EXHIBIT 1.1
HOUSTON INDUSTRIES INCORPORATED
___% Automatic Common Exchange Securities due 2000
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Underwriting Agreement
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July __, 1997
Goldman, Sachs & Co.,
Credit Suisse First Boston Corporation,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
As representatives of the several Underwriters
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
Houston Industries Incorporated, a Texas corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule 1 hereto (the "Underwriters") an aggregate
of 20,000,000 __% Automatic Common Exchange Securities due ______ 2000 (the
"Firm Securities") with a mandatory exchange at maturity for a number of shares
of common stock, par value $0.01 per share (the "Time Warner Common Stock"), of
Time Warner Inc., a Delaware corporation ("Time Warner"), (or, at the Company's
option, cash with an equal value) at a rate determined with reference to the
market price of Time Warner Common Stock at maturity, and, at the election of
the Underwriters, 2,909,040 additional __% Automatic Common Exchange Securities
due 2000 (the "Optional Securities") (the Firm Securities and the Optional
Securities which the Underwriters elect to purchase pursuant to Section 2(a)
hereof are herein collectively called the "Securities").
1. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(i) A registration statement on Form S-3, and two amendments thereto, with
respect to the Securities (File Nos. 333-30443) including a prospectus (any
preliminary prospectus included in such registration statement being hereinafter
referred to as a "Preliminary Prospectus"), copies of which have been delivered
to you, have been prepared and filed by the Company with the Securities and
Exchange Commission (the "Commission") and have been declared effective under
the Securities Act of 1933, as amended (the "Act"). No other document with
respect to the registration statement or document incorporated by reference
therein has heretofore been filed or transmitted for filing with the Commission.
No stop order suspending the effectiveness of such registration statement has
been issued and no proceeding for that purpose has been initiated or, to the
best knowledge of the Company, threatened by the Commission. The various parts
of such registration statement including all exhibits thereto but excluding Form
T-1, and including the information contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) under the Act hereof and
deemed by virtue of Rule 430A under the Act to be part of the registration
statement at the time it was declared effective and the documents incorporated
by reference in the prospectus contained in the registration statement at the
time such part of the registration statement became effective, each as amended
at the time such part of the registration statement became effective are
hereinafter collectively called the "Registration Statement".
The final prospectus in the form first filed pursuant to Rule 424(b) under
the Act (including all documents then incorporated by reference therein), is
hereinafter referred to as the "Prospectus". Any reference herein to the
Prospectus or a Preliminary Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein, or deemed to be incorporated by
reference therein, and filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), on or before the date of such Prospectus or
Preliminary Prospectus. Any reference herein to the terms "amend", "amendment"
or "supplement" with respect to the Prospectus or the Preliminary Prospectus
shall be deemed to refer to and include, without limitation, the filing of any
document under the Exchange Act deemed to be incorporated therein by reference
after the date of such Prospectus or Preliminary Prospectus.
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(ii) The Registration Statement conforms, and any further amendments
thereto will conform, in all material respects to the requirements of the Act
and the Trust Indenture Act of 1939, as amended (the "TIA"), and the applicable
rules and regulations of the Commission thereunder, and does not and will not,
as of the applicable effective date of the Registration Statement and any
amendment thereto, include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading; each Preliminary Prospectus at the time of
the filing thereof conformed in all material respects to the requirements of the
Act and the TIA and the applicable rules and regulations of the Commission
thereunder, and did not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and no order preventing or suspending the
use of any Preliminary Prospectus has been issued by the Commission; and the
Prospectus conforms, and any further amendments or supplements thereto will
conform, in all material respects to the requirements of the Act and the TIA and
the applicable rules and regulations of the Commission thereunder, and do not
and will not, as of the applicable filing date of the Prospectus and any
amendment or supplement thereto, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading;
(iii) Each document filed or to be filed pursuant to the Exchange Act and
incorporated by reference, or deemed to be incorporated by reference in the
Prospectus (including any document to be filed pursuant to the Exchange Act
which will constitute an amendment to the Prospectus) conformed or, when so
filed, will conform in all material respects to the requirements of the Exchange
Act and the applicable rules and regulations of the Commission thereunder, and
none of such documents included or, when so filed, will include any untrue
statement of a material fact or omitted or, when so filed, will omit to state
any material fact required to be stated therein or necessary to make the
statements therein (and, in the case of a document filed after the effective
date of the Registration Statement and not treated as a post-effective amendment
to the Registration Statement for purposes of the liability provisions of the
Act, in the light of the circumstances at the time of the filing of such
document with the Commission) not misleading;
(iv) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Texas, with power
and authority to own, lease and operate its properties and conduct its business
as described in the Prospectus;
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(v) This Agreement has been duly authorized, executed and delivered by the
Company;
(vi) The Securities have been duly authorized by the Company and, when
executed and delivered pursuant to this Agreement and duly authenticated and
delivered by the Trustee under the Indenture (each as herein defined), such
Securities will be duly and validly issued and will constitute valid and legally
binding obligations of the Company enforceable in accordance with their terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors' rights and
to general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and entitled to the benefits
provided by the indenture to be dated as of July __, 1997 (the "Indenture")
between the Company and The First National Bank of Chicago, as Trustee (the
"Trustee"), under which they are to be issued, which will be substantially in
the form filed as an exhibit to the Registration Statement; the Indenture has
been duly authorized by the Company and, when executed and delivered by the
Company and the Trustee, will constitute a valid and legally binding instrument,
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); and the Securities and the Indenture conform to the
descriptions thereof in the Prospectus;
(vii) Neither the issue and sale of the Securities by the Company, the
compliance by the Company with all of the provisions of this Agreement, the
Securities and the Indenture nor the consummation of the transactions
contemplated herein and therein (i) conflicts with or results in a breach or
violation of any of the terms or provisions of, or constitutes a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or Houston Lighting & Power Company ("HL&P") is
a party or by which the Company or HL&P is bound or to which any of the property
or assets of the Company or HL&P is subject, which conflict, breach, violation
or default would, individually or in the aggregate, have a material adverse
effect on the business, properties or financial condition of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect"), (ii) violates the
provisions of the Articles of Incorporation or By-Laws of the Company or (iii)
violates any existing statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or HL&P or any
of their properties, which violation would, individually or in the aggregate,
have a Material Adverse Effect; the Commission has issued an order under
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the Act declaring the Registration Statement effective and qualifying the
Indenture under the TIA and no other consent, approval, authorization, order,
registration or qualification of or with any such court or governmental agency
or body is required for the issue and sale of the Securities by the Company or
the consummation by the Company of the transactions contemplated by this
Agreement or the Indenture, except such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Securities
by the Underwriters;
(viii) Neither the Company nor any of its subsidiaries is an
"affiliate" (as defined for purposes of Section 2(11) of the Act) of Time
Warner; neither the Company nor any of its subsidiaries has material non-public
information with respect to Time Warner; and neither the Company nor any of its
subsidiaries has the right to cause the registration of the shares of Time
Warner Common Stock under the Act; and
(ix) The Company owns of record and beneficially 11,000,000 shares of
Series D Convertible Preferred Stock, par value $.10 per share (the "Series D
Preferred Stock"); and the Series D Preferred Stock and the shares of Time
Warner Common Stock into which it is convertible are not "restricted securities"
as that term is defined in Rule 144 under the Act.
2. Sale and Delivery.
(a) Subject to the terms and conditions herein set forth, (i) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase, at a purchase price
of $______ per Security, plus accrued interest, if any, from ___________, 1997
to the Time of Delivery hereunder, the number of Securities set forth opposite
the name of such Underwriter in Schedule I hereto, and (ii) in the event and to
the extent that the Underwriters shall exercise the election to purchase
Optional Securities as provided below, the Company agrees to issue and sell to
each of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase, at the same purchase price set forth in clause (i) of this
Section 2(a), that number of the Optional Securities as to which such election
shall have been exercised determined by multiplying such number of Optional
Securities by a fraction, the numerator of which is the maximum number of
Optional Securities which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Securities which all of the
Underwriters are entitled to purchase hereunder.
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The Company hereby grants to the Underwriters the right to purchase at
their election up to 2,909,040 Optional Securities, at the purchase price set
forth in clause (a) of the first paragraph of this Section 2, for the sole
purpose of covering overallotments in the sale of Firm Securities. Any such
election to purchase Optional Securities may be exercised by written notice from
you to the Company, given within a period of 30 calendar days after the date of
this Agreement, setting forth the aggregate number of Optional Securities to be
purchased and the date on which such Optional Securities are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 2(b) hereof) or, unless you and the Company otherwise agree
in writing, earlier than two or later than ten business days after the date of
such notice.
(b) The Securities to be purchased by each Underwriter hereunder will be
represented by one or more definitive global Securities in book-entry form which
will be deposited by or on behalf of the Company with The Depository Trust
Company ("DTC") or its designated custodian. The Company will deliver the
Securities to Goldman, Sachs & Co., for the account of each Underwriter, against
payment by or on behalf of such Underwriter of the purchase price therefor by
wire transfer of Federal (same day) funds to a commercial bank account located
in the United States and designated in writing at least forty-eight hours prior
to the Time of Delivery by the Company to Goldman, Sachs & Co., by causing DTC
to credit the Securities to the account of Goldman, Sachs & Co. at DTC. The
Company will cause the global certificates representing the Securities to be
made available to Goldman, Sachs & Co. for checking at least twenty-four hours
prior to the Time of Delivery at the office of DTC or its designated custodian
(the "Designated Office"). The time and date of such delivery and payment shall
be, with respect to the Firm Securities, 9:30 a.m., New York City time, on
_________, 1997 or such other time and date as Goldman, Sachs & Co. and the
Company may agree upon in writing, and, with respect to the Optional Securities,
9:30 a.m., New York City time, on the date specified by Goldman, Sachs & Co. in
the written notice given by Goldman, Sachs & Co. of the Underwriters' election
to purchase such Optional Securities, or such other time and date as Goldman,
Sachs & Co. and the Company may agree upon in writing. Such time and date for
delivery of the Firm Securities is herein called the "First Time of Delivery",
such time and date of delivery of the Optional Securities, if not the First Time
of Delivery, is herein called the "Second Time of Delivery", and each such time
and date for delivery is herein called a "Time of Delivery".
(c) The documents to be delivered at the Time of Delivery by or on behalf
of the parties hereto pursuant to Section 5 hereof, including the cross-receipt
for the Securities and any additional documents requested by the Underwriters
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pursuant to Section 5(k) hereof, will be delivered at such time and date at the
offices of Baker & Botts, L.L.P., 910 Louisiana Street, Houston, Texas 77002-
4995 or such other location as Goldman, Sachs & Co. and the Company may agree in
writing (the "Closing Location"), and the Securities will be delivered at the
Designated Office, all at the Time of Delivery. A meeting will be held at the
Closing Location at 1:00 P.M., local time or at such other time as Goldman,
Sachs & Co. and the Company may agree in writing, on the New York Business Day
next preceding the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 2, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
3. Covenants and Agreements.
The Company covenants and agrees with each of the Underwriters:
(a) To furnish without charge to the Underwriters a copy of the
Registration Statement, including all documents incorporated by reference
therein and exhibits filed with the Registration Statement (other than exhibits
which are incorporated by reference and have previously been so furnished),
and, during the period mentioned in paragraph (c) below, as many copies of the
Prospectus, any Preliminary Prospectus and any documents incorporated by
reference therein at or after the date thereof (including documents from which
information has been so incorporated) and any supplements and amendments thereto
as each Underwriter may reasonably request so long as such Underwriter is
required to deliver a prospectus;
(b) To prepare and to file the Prospectus pursuant to, and in compliance
with, the applicable rules under the Act and to promptly advise the Underwriters
(i) when any amendment to the Registration Statement shall have been filed;
provided, that, with respect to documents filed pursuant to the Exchange Act and
incorporated by reference into the Registration Statement, such notice shall
only be required during such time as the Underwriters are required, in their
reasonable opinion after consultation with counsel, to deliver a prospectus,
(ii) of any request by the Commission for any amendment of the Registration
Statement, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose, and (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Securities for sale in any jurisdiction or the initiation or threatening
of
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any proceeding for such purpose. So long as any Underwriter is required, in its
reasonable opinion after consultation with counsel, to deliver a prospectus, the
Company will not file any amendment to the Registration Statement or supplement
to the Prospectus unless the Company has furnished one copy of such amendment or
supplement to Goldman, Sachs & Co., and, if such amendment or supplement is to
be filed on or prior to the Time of Delivery, or under circumstances where the
Underwriters are required, in their reasonable opinion after consultation with
counsel, to deliver a Prospectus, the Underwriters shall not reasonably have
objected thereto. If the Commission shall issue a stop order suspending the
effectiveness of the Registration Statement, the Company will take such steps to
obtain the lifting of that order as in the best judgment of the Company are not
contrary to the interests of the Company;
(c) If, at any time when in any Underwriter's reasonable opinion, after
consultation with counsel, the Prospectus is required by law to be delivered by
such Underwriter or a dealer, any event shall occur as a result of which it is
necessary, in the reasonable opinion of any Underwriter or the Company, after
consultation with counsel, to amend or supplement the Prospectus or modify the
information incorporated by reference therein in order to make the statements
therein, in light of the circumstances existing when the Prospectus is
delivered to a purchaser, not misleading, or if it shall be necessary in the
reasonable opinion of any Underwriter or the Company, after consultation with
counsel, to amend or supplement the Prospectus or modify such information to
comply with law, to forthwith (i) prepare and furnish, at the Company's own
expense, to the Underwriters and to the dealers (whose names and addresses the
Underwriters will furnish to the Company) to whom Securities may have been sold
by the Underwriters and to any other dealers upon reasonable request, either
amendments or supplements to the Prospectus or (ii) file with the Commission
documents incorporated by reference in the Prospectus, which shall be so
supplied to the Underwriters and such dealers, in either case so that the
statements in the Prospectus as so amended, supplemented or modified will not,
in light of the circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus will comply with law;
(d) To endeavor to qualify, at its expense, the Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Underwriters shall reasonably request and to pay all filing fees, reasonable
expenses and legal fees in connection therewith and in connection with the
determination of the eligibility for investment of the Securities; provided,
that the Company shall not be required to qualify as a foreign corporation or a
dealer in securities or to file any consents to service of process under the
laws of any jurisdiction;
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(e) To make generally available to its security holders as soon as
practicable an earnings statement of the Company covering a twelve-month period
beginning after the Time of Delivery which shall satisfy the provisions of
Section 11(a) of the Act and the rules and regulations of the Commission
thereunder (including Rule 158 under the Act);
(f) During the period beginning on the date of this Agreement and
continuing to and including the date 90 days after the date of this Agreement,
the Company will not offer, sell, contract to sell or otherwise dispose of any
Time Warner Common Stock, any securities of Time Warner which are substantially
similar to shares of Time Warner Common Stock or any securities which are
convertible into or exchangeable for Time Warner Common Stock or such
substantially similar securities (except for the Securities issued pursuant to
this Agreement) without the prior written consent of Goldman, Sachs & Co.; and
(g) To use best efforts to effect the listing of the Securities on the New
York Stock Exchange.
4. Expenses.
The Company covenants and agrees with the several Underwriters that the
Company will pay or cause to be paid the following: (i) all expenses in
connection with the preparation, printing and filing of the Registration
Statement as originally filed and of each amendment thereto; (ii) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the issue of the Securities and all other expenses in connection
with the preparation, printing and filing of the Registration Statement, the
Prospectus, any Preliminary Prospectus and any amendments and supplements
thereto and the mailing and delivering of copies thereof to the Underwriters and
dealers; (iii) all reasonable expenses in connection with the qualification of
the Securities, for offering and sale under state securities laws as provided in
Section 3(d) hereof, including the reasonable fees and disbursements of counsel
for the Underwriters in connection with such qualification and in connection
with the Blue Sky and legal investment surveys; (iv) any fees charged by
securities rating services for rating the Securities; (v) the cost of preparing
the Securities; (vi) the fees and expenses of the Trustee and any agent of the
Trustee and the fees and disbursements of counsel for the Trustee in connection
with the Indenture and the Securities; (vii) the fees and expenses incurred in
connection with the listing of the Securities on the New York Stock Exchange;
and (viii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section. It is understood, however, that, except as provided in this Section,
and Sections 6 and 9 hereof, the
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Underwriters will pay all of their own costs and expenses, including the fees of
their counsel and any advertising expenses connected with any offers they may
make.
5. Conditions of Underwriters' Obligations.
The obligations of the Underwriter hereunder shall be subject to the
accuracy, at and (except as otherwise stated herein) as of the date hereof and
at and as of the Time of Delivery, of the representations and warranties made
herein by the Company, to compliance at and as of the Time of Delivery by the
Company with its covenants and agreements herein contained and the other
provisions hereof to be satisfied at or prior to the Time of Delivery, and to
the following additional conditions:
(a) (i) The Prospectus shall have been filed with the Commission pursuant
to, and in compliance with, the applicable rules under the Act; no stop order
suspending the effectiveness of the Registration Statement shall be in effect,
and no proceeding for such purpose shall be pending before or threatened by the
Commission, and the Underwriters shall have received on and as of the Time of
Delivery, a certificate dated such date, signed by an executive officer of the
Company or an authorized agent of the Company designated as such by the Board of
Directors of the Company to the foregoing effect, and (ii) there shall have been
no material adverse change in or affecting the business, properties or financial
condition of the Company from that set forth in or contemplated by the
Registration Statement at the time it became effective, except as set forth in
or contemplated by the Prospectus, and the Underwriters shall have received on
and as of the Time of Delivery, a certificate dated such date, signed by an
executive officer of the Company to the foregoing effect. The officer or
agent executing such certificate may rely upon the best of his or her knowledge
as to any proceedings pending or threatened.
(b) Sullivan & Cromwell, counsel for the Underwriters, shall have
furnished to you such opinion or opinions, dated the Time of Delivery, with
respect to such matters as you may reasonably request, and such counsel shall
have received such papers and information as they may reasonably request to
enable them to pass upon such matters. In giving such opinion, such counsel may
rely as to matters of Texas law upon the opinions of Baker & Botts, L.L.P. and
Hugh Rice Kelly.
(c) Dewey Ballantine, special counsel for the Underwriters, shall have
furnished to you such opinion or opinions addressing such matters as you may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters.
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(d) Hugh Rice Kelly, Executive Vice President, General Counsel, and
Corporate Secretary for the Company, shall have furnished to you his written
opinion, dated such Time of Delivery, in form and substance satisfactory to you,
to the effect that:
(i) The Company has been duly incorporated and is validly existing in good
standing under the laws of the State of Texas and has corporate power and
authority to enter into and perform its obligations under this Agreement and the
Indenture;
(ii) No consent, approval, authorization or other order of, or
registration with, any governmental regulatory body (other than such as may be
required under applicable securities laws, as to which such counsel need not
express an opinion) is required for the issuance and sale of the Securities
being delivered at such Time of Delivery or the consummation by the Company of
the transactions contemplated by this Agreement or the Indenture;
(iii) To the best of such counsel's knowledge and other than as set forth
or contemplated in the Prospectus, there are no legal or governmental
proceedings pending or threatened to which Company is subject, which,
individually or in the aggregate, are expected to have a material adverse effect
on the financial position, shareholders' equity or results of operations of the
Company;
(iv) The issuance by the Company of the Securities and the execution,
delivery and performance by the Company of this Agreement and the Indenture will
not result in the breach or violation of, or constitute a default under, the
Articles of Incorporation or the Bylaws of the Company, each as amended to date,
any indenture, mortgage, deed of trust or other agreement or instrument for
borrowed money to which the Company is a party or by which it is bound or to
which its property is subject or any law, order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or its
property, in any manner which would have a material adverse effect on the
business of the Company;
(v) The description of statutes and regulations set forth in Part I of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996 under the captions "Business-- Business of HL&P -- Regulatory Matters--
Rates and Services" and "--Environmental Quality" fairly describe in all
material respects the portions of the statutes and regulations addressed
thereby.
(e) Baker & Botts, L.L.P., counsel for the Company, shall have furnished to
you their written opinion, dated the Time
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of Delivery, in form and substance satisfactory to you, to the effect that:
(i) Such counsel does not know of any contracts or documents of a
character required to be described in the Registration Statement or Prospectus
or to be filed as exhibits to the Registration Statement which are not so
described or filed;
(ii) The statements set forth in the Prospectus under the caption
"Description of the Securities" accurately summarize in all material respects
the terms of the Securities and the Indenture;
(iii) The Securities conform as to legal matters in all material respects
to the description thereof contained in the Prospectus, including, without
limitation, under the caption "Description of the Securities";
(iv) The Securities are in the form prescribed in or pursuant to the
Indenture, have been duly and validly authorized by all necessary corporate
action on the part of the Company and, when executed and delivered by the
Company and authenticated by the Trustee as specified in or pursuant to the
Indenture, will be valid and binding obligations of the Company, enforceable in
accordance with their terms, except as such enforceability is subject to the
effect of any applicable bankruptcy, insolvency, reorganization or other law
relating to or affecting creditors' rights generally and to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law); the Indenture has been duly authorized,
executed and delivered by the Company and, when executed and delivered by the
Trustee, will constitute a valid and binding obligation of the Company,
enforceable in accordance with its terms, except as such enforceability is
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or other law relating to or affecting creditors' rights generally and to general
principles of equity (regardless of whether such enforceability is considered in
proceeding in equity or at law);
(v) The Indenture has been duly qualified under the TIA;
(vi) The Registration Statement has become effective under the Act, and,
to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or any part thereof has been issued
and no proceedings for that purpose have been instituted and are pending or are
threatened by the Commission under the Act; the Registration Statement, as of
its effective date, and the Prospectus, as of its date, and any amendment or
supplement thereto after the
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date hereof and prior to such Time of Delivery, as of the date thereof (except
for (A) the operating statistics, financial statements and financial statement
schedules contained or incorporated by reference therein or omitted therefrom
(including the auditors' reports on the financial statements and the notes to
the financial statements), (B) the other financial and statistical information
contained or incorporated by reference therein or omitted therefrom and (C) the
exhibits thereto, as to which such counsel need not express an opinion) complied
as to form in all material respects with the requirements of Form S-3 under the
Act and the applicable rules and regulations of the Commission thereunder, and
each document incorporated by reference therein as originally filed pursuant to
the Exchange Act (except for (A) the operating statistics, financial statements
and financial statement schedules contained or incorporated by reference therein
or omitted therefrom (including the auditors' reports on the financial
statements and the notes to the financial statements), (B) the other financial
and statistical information contained or incorporated by reference therein or
omitted therefrom and (C) the exhibits thereto, as to which such counsel need
not express an opinion) when so filed complied as to form in all material
respects with the Exchange Act and the applicable rules and regulations of the
Commission thereunder; and
(vii) The execution, delivery and performance by the Company of this
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, and this Agreement has been duly executed and delivered by
the Company.
In addition, such counsel shall state that no facts have come to the
attention of such counsel that lead them to believe that the Registration
Statement and any amendment made thereto prior to the time of such Time of
Delivery (except for (A) the operating statistics, financial statements and
financial statement schedules contained or incorporated by reference therein
(including the auditors' reports on the financial statements and the notes to
the financial statements, except to the extent that such notes describe legal or
governmental proceedings to which the Company is a party and are incorporated by
reference into one or more items of a report that is incorporated by reference
in the Registration Statement or the Prospectus, other than an item that
requires that financial statements be provided), (B) the other financial and
statistical information contained or incorporated by reference therein and (C)
the exhibits thereto, as to which such counsel need not comment) as of the time
such Registration Statement became effective or such amendment was filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus, and any amendment or supplement
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thereto made prior to such Time of Delivery (except for (A) the operating
statistics, financial statements and financial statement schedules contained or
incorporated by reference therein (including the auditors, reports on the
financial statements and the notes to the financial statements, except to the
extent that such notes describe legal or governmental proceedings to which the
Company is a party and are incorporated by reference into one or more items of a
report that is incorporated by reference in the Prospectus, other than an item
that requires that financial statements be provided), (B) the other financial
and statistical information contained or incorporated by reference therein and
(C) the exhibits thereto, as to which such counsel need not comment), as of the
date of the Prospectus or such amendment or supplement contained, or as of the
Time of Delivery contains, any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(f) Baker & Botts, L.L.P., special tax counsel for the Company, shall have
furnished to you their written opinion, dated the Time of Delivery, in form and
substance satisfactory to you, to the effect that such firm confirms its opinion
set forth in the Prospectus under the caption "Certain United States Federal
Income Tax Considerations".
(g) At the time of execution of this Agreement, Deloitte & Touche LLP
shall have furnished to you a letter dated the date of such execution,
substantially in the form heretofore supplied and deemed satisfactory to you.
(h) At the Time of Delivery, Deloitte & Touche LLP shall have furnished
you a letter, dated the Time of Delivery, to the effect that such accountants
reaffirm, as of the Time of Delivery and as though made on the Time of Delivery,
the statements made in the letter furnished by such accountants pursuant to
paragraph (g) of this Section 5, except that the specified date referred to in
such letter will be a date not more than five business days prior to the Time of
Delivery.
(i) There shall have been no material adverse change in or affecting the
business, properties or financial condition of Time Warner from that set forth
in or contemplated by the publicly available documents referred to in the
Registration Statement at the time it became effective.
(j) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in
14
trading in the Company's or Time Warner's securities on the New York Stock
Exchange; (iii) a general moratorium on commercial banking activities declared
by either Federal or New York State authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by the
United States of a national emergency or war, if the effect of any such event
specified in this paragraph (j) in the reasonable judgment of the
Representatives makes it impracticable to market the Securities, to proceed with
the public offering or to deliver the Securities being issued at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus.
(k) The Company shall have furnished or caused to be furnished to you at
such Time of Delivery certificates of officers of the Company or an authorized
agent of the Company designated as such by the Board of Directors of the Company
satisfactory to you as to the accuracy of the representations and warranties of
the Company herein at and as of such Time of Delivery, as to the performance by
the Company of all of its obligations hereunder to be performed at or prior to
such Time of Delivery, as to the matters set forth in the introductory paragraph
to this Section 5 and subsection (a) of this Section and as to such other
matters as you may reasonably request.
6. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter,
and each person, if any, who controls each Underwriter within the meaning of the
Act or the Exchange Act, against any losses, claims, damages, liabilities or
expenses (including the reasonable cost of investigating and defending against
any claims therefore and counsel fees incurred in connection therewith), joint
or several, which may be based upon either the Act, or the Exchange Act, or any
other statute or at common law, on the ground or alleged ground that any
Preliminary Prospectus, the Registration Statement or the Prospectus (or any
such document, as from time to time amended, or deemed to be amended,
supplemented or modified) includes or allegedly includes an untrue statement of
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, unless such
statement or omission was made in reliance upon, and in conformity with, written
information furnished to the Company by any Underwriter through Goldman, Sachs &
Co. specifically for use in the preparation thereof; provided that in no case is
the Company to be liable with respect to any claims made against any Underwriter
or any such controlling person unless such Underwriter or such controlling
person shall have notified the Company in writing within a reasonable time after
the summons or other first legal process giving information of the nature of the
claim shall have been served upon such Underwriter or such controlling person,
but
15
failure to notify the Company of any such claim shall not relieve it from any
liability which it may have to such Underwriter or such controlling person
otherwise than on account of the indemnity agreement contained in this
paragraph; and provided, further, that the foregoing indemnity with respect to
the Preliminary Prospectus or the Prospectus shall not inure to the benefit of
any Underwriter if a copy of the Preliminary Prospectus or the Prospectus as
amended or supplemented, had not been sent or given by or on behalf of such
Underwriter to the person asserting any such losses, claims, damages or
liabilities concurrently with or prior to delivery of the written confirmation
of the sale of Securities to such person and the untrue statement or omission of
a material fact contained in any such Preliminary Prospectus or Prospectus was
corrected in the Preliminary Prospectus or Prospectus, as amended or
supplemented.
The Company will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but, if the Company elects to assume the defense,
such defense shall be conducted by counsel chosen by it. In the event that the
Company elects to assume the defense of any such suit and retains such counsel,
the Underwriter or Underwriters or controlling person or persons, defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) the Company shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include the Underwriter or Underwriters or controlling person or persons and the
Underwriter or Underwriters or controlling person or persons have been advised
by such counsel that one or more legal defenses may be available to it or them
which may not be available to the Company, in which case the Company shall not
be entitled to assume the defense of such suit on behalf of such Underwriter or
Underwriters or controlling person or persons, notwithstanding their obligation
to bear the reasonable fees and expenses of such counsel, it being understood,
however, that the Company shall not, in connection with any one such suit or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time for all such Underwriters and their
controlling persons, which firm shall be designated in writing by
16
Goldman, Sachs & Co. The Company shall not be liable to indemnify any person
for any settlement of any such claim effected without the Company's consent.
The Company shall not, without the written consent of the Underwriter and/or
controlling person entitled to indemnification under this Section 6(a), effect
the settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not such
Underwriter or controlling person is an actual or potential party to such action
or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of such Underwriter and/or controlling person from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of such Underwriter and/or controlling person. This indemnity
agreement will be in addition to any liability, which the Company might
otherwise have.
(b) Each Underwriter agrees to indemnify and hold harmless the Company,
each of the Company's directors, each of the Company's officers who have signed
the Registration Statement and each person, if any, who controls the Company
within the meaning of the Act or the Exchange Act, against any losses, claims,
damages, liabilities or expenses (including the reasonable cost of investigating
and defending against any claims therefor and counsel fees incurred in
connection therewith), joint or several, which may be based upon the Act, or any
other statute or at common law, on the ground or alleged ground that any
Preliminary Prospectus, the Registration Statement or the Prospectus (or any
such document, as from time to time amended, or deemed to be amended,
supplemented or modified) includes or allegedly includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, but only
insofar as any such statement or omission was made in reliance upon, and in
conformity with, written information furnished to the Company by such
Underwriter through Goldman, Sachs & Co. specifically for use in the preparation
thereof; provided that in no case is such Underwriter to be liable with respect
to any claims made against the Company or any such director, officer or
controlling person unless the Company or any such director, officer or
controlling person shall have notified such Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the Company
or any such director, officer or controlling person, but failure to notify such
Underwriter of any such claim shall not relieve it from any liability which it
may have to the Company or any such director, officer or controlling person
otherwise than on account of the indemnity agreement contained in this
paragraph. Such
17
Underwriter will be entitled to participate at its own expense in the defense,
or, if it so elects, to assume the defense of any suit brought to enforce any
such liability, but, if such Underwriter elects to assume the defense, such
defense shall be conducted by counsel chosen by it. In the event that such
Underwriter elects to assume the defense of any such suit and retain such
counsel, the Company or such director, officer or controlling person, defendant
or defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) such Underwriter shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include the Company or any such director, officer or controlling person and such
Underwriter and the Company or such director, officer, trustee or controlling
person have been advised by such counsel that one or more legal defenses may be
available to it or them which may not be available to such Underwriter, in which
case such Underwriter shall not be entitled to assume the defense of such suit
on behalf of the Company or such director, officer or controlling person,
notwithstanding its obligation to bear the reasonable fees and expenses of such
counsel, it being understood, however, that such Underwriter shall not, in
connection with any one such suit or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any time for
all of the Company and any such director, officer or controlling person, which
firm shall be designated in writing by the Company. Such Underwriter shall not
be liable to indemnify any person for any settlement of any such claim effected
without such Underwriter's consent. Such Underwriter shall not, without the
written consent of the Company or any such person, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the Company or
any such person from all liability arising out of such action or claim and (ii)
does not include a statement as to or an admission of fault, culpability or a
failure to act, by or on behalf of the Company or any such person. This
indemnity agreement will be in addition to any liability which such Underwriter
might otherwise have.
(c) If recovery is not available under Section 6(a) or 6(b) hereof, for
any reason other than as specified therein, the parties entitled to
indemnification by the terms thereof shall be entitled to contribution for
liabilities and expenses, except to the extent that contribution is not
permitted under Section 11(f) of the Act. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered
18
the relative benefits received by each party from the offering of the Securities
(taking into account the portion of the proceeds of the offering realized by
each), the parties' relative knowledge and access to information concerning the
matter with respect to which the claim was asserted, the opportunity to correct
and prevent any statement or omission, and any other equitable considerations
appropriate under the circumstances. The Company and the Underwriters agree that
it would not be equitable if the amount of such contribution were determined by
pro rata or per capita allocation (even if the Underwriters were treated as one
entity for such purpose). No Underwriters or any person controlling such
Underwriters shall be obligated to make contribution hereunder which in the
aggregate exceeds the total public offering price of the Securities purchased by
such Underwriters under this Agreement, less the aggregate amount of any damages
which such Underwriters and its controlling persons have otherwise been required
to pay in respect of the same claim or any substantially similar claim. The
Underwriters' obligations to contribute are several in proportion to their
respective underwriting obligations, and not joint.
7. Substitution of Underwriters.
If any Underwriter shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder and the aggregate number of
such Securities which such defaulting Underwriter agreed but failed to purchase
does not exceed 10% of the aggregate number of all the Securities, the non-
defaulting Underwriters may make arrangements satisfactory to the Company for
the purchase of the aggregate number of such Securities by other persons,
including the non-defaulting Underwriters, but if no such arrangements are made
prior to the Time of Delivery, the non-defaulting Underwriters shall be
obligated severally in proportion to their respective commitments hereunder, to
purchase the Securities which such defaulting Underwriter agreed but failed to
purchase. If any Underwriter or Underwriters shall so default and the aggregate
number of such Securities with respect to which such default or defaults occur
is more than 10% of the aggregate number of all the Securities and arrangements
satisfactory to the non-defaulting Underwriters and the Company for the
purchase of such Securities by other persons are not made within 48 hours after
such default, this Agreement will terminate (or, with respect to the Second Time
of Delivery, the obligation of the Underwriters to purchase and of the Company
to sell the Optional Securities).
If the non-defaulting Underwriter or substituted underwriter or
underwriters are required hereby or agree to take up all or part of the
Securities of the defaulting Underwriter as provided in this Section 7, (i) the
Company shall have the right to postpone the Time of Delivery for a period of
not more than
19
five full business days, in order that the Company may effect whatever changes
may thereby be made necessary in the Registration Statement or Prospectus or in
any other documents or arrangements, and the Company agrees to promptly file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective aggregate number of
Securities which the non-defaulting Underwriters or substituted purchaser or
purchasers shall thereafter be obligated to purchase shall be taken as the basis
of their underwriting obligation for all purposes of this Agreement. Nothing
herein contained shall relieve any defaulting Underwriter of its liability to
the Company or the non-defaulting Underwriters for damages occasioned by its
default hereunder. Any termination of this Agreement pursuant to this Section 7
shall be without liability on the part of the non-defaulting Underwriters or the
Company, other than as provided in Sections 6 and 9.
8. Survival of Indemnities, Representations, Warranties, etc.
The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.
9. Termination.
If this Agreement shall be terminated by the Underwriters, because of any
failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement, the
respective indemnities shall remain in full force and effect and the Company
will reimburse the Underwriter or such Underwriters as have so terminated this
Agreement with respect to themselves for all out-of-pocket expenses (including
the fees and disbursements of their counsel) reasonably incurred by them in
connection with the transactions contemplated by this Agreement.
10. Notices.
In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be
20
entitled to act and rely upon any statement, request, notice or agreement on
behalf of any Underwriter made or given by you.
All statements, requests, notices and agreements hereunder shall be in
writing, and (i) if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to you in care of Goldman, Sachs & Co., 85
Broad Street, New York, New York 10004, Attention: Registration Department; (ii)
if to the Company shall be delivered or sent by mail, telex or facsimile
transmission to Houston Industries Incorporated, 1111 Louisiana, Houston, Texas
77002, Attention, Assistant Treasurer. Any such statements, requests, notices
or agreements shall take effect upon receipt thereof.
11. Successors.
This Agreement shall inure to the benefit of and be binding upon the
several Underwriters and the Company and their respective successors and the
directors, officers and controlling persons referred to in Section 6 of this
Agreement. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person other than the persons mentioned in the
preceding sentence any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained; this Agreement
and all conditions and provisions hereof being intended to be, and being, for
the sole and exclusive benefit of such persons and for the benefit of no other
person; except that the representations, warranties, covenants, agreements and
indemnities of the Company contained in this Agreement shall also be for the
benefit of the person or persons, if any, who control any Underwriter within the
meaning of the Act or the Exchange Act, and the representations, warranties,
covenants, agreements and indemnities of the several Underwriters shall also be
for the benefit of each director of the Company, each person who has signed the
Registration Statement and the person or persons, if any, who control the
Company within the meaning of the Act.
12. Applicable Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
13. Counterparts.
This Agreement may be executed by any one or more of the parties hereto in
any number of counterparts, each of which shall be deemed to be an original, but
all such respective counterparts shall together constitute one and the same
instrument.
21
If the foregoing is in accordance with your understanding, please sign
and return to us seven counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement between each of the Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
Houston Industries Incorporated
By:__________________________________
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: ___________________________
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
22
SCHEDULE I
Number of
Securities
to be
Underwriters Purchased
- ------------ ----------
Total..............................................
23