four (4), and:
(a) at any time before the issuance of any Securities,
the Sponsor may, by written instrument, increase or decrease the
number of Trustees; and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a
majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities; provided,
however, that the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, in the case of a
natural person, shall be a person who is a resident of the State of
Delaware or that, if not a natural person, is an entity which has its
principal place of business in the State of Delaware (the "Delaware
Trustee"); (2) there shall be at least one Trustee who is an employee
or officer of, or is affiliated with the Parent (a "Regular Trustee");
and (3) one Trustee shall be the Property Trustee for so long as this
Declaration is required to qualify as an indenture under the Trust
Indenture Act, and such Trustee may also serve as Delaware Trustee if
it meets the applicable requirements.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
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(b) if not a natural person, an entity which has its
principal place of business in the State of Delaware, and otherwise
meets the requirements of applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall
act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(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 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 5.3(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; and
(iii) if the Trust is excluded from the definition of an
Investment Company solely by means of Rule 3a-7 and to the extent Rule
3a-7 requires a trustee having certain qualifications to hold title to
the "eligible assets" of the Trust, the Property Trustee shall possess
those qualifications.
(b) If at any time the Property Trustee shall cease to
be eligible to so act under Section 5.3(a), the Property Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.6(c).
(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Property Trustee and the Holder of the Common Securities (as
if it were the obligor referred to in Section
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310(b) of the Trust Indenture Act) shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
(d) The Convertible Preferred Securities Guarantee
shall be deemed to be specifically described in this Declaration for purposes
of clause (i) of the first provision contained in Section 310(b) of the Trust
Indenture Act.
(e) The initial Property Trustee shall be:
The Bank of New York
SECTION 5.4 Certain Qualifications of Regular Trustees and Delaware
Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Regular Trustees.
The initial Regular Trustees shall be:
Michael B. Bracy
Michael A. Creel
(a) Except as expressly set forth in this Declaration
and except if a meeting of the Regular Trustees is called with respect to any
matter over which the Regular Trustees have power to act, any power of the
Regular Trustees may be exercised by, or with the consent of, any one such
Regular Trustee.
(b) Unless otherwise determined by the Regular
Trustees, and except as otherwise required by the Business Trust Act or
applicable law, any Regular Trustee is authorized to execute on behalf of the
Trust any documents which the Regular Trustees have the power and authority to
cause the Trust to execute pursuant to Section 3.6, provided, that, the
registration statement referred to in Section 3.6, including any amendments
thereto, shall be signed by a majority of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purposes of signing any documents which the
Regular Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION 5.6 Delaware Trustee.
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The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
SECTION 5.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be
appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of
the Holders of a Majority in liquidation amount of the Common
Securities voting as a class at a meeting of the Holders of the Common
Securities.
(b)(i) The Trustee that acts as Property Trustee shall not
be removed in accordance with Section 5.6(a) until a Successor Property Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Property Trustee and delivered to the Regular
Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not
be removed in accordance with this Section 5.6(a) until a successor
Trustee possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office
until his successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect
upon such delivery or upon such later date as is specified therein; provided,
however, that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee has been
appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to
the Trust, the Sponsor and the resigning Property Trustee; or
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(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to
the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use
their best efforts to promptly appoint a Successor Delaware Trustee or
Successor Property Trustee as the case may be if the Property Trustee or the
Delaware Trustee delivers an instrument of resignation in accordance with this
Section 5.6.
(e) If no Successor Property Trustee or Successor
Delaware Trustee shall have been appointed and accepted appointment as provided
in this Section 5.6 within 60 days after delivery to the Sponsor and the Trust
of an instrument of resignation, the resigning Property Trustee or Delaware
Trustee, as applicable, may petition any court of competent jurisdiction for
appointment of a Successor Property Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be
liable for the acts or omissions to act of any Successor Property Trustee or
successor Delaware Trustee, as the case may be.
SECTION 5.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1, or if the number of
Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A
resolution certifying the existence of such vacancy by the Regular Trustees or,
if there are more than two, a majority of the Regular Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.6.
SECTION 5.9 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 5.6, the Regular
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Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed upon
the Regular Trustees by this Declaration.
SECTION 5.10 Meetings.
If there is more than one Regular Trustee, meetings of the
Regular Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 48 hours before such meeting. Notice of any telephonic meetings of
the Regular Trustees or any committee thereof shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting. Notices shall
contain a brief statement of the time, place and anticipated purposes of the
meeting. The presence (whether in person or by telephone) of a Regular Trustee
at a meeting shall constitute a waiver of notice of such meeting except where a
Regular Trustee attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in this Declaration,
any action of the Regular Trustees may be taken at a meeting by vote of a
majority of the Regular Trustees present (whether in person or by telephone)
and eligible to vote with respect to such matter, provided that a Quorum is
present, or without a meeting by the unanimous written consent of the Regular
Trustees. In the event there is only one Regular Trustee, any and all action
of such Regular Trustee shall be evidenced by a written consent of such Regular
Trustee.
SECTION 5.11 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.6, including any registration statement or amendment
thereto filed with the Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate
from time to time to such of their number or to officers of the Trust the doing
of such things and the execution of such instruments either in the name of the
Trust or the names of the Regular Trustees or otherwise as the Regular Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
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Section 5.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Property Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Property Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Property Trustee or the
Delaware Trustee, as the case may be, shall be the successor of the Property
Trustee or the Delaware Trustee, as the case may be, hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Convertible Preferred Securities and the
Common Securities in accordance with the preferences set forth in their
respective terms. If and to the extent that the Convertible Debenture Issuer
makes a payment of interest (including Compounded Interest (as defined in the
Indenture) and Additional Interest (as defined in the Indenture)), premium
and/or principal on the Convertible Debentures held by the Property Trustee
(the amount of any such payment being a "Payment Amount"), the Property Trustee
shall and is directed, to the extent funds are available for that purpose, to
make a distribution (a "Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust
issue one class of convertible preferred securities representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the "Convertible Preferred Securities") and one class of
convertible common securities, representing undivided beneficial interests in
the assets of the Trust having such terms as are set forth in Annex I (the
"Common Securities.") The Trust shall issue no securities or
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other interests in the assets of the Trust other than the Convertible Preferred
Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the
Trust by a Regular Trustee. Such signature shall be the manual signature of
any present or any future Regular Trustee. In case any Regular Trustee of the
Trust who shall have signed any of the Securities shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Security, shall be the Regular Trustees of the
Trust, although at the date of the execution and delivery of the Declaration
any such person was not such a Regular Trustee. Certifi- cates shall be
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by their execution
thereof, and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements as the Regular Trustees may deem
appropriate, or as may be required to comply with any law or with any rule or
regulation of any stock exchange on which Securities may be listed, or to
conform to usage.
(c) The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the capital of
the Trust and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
(e) Every Person, by virtue of having become a Holder
or a Convertible Preferred Security Beneficial Owner in accordance with the
terms of this Declaration, shall be deemed to have expressly assented and
agreed to the terms of, and shall be bound by, this Declaration.
SECTION 7.2 Paying Agent.
In the event that the Convertible Preferred Securities are not
in book-entry only form, the Trust shall maintain in the Borough of Manhattan,
City of New York, State of New York, an office or agency where the Convertible
Preferred Securities may be presented for payment ("Paying Agent). The Trust
shall maintain an office or agency where Securities may be presented for
conversion ("Conversion Agent"). The Trust may appoint the Paying Agent and
the Conversion Agent and may appoint one or more additional paying agents and
one or more additional conversion agents in such other locations as it shall
determine. The term
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"Paying Agent" includes any additional paying agent and the term "Conversion
Agent" includes any additional conversion agent. The Trust may change any
Paying Agent or Conversion Agent without prior notice to any Holder. The Trust
shall notify the Property Trustee of the name and address of any Agent not a
party to this Declaration. If the Trust fails to appoint or maintain another
entity as Paying Agent or Conversion Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent or Conversion
Agent. The Trust shall act as Paying Agent and Conversion Agent for the Common
Securities.
The Trust initially appoints the Property Trustee as
Conversion Agent for the Convertible Preferred Securities.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Holder of the Common
Securities or the Sponsor;
(ii) upon the filing of a certificate of dissolution or
its equivalent with respect to the Holder of the Common Securities or
the Sponsor; the filing of a certificate of cancellation with respect
to the Trust or the revocation of the Holder of the Common Securities,
or the Sponsor's charter and the expiration of 90 days after the date
of revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution
of the Holder of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called
for redemption and the amounts necessary for redemption thereof shall
have been paid to the Holders in accordance with the terms of the
Securities;
(v) upon the occurrence and continuation of a Tax Event
pursuant to which the Trust shall have been dissolved in accordance
with the terms of the Securities and all of the Convertible Debentures
endorsed thereon shall have been distributed to the Holders of
Securities in exchange for all of the Securities; or
(vi) before the issuance of any Securities, with the
consent of all of the Regular Trustees and the Sponsor.
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(b) As soon as is practicable after the occurrence of
an event referred to in Section 8.1(a), the Trustees shall file a certificate
of cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall
survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this Declaration
and in the terms of the Securities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Convertible Preferred
Securities shall be freely transferable.
(c) Subject to this Article IX, the Sponsor and any
Related Party may only transfer Common Securities to the Sponsor or a Related
Party of the Sponsor; provided that, any such transfer is subject to the
condition precedent that the transferor obtain the written opinion of
nationally recognized independent counsel experienced in such matters that such
transfer would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for United States
federal income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the
transferee would become an Investment Company.
SECTION 9.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees
duly executed by the Holder or such Holder's attorney duly authorized in
writing. Each Certificate surrendered for registration of transfer shall
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be canceled by the Regular Trustees. A transferee of a Certificate shall be
entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any
Certificate shall be registered on the books and records of the Trust as the
sole holder of such Certificate and of the Securities represented by such
Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Certificate or in the Securities represented
by such Certificate on the part of any Person, whether or not the Trust shall
have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Convertible
Preferred Securities, the Convertible Preferred Securities Certificates, on
original issuance, will be issued in the form of one or more, fully registered,
global Convertible Preferred Security Certificates (each a "Global
Certificate"), to be delivered to DTC, the initial Clearing Agency, by, or on
behalf of, the Trust. Such Global Certificates shall initially be registered
on the books and records of the Trust in the name of Cede & Co., the nominee of
DTC, and no Convertible Preferred Security Beneficial Owner will receive a
definitive Convertible Preferred Security Certificate representing such
Convertible Preferred Security Beneficial Owner's interests in such Global
Certificates, except as provided in Section 9.7. Unless and until definitive,
fully registered Convertible Preferred Security Certificates (the "Definitive
Convertible Preferred Security Certificates") have been issued to the
Convertible Preferred Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full
force and effect;
(b) the Trust and the Trustees shall be entitled to
deal with the Clearing Agency for all purposes of this Declaration
(including the payment of Distributions on the Global Certificates and
receiving approvals, votes or consents hereunder) as the Holder of the
Convertible Preferred Securities and the sole holder of the Global
Certificates and shall have no obligation to the Convertible Preferred
Security Beneficial Owners;
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(c) to the extent that the provisions of this Section
9.4 conflict with any other provisions of this Declaration, the
provisions of this Section 9.4 shall control; and
(d) the rights of the Convertible Preferred Security
Beneficial Owners shall be exercised only through the Clearing Agency
and shall be limited to those established by law and agreements
between such Convertible Preferred Security Beneficial Owners and the
Clearing Agency and/or the Clearing Agency Participants and receive
and transmit payments of Distributions on the Global Certificates to
such Clearing Agency Participants. DTC will make book entry transfers
among the Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Convertible
Preferred Security Holders is required under this Declaration, unless and until
Definitive Convertible Preferred Security Certificates shall have been issued
to the Convertible Preferred Security Beneficial Owners pursuant to Section
9.7, the Regular Trustees shall give all such notices and communications
specified herein to be given to the Convertible Preferred Security Holders to
the Clearing Agency, and shall have no notice obligations to the Convertible
Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Convertible Preferred Securities, the
Regular Trustees may, in their sole discretion, appoint a successor Clearing
Agency with respect to such Convertible Preferred Securities.
SECTION 9.7 Definitive Convertible Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its
services as securities depositary with respect to the Convertible
Preferred Securities and a successor Clearing Agency is not appointed
within 90 days after such discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with
the Sponsor to terminate the book entry system through the Clearing
Agency with respect to the Convertible Preferred Securities,
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then:
(c) Definitive Convertible Preferred Security
Certificates shall be prepared by the Regular Trustees on behalf of
the Trust with respect to such Convertible Preferred Securities; and
(d) upon surrender of the Global Certificates by the
Clearing Agency, accompanied by registration instructions, the Regular
Trustees shall cause Definitive Certificates to be delivered to
Convertible Preferred Security Beneficial Owners in accordance with
the instructions of the Clearing Agency. Neither the Trustees nor the
Trust shall be liable for any delay in delivery of such instructions
and each of them may conclusively rely on and shall be protected in
relying on, said instructions of the Clearing Agency. The Definitive
Convertible Preferred Security Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks
of identification or designation and such legends or endorsements as
the Regular Trustees may deem appropriate, or as may be required to
comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which
Convertible Preferred Securities may be listed, or to conform to
usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to
the Regular Trustees, or if the Regular Trustees shall receive
evidence to their satisfaction of the destruction, loss or theft of
any Certificate; and
(b) there shall be delivered to the Regular Trustees
such security or indemnity as may be required by them to keep each of
them harmless.
then, in the absence of notice that such Certificate shall have been acquired
by a bona fide purchaser, any Regular Trustee on behalf of the Trust shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like denomination.
In connection with the issuance of any new Certificate under this Section 9.8,
the Regular Trustees may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of an
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ownership interest in the relevant Securities, as if originally issued, whether
or not the lost, stolen or destroyed Certificate shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration,
the Securities Guarantees and the terms of the Securities, the Sponsor shall
not be:
(i) personally liable for the return of any portion of
the capital contributions (or any return thereon) of the Holders of
the Securities which shall be made solely from assets of the Trust;
and
(ii) be required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable
for all of the debts and obligations of the Trust (other than with respect to
the Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust
Act, the Holders of the Convertible Preferred Securities shall be entitled to
the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible
or accountable in damages or otherwise to the Trust 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 on behalf of the Trust and
in a manner such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Declaration 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 gross
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 Trust and upon such information,
opinions, reports or statements presented to
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the Trust 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 Trust,
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 Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity (other than the duties imposed on the Property Trustee
under the Trust Indenture Act), are agreed by the parties hereto to replace
such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person
is permitted or required to make a decision:
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(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard imposed by
this Declaration or by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Convertible Debenture Issuer shall
indemnify, to the full extent permitted by law, 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 and expenses), judgments, fines
and 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 termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good
faith and in a manner which 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 reasonable cause to believe that
his conduct was unlawful.
(ii) The Convertible Debenture Issuer shall indemnify,
to the full extent permitted by law, 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 and expenses) 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
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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.
(iii) To the extent that a Company Indemnified Person
shall be successful on the merits or otherwise (including dismissal of
an action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii)
of this Section 10.4(a) (unless ordered by a court) shall be made by
the Convertible Debenture Issuer only as authorized in the specific
case upon a determination that indemnification of the Company
Indemnified Person is proper in the circumstances because he has met
the applicable standard of conduct set forth in paragraphs (i) and
(ii). Such determination shall be made (1) by the Regular Trustees by
a majority vote of a quorum consisting of such Regular Trustees who
were not parties to such action, suit or proceeding, (2) if such a
quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested Regular Trustees so directs, by independent legal
counsel in a written opinion, or (3) by the Common Security Holder of
the Trust.
(v) Expenses (including attorneys' fees and expenses)
incurred by a Company Indemnified Person in defending a civil,
criminal, administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall
be paid by the Convertible Debenture Issuer 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 the Convertible Debenture Issuer as
authorized in this Section 10.4(a). Notwithstanding the foregoing, no
advance shall be made by the Convertible Debenture Issuer if a
determination is reasonably and promptly made (i) by the Regular
Trustees by a majority vote of a quorum of disinterested Regular
Trustees, (ii) if such a quorum is not obtainable, or, even if
obtainable, if a
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quorum of disinterested Regular Trustees so directs, by independent
legal counsel in a written opinion or (iii) the Common Security Holder
of the Trust, that, based upon the facts known to the Regular
Trustees, counsel or the Common Security Holder at the time such
determination is made, such Company Indemnified Person acted in bad
faith or in a manner that such person did not believe to be in or not
opposed to the best interests of the Trust, or, with respect to any
criminal proceeding, that such Company Indemnified Person believed or
had reasonable cause to believe his conduct was unlawful. In no event
shall any advance be made in instances where the Regular Trustees,
independent legal counsel or Common Security Holder reasonably
determine that such person deliberately breached his duty to the Trust
or its Common or Convertible Preferred Security Holders.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 10.4(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Convertible Debenture Issuer or Convertible Preferred
Security Holders of the Trust or otherwise, both as to action in his
official capacity and as to action in another capacity while holding
such office. All rights to indemnification under this Section 10.4(a)
shall be deemed to be provided by a contract between the Convertible
Debenture Issuer and each Company Indemnified Person who serves in
such capacity at any time while this Section 10.4(a) is in effect.
Any repeal or modification of this Section 10.4(a) shall not affect
any rights or obligations then existing.
(vii) The Convertible Debenture Issuer or the Trust may
purchase and maintain insurance on behalf of any person who is or was
a Company Indemnified Person against any liability asserted against
him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Convertible Debenture Issuer would
have the power to indemnify him against such liability under the
provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 10.4(a) with respect to
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the resulting or surviving entity as he would have with respect to
such constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.4(a) shall,
unless otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a Company Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
(b) The Convertible Debenture Issuer agrees to
indemnify the (i) Property Trustee, (ii) the Delaware Trustee, (iii) any
Affiliate of the Property Trustee and the Delaware Trustee, and (iv) any
officers, directors, shareholders, members, partners, employees,
representatives, custodians, nominees or agents of the Property Trustee and the
Delaware Trustee (each of the Persons in (i) through (iv) being referred to as
a "Fiduciary Indemnified Person") for, and to hold each Fiduciary 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 or 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 10.4(b) shall survive the
satisfaction and discharge of this Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor, the Delaware Trustee, or the Property Trustee shall be obligated to
present any particular invest- ment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee
and the Property Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Property Trustee may engage or be interested in any financial
or other transaction with the Sponsor or any Affiliate of the Sponsor, or may
act as depositary for, trustee or agent for, or
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act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Regular Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail,
each transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The Trust shall use the accrual method of
accounting for United States federal income tax purposes. The books of account
and the records of the Trust shall be examined by and reported upon as of the
end of each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and
delivered to each of the Holders of Securities, within 90 days after the end of
each Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal Year, and
the related statements of income or loss;
(c) The Regular Trustees shall cause to be duly
prepared and delivered to each of the Holders of Securities, any annual United
States federal income tax information statement, required by the Code,
containing such information with regard to the Securities held by each Holder
as is required by the Code and the Treasury Regulations. Notwithstanding any
right under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such statements within 30 days after the
end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly
prepared and filed with the appropriate taxing authority, an annual United
States federal income tax return, on a Form 1041 or such other form required by
United States federal income tax law, and any other annual income tax returns
required to be filed by the Regular Trustees on behalf of the Trust with any
state or local taxing authority.
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SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, how- ever, that all payments
of funds in respect of the Convertible Debentures held by the Property Trustee
shall be made directly to the Property Trustee Account and no other funds of
the Trust shall be deposited in the Property Trustee Account. The sole
signatories for such accounts shall be designated by the Regular Trustees;
provided, however, that the Property Trustee shall designate the signatories
for the Property Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably
be requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Regular Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a distribution in the amount of the withholding to the
Holder. In the event of any claimed over-withholding, Holders shall be limited
to an action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or
by any applicable terms of the Securities, this Declaration may only be amended
by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than
two Regular Trustees a majority of the Regular Trustees);
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(ii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Property Trustee, the
Property Trustee; and
(iii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee, the
Delaware Trustee;
(b) no amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Property Trustee shall have first received an Officers' Certificate
from each of the Trust and the Sponsor that such amendment is
permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Property Trustee, the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(B) an opinion of counsel (who may be counsel
to the Sponsor or the Trust) that such amendment is permitted
by, and conforms to, the terms of this Declaration (including
the terms of the Securities); and
(iii) to the extent the result of such amendment would be
to:
(A) cause the trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
(B) reduce or otherwise adversely affect the
powers of the Property Trustee in contravention of the Trust
Indenture Act; or
(C) cause the Trust to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(c) at such time after the Trust has issued any
Securities that remain outstanding, any amendment that would adversely affect
the rights, privileges or preferences of any Holder of Securities may be
effected only with such additional requirements as may be set forth in the
terms of such Securities;
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(d) Section 9.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent
of the Holders of a Majority in liquidation amount of the Common Securities
and;
(f) the rights of the holders of the Common Securities
under Article V to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Common Securities; and
(g) notwithstanding Section 12.1(c), this Declaration
may be amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent with any other
provision of this Declaration;
(iii) add to the covenants, restrictions or obligations
of the Sponsor;
(iv) to conform to any change in Rule 3a-5 or written
change in interpretation or application of Rule 3a-5 by any
legislative body, court, government agency or regulatory authority
which amendment does not have a material adverse effect on the right,
preferences or privileges of the Holders; and
(v) to modify, eliminate and add to any provision of
the Amended Declaration to such extent as may be necessary.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Securities
may be called at any time by the Regular Trustees (or as provided in the terms
of the Securities) to consider and act on any matter on which Holders of such
class of Securities are entitled to act under the terms of this Declaration,
the terms of the Securities or the rules of any stock exchange on which the
Convertible Preferred Securities are listed or admitted for trading. The
Regular Trustees shall call a meeting of the Holders of such class if directed
to do so by the Holders of at least 10% in liquidation amount of such class of
Securities. Such direction shall be given by delivering to the Regular
Trustees one or more calls in a writing stating that the signing Holders of
Securities
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wish to call a meeting and indicating the general or specific purpose for which
the meeting is to be called. Any Holders of Securities calling a meeting shall
specify in writing the Security Certificates held by the Holders of Securities
exercising the right to call a meeting and only those Securities specified
shall be counted for purposes of determining whether the required percentage
set forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the
terms of the Securities, the following provisions shall apply to meetings of
Holders of Securities:
(i) notice of any such meeting shall be given to all
the Holders of Securities having a right to vote thereat at least 7
days and not more than 60 days before the date of such meeting.
Whenever a vote, consent or approval of the Holders of Securities is
permitted or required under this Declaration or the rules of any stock
exchange on which the Convertible Preferred Securities are listed or
admitted for trading, such vote, consent or approval may be given at a
meeting of the Holders of Securities. Any action that may be taken at
a meeting of the Holders of Securities may be taken without a meeting
if a consent in writing setting forth the action so taken is signed by
the Holders of Securities owning not less than the minimum amount of
Securities in liquidation amount that would be necessary to authorize
or take such action at a meeting at which all Holders of Securities
having a right to vote thereon were present and voting. Prompt notice
of the taking of action without a meeting shall be given to the
Holders of Securities entitled to vote who have not consented in
writing. The Regular Trustees may specify that any written ballot
submitted to the Security Holder for the purpose of taking any action
without a meeting shall be returned to the Trust within the time
specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person
to act for it by proxy on all matters in which a Holder of Securities
is entitled to participate, including waiving notice of any meeting,
or voting or participating at a meeting. No proxy shall be valid
after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at
the pleasure of the Holder of Securities executing it. Except as
otherwise provided herein, all matters relating to the giving, voting
or validity of proxies shall be governed by the General Corporation
Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a
Delaware corporation;
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(iii) each meeting of the Holders of the Securities shall
be conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration,
the terms of the Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Convertible Preferred
Securities are then listed or trading, otherwise provides, the Regular
Trustees, in their sole discretion, shall establish all other
provisions relating to meetings of Holders of Securities, including
notice of the time, place or purpose of any meeting at which any
matter is to be voted on by any Holders of Securities, waiver of any
such notice, action by consent without a meeting, the establishment of
a record date, quorum requirements, voting in person or by proxy or
any other matter with respect to the exercise of any such right to
vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Property Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) the Property Trustee is a national banking
association with trust powers, duly organized, validly existing and in
good standing under the laws of the United States, with trust power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration;
(b) the execution, delivery and performance by the
Property Trustee of the Declaration has been duly authorized by all
necessary corporate action on the part of the Property Trustee. The
Declaration has been duly executed and delivered by the Property
Trustee, and it constitutes a legal, valid and binding obligation of
the Property Trustee, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of
the court (regardless of whether the enforcement
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of such remedies is considered in a proceeding in equity or at law);
(c) the execution, delivery and performance of the
Declaration by the Property Trustee does not conflict with or
constitute a breach of the Articles of Organization or By-laws of the
Property Trustee; and
(d) no consent, approval or authorization of, or
registration with or notice to, any State or Federal banking authority
is required for the execution, delivery or performance by the Property
Trustee, of the Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Delaware Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking
corporation with trust powers, duly organized, validly existing and in
good standing under the laws of the State of Delaware, with trust
power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, the Declaration.
(b) The Delaware Trustee has been authorized to perform
its obligations under the Certificate of Trust and the Declaration.
The Declaration under Delaware law constitutes a legal, valid and
binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws
affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity
or at law).
(c) No consent, approval or authorization of, or
registration with or notice to, any State or Federal banking authority
is required for the execution, delivery or performance by the Delaware
Trustee, of the Declaration.
(d) The Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person, an
entity which has its principal place of business in the State of
Delaware.
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, if to the Trust, the
Delaware Trustee, the Property Trustee or to the Holder of Common Securities by
first class mail, and to any other Holders by first class mail, as follows:
(a) if given to the Trust, in care of the Regular
Trustees at the Trust's mailing address set forth below (or such other
address as the Trust may give notice of to the Holders of the
Securities):
NorAm Capital Financing I
c/o NorAm Energy Corp.
1600 Smith Street
32nd Floor
Houston, Texas 77002
Attention: Michael A. Creel,
Vice President and Treasurer
(b) if given to the Delaware Trustee, at the mailing
address set forth below (or such other address as Delaware Trustee may
give notice of to the Holders of the Securities):
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
(c) if given to the Property Trustee, at its Corporate
Trust Office to the attention of Corporate Trust Trustee
Administration (or such other address as the Property Trustee may
give notice of to the Holders of the Securities):
(d) if given to the Holder of the Common Securities, at
the mailing address of the Sponsor set forth below (or such other
address as the Holder of the Common Securities may give notice to the
Trust):
NorAm Energy Corp.
1600 Smith Street
32nd Floor
Houston, Texas 77002
Attention: Michael A. Creel
Vice President and Treasurer
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(e) if given to any other Holder, at the address set
forth on the books and records of the Trust.
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 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust.
The provisions of this Declaration shall be interpreted to further this
intention of the parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 14.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
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SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
---------------------------------------
MICHAEL B. BRACY,
as Regular Trustee
---------------------------------------
MICHAEL A. CREEL,
as Regular Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By:
-----------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Property Trustee
By:
-----------------------------------
Name:
Title:
NORAM ENERGY CORP., as Sponsor
By:
-----------------------------------
Name:
Title:
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ANNEX I
TERMS OF
___% CONVERTIBLE PREFERRED SECURITIES
___% CONVERTIBLE COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of June __, 1996 (as amended from time to time,
the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Convertible Preferred
Securities and the Common Securities are set out below (each capitalized term
used but not defined herein has the meaning set forth in the Declaration or, if
not defined in such Declaration, as defined in the Prospectus referred to
below):
1. Designation and Number.
(a) Convertible Preferred Securities. 3,000,000
Convertible Preferred Securities of the Trust with an aggregate liquidation
amount with respect to the assets of the Trust of one hundred and fifty million
dollars ($150,000,000) (plus up to an additional 450,000 Convertible Preferred
Securities with an aggregate liquidation amount of twenty-two million five
hundred thousand dollars ($22,500,000) solely to cover over-allotments) and a
liquidation amount with respect to the assets of the Trust of $50 per
Convertible Preferred Security, are hereby designated for the purposes of
identification only as "_____% Convertible Trust Originated Preferred
Securities(SM) (the "Convertible Pre- ferred Securities"). The Convertible
Preferred Security Certificates evidencing the Convertible Preferred Securities
shall be substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of any stock
exchange on which the Convertible Preferred Securities are listed.
(b) Common Securities. [ ] Common
Securities of the Trust with an aggregate liquidation amount with respect to
the assets of the Trust of [ ] dollars ($[ ]) and a
liquidation amount with respect to the assets of the Trust of $50 per common
security, are hereby designated for the purposes of identification only as
"______% Convertible Trust Originated Common Securities" (the "Common
Securities").
- ----------------------------------
(SM) "Convertible Trust Originated Preferred Securities" and "Convertible
TOPrS" are service marks of Merrill Lynch & Co.
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The Common Security Certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed
at a rate per annum of ______% (the "Coupon Rate") of the stated liquidation
amount of $50 per Security, such rate being the rate of interest payable on the
Convertible Debentures to be held by the Property Trustee. Distributions in
arrears for more than one quarter will bear interest thereon compounded
quarterly at the Coupon Rate (to the extent permitted by applicable law). The
term "Distributions" as used herein includes any such interest payable unless
otherwise stated. A Distribution is payable only to the extent that payments
are made in respect of the Convertible Debentures held by the Property Trustee
and to the extent the Property Trustee has funds available therefor. The
amount of Distributions payable for any period will be computed for any full
quarterly Distribution period on the basis of a 360-day year of twelve 30-day
months, and for any period shorter than a full quarterly Distribution period
for which Distributions are computed, Distributions will be computed on the
basis of the actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative,
will accrue from the date of original issuance, and will be payable quarterly
in arrears, on March 31, June 30, September 30, and December 31 of each year,
commencing September 30, 1996, except as otherwise described below. The
Convertible Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period from time to time
on the Convertible Debentures for a period not exceeding 20 consecutive
quarters (each an "Extension Period"), during which Extension Period no
interest shall be due and payable on the Convertible Debentures, provided that
no Extension Period shall last beyond the date of maturity of the Convertible
Debentures. As a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to
accrue with interest thereon (to the extent permitted by applicable law) at the
Coupon Rate compounded quarterly during any such Extension Period. In the
event that the Convertible Debenture Issuer exercises this right to defer
interest payments, then (a) the Convertible Debenture Issuer shall not declare
or pay dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital
stock (other than (i) purchases or acquisitions of shares of the Convertible
Debenture Issuer's common stock in connection with the satisfaction by the
Convertible Debenture Issuer of its obligations under any employee benefit
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plans or the satisfaction by the Convertible Debenture Issuer of its
obligations pursuant to any contract or security requiring the Convertible
Debenture Issuers to purchase shares of the Convertible Debenture Issuer's
capital stock, (ii) as a result of a reclassification of the Convertible
Debenture Issuer's capital stock or the exchange or conversion of one class or
series of the Convertible Debenture Issuer's capital stock for another class or
series of the Convertible Debenture Issuer's capital stock, (iii) the payment
of dividends or distributions in shares of its capital stock of the same class
on which such dividends or distributions are being paid, or (iv) the purchase
of fractional interests in shares of the Convertible Debenture Issuer's capital
stock pursuant to the conversion or exchange provisions of the Convertible
Debenture Issuer's capital stock or the security being converted or exchanged)
or make any guarantee payments with respect to the foregoing and (b) the
Convertible Debenture Issuer shall not make any payment of interest, principal
or premium, if any, on or repay, repurchase or redeem any debt securities
issued by the Convertible Debenture Issuer that rank pari passu with or junior
to such Convertible Debentures. Prior to the termination of any such Extension
Period, the Convertible Debenture Issuer may further extend such Extension
Period; provided that such Extension Period together with all such previous and
further extensions thereof may not exceed 20 consecutive quarters or extend
beyond the maturity date of the Convertible Debentures. Payments of accrued
Distributions will be payable to Holders as they appear on the books and
records of the Trust on the first record date after the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all
amounts then due, the Convertible Debenture Issuer may commence a new Extension
Period, subject to the above requirements.
(c) The Convertible Debenture Issuer has the right under
the Indenture to elect to extend the Scheduled Maturity Date of the Convertible
Debentures provided that the Convertible Debenture Issuer meets certain
requirements. Upon such election by the Convertible Debenture Issuer, the
Regular Trustees are required to give at least 60 days' notice of such election
to extend the Scheduled Maturity Date to the holders of Convertible Preferred
Securities.
(d) Distributions on the Securities will be payable to
the Holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which as long as the Convertible Preferred Securities
remain in book-entry only form, the relevant record dates shall be one Business
Day prior to the relevant payment dates which payment dates correspond to the
interest payment dates on the Convertible Debentures. Subject to any
applicable laws and regulations and the provisions of the Declaration, each
such payment in respect of the Convertible Preferred Securities will be made as
described under the heading "Description of the Convertible Preferred
Securities -- Book-
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Entry Only Issuance -- The Depository Trust Company" in the Prospectus
Supplement dated ______, 1996, to the Prospectus dated ______, 1996 (together,
the "Prospectus"), of the Trust included in the Registration Statement on Form
S-3 of the Sponsor, the Trust, certain other business trusts and a certain
partnership. The relevant record dates for the Common Securities shall be the
same record date as for the Convertible Preferred Securities. If the
Convertible Preferred Securities shall not continue to remain in book-entry
only form, the relevant record dates for the Convertible Preferred Securities
shall conform to the rules of any securities exchange on which the securities
are listed and, if none, shall be selected by the Regular Trustees, which dates
shall be at least fifteen Business Days prior to the relevant payment dates,
which payment dates correspond to the interest payment dates on the Convertible
Debentures. Distributions payable on any Securities that are not punctually
paid on any Distribution payment date, as a result of the Convertible Debenture
Issuer having failed to make a payment under the Convertible Debentures, will
cease to be payable to the Person in whose name such Securities are registered
on the relevant record date, and such defaulted Distribution will instead be
payable to the Person in whose name such Securities are registered on the
special record date or other specified date determined in accordance with the
Indenture. If any date on which Distributions are payable on the Securities is
not a Business Day, then payment of the Distribution payable on such date will
be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date.
(e) In the event of an election by the Holder to convert
its Securities through the Conversion Agent into NorAm Common Stock pursuant to
the terms of the Securities as forth in this Annex I to the Declaration, no
payment, allowance or adjustment shall be made with respect to accumulated and
unpaid Distributions on such Securities, or be required to be made; provided
that Holders of Securities at the close of business on any record date for the
payment of Distributions will be entitled to receive the Distributions payable
on such Securities on the corresponding payment date notwithstanding the
conversion of such Securities into NorAm Common Stock following such record
date.
(f) In the event that there is any money or other
property held by or for the Trust that is not accounted for hereunder, such
property shall be distributed Pro Rata (as defined herein) among the Holders of
the Securities.
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3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust (each a "Liquidation"), the Holders of
the Securities on the date of the dissolution, winding-up or termination, as
the case may be, will be entitled to receive out of the assets of the Trust
available for distribution to Holders of Securities after satisfaction of
liabilities of creditors an amount equal to the aggregate of the stated
liquidation amount of $50 per Security plus accrued and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"), unless, in connection with such dissolution, winding-up or
termination, Convertible Debentures in an aggregate principal amount equal to
the aggregate stated liquidation amount of such Securities, with an interest
rate equal to the Coupon Rate of, and bearing accrued and unpaid interest in an
amount equal to the accrued and unpaid Distributions on, such Securities, shall
be distributed on a Pro Rata basis to the Holders of the Securities in exchange
for such Securities.
If, upon any such Liquidation, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Convertible Debentures in
whole or in part, whether at maturity or upon redemption (either at the option
of the Convertible Debenture Issuer or pursuant to a Tax Event as described
below), the proceeds from such repayment or payment shall be simultaneously
applied to redeem Securities having an aggregate liquidation amount equal to
the aggregate principal amount of the Convertible Debentures so repaid or
redeemed at a redemption price of $50 per Security plus an amount equal to
accrued and unpaid Distributions thereon at the date of the redemption, payable
in cash (the "Redemption Price"). Holders will be given not less than 30 nor
more than 60 days notice of such redemption.
(b) If fewer than all the outstanding Securities are to
be so redeemed, the Common Securities and the Convertible Preferred Securities
will be redeemed Pro Rata and the Convertible Preferred Securities to be
redeemed will be as described in Section 4(f)(ii) below.
(c) If a Tax Event shall occur and be continuing the
Regular Trustees shall, except in certain limited circumstances in relation to
a Tax Event described in this Section 4(c), dissolve the Trust and, after
satisfaction of creditors, cause
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Convertible Debentures held by the Property Trustee, having an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on, and having the same record date
for payment as the Securities, to be distributed to the Holders of the
Securities in liquidation of such Holders' interests in the Trust on a Pro Rata
basis, within 90 days following the occurrence of such Tax Event (the "90 Day
Period"); provided, however, that, as a condition of such dissolution and
distribution, the Regular Trustees shall have received an opinion of a
nationally recognized independent tax counsel experienced in such matters (a
"No Recognition Opinion"), which opinion may rely on published revenue rulings
of the Internal Revenue Service, to the effect that the Holders of the
Securities will not recognize any gain or loss for United States federal income
tax purposes as a result of the dissolution of the Trust and the distribution
of Convertible Debentures, and provided, further, that, if at the time there is
available to the Trust the opportunity to eliminate, within the 90 Day Period,
the Tax Event by taking some ministerial action, such as filing a form or
making an election, or pursuing some other similar reasonable measure that has
no adverse effect on the Trust, the Convertible Debenture Issuer or the Holders
of the Securities ("Ministerial Action"), the Trust will pursue such
Ministerial Action in lieu of dissolution.
If (i) in the event of a Tax Event, after receipt of a Tax
Event Opinion (as defined hereinafter) by the Regular Trustees, the Convertible
Debenture Issuer has received an opinion (a "Redemption Tax Opinion") of a
nationally recognized independent tax counsel experienced in such matters that,
as a result of a Tax Event, there is more than an insubstantial risk that the
Convertible Debenture Issuer would be precluded from deducting the interest on
the Convertible Debentures for United States federal income tax purposes even
if the Convertible Debentures were distributed to the Holders of Securities in
liquidation of such Holders' interests in the Trust as described in this
Section 4(c), or (ii) in the event of a Tax Event, after receipt of a Tax Event
Opinion (as defined hereinafter), as the case may be, the Regular Trustees
shall have been informed by such tax counsel that a No Recognition Opinion
cannot be delivered to the Trust, the Convertible Debenture Issuer shall have
the right at any time, upon not less than 30 nor more than 60 days notice, to
redeem the Convertible Debentures in whole or in part for cash within 90 days
following the occurrence of such Tax Event, and, following such redemption,
Securities with an aggregate liquidation amount equal to the aggregate
principal amount of the Convertible Debentures so redeemed shall be redeemed by
the Trust at the Redemption Price on a Pro Rata basis; provided, however, that,
if at the time there is available to the Trust the opportunity to eliminate,
within such 90 day period, the Tax Event by taking some Ministerial Action, the
Trust or the Convertible
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Debenture Issuer will pursue such Ministerial Action in lieu of redemption.
"Tax Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent tax counsel
experienced in such matters (a "Tax Event Opinion") to the effect that on or
after the date of the Prospectus Supplement, as a result of (a) any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by any
legislative body, court, governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or announced or which
interpretation or pronouncement is issued or announced or which action is
taken, in each case on or after the date of the Prospectus Supplement, there is
more than an insubstantial risk that (i) the Trust is or will be within 90 days
of the date thereof, subject to United States federal income tax with respect
to interest accrued or received on the Convertible Debentures, (ii) the Trust
is, or will be within 90 days of the date thereof, subject to more than a de
minimis amount of taxes, duties or other governmental charges, or (iii)
interest payable by the Convertible Debenture Issuer to the Trust on the
Convertible Debentures is not, or within 90 days of the date thereof will not
be, deductible, in whole or in part, by the Convertible Debenture Issuer for
United States federal income tax purposes.
On and from the date fixed by the Regular Trustees for any
distribution of Convertible Debentures and dissolution of the Trust: (i) the
Securities will no longer be deemed to be outstanding, (ii) The Depository
Trust Company (the "Depository") or its nominee (or any successor Clearing
Agency or its nominee), as the record Holder of the Convertible Preferred
Securities, will receive a registered global certificate or certificates
representing the Convertible Debentures to be delivered upon such distribution
and (iii) any certificates representing Securities, except for certificates
representing Convertible Preferred Securities held by the Depository or its
nominee (or any successor Clearing Agency or its nominee), will be deemed to
represent beneficial interests in the Convertible Debentures having an
aggregate principal amount equal to the aggregate stated liquidation amount of,
with an interest rate identical to the Coupon Rate of, and accrued and unpaid
interest equal to accrued and unpaid Distributions on such Securities until
such certificates are presented to the Convertible Debenture Issuer or its
agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the
outstanding Securities unless all accrued and unpaid Distributions
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have been paid on all Securities for all quarterly Distribution periods
terminating on or before the date of redemption.
(e) If the Convertible Debentures are distributed to
holders of the Securities, pursuant to the terms of the Indenture, the
Convertible Debenture Issuer will use its best efforts to have the Convertible
Debentures listed on the New York Stock Exchange or on such other exchange as
the Convertible Preferred Securities were listed immediately prior to the
distribution of the Convertible Debentures.
(f) "Redemption or Distribution Procedures."
(i) Notice of any redemption of, or notice of
distribution of Convertible Debentures in exchange for the Securities
(a "Redemption/Distribution Notice") will be given by the Trust by
mail to each Holder of Securities to be redeemed or exchanged not
fewer than 30 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a redemption,
will be the date fixed for redemption of the Convertible Debentures.
For purposes of the calculation of the date of redemption or exchange
and the dates on which notices are given pursuant to this Section
4(f)(i), a Redemption/ Distribution Notice shall be deemed to be given
on the day such notice is first mailed by first-class mail, postage
prepaid, to Holders of Securities. Each Redemption/Distribution
Notice shall be addressed to the Holders of Securities at the address
of each such Holder appearing in the books and records of the Trust.
No defect in the Redemption/Distribution Notice or in the mailing of
either thereof with respect to any Holder shall affect the validity of
the redemption or exchange proceedings with respect to any other
Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Convertible Preferred
Securities, it being understood that, in respect of Convertible
Preferred Securities registered in the name of and held of record by
the Depository or its nominee (or any successor Clearing Agency or its
nominee) or any nominee, the distribution of the proceeds of such
redemption will be made to each Clearing Agency Participant (or Person
on whose behalf such nominee holds such securities) in accordance with
the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives
a Redemption/Distribution Notice, which notice may only be issued if
the Convertible Debentures are redeemed as set out in this Section 4
(which notice will be irrevocable), then (A) while the Convertible
Preferred
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Securities are in book-entry only form, with respect to the
Convertible Preferred Securities, by 12:00 noon, New York City time,
on the redemption date, provided that the Convertible Debenture Issuer
has paid the Property Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Convertible
Debentures, the Property Trustee will deposit irrevocably with the
Depository or its nominee (or successor Clearing Agency or its
nominee) funds sufficient to pay the applicable Redemption Price with
respect to the Convertible Preferred Securities and will give the
Depository irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Convertible Preferred
Securities, and (B) with respect to Convertible Preferred Securities
issued in definitive form and Common Securities, provided that the
Convertible Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related redemption or
maturity of the Convertible Debentures, the Property Trustee will pay
the relevant Redemption Price to the Holders of such Securities by
check mailed to the address of the relevant Holder appearing on the
books and records of the Trust on the redemption date. If a
Redemption/Distribution Notice shall have been given and funds
deposited as required, if applicable, then immediately prior to the
close of business on the date of such deposit, or on the redemption
date, as applicable, distributions will cease to accrue on the Secu-
rities so called for redemption and all rights of Holders of such
Securities so called for redemption will cease, except the right of
the Holders of such Securities to receive the Redemption Price, but
without interest on such Redemption Price. Neither the Regular
Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Securities that have been so called for
redemption. If any date fixed for redemption of Securities is not a
Business Day, then payment of the Redemption Price payable on such
date will be made on the next succeeding day that is a Business Day
(and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such
date fixed for redemption. If payment of the Redemption Price in
respect of any Securities is improperly withheld or refused and not
paid either by the Property Trustee or by the Sponsor as guarantor
pursuant to the relevant Securities Guarantee, Distributions on such
Securities will continue to accrue from the original redemption date
to the actual date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
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(iv) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to (A) in respect of the
Convertible Preferred Securities, the Depository or its nominee (or
any successor Clearing Agency or its nominee) if the Global
Certificates have been issued or, if Definitive Convertible Preferred
Security Certificates have been issued, to the Holder thereof, and (B)
in respect of the Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities
laws), provided the acquiror is not the Holder of the Common
Securities or the obligor under the Indenture, the Sponsor may at any
time, and from time to time, purchase outstanding Convertible
Preferred Securities by tender, in the open market or by private
agreement.
5. Conversion Rights.
The Holders of Securities shall have the right at any time, at
their option, to cause the Conversion Agent to convert Securities, on behalf of
the converting Holders, into shares of NorAm Common Stock in the manner
described herein on and subject to the following terms and conditions:
(a) The Securities will be convertible at the office of the
Conversion Agent into fully paid and nonassessable shares of NorAm Common Stock
pursuant to the Holder's direction to the Conversion Agent to exchange such
Securities for a portion of the Convertible Debentures theretofore held by the
Trust on the basis of one Security per $__ principal amount of Convertible
Debentures, and immediately convert such amount of Convertible Debentures into
fully paid and nonassessable shares of NorAm Common Stock at an initial rate of
________ shares of NorAm Common Stock per $__ principal amount of Convertible
Debentures (which is equivalent to a conversion price of $______ per share of
NorAm Common Stock, subject to certain adjustments set forth in the terms of
the Convertible Debentures (as so adjusted, "Conversion Price")).
(b) In order to convert Securities into NorAm Common Stock
the Holder shall submit to the Conversion Agent at the office referred to above
an irrevocable request to convert Securities on behalf of such Holder (the
"Conversion Request"), together, if the Securities are in certificated form,
with such certificates. The Conversion Request shall (i) set forth the number
of Securities to be converted and the name or names, if other than the Holder,
in which the shares of NorAm Common Stock should be issued and (ii) direct the
Conversion Agent (a) to exchange such Securities for a portion of the
Convertible Debentures held by the Trust (at the rate of exchange specified in
the preceding paragraph) and (b) to immediately convert such Convertible
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Debentures on behalf of such Holder, into NorAm Common Stock (at the conversion
rate specified in the preceding paragraph). The Conversion Agent shall notify
the Trust of the Holder's election to exchange Securities for a portion of the
Convertible Debentures held by the Trust and the Trust shall, upon receipt of
such notice, deliver to the Conversion Agent the appropriate principal amount
of Convertible Debentures for exchange in accordance with this Section. The
Conversion Agent shall thereupon notify NorAm Energy Corp. of the Holder's
election to convert such Convertible Debentures into shares of NorAm Common
Stock.
Holders of Securities at the close of business on a
Distribution record date will be entitled to receive any Distribution (whether
or not declared) payable on such securities with respect to the corresponding
Distribution payment date notwithstanding the conversion of such Securities
following such record date but prior to such distribution payment date. Except
as provided above, neither the Trust nor the Sponsor will make, or be required
to make, any payment, allowance or adjustment upon any conversion on account of
any accumulated and unpaid Distributions accrued on the Securities (including
any Additional Amounts accrued thereon) surrendered for conversion, or on
account of any accumulated and unpaid dividends on the shares of NorAm Common
Stock issued upon such conversion, and the delivery of the NorAm Common Stock
upon conversion of the Securities shall be deemed to constitute full payment
for all accrued and unpaid distributions on the Securities. Securities shall
be deemed to have been converted immediately prior to the close of business on
the day on which a Notice of Conversion relating to such Securities is received
the Trust in accordance with the foregoing provision (the "Conversion Date").
The Person or Persons entitled to receive the NorAm Common Stock issuable upon
conversion of the Convertible Debentures shall be treated for all purposes as
the record holder or holders of such NorAm Common Stock at such time. As
promptly as practicable on or after the Conversion Date, NorAm Energy Corp.
shall issue and deliver at the office of the Conversion Agent a certificate or
certificates for the number of full shares of NorAm Common Stock issuable upon
such conversion, together with the cash payment, if any, in lieu of any
fraction of any share to the Person or Persons entitled to receive the same,
unless otherwise directed by the Holder in the notice of conversion and the
Conversion Agent shall distribute such certificate or certificates to such
Person or Persons.
(c) Each Holder of a Security by his acceptance thereof
appoints The Bank of New York "Conversion Agent" for the purpose of effecting
the conversion of Securities in accordance with this Section. In effecting the
conversion and transactions described in this Section, the Conversion Agent
shall be acting as agent of the Holders of Securities directing it to effect
such conversion transactions. The Conversion Agent is hereby authorized
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(i) to exchange Securities from time to time for Convertible Debentures held by
the Trust in connection with the conver- sion of such Securities in accordance
with this Section and (ii) to convert all or a portion of the Convertible
Debentures into NorAm Common Stock and thereupon to deliver such shares of
NorAm Common Stock in accordance with the provisions of this Section and to
deliver to the Trust a new Debenture or Convertible Debentures for any
resulting unconverted principal amount.
(d) No fractional shares of NorAm Common Stock will be issued
as a result of conversion, but in lieu thereof, such fractional interest will
be paid by NorAm Energy Corp. in cash based upon the last reported sales price
of NorAm Common Stock on the date such Securities are surrendered for
conversion to the Trust, which in turn will make such payment to the Holder or
Holders of Securities so converted.
(e) NorAm Energy Corp. shall at all times reserve and keep
available out of its authorized and unissued NorAm Common Stock, solely for
issuance upon the conversion of the Convertible Debentures, free from any
preemptive or other similar rights, such number of shares of NorAm Common Stock
as shall from time to time be issuable upon the conversion of all the
Convertible Debentures then outstanding. Notwithstanding the foregoing, NorAm
Energy Corp. shall be entitled to deliver upon conversion of Convertible
Debentures, shares of NorAm Common Stock reacquired and held in the treasury of
NorAm Energy Corp. (in lieu of the issuance of authorized and unissued shares
of NorAm Common Stock), so long as any such treasury shares are free and clear
of all liens, charges, security interests or encumbrances. Any shares of NorAm
Common Stock issued upon conversion of the Convertible Debentures shall be duly
authorized, validly issued and fully paid and nonassessable. The Trust shall
deliver the shares of NorAm Common Stock received upon conversion of the
Convertible Debentures to the converting Holder free and clear of all liens,
charges, security interests and encumbrances, except for United States
withholding taxes. Each of NorAm Energy Corp. and the Trust shall prepare and
shall use its best efforts to obtain and keep in force such governmental or
regulatory permits or other authorizations as may be required by law, and shall
comply with all applicable requirements as to registration or qualification of
the NorAm Common Stock (and all requirements to list the NorAm Common Stock
issuable upon conversion of Convertible Debentures that are at the time
applicable), in order to enable NorAm Energy Corp. to lawfully issue NorAm
Common Stock to the Trust upon conversion of the Convertible Debentures and the
Trust to lawfully deliver the NorAm Common Stock to each Holder upon conversion
of the Securities.
(f) NorAm Energy Corp. will pay any and all taxes that may be
payable in respect of the issue or delivery of shares of NorAm Common Stock on
conversion of Convertible Debentures and
I-12
<PAGE> 76
the delivery of the shares of NorAm Common Stock by the Trust upon conversion
of the Securities. NorAm Energy Corp. shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issue
and delivery of shares of NorAm Common Stock in a name other than that in which
the Securities so converted were registered, and no such issue or delivery
shall be made unless and until the person requesting such issue has paid to the
Trust the amount of any such tax, or has established to the satisfaction of the
Trust that such tax has been paid.
(g) Nothing in the preceding Paragraph (f) shall limit the
requirement of the Trust to withhold taxes pursuant to the terms of the
Securities or set forth in this Annex I to the Declaration or to the
Declaration itself or otherwise require the Property Trustee or the Trust to
pay any amounts on account of such withholdings.
6. Voting Rights - Convertible Preferred Securities.
(a) Except as provided under Sections 5(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Convertible
Preferred Securities will have no voting rights.
(b) Subject to the requirements set forth in this
paragraph, the Holders of a Majority in liquidation amount of the Convertible
Preferred Securities, voting separately as a class have the right to direct the
time, method, and place of conducting any proceeding for any remedy available
to the Property Trustee, or direct the exercise of any trust or power conferred
upon the Property Trustee under the Declaration, including the right to (i)
direct the time, method, place of conducting any proceeding for any remedy
available to the Convertible Debenture Trustee, or exercising any trust or
power conferred on the Convertible Debenture Trustee with respect to the
Convertible Debentures, (ii) waive any past default and its consequences that
is waivable under Section 6.6 of the Indenture, or (iii) exercise any right to
rescind or annul a declaration that the principal of all the Convertible
Debentures shall be due and payable, provided, however, that, where a consent
under the Indenture would require the consent or act of the Holders of greater
than a majority of the Holders in principal amount of Convertible Debentures
affected thereby, (a "Super-Majority"), the Property Trustee may only give such
consent or take such action at the written direction of the Holders of at least
the proportion in liquidation amount of the Convertible Preferred Securities
which the relevant Super-Majority represents of the aggregate principal amount
of the Convertible Debentures outstanding. Except with respect to directing
the time, method and place of conducting a proceeding for a remedy, the
Property Trustee shall not take any of the actions described in clauses (i),
(ii) or (iii) above unless the Property Trustee has obtained an opinion of tax
I-13
<PAGE> 77
counsel to the effect that, as a result of such action, the Trust will not fail
to be classified as a grantor trust for United States federal income tax
purposes. The Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Convertible Preferred
Securities. Other than with respect to directing the time, method and place of
conducting any remedy available to the Property Trustee or the Convertible
Debenture Trustee as set forth above, the Property Trustee shall not take any
action in accordance with the directions of the Holders of the Convertible
Preferred Securities under this paragraph unless the Property Trustee has
obtained an opinion of tax counsel to the effect that for the purposes of
United States federal income tax the Trust will not be classified as other than
a grantor trust on account of such action. If the Property Trustee fails to
enforce its rights under the Convertible Debentures, any Holder of Convertible
Preferred Securities may, after such holder's written request to the Property
Trustee to enforce such rights, institute a legal proceeding directly against
the Convertible Debenture Issuer to enforce the Property Trustee's rights under
the Convertible Debentures without first instituting a legal proceeding against
the Property Trustee or any other Person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Convertible Debenture Issuer
to pay interest or principal on the Convertible Debentures 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 may directly
institute a proceeding for enforcement of payment to such Holder (a "Direct
Action") of the principal of or interest on the Convertible Debentures having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Convertible Debentures. Except as provided in the preceding sentence, the
Holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Convertible Debentures. In connection
with such Direct Action, the Convertible Debenture Issuer will be subrogated to
the rights of such holder of Convertible Preferred Securities under the
Declaration to the extent of any payment made by the Convertible Debenture
Issuer to such holder of Preferred Securities in such Direct Action.
Any required approval or direction of Holders of Convertible
Preferred Securities may be given at a separate meeting of Holders of
Convertible Preferred Securities convened for such purpose, at a meeting of all
of the Holders of Securities in the Trust or pursuant to written consent. The
Regular Trustees will cause a notice of any meeting at which Holders of
Convertible Preferred Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to
each Holder of record of Convertible Preferred
I-14
<PAGE> 78
Securities. Each such notice will include a statement setting forth (i) the
date of such meeting or the date by which such action is to be taken, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matter upon which written consent
is sought and (iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Convertible Preferred
Securities will be required for the Trust to redeem and cancel Convertible
Preferred Securities or to distribute the Convertible Debentures in accordance
with the Declaration and the terms of the Securities.
Notwithstanding that Holders of Convertible Preferred
Securities are entitled to vote or consent under any of the circumstances
described above, any of the Convertible Preferred Securities that are owned at
such time by the Sponsor or any Affiliate of the Sponsor shall not be entitled
to vote or consent and shall, for purposes of such vote or consent, be treated
as if they were not outstanding.
7. Voting Rights - Common Securities.
(a) Except as provided under Sections 7(b), (c) and 8 as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only
after the Event of Default with respect to the Convertible Preferred Securities
has been cured, waived, or otherwise eliminated and subject to the requirements
of the second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class, have
the right to direct the time, method, and place of conducting any proceeding
for any remedy available to the Property Trustee, or direct the exercise of any
trust or power conferred upon the Property Trustee under the Declaration,
including the right to (i) direct the time, method, place of conducting any
proceeding for any remedy available to the Convertible Debenture Trustee, or
exercising any trust or power conferred on the Convertible Debenture Trustee
with respect to the Convertible Debentures, (ii) waive any past default and its
consequences that is waivable under Section 6.6 of the Indenture, or (iii)
exercise any right to rescind or annul a declaration that the principal of all
the Convertible Debentures shall be due and payable, provided that, where a
consent or action under the Indenture would require
I-15
<PAGE> 79
the consent or act of the Holders of greater than a majority in principal
amount of Convertible Debentures affected thereby (a "Super-Majority"), the
Property Trustee may only give such consent or take such action at the written
direction of the Holders of at least the proportion in liquidation amount of
the Common Securities which the relevant Super-Majority represents of the
aggregate principal amount of the Convertible Debentures outstanding. Pursuant
to this Section 6(c), the Property Trustee shall not revoke any action
previously authorized or approved by a vote of the Holders of the Convertible
Preferred Securities. Other than with respect to directing the time, method
and place of conducting any remedy available to the Property Trustee or the
Convertible Debenture Trustee as set forth above, the Property Trustee shall
not take any action in accordance with the directions of the Holders of the
Common Securities under this paragraph unless the Property Trustee has obtained
an opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than a grantor
trust on account of such action. If the Property Trustee fails to enforce its
rights under the Convertible Debentures, any Holder of Common Securities may
institute a legal proceeding directly against the Convertible Debenture Issuer
to enforce the Property Trustee's rights under the Convertible Debentures,
without first instituting a legal proceeding against the Property Trustee or
any other Person. Notwithstanding the foregoing, if a Declaration Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Convertible Debenture Issuer to pay interest or principal on the
Convertible Debentures 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 may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or interest on the Convertible
Debentures having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such holder on or after the respective due date
specified in the Convertible Debentures. Except as provided in the preceding
sentence, the Holders of Preferred Securities will not be able to exercise
directly any other remedy available to the holders of the Convertible
Debentures. In connection with such Direct Action, the Convertible Debenture
Issuer will be subrogated to the rights of such holder of Convertible Preferred
Securities under the Declaration to the extent of any payment made by the
Convertible Debenture Issuer to such holder of Preferred Securities in such
Direct Action.
Any required approval or direction of Holders of Common
Securities may be given at a separate meeting of Holders of Common Securities
convened for such purpose, at a meeting of all of the Holders of Securities in
the Trust or pursuant to written consent. The Regular Trustees will cause a
notice of any meeting at which Holders of Common Securities are entitled to
vote, or of any matter upon which action by written consent of such Holders
I-16
<PAGE> 80
is to be taken, to be mailed to each Holder of record of Common Securities.
Each such notice will include a statement setting forth (i) the date of such
meeting or the date by which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities
will be required for the Trust to redeem and cancel Common Securities or to
distribute the Convertible Debentures in accordance with the Declaration and
the terms of the Securities.
8. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of
the Declaration, if any proposed amendment to the Declaration provides for, or
the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities as a
class, will be entitled to vote on such amendment or proposal (but not on any
other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in
liquidation amount of the Securities, voting together as a single class;
provided, however, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Convertible Preferred Securities or only the
Common Securities, then only the affected class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of a Majority in liquidation amount of such
class of Securities.
(b) In the event the consent of the Property Trustee as
the holder of the Convertible Debentures is required under the Indenture with
respect to any amendment, modification or termination of the Indenture or the
Convertible Debentures, the Property Trustee shall request the written
direction of the Holders of the Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a Majority in liquidation amount of
the Securities voting together as a single class; provided, however, that where
a consent under the Indenture would require the consent of the holders of
greater than a majority in aggregate principal amount of the Convertible
Debentures (a "Super-Majority"), the Property Trustee may only give such
consent at the direction of the Holders of at least the proportion in
liquidation amount of the Securities which the relevant
I-17
<PAGE> 81
Super-Majority represents of the aggregate principal amount of the Convertible
Debentures outstanding; provided, further, that the Property Trustee shall not
take any action in accordance with the directions of the Holders of the
Securities under this Section 7(b) unless the Property Trustee has obtained an
opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than a grantor
trust on account of such action.
9. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each
Holder of Securities according to the aggregate liquidation amount of the
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Securities outstanding unless, in relation to a payment, an Event
of Default under the Declaration has occurred and is continuing, in which case
any funds available to make such payment shall be paid first to each Holder of
the Convertible Preferred Securities pro rata according to the aggregate
liquidation amount of Convertible Preferred Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Convertible
Preferred Securities outstanding, and only after satisfaction of all amounts
owed to the Holders of the Convertible Preferred Securities, to each Holder of
Common Securities pro rata according to the aggregate liquidation amount of
Common Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Common Securities outstanding.
10. Ranking.
The Convertible Preferred Securities rank pari passu and
payment thereon shall be made Pro Rata with the Common Securities except that,
where an Event of Default occurs and is continuing under the Indenture in
respect of the Convertible Debentures held by the Property Trustee, the rights
of Holders of the Common Securities to payment in respect of Distributions and
payments upon liquidation, redemption and otherwise are subordinated to the
rights to payment of the Holders of the Convertible Preferred Securities.
11. Listing.
The Regular Trustees shall use their best efforts to cause the
Convertible Preferred Securities to be listed for quotation on the New York
Stock Exchange, Inc.
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<PAGE> 82
12. Acceptance of Securities Guarantee and Indenture.
Each Holder of Convertible Preferred Securities and Common
Securities, by the acceptance thereof, agrees to the provisions of the
Convertible Preferred Securities Guarantee and the Common Securities Guarantee,
respectively, including the subordination provisions therein and to the
provisions of the Indenture.
13. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights
to subscribe for any additional securities.
14. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the
Convertible Preferred Securities Guarantee or the Common Securities Guarantee
(as may be appropriate), and the Indenture to a Holder without charge on
written request to the Sponsor at its principal place of business.
I-19
<PAGE> 83
EXHIBIT A-1
FORM OF CONVERTIBLE TRUST ORIGINATED
PREFERRED SECURITY CERTIFICATE
This Convertible Preferred Security is a Global Certificate
within the meaning of the Declaration hereinafter referred to and is registered
in the name of The Depository Trust Company (the "Depositary") or a nominee of
the Depositary. This Convertible Preferred Security is exchangeable for
Convertible Preferred Securities registered in the name of a person other than
the Depositary or its nominee only in the limited circumstances described in
the Declaration and no transfer of this Convertible Preferred Security (other
than a transfer of this Convertible Preferred Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered except
in limited circumstances.
Unless this Convertible Trust Originated Preferred Security is
presented by an authorized representative of The Depository Trust Company (55
Water Street, New York, New York) to the Trust or its agent for registration of
transfer, exchange or payment, and any Convertible Preferred Security issued is
registered in the name of Cede & Co. or such other name as requested by an
authorized representative of The Depository Trust Company and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.
Certificate Number Number of Convertible Trust Originated
Preferred Securities
CUSIP NO. [ ]
Certificate Evidencing Convertible Trust Originated Preferred
Securities
of
NORAM FINANCING I
____% Convertible Trust Originated Preferred Securities
(liquidation amount $50 per Convertible
Trust Originated Preferred Security)
A1-1
<PAGE> 84
NORAM FINANCING I, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of convertible preferred
securities of the Trust representing undivided beneficial interests in the
assets of the Trust designated the _____% Convertible Trust Originated
Preferred Securities (liquidation amount $50 per Convertible Trust Originated
Preferred Security) (the "Convertible Preferred Securities"). The Convertible
Preferred Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Convertible Preferred Securities represented hereby are issued and shall in all
respects be subject to the provisions of the Amended and Restated Declaration
of Trust of the Trust dated as of June __, 1996, as the same may be amended
from time to time (the "Declaration"), including the designation of the terms
of the Convertible Preferred Securities as set forth in Annex I to the
Declaration. Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits
of the Convertible Preferred Securities Guarantee to the extent provided
therein. The Sponsor will provide a copy of the Declaration, the Convertible
Preferred Securities Guarantee and the Indenture to a Holder without charge
upon written request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Convertible Debentures as indebtedness and the
Convertible Preferred Securities as evidence of indirect beneficial ownership
in the Convertible Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate
this ___ day of June, 1996.
NORAM FINANCING I
By:
--------------------------------
Name:
Title: Regular Trustee
A1-2
<PAGE> 85
FORM OF REVERSE OF SECURITY
Distributions payable on each Convertible Preferred Security
will be fixed at a rate per annum of ______% (the "Coupon Rate") of the stated
liquidation amount of $50 per Convertible Preferred Security, such rate being
the rate of interest payable on the Convertible Debentures to be held by the
Property Trustee. Distributions in arrears for more than one quarter will bear
interest thereon compounded quarterly at the Coupon Rate (to the extent
permitted by applicable law). The term "Distributions" as used herein includes
any such interest payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Convertible
Debentures held by the Property Trustee and to the extent the Property Trustee
has funds available therefor. The amount of Distributions payable for any
period will be computed for any full quarterly Distribution period on the basis
of a 360-day year of twelve 30-day months, and for any period shorter than a
full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days
elapsed per 90-day quarter.
Except as otherwise described below, distributions on the
Convertible Preferred Securities will be cumulative, will accrue from the date
of original issuance and will be payable quarterly in arrears, on March 31,
June 30, September 30 and December 31 of each year, commencing on September 30,
1996. The Convertible Debenture Issuer has the right under the Indenture to
defer payments of interest by extending the interest payment period from time
to time on the Convertible Debentures for a period not exceeding 20 consecutive
quarters (each an "Extension Period") and, as a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded quarterly during any
such Extension Period. Prior to the termination of any such Extension Period,
the Convertible Debenture Issuer may further extend such Extension Period;
provided that such Extension Period together with all such previous and further
extensions thereof may not exceed 20 consecutive quarters or extend beyond the
maturity date of the Convertible Debentures. Payments of accrued Distributions
will be payable to Holders as they appear on the books and records of the Trust
on the first record date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due,
the Convertible Debenture Issuer may commence a new Extension Period, subject
to the above requirements.
The Convertible Preferred Securities shall be redeemable as
provided in the Declaration.
A1-3
<PAGE> 86
The Convertible Preferred Securities shall be convertible into
shares of NorAm Common Stock, through (i) the exchange of Convertible Preferred
Securities for a portion of the Convertible Debentures and (ii) the immediate
conversion of such Convertible Debentures into NorAm Common Stock, in the
manner and according to the terms set forth in the Declaration.
A1-4
<PAGE> 87
CONVERSION REQUEST
To: The Bank of New York
as Property Trustee of
NorAm Financing I
The undersigned owner of these Convertible Preferred
Securities hereby irrevocably exercises the option to convert these Convertible
Preferred Securities, or the portion below designated, into Common Stock of
NorAm Energy Corp. (the "NorAm Common Stock") in accordance with the terms of
the Amended and Restated Declaration of Trust (the "Declaration"), dated as of
June ___, 1996, by Michael B. Bracy and Michael A. Creel, as Regular Trustees,
The Bank of New York (Delaware), as Delaware Trustee, The Bank of New York, as
Property Trustee, NorAm Energy Corp., as Sponsor, and by the Holders, from time
to time, of individual beneficial interests in the Trust to be issued pursuant
to the Declaration. Pursuant to the aforementioned exercise of the option to
convert these Convertible Preferred Securities, the undersigned hereby directs
the Conversion Agent (as that term is defined in the Declaration) to (i)
exchange such Convertible Preferred Securities for a portion of the Convertible
Debentures (as that term is defined in the Declaration) held by the Trust (at
the rate of exchange specified in the terms of the Convertible Preferred
Securities set forth as Annex I to the Declaration) and (ii) immediately
convert such Convertible Debentures on behalf of the undersigned, into NorAm
Common Stock (at the conversion rate specified in the terms of the Convertible
Preferred Securities set forth as Annex I to the Declaration).
The undersigned does also hereby direct the Conversion Agent
that the shares issuable and deliverable upon conversion, together with any
check in payment for fractional shares, be issued in the name of and delivered
to the undersigned, unless a different name has been indicated in the
assignment below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
A1-5
<PAGE> 88
Date:
------------, ----
in whole in part
--- ---
Number of Convertible Preferred
Securities to be converted:
-----------
------------------
If a name or names other than the
undersigned, please indicate in the
spaces below the name or names in which
the shares of NorAm Common Stock are to
be issued, along with the address or
addresses of such person or persons
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and Social
Security or Other Identifying Number
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Signature Guarantee:**
---------------------------
- ----------------------------------
** (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee
program" as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.)
A1-6
<PAGE> 89
-------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Convertible
Preferred Security Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer
- -----------------------------------------------------------
this Convertible Preferred Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date:
-----------------------
Signature:**
-------------------
(Sign exactly as your name appears on the other side of this Convertible
Preferred Security Certificate)
- ----------------------------------
** (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee
program" as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.)
A1-7
<PAGE> 90
EXHIBIT A-2
FORM OF CONVERTIBLE TRUST ORIGINATED
COMMON SECURITY CERTIFICATE
Certificate Number Number of Convertible Trust
Originated Common Securities
Certificate Evidencing Convertible Trust
Originated Common Securities
of
NORAM FINANCING I
______% Convertible Trust Originated Common Securities
(liquidation amount $50 per Common Security)
NORAM FINANCING I a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
_________________ (the "Holder") is the registered owner of common securities
of the Trust representing undivided beneficial interests in the assets of the
Trust designated the _____% Convertible Trust Originated Common Securities
(liquidation amount $50 per Convertible Trust Originated Common Security) (the
"Common Securities"). The Common Securities are transferable on the books and
records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer.
The designation, rights, privileges, restrictions, preferences and other terms
and provisions of the Common Securities represented hereby are issued and shall
in all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of June ___, 1996, as the same may
be amended from time to time (the "Declaration"), including the designation of
the terms of the Common Securities as set forth in Annex I to the Declaration.
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration. The Holder is entitled to the benefits of the Common
Securities Guarantee to the extent provided therein. The Sponsor will provide
a copy of the Declaration, the Common Securities Guarantee and the Indenture to
a Holder without charge upon written request to the Sponsor at its principal
place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
A2-1
<PAGE> 91
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Convertible Debentures as indebtedness and the
Common Securities as evidence of indirect beneficial ownership in the
Convertible Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate
this ___ day of ____________, 1996.
NORAM FINANCING I
By:
--------------------------------
Name:
Title: Regular Trustee
A2-2
<PAGE> 92
FORM OF REVERSE OF SECURITY
Distributions payable on each Common Security will be fixed at
a rate per annum of ______% (the "Coupon Rate") of the stated liquidation
amount of $50 per Common Security, such rate being the rate of interest payable
on the Convertible Debentures to be held by the Property Trustee.
Distributions in arrears for more than one quarter will bear interest thereon
compounded quarterly at the Coupon Rate (to the extent permitted by applicable
law). The term "Distributions" as used herein includes such cash distributions
and any such interest payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Convertible
Debentures held by the Property Trustee and to the extent the Property Trustee
has funds available therefor. The amount of Distributions payable for any
period will be computed for any full quarterly Distribution period on the basis
of a 360-day year of twelve 30-day months, and for any period shorter than a
full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days
elapsed per 90-day quarter.
Except as otherwise described below, distributions on the
Common Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on September 30, 1996.
The Convertible Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period from time to time
on the Convertible Debentures for a period not exceeding 20 consecutive
quarters (each an "Extension Period") and, as a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded quarterly during any
such Extension Period. Prior to the termination of any such Extension Period,
the Convertible Debenture Issuer may further extend such Extension Period;
provided that such Extension Period together with all such previous and further
extensions thereof may not exceed 20 consecutive quarters or extend beyond the
maturity date of the Convertible Debentures. Payments of accrued Distributions
will be payable to Holders as they appear on the books and records of the Trust
on the first record date after the end of the Extension Period. Upon the
termination of any Exten- sion Period and the payment of all amounts then due,
the Convertible Debenture Issuer may commence a new Extension Period, subject
to the above requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
A2-3
<PAGE> 93
The Common Securities shall be convertible into shares of
NorAm Common Stock, through (i) the exchange of Common Securities for a portion
of the Convertible Debentures and (ii) the immediate conversion of such
Convertible Debentures into NorAm Common Stock, in the manner and according to
the terms set forth in the Declaration.
A2-4
<PAGE> 94
CONVERSION REQUEST
To: The Bank of New York
as Property Trustee of
NorAm Financing I
The undersigned owner of these Common Securities hereby
irrevocably exercises the option to convert these Common Securities, or the
portion below designated, into Common Stock of NorAm Energy Corp. (the "NorAm
Common Stock") in accordance with the terms of the Amended and Restated
Declaration of Trust (the "Declaration"), dated as of June __, 1996, by Michael
B. Bracy and Michael A. Creel, as Regular Trustees, The Bank of New York
(Delaware), as Delaware Trustee, The Bank of New York, as Property Trustee,
NorAm Energy Corp., as Sponsor, and by the Holders, from time to time, of
individual beneficial interests in the Trust to be issued pursuant to the
Declaration. Pursuant to the aforementioned exercise of the option to convert
these Common Securities, the undersigned hereby directs the Conversion Agent
(as that term is defined in the Declaration) to (i) exchange such Common
Securities for a portion of the Convertible Debentures (as that term is defined
in the Declaration) held by the Trust (at the rate of exchange specified in the
terms of the Common Securities set forth as Annex I to the Declaration) and
(ii) immediately convert such Convertible Debentures on behalf of the
undersigned, into NorAm Common Stock (at the conversion rate specified in the
terms of the Common Securities set forth as Annex I to the Declaration).
The undersigned does also hereby direct the Conversion Agent
that the shares issuable and deliverable upon conversion, together with any
check in payment for fractional shares, be issued in the name of and delivered
to the undersigned, unless a different name has been indicated in the
assignment below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
A2-5
<PAGE> 95
Date:
------------, --- in whole in part
-- --
Number of Common Securities to be
converted:
---------------------
If a name or names other than the
undersigned, please indicate in the
spaces below the name or names in
which the shares of NorAm Common Stock
are to be issued, along with the
address or addresses of such person or
persons
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and Social
Security or Other Identifying Number
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
Signature Guarantee:*
----------------------------
- ----------------------------------
* (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee
program" as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.)
A2-6
<PAGE> 96
--------------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
-------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Common Security
-------------------------------
Certificate on the books of the Trust. The agent may substitute another to act
for him or her.
Date:
-----------------------
Signature:
-------------------
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
Signature Guarantee**:
---------------------------------------------------------
- ----------------------------------
** (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee
program" as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.)
A2-7
<PAGE> 97
EXHIBIT B
SPECIMEN OF CONVERTIBLE DEBENTURE
B-1
<PAGE> 98
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
<PAGE> 1
EXHIBIT 4.04
====================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
NorAm Financing I
Dated as of June __, 1996
====================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION> Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
<S> <C> <C>
SECTION 1.1 Definitions and Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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 . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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 . . . . . . . . . . . . . . . . . . . 8
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee Trustees . . . . . . . . . . . 13
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.2 Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.3 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.4 Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.5 Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.6 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.7 Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION> Page
----
<S> <C> <C>
SECTION 5.8 Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 6.2 Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII
TERMINATION
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 8.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.4 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 9.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
ii
<PAGE> 4
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities
Guarantee"), dated as of June __, 1996, is executed and delivered by NorAm
Energy Corp., a Delaware corporation (the "Guarantor"), and The Bank of New
York, 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 June __, 1996, 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 3,000,000 convertible trust originated preferred
securities, having an aggregate liquidation amount of $150,000,000 (plus up to
an additional 450,000 convertible trust originated preferred securities, having
an aggregate liquidation amount of $22,500,000, solely to cover
over-allotments, if any), designated the _____% Convertible Trust Originated
Preferred Securities(SM) (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
guarantee the obligations of the Issuer to the Holders of the Preferred
Securities 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 (as
defined herein) under the Common Securities Guarantee shall be 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.
- ------------------
(SM) "Convertible Trust Originated Preferred Securities" and "Convertible
TOPrS" are service marks of Merrill Lynch & Co., Inc.
<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;
(f) a reference to the singular includes the plural and
vice versa;
(g) a reference to any Person shall include its
successors and assigns;
(h) a reference to any agreement or instrument shall mean
such agreement or instrument or instrument as
supplemented, modified, amended or amended and
restated and in effect from time to time; and
(i) a reference to any statute, law, rule or regulation,
shall include any amendments thereto applicable to
the relevant Person, and any successor statute, law,
rule or regulation.
"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.
2
<PAGE> 6
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Business Day" means Saturday, Sunday or any day other than a
day on which banking institutions in New York City (in the State of 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 The Bank of New York,
until a Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment pursuant to 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 101
Barclay Street, Floor 21 West, New York, New York 10286, Attn: Corporate Trust
Trustee Administration.
"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 of the Issuer held by the Property Trustee.
"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 of Preferred
Securities or the redemption of all of the Preferred Securities), the lesser
3
<PAGE> 7
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 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 Subordinated Indenture dated as of June
__, 1996, among the Guarantor (the "Debenture Issuer") and The Bank of New
York, 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 on behalf of the Issuer.
"Indenture Trustee" means the Person acting as trustee under
the Indenture, initially The Bank of New York.
"Majority in liquidation amount of the Preferred 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:
4
<PAGE> 8
(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, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Property Trustee" means initially, The Bank of New York, as
trustee.
"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.
5
<PAGE> 9
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 one 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
by the Guarantor or the Preferred Securities are represented by one or more
Global Securities (as defined in the Indenture). 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 July 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
6
<PAGE> 10
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.
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
7
<PAGE> 11
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 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:
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(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 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
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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
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 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
of its choice, 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.
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(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 the
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.
(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 written instructions with respect to enforcing
any remedy or right or taking any other action hereunder, the
Preferred Guarantee Trustee (i) may
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request written 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
written instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such written
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.
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
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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.
(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.
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(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 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
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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 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 to
exercise any trust or power conferred upon the Preferred Guarantee Trustee
under this Preferred Securities Guarantee.
(b) If the Preferred Guarantee Trustee fails to enforce the
Preferred Securities Guarantee, any holder of Preferred Securities may
institute a legal proceeding directly against the Guarantor to enforce the
Preferred Guarantee Trustee's
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rights under the Preferred Securities Guarantee without first instituting a
legal proceeding against the Trust, the Preferred Guarantee Trustee or any
other person or entity.
(c) A holder of Preferred Securities may also institute a
legal proceeding directly against the Guarantor to enforce such holder's right
to receive payment under the Preferred Securities Guarantee without first (i)
directing the Preferred Guarantee Trustee to enforce the terms of the Guarantee
or (ii) instituting a legal proceeding against the Trust or any other person or
entity.
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 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.
SECTION 5.8 Conversion
The Guarantor acknowledges its obligation to issue and deliver
common stock upon the conversion of the Preferred Securities.
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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 or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of the Guarantor's common stock in
connection with the satisfaction by the Guarantor of its obligations under any
employee benefit plans or the satisfaction by the Guarantor of its obligations
pursuant to any contract or security requiring the Guarantor to purchase shares
of the Guarantor's capital stock, (ii) as a result of a reclassification of the
Guarantor's capital stock or the exchange or conversion of one class or series
of the Guarantor's capital stock for another class or series of the Guarantor's
capital stock, (iii) the payment of dividends or distributions in shares of its
capital stock of the same class on which such dividends or distributions are
being paid, or (iv) the purchase of fractional interests in shares of the
Guarantor's capital stock pursuant to the conversion or exchange provisions of
such Guarantor's capital stock or the security being converted or exchanged) or
make any guarantee payments with respect to the foregoing, and (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.
SECTION 6.2 Ranking
(a) 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.
(b) The holders of any obligations of the Guarantor which
are senior in priority to the obligations under the Preferred Securities
Guarantee will be entitled to all of the rights inuring to the holders of the
"Senior Indebtedness" under Article XIV of the Indenture, and the Holders of
the Preferred Securities will be subject to all of the terms and conditions of
such Article XIV with respect to any claims or rights hereunder with the same
effect as though fully set forth herein.
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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
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 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.
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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.
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 be amended only with the prior approval of
the Holders of at least a Majority in liquidation amount 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 if to the
Preferred Guarantee Trustee or the Guarantor, and by first class mail if to any
Holder of Preferred Securities, 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):
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The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
(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: Michael A. Creel,
Vice President and Treasurer
(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, CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
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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:
THE BANK OF NEW YORK,
as Preferred Guarantee Trustee
By:
------------------------------------
Name:
Title:
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