EXHIBIT 1
NORAM ENERGY CORP.
$300,000,000
Debt Securities
6 1/2% Debentures due February 1, 2008
Underwriting Agreement
February 5, 1998
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Salomon Brothers Inc
Credit Suisse First Boston Corporation
NationsBanc Montgomery Securities LLC
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower
New York, New York 10281
Ladies and Gentlemen:
NorAm Energy Corp., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
$300,000,000 principal amount of its 6 1/2% Debentures due February 1, 2008 (the
"Debt Securities") to be issued pursuant to an indenture dated as of February 1,
1998 (the "Base Indenture") between the Company and Chase Bank of Texas,
National Association (formerly known as Texas Commerce Bank National
Association), as trustee (the "Trustee") and a Supplemental Indenture No. 1 to
the Base Indenture, dated as of February 1, 1998 (the "Supplemental Indenture",
and together with the Base Indenture and any other amendments or supplements
thereto, the "Indenture"), between the Company and the Trustee.
1. Representations and Warranties of the Company.
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(a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(i) A registration statement on Form S-3 with respect to the Debt
Securities, (File No. 333-41017) 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, has
been prepared and filed by the Company with the Securities and Exchange
Commission (the "Commission") and has been declared effective under the
Securities Act of 1933, as amended (the "Act"). 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. Such registration statement (including all
documents filed as part thereof or incorporated by reference therein, but
excluding any Forms T-1, as amended), as amended and supplemented at the date of
this Agreement, is hereinafter referred to as to the "Registration Statement."
The Prospectus contained in the Registration Statement at the time that the
Registration Statement was declared effective is hereinafter referred to as the
"Basic Prospectus."
The prospectus included in the Registration Statement, as amended and
supplemented to the date of this Agreement (including all documents then
incorporated by reference therein and including the Preliminary Supplemented
Prospectus (hereinafter defined) as further supplemented by the Final
Supplemented Prospectus (hereinafter defined)), is hereinafter referred to as
the "Prospectus". Any reference herein to the Registration Statement, the
Prospectus, a Preliminary Prospectus, the Basic Prospectus, the Preliminary
Supplemented Prospectus or the Final Supplemented 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
Registration Statement, Prospectus, Preliminary Prospectus, the Basic
Prospectus, the Preliminary Supplemented Prospectus or the Final Supplemented
Prospectus. Any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement or the 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 Registration Statement or Prospectus.
A prospectus supplement, subject to completion, dated February 2, 1998
(the "Preliminary Supplemented Prospectus") has been prepared and was filed
pursuant to Rule 424(b) under the Act ("Rule 424(b)") on February 4, 1998. A
prospectus supplement, dated the date hereof, setting forth the terms of the
Debt Securities and of their sale and distribution (the "Final Supplemented
Prospectus") has been prepared and will be filed pursuant to Rule 424(b).
(ii) On the effective date of the Registration Statement, the Registration
Statement, as amended and supplemented at that time, conformed 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 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; on the date of the Preliminary
Supplemented Prospectus, the Preliminary Supplemented
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Prospectus conformed in all material respects to the requirements of the Act 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 on the date of this Agreement, the Registration Statement
and the Prospectus conform, and at the Time of Delivery (hereinafter defined)
they 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 on the date of this Agreement do not, and on the Time of Delivery will not,
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, in the light of the circumstances under which they were
made, not misleading;
(iv) This Agreement has been duly authorized, executed and delivered
by the Company;
(v) The Debt Securities and the Indenture have been duly authorized by
the Company and, in the case of the Indenture, when validly executed and
delivered by the Company and the Trustee, and, in the case of the Debt
Securities, when validly issued by the Company and duly authenticated and
delivered by the Trustee, will constitute valid and legally binding obligations
of the Company and the Trustee, enforceable in accordance with their respective
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); the Debt Securities when
validly issued by the Company and duly authenticated and delivered by the
Trustee, will be entitled to the benefits of the Indenture; and the Debt
Securities conform to the descriptions thereof in the Prospectus.
(vi) The issuance by the Company of the Debt Securities, the
compliance by the Company with all of the provisions of this Agreement, the Debt
Securities and the Indenture, and the consummation of the transactions
contemplated herein and therein (a) will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument for borrowed money to which the Company or any Significant
Subsidiary (as defined in Regulation S-X) of the Company (each, a "Significant
Subsidiary") is a party or by which the Company or any Significant
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Subsidiary is bound or to which any of the property or assets of the Company or
any Significant Subsidiary is subject, which conflict, breach, violation, or
default would singly, or in the aggregate, have a material adverse effect on the
business, properties or financial condition of the Company and the Significant
Subsidiaries, taken as a whole; and (b) nor will such action result in any
violation of the provisions of the Certificate of Incorporation or By-laws of
the Company or any existing statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Company's or
any of its or its Significant Subsidiaries' properties.
(vii) The Commission has issued an order under 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 of the Debt Securities or the consummation by the Company of the other
transactions contemplated by this Agreement and 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 issuance
by the Company of the Debt Securities and the purchase and distribution of the
Debt Securities by the Underwriters.
(viii) At the date hereof, the Company has outstanding the following
securities (excluding for this purpose any revolving credit facility, letter of
credit facility or similar bank credit facility), and no others, which contain
covenants (i) limiting liens on any Principal Property (as defined in the
Prospectus) and (ii) limiting the sale and leaseback of assets:
(a) Medium-Term Notes, Series A and B (due through 2001), (b) 8.875%
Notes due 1999, (c) 7-1/2% Notes due 2000, (d) 8.90% Debentures due 2006, (e)
10% Debentures due 2019 and (f) Term Loan (due November 1998) under that certain
$150,000,000 Term Loan Agreement dated May 15, 1997, as amended, among the
Company, Citibank, N.A., as Agent, and various lenders party thereto.
2. Sale and Delivery.
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(a) Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company,
the principal amount of the Debt Securities set forth in Schedule I opposite the
name of such Underwriter (plus an additional amount of Debt Securities that such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 7 hereof) at a price equal to 99.186% of the principal amount thereof,
plus accrued interest from February 10, 1998 to the Time of Delivery.
(b) The Debt Securities to be purchased by each Underwriter hereunder
will be represented by one or more definitive global Debt 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 Debt Securities to Merrill Lynch, Pierce, Fenner & Smith
Incorporated, for the
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account of each Underwriter, against payment by or on behalf of such Underwriter
of the amount therefor, as set forth above, 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 Merrill Lynch, Pierce, Fenner & Smith Incorporated, by causing
DTC to credit the Debt Securities to the account of Merrill Lynch, Pierce,
Fenner & Smith Incorporated at DTC. The Company will cause the global
certificates representing the Debt Securities to be made available to Merrill
Lynch, Pierce, Fenner & Smith Incorporated 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 9:30 a.m., New York City time, on February 10, 1998 or such
other time and date as Merrill Lynch, Pierce, Fenner & Smith Incorporated and
the Company may agree upon in writing. Such time and date are herein called the
"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 Debt Securities and any additional documents requested by the
Underwriters pursuant to Section 5(i) hereof, will be delivered at such time and
date at the offices of Baker & Botts L.L.P., One Shell Plaza, 910 Louisiana,
Houston, Texas 77002-4995 or such other location as Merrill Lynch, Pierce,
Fenner & Smith Incorporated and the Company may agree in writing (the "Closing
Location"), and the Debt 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., New York City time or at such other time as Merrill Lynch, Pierce,
Fenner & Smith Incorporated 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.
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The Company covenants and agrees with each of the Underwriters:
(a) That the Company will 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, the Preliminary Supplemented Prospectus and the Final
Supplemented Prospectus, 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) That the Company will cause the Final Supplemented Prospectus
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to be filed pursuant to, and in compliance with, Rule 424(b) and will 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 the reasonable opinion of Dewey Ballantine LLP,
counsel for the Underwriters, 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 Debt Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose. So long as any Underwriter is required in the reasonable opinion of
Dewey Ballantine LLP 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 Merrill
Lynch, Pierce, Fenner & Smith Incorporated and to Dewey Ballantine LLP, 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 the reasonable
opinion of Dewey Ballantine LLP, to deliver a Prospectus, the Underwriters or
Dewey Ballantine LLP, 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) That if, at any time when in the reasonable opinion of Dewey
Ballantine LLP the Prospectus is required by law to be delivered by an
Underwriter or a dealer, any event shall occur as a result of which it is
necessary, in the reasonable opinion of Dewey Ballantine LLP or counsel for the
Company, 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 such counsel, to amend or supplement the Prospectus or modify such
information to comply with law, the Company will forthwith (i) prepare and
furnish, at its own expense, to the Underwriters and to the dealers (whose names
and addresses the Underwriters will furnish to the Company) to whom Debt
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) That the Company will endeavor to qualify, at its expense, the
Debt 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
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determination of the eligibility for investment of the Debt 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;
(e) That the Company will make generally available to its security
holders and the holders of the Debt Securities 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) That during the period beginning on the date of this Agreement and
continuing to and including the Time of Delivery, the Company will not offer,
sell, contract to sell or otherwise dispose of any Debt Securities, any security
convertible into or exchangeable into or exercisable for Debt Securities or any
debt securities substantially similar to the Debt Securities (except for the
Debt Securities issued pursuant to this Agreement), without the prior written
consent of the Underwriters.
4. Expenses.
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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 Debt Securities and all other expenses in
connection with the preparation, printing and filing of the Registration
Statement, the Prospectus, the Preliminary Supplemented Prospectus, the Final
Supplemented 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 Debt
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 Debt
Securities rating services for rating the Debt Securities; (v) the cost of
preparing the Debt 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; (vii) the reasonable fees, disbursements and
expenses of Underwriters' counsel; 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
Underwriters will pay all of their own costs and expenses, including any
advertising expenses connected with any offers they may make.
5. Conditions of Underwriters' Obligations.
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The obligations of the Underwriters 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,
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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) 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 (including, without limitation, the
Treasurer) of the Company or an executive officer of Houston Industries
Incorporated, the sole stockholder of the Company ("Houston Industries"), 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 or an
executive officer of Houston Industries to the foregoing effect. The officers
or agents making such certificates may rely upon the best of his knowledge as to
proceedings pending or threatened.
(b) Dewey Ballantine LLP, 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 the exemption of Houston Industries under the Public Utility Holding
Company Act of 1935, as amended (the "1935 Act"), upon the opinion of Baker &
Botts, L.L.P. referred to in (d) below.
(c) Hugh Rice Kelly, Esq., Executive Vice President and Secretary of
the Company, or Rufus S. Scott, Esq., Assistant Secretary of the Company, shall
have furnished to you his written opinion, dated the 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 Delaware 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 state securities laws, as to which such counsel need
not express an opinion) is required for the issuance and sale of the Debt
Securities being delivered at the Time of Delivery or the consummation by the
Company of the transactions contemplated by this Agreement and 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
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proceedings pending or threatened to which the Company is subject, which,
individually or in the aggregate, are expected to have a material adverse effect
on the financial position, stockholders' equity or results of operations of the
Company;
(iv) 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 Certificate 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; and
(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--Regulation" and "-- Environmental Matters",
as updated in the Forms 10-Q for the quarters ended March 31, June 30 and
September 30, 1997, fairly describe in all material respects the portions of the
statutes and regulations addressed thereby.
(d) Baker & Botts, L.L.P., 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:
(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 and filed;
(ii) The statements set forth in the Final Supplemented Prospectus
under the caption "Description of Debentures", and in the Basic Prospectus under
the caption "Description of Debt Securities" accurately summarizes in all
material respects the terms of the Debt Securities;
(iii) The Debt Securities conform, as to legal matters in all
material respects to the descriptions thereof contained in the Final
Supplemented Prospectus including, without limitation, under the caption
"Description of Debentures", and in the Basic Prospectus including, without
limitation, under the caption "Description of Debt Securities";
(iv) The Debt 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'
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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 a proceeding in equity or at law);
(v) The Indenture has been duly qualified under the TIA;
(vi) Pursuant to a Memorandum Opinion and Order Granting Exemption to
Holding Company dated July 24, 1997 issued by the Commission (Release No. 35-
26744), Houston Industries is exempt from regulation as a public utility holding
company under Section 3(a)(2) of the 1935 Act, except the provisions of Section
9(a)(2) thereof;
(vii) 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 Final Supplemented Prospectus, as of February 5,
1998, (except for (A) the operating statistics, financial statements, pro forma
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), (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 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, pro forma 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), (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 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
(ix) 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 (except for (A) the operating statistics, financial statements, pro
forma financial statements and
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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, 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, as amended, supplemented or modified by the filing of a document
incorporated by reference therein if so amended, supplemented or modified
(except for (A) the operating statistics, financial statement, pro forma
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 Final
Supplemented Prospectus contained, or as of the Time of Delivery contains, any
untrue statement of a material fact 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.
(e) 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.
(f) At the time of execution of this Agreement, Coopers & Lybrand
L.L.P. shall have furnished to you a letter dated the date of such execution,
substantially in the form heretofore supplied and deemed satisfactory to you.
(g) 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 (e) 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.
(h) At the Time of Delivery, Coopers & Lybrand L.L.P. shall have
furnished you a letter, dated the Time of Delivery, addressing certain matters
requested by you at the date hereof.
(i) The Company shall have furnished or caused to be furnished to you
at the Time of Delivery certificates of officers of the Company satisfactory to
you as
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to the accuracy of the representations and warranties of the Company herein at
and as of the Time of Delivery, as to the performance by the Company of all of
its obligations hereunder to be performed at or prior to the 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 Supplemented Prospectus, Final Supplemented
Prospectus, Preliminary Prospectus, the Registration Statement, the Basic
Prospectus 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 Merrill Lynch, Pierce, Fenner & Smith
Incorporated 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 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, the Basic
Prospectus, the Prospectus, the Preliminary Supplemented Prospectus and the
Final Supplemented Prospectus shall not inure to the benefit of any Underwriter
if a copy of the Preliminary Prospectus, the Basic Prospectus, the Prospectus,
the Preliminary Supplemented Prospectus or the Final Supplemented 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 Debt Securities to such person and the untrue statement or
omission of a material fact contained in any such Preliminary Prospectus, Basic
Prospectus, Prospectus, Preliminary Supplemented Prospectus or Final
Supplemented Prospectus was corrected in the Preliminary Prospectus, Basic
Prospectus, Prospectus, Preliminary Supplemented Prospectus or Final
Supplemented 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
12
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 Merrill Lynch, Pierce, Fenner &
Smith Incorporated. The Company shall not be liable to indemnify any person for
any settlement of any such claim effected without the Company's consent. 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 Supplemented Prospectus, Final Supplemented Prospectus,
Preliminary Prospectus, the Registration Statement, the Basic Prospectus 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 Merrill Lynch, Pierce, Fenner & Smith
Incorporated 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, trustee or controlling person unless
the Company or any such director, officer, trustee 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,
trustee 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, trustee or controlling person otherwise
than on account of the indemnity agreement contained in
13
this paragraph. Such 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, trustee 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,
trustee 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, trustee 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, trustee 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. 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 the relative benefits received by each party from the offering of the
Debt 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
Debt 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.
----------------------------
14
If any Underwriter shall default in its obligation to purchase the
Debt Securities which it has agreed to purchase hereunder and the aggregate
principal amount of such Debt Securities which such defaulting Underwriter
agreed but failed to purchase does not exceed 10% of the aggregate principal
amount of all the Debt Securities, the non-defaulting Underwriters may make
arrangements satisfactory to the Company for the purchase of the aggregate
principal amount of such Debt 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 Debt
Securities which such defaulting Underwriter agreed but failed to purchase. If
any Underwriter or Underwriters shall so default and the aggregate principal
amount of such Debt Securities with respect to which such default or defaults
occur is more than 10% of the aggregate principal amount of all the Debt
Securities and arrangements satisfactory to the non-defaulting Underwriters and
the Company for the purchase of such Debt Securities by other persons are not
made within 48 hours after such default, this agreement will terminate.
If the non-defaulting Underwriter or Underwriters or substituted
underwriter or underwriters are required hereby or agree to take up all or part
of the Debt 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 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 principal amount of Debt 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 Debt Securities.
9. Termination.
-----------
15
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 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 Merrill Lynch, Pierce, Fenner
& Smith Incorporated, World Financial Center, North Tower, New York, New York
10281-1327, Attention: Robert D. Craig; and (ii) if to the Company shall be
delivered or sent by mail, telex or facsimile transmission to the Company in
care of 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, trustees, 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.
16
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.
17
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,
NorAm Energy Corp.
/s/ MARC KILBRIDE
By:________________________
Name: Marc Kilbride
Title: Treasurer
Accepted as of the date hereof:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Salomon Brothers Inc
Credit Suisse First Boston Corporation
NationsBanc Montgomery Securities LLC
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
/s/ ROBERT CRAIG
By:___________________________
Name: Robert Craig
Title: Vice President
On behalf of each of the Underwriters
18
SCHEDULE I
Principal Amount of
Underwriters Debt Securities
------------ ---------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated $ 75,000,000
Salomon Brothers Inc 75,000,000
Credit Suisse First Boston Corporation 75,000,000
NationsBanc Montgomery Securities LLC 75,000,000
Total $300,000,000
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