EXHIBIT 1.1
ENSERCH CORPORATION
DEBT SECURITIES
UNDERWRITING AGREEMENT
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______________, 199_
Gentlemen:
ENSERCH Corporation, a Texas corporation ("Company"), confirms its
agreement with the several Underwriters listed in Schedule A hereto
("Underwriters", which term may refer to a single Underwriter if only one is
listed in Schedule A) as follows:
1. DESCRIPTION OF SECURITIES. The Company proposes to issue and sell to
the several Underwriters securities of the title, amount and particular terms
set forth or referred to in Schedule B hereto ("Securities"). The Securities
are to be issued under the Indenture ("Indenture") identified in Schedule B
hereto.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, each Underwriter that:
(a) A registration statement on Form S-3 (with the file number set
forth in Schedule B hereto), including a prospectus, with respect to
securities of the Company, including the Securities, and of a special
purpose subsidiary of the Company, has been carefully prepared by the
Company in conformity with the requirements of the Securities Act of 1933,
as amended ("Act"), the Trust Indenture Act of 1939, as amended ("Trust
Indenture Act") and the rules and regulations ("Rules and Regulations") of
the Securities and Exchange Commission ("Commission") thereunder and filed
with the Commission and has become effective. Such registration statement
and prospectus may have been amended or supplemented prior to the date of
this Agreement; any such amendment or supplement was so prepared and filed,
and any such amendment filed after the effective date of such registration
statement has become effective. No stop order suspending the effectiveness
of the registration statement has been issued, and no proceeding for that
purpose has been instituted or threatened by the Commission. A prospectus
supplement ("Prospectus Supplement") setting forth the terms of the
Securities and of their sale and distribution has been or will
be so prepared and will be filed pursuant to Rule 424(b) of the Rules and
Regulations on or before the second business day after the date hereof (or
such earlier time as may be required by the Rules and Regulations). Copies
of such registration statement and prospectus, any such amendment or
supplement and all documents incorporated by reference therein that were
filed with the Commission on or prior to the date of this Agreement
(including one fully executed copy of the registration statement and of
each amendment thereto for each of you and for counsel for the
Underwriters) have been delivered to you. Such registration statement, as
it may have heretofore been amended, is referred to herein as the
"Registration Statement", and the final form of prospectus included in the
Registration Statement, as supplemented by the Prospectus Supplement, is
referred to herein as the "Prospectus". Each form of Prospectus, or
Prospectus and Prospectus Supplement, if any, heretofore made available for
use in offering the Securities is referred to herein as a "Preliminary
Prospectus". Any reference herein to the Registration Statement, the
Prospectus, any amendment or supplement thereto or any Preliminary
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein, and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Registration
Statement or Prospectus shall be deemed to refer to and include the filing
after the execution hereof of any document with the Commission deemed to be
incorporated by reference therein.
(b) Each part of the registration statement, when such part became or
becomes effective, each Preliminary Prospectus (if any) on the date of
filing thereof with the Commission, and the Prospectus and any amendment or
supplement thereto, on the date of filing thereof with the Commission and
at the Closing Date (as hereinafter defined), conformed or will conform in
all material respects with the requirements of the Act, the Trust Indenture
Act and the Rules and Regulations; each part of the registration statement,
when such part became or becomes effective, did not or will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; each Preliminary Prospectus (if any), on the date of filing
thereof with the Commission, and the Prospectus and any amendment or
supplement thereto, on the date of filing thereof with the Commission and
at the Closing Date, did not or will not include an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and the statements made in such documents in response
to Rule 4-10 of Regulation S-X and the statements made in such documents
within the coverage of Rule 175(b) of the General Rules and
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Regulations under the Act were made by the Company with a reasonable basis
and in good faith; except that the foregoing shall not apply to statements
in or omissions from any such document in reliance upon, and in conformity
with, written information furnished to the Company by you, or by any
Underwriter through you, specifically for use in the preparation thereof.
(c) The documents incorporated by reference in the Registration
Statement, the Prospectus, any amendment or supplement thereto or any
Preliminary Prospectus, when they became or become effective under the Act
or were or are filed with the Commission under the Securities Exchange Act
of 1934, as amended ("Exchange Act"), as the case may be, conformed or will
conform in all material respects with the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder.
(d) The financial statements of the Company and its subsidiaries set
forth in the Registration Statement and Prospectus fairly present the
financial condition of the Company and its subsidiaries as of the dates
indicated and the results of operations and cash flows for the periods
therein specified in conformity with generally accepted accounting
principles consistently applied throughout the periods involved (except as
otherwise stated therein).
(e) The Company and each United States subsidiary and each material
non-United States subsidiary of the Company has been duly incorporated and
is an existing corporation in good standing under the laws of its
jurisdiction of incorporation, has full power and authority (corporate and
other) to conduct its business as described in the Registration Statement
and Prospectus and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction in
which it owns or leases real property or in which the conduct of its
business requires such qualification except where the failure to be so
qualified, considering all such cases in the aggregate, does not involve a
material risk to the business, properties, financial position or results of
operations of the Company and its subsidiaries; and all of the outstanding
shares of capital stock of each such subsidiary have been duly authorized
and validly issued, are fully paid and non-assessable and (except as
otherwise stated in the Registration Statement) are owned beneficially by
the Company subject to no security interest, other encumbrance or adverse
claim.
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(f) The Indenture and the Securities have been duly authorized, the
Indenture has been duly qualified under the Trust Indenture Act and
executed and delivered and constitutes, and the Securities, when duly
executed, authenticated, issued and delivered as contemplated hereby and by
the Indenture, 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; as to any Securities which are convertible into
Common Stock, $4.45 par value ("Common Stock") of the Company ("Convertible
Securities"), such Convertible Securities, when issued as contemplated
hereby, will be convertible into Common Stock in accordance with the terms
of the Indenture, the shares of Common Stock initially issuable upon
conversion of any Convertible Securities will have been duly authorized and
reserved for issuance upon such conversion, and, when so issued, will be
validly issued, fully paid and non-assessable; and the outstanding shares
of Common Stock of the Company have been duly authorized and validly
issued, are fully paid and non-assessable and conform to the description
thereof in the Prospectus, and the shareholders of the Company have no
preemptive rights with respect to such Securities or the Common Stock.
(g) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, neither the Company nor any of its
subsidiaries has incurred any liabilities or obligations, direct or
contingent, or entered into any transactions, not in the ordinary course of
business, that are material to the Company and its subsidiaries, and there
has not been any material change, on a consolidated basis, in the capital
stock (other than from stock issued under employee benefit and stock option
plans) or long-term debt (other than from currency fluctuations and normal
repurchases of long-term debt for sinking fund purposes and scheduled
repayments) of the Company and its subsidiaries, or any material adverse
change, or any development involving a prospective material adverse change,
in the condition (financial or other), business, prospects, net worth
(other than any decrease in net worth as a result of the declaration by the
Company of regular quarterly dividends on its preferred stock and Common
Stock) or results of operations of the Company and its subsidiaries
considered as a whole.
(h) Except as set forth in the Prospectus, there is not pending or, to
the knowledge of the Company, threatened any action, suit or proceeding to
which the Company or any of its subsidiaries is a party, before or by any
court or governmental agency or body, other than litigation incident to
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the kind of business conducted by the Company, that might result in any
material adverse change in the condition (financial or other), business,
prospects, net worth or results of operations of the Company and its
subsidiaries considered as a whole, or might materially and adversely
affect the properties or assets thereof.
(i) There are no contracts or documents of the Company or any of its
subsidiaries that are required to be filed as exhibits to the Registration
Statement or to any of the documents incorporated by reference therein by
the Act, the Trust Indenture Act or the Exchange Act or by the rules and
regulations of the Commission thereunder that have not been so filed.
(j) The performance of this Agreement and of any Delayed Delivery
Contracts (as hereinafter defined) and the consummation of the transactions
herein contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute, any
agreement or instrument to which the Company is a party or by which it is
bound or to which any of the property of the Company is subject, the
Restated Articles of Incorporation, as amended, or By-laws of the Company,
or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its properties; no
consent, approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with the issuance
or sale of the Securities by the Company, except such as may be required
under the Act, the Trust Indenture Act or state securities laws; and the
Company has full power and authority to authorize, issue and sell the
Securities as contemplated by this Agreement.
(k) The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property described in the Registration Statement and Prospectus as
being owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Registration Statement and
Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries; the real properties referred
to in the Registration Statement and Prospectus as held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the conduct of the business of the Company and its
subsidiaries; the pipeline easements enjoyed by the Company and its
subsidiaries are
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valid, subsisting and enforceable easements with such exceptions as are not
material and do not interfere with the conduct of the business of the
Company and its subsidiaries; the gas purchase contracts referred to in the
Registration Statement and the Prospectus are valid contracts in accordance
with their terms; the leases, operating agreements and other interests in
gas acreage referred to in the Registration Statement and Prospectus as
held by the Company and its subsidiaries entitle them to the rights therein
purported to be granted, subject to the jurisdiction of regulatory agencies
to establish allowable levels of production; the Company and its
subsidiaries possess all licenses, franchises, permits, authorizations,
approvals, consents and orders of all governmental authorities or agencies
(including, without limitation, all certificates of public convenience and
necessity issued by the Federal Energy Regulatory Commission) necessary for
the ownership or lease of the properties owned or leased or proposed to be
owned or leased by them and for the operation of the business carried on or
proposed to be carried on by them as described in the Registration
Statement and Prospectus; all such licenses, franchises, permits, orders,
authorizations, approvals and consents are in full force and effect and
contain no unduly burdensome provisions and, except as otherwise set forth
in the Registration Statement and Prospectus, there are no legal or
governmental proceedings pending or threatened that would result in a
material modification, suspension or revocation thereof.
3. PURCHASE, SALE AND DELIVERY OF SECURITIES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell to
each Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at the purchase price set forth in Schedule B hereto,
the amount of Securities set forth opposite the name of such Underwriter in
Schedule A hereto less the reduction for such Underwriter's portion of any
Contract Securities determined as provided below.
If so authorized in Schedule B hereto, the Underwriters may solicit
offers from investors of the types set forth in the Prospectus to purchase
Securities from the Company pursuant to delayed contracts ("Delayed Delivery
Contracts"). Such contracts shall be substantially in the form of Exhibit I
hereto but with such changes therein as the Company may approve. Securities to
be purchased pursuant to Delayed Delivery Contracts are herein called "Contract
Securities". When Delayed Delivery Contracts are authorized in Schedule B, the
Company will enter into a Delayed Delivery Contract in each case where a sale of
Contract Securities arranged through you has been approved by the Company but,
except as the Company may otherwise agree, such Delayed Delivery Contracts must
be for at least the minimum amount of Contract Securities set
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forth in Schedule B hereto, and the aggregate amount of Contract Securities may
not exceed the amount set forth in such Schedule. The Company will advise you
not later than 10:00 A.M., New York City time, on the third full business day
preceding the Closing Date (or at such later time as you may otherwise agree) of
the sales of Contract Securities that have been so approved. You and the other
Underwriters will not have any responsibility in respect of the validity or
performance of Delayed Delivery Contracts.
The amount of Securities to be purchased by each Underwriter as set
forth in Schedule A hereto shall be reduced by an amount that shall bear the
same proportion to the total amount of Contract Securities as the amount of
Securities set forth opposite the name of such Underwriter bears to the total
amount of Securities set forth in Schedule A hereto, except to the extent that
you determine that such reduction shall be otherwise than in such proportion and
so advise the Company; provided, however, that the total amount of Securities to
be purchased by all Underwriters shall be the total amount of Securities set
forth in Schedule A hereto less the aggregate amount of Contract Securities.
The Securities to be purchased by the Underwriters will be delivered
by the Company to you or the securities depositary as set forth in Schedule B
for the accounts of the several Underwriters against payment of the purchase
price therefor by certified or official bank check or checks, payable to the
order of the Company or, if so requested by the Company, by wire transfer to a
bank account designated by the Company in the funds specified, at the office, on
the date and at the times specified in such Schedule B, or at such other time
not later than eight full business days thereafter as you and the Company
determine, such time being herein referred to as the "Closing Date". Unless
otherwise specified in Schedule B, such Securities will be issued in book-entry
form and prepared in the denominations requested by and registered in the name
of, the securities depository (or a nominee thereof) set forth in Schedule B
hereto and will be made available for checking at least one business day prior
to the Closing Date. If not issued in book-entry form, such Securities will be
prepared in definitive form and in such authorized denominations and registered
in such names as you may request upon at least two business days' prior notice
to the Company and will be made available for checking and packaging at the
office at which they are to be delivered at the Closing Date (or such other
office as may be specified for that purpose in Schedule B) at least one business
day prior to the Closing Date.
It is understood that you, acting individually and not in a
representative capacity, may (but shall not be obligated to) make payment to the
Company on behalf of any other Underwriter for Securities to be purchased by
such Underwriter. Any such payment by you shall not relieve any such
Underwriter of any of its obligations hereunder.
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The Company will pay to you, at the Closing Date, for the account of
each Underwriter any commission or other compensation that is specified in
Schedule B hereto. Such payment will be made by certified or official bank
check or checks in New York Clearing House (next day) funds.
4. COVENANTS. The Company covenants and agrees with each Underwriter
that:
(a) The Company will cause the Prospectus Supplement to be filed as
required by Section 2(a) hereof (but only if you have not reasonably
objected thereto by notice to the Company after having been furnished a
copy a reasonable time prior to filing) and will notify you promptly of
such filing. During the period in which a prospectus relating to the
Securities is required to be delivered under the Act, the Company will
notify you promptly of the time when any subsequent amendment to the
Registration Statement has become effective or any subsequent supplement to
the Prospectus has been filed and of any request by the Commission for any
amendment or supplement to the Registration Statement or Prospectus or for
additional information; it will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the
Registration Statement or Prospectus that, in your opinion, may be
necessary or advisable in connection with the distribution of the
Securities by the Underwriters; it will file no amendment or supplement to
the Registration Statement or Prospectus (other than any prospectus
supplement relating to the offering of other securities registered under
the Registration Statement or any document required to be filed under the
Exchange Act that upon filing is deemed to be incorporated by reference
therein) to which you shall reasonably object by notice to the Company
after having been furnished a copy a reasonable time prior to the filing;
and it will furnish to you at or prior to the filing thereof a copy of any
such prospectus supplement or any document that upon filing is deemed to be
incorporated by reference in the Registration Statement or Prospectus.
(b) The Company will advise you, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement,
of the suspension of the qualification of the Securities for offering or
sale in any jurisdiction, or of the initiation or threatening of any
proceeding for any such purpose; and it will promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if
such a stop order should be issued.
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(c) Within the time during which a prospectus relating to the
Securities is required to be delivered under the Act, the Company will
comply as far as it is able with all requirements imposed upon it by the
Act and by the Rules and Regulations, as from time to time in force, so far
as necessary to permit the continuance of sales of or dealings in the
Securities as contemplated by the provisions hereof and the Prospectus. If
during such period any event occurs as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances then existing, not
misleading, or if during such period it is necessary to amend or supplement
the Registration Statement or Prospectus to comply with the Act, the
Company will promptly notify you and will amend or supplement the
Registration Statement or Prospectus (at the expense of the Company) so as
to correct such statement or omission or effect such compliance.
(d) The Company will use its best efforts to qualify the Securities
and any Common Stock into which any Securities are convertible for sale
under the securities laws of such jurisdictions as you reasonably designate
and to continue such qualifications in effect so long as required for the
distribution of the Securities, except that the Company shall not be
required in connection therewith to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction. The
Company will also arrange for the determination of the eligibility for
investment of the Securities under the laws of such jurisdictions as you
reasonably request.
(e) The Company will furnish to the Underwriters copies of the
Registration Statement, the Prospectus (including all documents
incorporated by reference therein) and all amendments and supplements to
the Registration Statement or Prospectus that are filed with the Commission
during the period in which a prospectus relating to the Securities is
required to be delivered under the Act (including all documents filed with
the Commission during such period that are deemed to be incorporated by
reference therein), in each case as soon as available and in such
quantities as you may from time to time reasonably request.
(f) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than 15 months after the
end of the Company's current fiscal quarter, an earnings statement (which
need not be audited) covering a 12-month period beginning after the date
upon which the Prospectus Supplement is filed pursuant to Rule 424 under
the Act that shall satisfy the provisions of Section 11(a) of the Act or
Rule 158 thereunder.
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(g) The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, will pay all
expenses incident to the performance of its obligations hereunder, will pay
the expenses of printing all documents relating to the offering, and will
reimburse the Underwriters for any expenses (including fees and
disbursements of counsel) incurred by them in connection with the matters
referred to in Section 4(d) hereof and the preparation of memoranda
relating thereto, for any filing fee of the National Association of
Securities Dealers, Inc. relating to the Securities and for any fees
charged by investment rating agencies for rating the Securities. If the
sale of Securities to be purchased by the several Underwriters as provided
for herein is not consummated by reason of any failure, refusal or
inability on the part of the Company to perform any agreement on its part
to be performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company is not
fulfilled, the Company will reimburse the several Underwriters for all
reasonable out-of-pocket disbursements (including fees and disbursements of
counsel) incurred by the Underwriters in connection with their
investigation, preparing to market and marketing the Securities or in
contemplation of performing their obligations hereunder. The Company shall
not in any event be liable to any of the Underwriters for loss of
anticipated profits from the transactions covered by this Agreement.
(h) The Company will apply the net proceeds from the sale of the
Securities as set forth in the Prospectus.
(i) The Company will not, directly or indirectly, offer or sell, or
determine to offer or sell, any debt securities that are substantially
similar to the Securities (except under prior contractual commitments)
during the period ending on the earlier of the Closing Date or 10 business
days after the date of this Agreement without your prior written consent.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for Securities as provided herein shall
be subject to the accuracy, as of the date hereof and the Closing Date (as if
made at the Closing Date), of the representations and warranties of the Company
herein, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall
have been instituted or, to the knowledge of the Company or any
Underwriter, threatened by the Commission, and any request of the
Commission for additional information (to be included in the Registration
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Statement or the Prospectus or otherwise) shall have been complied with to
your satisfaction.
(b) No Underwriter shall have advised the Company that the
Registration Statement or Prospectus, or any amendment or supplement
thereto, contains an untrue statement of fact that in your opinion is
material, or omits to state a fact that in your opinion is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(c) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, there shall not have been any change, on a
consolidated basis, in the capital stock (other than from stock issued
under employee benefit and stock option plans) or long-term debt (other
than from currency fluctuations and normal repurchases of long-term debt
for sinking fund purposes and scheduled repayments) of the Company and its
subsidiaries, or any adverse change, or any development involving a
prospective adverse change, in the condition (financial or other),
business, prospects, net worth (other than any decrease in net worth as a
result of the declaration by the Company of regular quarterly dividends on
its preferred stock and Common Stock) or results of operations of the
Company and its subsidiaries, or any change in the rating assigned to any
securities of the Company, that, in your judgment, makes it impractical or
inadvisable to offer or deliver the Securities on the terms and in the
manner contemplated in the Prospectus.
(d) You shall have received the opinion of William T. Satterwhite,
Esq., counsel for the Company, dated the Closing Date, to the effect that:
(i) Each of the Company, its United States subsidiaries and all
material non-United states subsidiaries have been duly incorporated
and is an existing corporation in good standing under the laws of its
jurisdiction of incorporation, has full power and authority (corporate
and other) to conduct its business as described in the Registration
Statement and Prospectus and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction in which it owns or leases real property or in which the
conduct of its business requires such qualification except where the
failure to be so qualified, considering all such cases in the
aggregate, does not involve a material risk to the business,
properties, financial position or results of operations of the Company
and its subsidiaries; and all of the outstanding shares of capital
stock of each of the Company's subsidiaries have been duly authorized
and
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validly issued, are fully paid and non-assessable and (except as
otherwise stated in the Registration Statement) are owned beneficially
by the Company subject to no security interest, other encumbrance or
adverse claim;
(ii) The Indenture and the Securities have been duly authorized,
the Indenture has been duly qualified under the Trust Indenture Act,
executed and delivered, the Securities purchased by the Underwriters
have been duly executed, authenticated, issued and delivered, and the
Indenture and such Securities constitute, and any Contract Securities,
when executed, authenticated, issued and delivered in the manner
provided in the Indenture and the Delayed Delivery Contracts, 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; and as to any Convertible Securities
purchased by the Underwriters or any Contract Securities which are
convertible into Common Stock ("Convertible Contract Securities"),
such Convertible Securities are, and such Convertible Contract
Securities, when executed, authenticated, issued and delivered in the
manner provided in the Indenture and the Delayed Delivery Contracts
will be, convertible into Common Stock of the Company in accordance
with the terms of the Indenture, the shares of Common Stock initially
issuable upon conversion of any Convertible Securities have been duly
authorized and reserved for issuance upon such conversion, and, when
so issued, will be validly issued, fully paid and non-assessable; and
the outstanding shares of Common Stock of the Company have been duly
authorized and validly issued, are fully paid and non-assessable and
conform to the description thereof in the Prospectus, and the
shareholders of the Company have no preemptive rights with respect to
the Securities or the Common Stock;
(iii) The Registration Statement has become effective under the
Act; the Prospectus Supplement has been filed as required by Section
2(a) hereof; and to the best knowledge of such counsel no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose has been instituted or
threatened by the Commission;
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(iv) Each part of the registration statement, when such part
became effective, and the Prospectus and any amendment or supplement
thereto, on the date of filing thereof with the Commission and at the
Closing Date, complied as to form in all material respects with the
requirements of the Act, the Trust Indenture Act and the Rules and
Regulations; such counsel has no reason to believe that either any
part of the registration statement, when such part became effective,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus and any
amendment or supplement thereto, on the date of filing thereof with
the Commission or at the Closing Date, included an untrue statement of
a material fact or omitted to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading; and the documents incorporated by
reference in the Registration Statement or Prospectus or any amendment
or supplement thereto, when they became effective under the Act or
were filed with the Commission under the Exchange Act, as the case may
be, complied as to form in all material respects with the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder; it being understood that
such counsel need express no opinion as to the financial statements or
other financial data and the description of the reports of DeGolyer
and MacNaughton, included in any of the documents mentioned in this
clause;
(v) The description in the Registration Statement and Prospectus
of statutes, legal and governmental proceedings, contracts and other
documents are accurate and fairly present the information required to
be shown; the pipeline easements enjoyed by the Company and its
subsidiaries are valid, subsisting and enforceable easements with such
exceptions as are not material and do not interfere with the conduct
of the business of the Company and its subsidiaries; the gas purchase
contracts referred to in the Registration Statement and the Prospectus
are valid contracts in accordance with their terms; the leases,
operating agreements and other interests in gas acreage referred to in
the Registration Statement and Prospectus as held by the Company and
its subsidiaries entitle them to the rights therein purported to be
granted, subject to the jurisdiction of regulatory agencies to
establish allowable levels of production; the Company and its
subsidiaries possess all material licenses, franchises, permits,
authorizations, approvals, consents and orders of all governmental
authorities or
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agencies (including, without limitation, all certificates of public"
convenience and necessity issued by the Federal Energy Regulatory
Commission) necessary for the ownership or lease of the properties
owned or leased or proposed to be owned or leased by them and for the
operation of the business carried on or proposed to be carried on by
them as described in the Registration Statement and Prospectus; all
such licenses, franchises, permits, orders, authorizations, approvals
and consents are in full force and effect and contain no unduly
burdensome provisions and, except as otherwise set forth in the
Registration Statement and Prospectus, there are no legal or
governmental proceedings pending or threatened that would result in a
material modification, suspension or revocation thereof; and such
counsel does not know of any statutes or legal or governmental
proceedings required to be described in the Prospectus that are not
described as required, or of any contracts or documents of a character
required to be described in the Registration Statement or Prospectus
(or required to be filed under the Exchange Act if upon such filing
they would be incorporated by reference therein) or to be filed as
exhibits to the Registration Statement that are not described and
filed as required;
(vi) This Agreement and any Delayed Delivery Contracts have been
duly authorized, executed and delivered by the Company; the
performance of this Agreement and of any Delayed Delivery Contracts
and the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute, any agreement or
instrument known to such counsel to which the Company is a party or by
which it is bound or to which any of the property of the Company is
subject, the Restated Articles of Incorporation, as amended, or By-
laws of the Company, or any order, rule or regulation known to such
counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its properties; and no
consent, approval, authorization or order of, or filing with, any
court or governmental agency or body is required for the consummation
of the transactions contemplated by this Agreement in connection with
the issuance or sale of the Securities by the Company, except such as
have been obtained under the Act and the Trust Indenture Act and such
as may be required under state securities laws in connection with the
purchase and distribution of the Securities by the Underwriters; and
(vii) The Company is not a "holding company" or a "subsidiary
company" of a "holding company" within the
14
meaning of the Public Utility Holding Company Act of 1935, as amended.
(e) You shall have received the opinion of Mudge Rose Guthrie
Alexander & Ferdon, counsel for the Underwriters, dated the Closing Date,
to the effect that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Texas;
(ii) The Indenture has been duly authorized, executed and
delivered by the Company and duly qualified under the Trust Indenture
Act; the Securities have been duly authorized, executed,
authenticated, issued and delivered; and the Indenture and the
Securities constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(iii) The Indenture and the Securities conform in all material
respects to the descriptions thereof contained in the Prospectus as
amended and supplemented; and
(iv) This Agreement has been duly authorized, executed and
delivered by the Company.
Such counsel shall also state in such opinion that although they are
not passing upon or assuming any responsibility for the accuracy,
completeness or fairness of any of the statements made in the Registration
Statement or the Prospectus or any amendment or supplement thereto, on the
basis of the information which they gained in the course of the services
specified in such opinion, in their opinion, each part of the Registration
Statement when such part became effective and the Prospectus, as amended or
supplemented on the date of this Agreement (other than certain incorporated
documents), appear on their face to comply as to form in all material
respects with the requirements of the Act, the Trust Indenture Act and the
Rules and Regulations. Such counsel shall further state in such opinion
that nothing which has come to their attention in the course of such review
has caused them to believe that any part of the Registration Statement,
when such part became effective, contained an untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that
the Prospectus, as amended or supplemented on the date of this
15
Agreement, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Such counsel shall also state in such opinion that nothing which has come
to their attention has caused them to believe that the Prospectus, as
amended or supplemented as of the time of the delivery of such opinion,
contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Notwithstanding
the foregoing, such counsel may state in such opinion that they are not
expressing any opinion or belief as to the financial statements or other
financial or statistical data contained in the Registration Statement, any
incorporated documents, the Prospectus and any amendment or supplement
thereto, or as to the estimates of reserves and other information included
in any thereof upon the authority of DeGolyer & MacNaughton, or as to the
statement of eligibility of the Trustee on Form T-1.
In rendering their opinion, such counsel may rely upon the opinion of
William T. Satterwhite, Esq., referred to above as to all matters governed
by Texas law.
(f) You shall have received a letter from Deloitte & Touche, dated the
Closing Date, to the effect set forth in Exhibit II hereto.
(g) You shall have received from the Company a certificate, signed by
the Chairman, the President or a Vice President, and by the principal
financial or accounting officer, of the Company, dated the Closing Date, to
the effect that, to the best of their knowledge based upon reasonable
investigation:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made at and as of the Closing
Date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceeding for that
purpose has been instituted or is threatened, by the Commission; and
16
(iii) Since the date of this Agreement, there has occurred no
event required to be set forth in an amendment or supplement to the
Registration Statement or Prospectus that has not been so set forth
and there has been no document required to be filed under the Exchange
Act and the rules and regulations of the Commission thereunder that
upon such filing would be deemed to be incorporated by reference in
the Prospectus that has not been so filed.
(h) The Company shall have furnished to you such further certificates
and documents as you shall have reasonably requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you. The Company will furnish you with such conformed copies of
such opinions, certificates, letters and other documents as you shall reasonably
request.
6. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
part of the registration statement when such part became effective, or in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by it in connection with investigating or defending against such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by you, or by any Underwriter through you, specifically for use in
the preparation thereof.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any
17
part of the registration statement when such part became effective, or in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made therein in reliance
upon and in conformity with written information furnished to the Company by you,
or by such Underwriter through you, specifically for use in the preparation
thereof, and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
against any such loss, claim, damage, liability or action as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability that it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except with
the consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above, (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters on
the
18
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total proceeds from the offering of the Securities (before deducting
expenses) received by the Company bear to the total compensation or profit
(before deducting expenses) received or realized by the Underwriters from the
purchase and resale, or underwriting, of the Securities. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
Company and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were to be determined by pro rata
allocations (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the first sentence of this subsection
(d). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending against any
action or claim that is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages that such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability that the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 6 shall be in addition to any liability that the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company (including any person who, with
his consent, is named in the Registration Statement as about to become a
director of the Company), to each officer of the Company who has signed the
19
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the several
Underwriters contained in Section 6 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or any controlling persons, or the Company or any of its officers,
directors or any controlling persons, and shall survive delivery of and payment
for the Securities.
8. SUBSTITUTION OF UNDERWRITERS. (a) If any Underwriter or
Underwriters shall fail to take up and pay for the amount of Securities agreed
by such Underwriter or Underwriters to be purchased hereunder, upon tender of
such Securities in accordance with the terms hereof, and the amount of
Securities not purchased does not aggregate more than 10% of the total amount of
Securities set forth in Schedule A hereto, the remaining Underwriters shall be
obligated to take up and pay for (in proportion to their respective underwriting
obligations hereunder as set forth in Schedule A hereto except as may otherwise
be determined by you) the Securities that the withdrawing or defaulting
Underwriter or Underwriters agreed but failed to purchase.
(b) If any Underwriter or Underwriters shall fail to take up and pay
for the amount of Securities agreed by such Underwriter or Underwriters to be
purchased hereunder, upon tender of such Securities in accordance with the terms
hereof, and the amount of Securities not purchased aggregates more than 10% of
the total amount of Securities set forth in Schedule A hereto, and arrangements
satisfactory to you and the Company for the purchase of such Securities by other
persons are not made within 36 hours thereafter, this Agreement shall terminate.
In the event of any such termination the Company shall not be under any
liability to any Underwriter (except to the extent provided in Section 4(g) and
Section 6 hereof) nor shall any Underwriter (other than an Underwriter who shall
have failed, otherwise than for some reason permitted under this Agreement, to
purchase the amount of Securities agreed by such Underwriter to be purchased
hereunder) be under any liability to the Company (except to the extent provided
in Section 6 hereof).
9. TERMINATION. You shall have the right by giving notice as
hereinafter specified at any time at or prior to the Closing Date, to terminate
this Agreement if (i) the Company shall have failed, refused or been unable, at
or prior to the Closing Date, to perform any agreement on its part to be
performed hereunder, (ii) any other condition of the Underwriters' obligations
hereunder is not fulfilled, (iii) trading on the New York Stock Exchange or the
American Stock Exchange shall have been
20
wholly suspended, (iv) minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required, on
the New York Stock Exchange or the American Stock Exchange, by such Exchange or
by order of the Commission or any other governmental authority having
jurisdiction, (v) a banking moratorium shall have been declared by Federal or
New York authorities, or (vi) an outbreak or escalation of hostilities in which
the United States is involved, any declaration by the United States of a
national emergency or war, or any other substantial national or international
calamity shall have occurred since the execution of this Agreement that, in your
judgment, makes it impractical or inadvisable to proceed with the completion of
the sale of and payment for the Securities to be purchased by the Underwriters.
Any such termination shall be without liability of any party to any other party
except that the provisions of Section 4(g) and Section 6 hereof shall at all
times be effective. If you elect to terminate this Agreement as provided in
this Section, the Company shall be notified promptly by you by telephone or
telecopy, confirmed by letter.
10. NOTICES. All notices or communications hereunder shall be in
writing and if sent to you shall be mailed, delivered or telecopied and
confirmed to you at the address set forth for that purpose in Schedule B hereto,
or if sent to the Company, shall be mailed, delivered or telecopied and
confirmed to the Company c/o the Treasurer, at ENSERCH Center, 300 South St.
Paul Street, Dallas, Texas 75201-5598. Notice to any Underwriter pursuant to
Section 6 hereof shall be mailed, delivered or telecopied and confirmed to such
Underwriter's address as it appears in such Underwriter's questionnaire or other
notice furnished to the Company in writing for the purpose of communications
hereunder. Any party to this Agreement may change such address for notices by
sending to the parties to this Agreement written notice of a new address for
such purpose.
11. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Company and the Underwriters and their respective successors
and the controlling persons, officers and directors referred to in Section 6
hereof, and no other person will have any right or obligation hereunder.
In all dealings with the Company under this Agreement, you shall act
on behalf of each of the several Underwriters, and any action under this
Agreement taken by you or by any one of you designated in Schedule B hereto will
be binding upon all the Underwriters.
12. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
21
_______________
If the foregoing correctly sets forth the understanding between the
Company and the several Underwriters, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement between the Company and the several Underwriters. Alternatively, the
execution of this Agreement by the Company and its acceptance by or on behalf of
the Underwriters may be evidenced by an exchange of telecopy or other written
communications.
Very truly yours,
ENSERCH CORPORATION
By_____________________________
Name:
Title:
ACCEPTED as of the date first
above written.
- -----------------------------
- -----------------------------
- -----------------------------
By: _________________________
By __________________________
Name:
Title:
SCHEDULE A
Principal
Amount of
Notes to be
Underwriter Purchased
----------- -----------
____________________ $ __________
- --------------------
____________________ $ ___________
-----------
Total $
===========
SCHEDULE B
Underwriting Agreement dated _____________, 199_
Indenture dated as of ____________, 199_, between the Company and
____________________________________, as Trustee
Registration Statement No. 33-___________
Title of Securities: ______________________________
Amount of Securities: ______________________________
Denomination of Global
Security: ______________________________
Securities Depository: ______________________________
Purchase Price: ______________________________
Delayed Delivery: ______________________________
Closing-
Office for delivery of
Securities: _________________________
Office for payment for
Securities: _________________________
Specified Funds for Payment
of Purchase Price: __________________________
Date and time of Closing: __________________________
Form of Securities: __________________________
Underwriting Discount: ____%
Address for notices per _________________________
Section 10:
Name of Underwriter to act _________________________
per Section 11:
Particular terms of the
Securities-
Interest: __________________________
Maturity: __________________________
Optional Redemption: __________________________
Sinking Fund: __________________________
Other terms: __________________________
ii
EXHIBIT I
ENSERCH CORPORATION
[Title of Securities]
DELAYED DELIVERY CONTRACT
-------------------------
_________________ __, 199_
ENSERCH Corporation
c/o _________________________________
[As Representative of the Several Underwriters,]
_____________________
_____________________
_____________________
Gentlemen:
The undersigned hereby agrees to purchase from ENSERCH Corporation
("Company"), and the Company agrees to sell to the undersigned, [If one delayed
closing, insert -- as of the date hereof, for delivery on __________, 199_
("Delivery Date")] $__________ principal amount of the Company's _______________
("Securities"), offered by the Company's Prospectus relating thereto, receipt of
a copy of which is hereby acknowledged, at a purchase price of ___% of the
principal amount thereof plus accrued interest, if any, from _________ to the
Delivery Date and on the further terms and conditions set forth in this
contract.
[If two or more delayed closings, insert the following:
The undersigned will purchase from the Company as of the date hereof,
for delivery on the dates set forth below, Securities in the amounts set forth
below:
DELIVERY DATE AMOUNT
------------- ------
_______________ ________
_______________ ________
Each of such delivery dates is hereinafter referred to as a Delivery Date.]
Payment for the Securities that the undersigned has agreed to purchase
for delivery on a Delivery Date shall be made to the Company or its order by
certified or official bank check in New York Clearing House (next day) funds at
the office of __________________ at ______ A.M. on that Delivery Date upon
delivery to the undersigned of the Securities to be purchased by the undersigned
for delivery on that Delivery Date in definitive form and in such denominations
and registered in such names as the undersigned may designate by written or
telegraphic communication addressed to the Company not less than five full
business days prior to that Delivery Date. If no request is received, the
Securities will be registered in the name of the undersigned and issued in a
denomination equal to the total amount of Securities to be purchased by the
undersigned on that Delivery Date.
The obligation of the Company to make delivery of and accept payment
for, and the obligation of the undersigned to take delivery of and make payment
for, Securities on a Delivery Date shall be subject only to the conditions that
(1) investment in the Securities shall not at that Delivery Date be prohibited
under the laws of any jurisdiction in the United States to which the undersigned
is subject, which investment the undersigned represents is not prohibited on the
date hereof, and (2) the Company shall have sold to the Underwriters the amount
of Securities to be sold to them pursuant to the Underwriting Agreement referred
to in the Prospectus mentioned above.
Promptly after completion of the sale to the Underwriters, the Company
will mail or deliver to the undersigned at its address set forth below notice to
such effect, accompanied by a copy of the opinion of counsel for the Company
delivered to the Underwriters in connection therewith.
This contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.
It is understood that the acceptance of this contract and any other
similar contracts is in the Company's sole discretion and, without limiting the
foregoing, need not be on a first-come, first-served basis. If this contract is
acceptable to the Company, it is requested that the Company sign the form of
acceptance below and mail or deliver one of the counterparts hereof to the
undersigned at its address set forth below. This will become a binding contract
between the Company and the undersigned when such counterpart is so mailed or
delivered.
2
This contract shall be governed by, and
construed in accordance with, the laws of the State of New York.
Very truly yours,
[Name of Purchaser]
By_____________________________
Name:
Title:
- -------------------------------
- -------------------------------
(Address of Purchaser)
Accepted, as of the above date.
ENSERCH CORPORATION
By_____________________________
Name:
Title:
3
EXHIBIT II
1. They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the Rules and
Regulations.
2. In their opinion, the financial statements and any schedules
audited by them and included or incorporated by reference in the Registration
Statement and Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Act and the Exchange Act, as
applicable, and the published rules and regulations of the Commission
thereunder. They have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim financial
information as described in SAS 71, Interim Financial Information, on the
unaudited financial statements included in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus.
3. On the basis of procedures referred to in such letter, including a
reading of the minutes and the latest available interim financial statements of
the Company and inquiries of officials of the Company responsible for financial
and accounting matters, nothing caused them to believe that:
(A) Any material modifications should be made to the unaudited
financial statements, if any, included or incorporated by reference in the
Prospectus, for them to be in conformity with generally accepted accounting
principles;
(B) the unaudited financial statements, if any, included or
incorporated by reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act or
the Exchange Act and the published rules and regulations of the Commission
thereunder;
(C) the unaudited pro forma condensed consolidated financial
statements, if any, included or incorporated by reference in the Prospectus
do not comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act and the published
rules and regulations of the Commission thereunder or the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of those statements;
(D) at the date of the latest available internal balance sheet of the
Company and at a subsequent specified date not more than five days prior to
the date of such letter, there was any change in the capital stock (other
than from stock issued under employee benefit and stock option plans), or
any increase in long-term debt (other than from currency fluctuations and
normal repurchases of long-term debt for sinking fund purposes and
scheduled repayments) of the Company and its subsidiaries consolidated or
any decrease in
consolidated net current assets or net assets (excluding any decrease in
net assets as a result of the declaration by the Company of regular
quarterly dividends on its preferred stock and Common Stock) as compared
with amounts shown in the latest balance sheet included or incorporated by
reference in the Prospectus, except in all cases for changes, increases or
decreases that the Prospectus discloses have occurred or may occur or as
may be set forth in such letter; or
(E) for the period from the date of the latest income statement
included or incorporated by reference in the Prospectus to the date of the
latest available internal income statement of the Company, there was any
decrease, as compared with the corresponding period of the previous year in
consolidated revenues or in the total or per share amounts of income before
extraordinary items or of net income, except in all cases for changes or
decreases that the Prospectus discloses have occurred or may occur or as
may be set forth in such letter.
4. In addition to their audit referred to in their reports included
or incorporated by reference in the Registration Statement and Prospectus and
the procedures referred to in (3) above, they have carried out certain other
specified procedures, not constituting an audit, with respect to certain
specified dollar amounts, percentages and other financial information (in each
case to the extent that such dollar amounts, percentages and other financial
information are derived, directly or by analysis or computation, from the
general accounting records of the Company and its subsidiaries) that are
included or incorporated by reference in the Prospectus and appear in the
Prospectus or incorporated documents and have found such dollar amounts,
percentages and financial information to be in agreement with the general
accounting records of the Company and its subsidiaries.
2
$
ENSERCH CORPORATION
% NOTES DUE
------------------
Dear :
ENSERCH Corporation (the "Company") intends to sell $___________ aggregate
principal amount of ___% Notes Due ____ (the "Notes") on (the
"Sale Date"). The Notes are described in the enclosed Registration Statement
and draft Prospectus Supplement. The Company anticipates subject to the terms
and provisions described in this letter, signing an Underwriting Agreement in
the form attached with the firm or firms submitting the offer which results in
the lowest cost of funds to the Company as determined in the sole discretion of
the Company.
After an offer is selected, the offering and sale of the Notes will proceed and
be documented like a normal negotiated sale. It is anticipated that the closing
will be held on , at the office of Mudge Rose Guthrie Alexander
& Ferdon, 180 Maiden Lane, 34th Floor, New York, New York 10038. Mudge Rose
has been designated as counsel to the prospective Underwriters. Persons at
Mudge Rose working on the proposed offering are Arnold Tracy (212/510-7400), Ted
Farris (212/510-7792) and Chris Moore (212/510-7568).
3
Page 2
Offers should be made by telephone to Messrs. Benjamin A. Brown and R.L. Jay, or
the Company's other authorized representatives between 10:00 a.m. and 10:10 a.m.
Eastern Time on the Sale Date at the following telephone numbers at Mudge Rose
Guthrie Alexander & Ferdon, 180 Maiden Lane, New York, New York 10038,
conference rooms 33-2 and 33-3:
(212) 510-7070 (212) 510-7039
(212) 510-7025 (212) 510-7072
(212) 510-7000 (ask for conference rooms 33-2 or 33-3)
Each offer shall be for the purchase of the entire principal amount of the Notes
and shall set forth the following information:
. Fixed rate of interest (payable semiannually)
. Price to the Company (expressed as a percent of par)
. Price to the Public (expressed as a percent of par)
. Effective all-in-cost to the Company after reflecting all
underwriting discounts and commissions (expressed in percent to the
nearest tenth of a basis point)
Each offer must be confirmed by facsimile transmission with a completed offer
form (using the offer form attached to this letter) to one of the following
facsimile numbers at Mudge Rose not later than 10:30 a.m. Eastern Time on the
Sale Date.
(212) 248-2655 (212) 248-2657
An executed Underwriting Agreement signature page must accompany the faxed offer
form. Each telephone offer must provide the Company with (i) the name of the
offeror, (ii) a telephone number at which such offer may be immediately
confirmed and the name of the individual who will be authorized to provide such
confirmation, and (iii) the other information specified above.
The Company intends to make a prompt determination. If two or more offers
provide identical lowest cost of funds, all other offers will be rejected and
negotiations will proceed with the firms which made the identical offers. The
winning firm or firms will also be asked to supply any information necessary to
complete the Prospectus Supplement.
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Each offer should be irrevocable until 10:30 a.m., New York City time, on the
Sale Date, unless earlier rejected by the Company or extended by the offeror.
Each offer will be selected or rejected in its entirety. Any offer not selected
by the Company prior to its expiration as provided herein shall be deemed to
have been rejected. The Company reserves the absolute right to reject any and
all offers at any time prior to the execution of the Underwriting Agreement or
to postpone the Sale Date in its discretion.
The winning offer will be formally accepted by execution of the facsimile
Underwriting Agreement signature page by 11:00 a.m. in New York City at the
offices of Mudge Rose Guthrie Alexander & Ferdon by an officer of the Company.
Executed originals of the completed Underwriting Agreement offer form and
Underwriting Agreement must be hand delivered in duplicate not later than 2:30
p.m. Eastern Time on the Sale Date to the above offices of Mudge Rose,
Attention: Chris Moore.
Please notify me by telephone (214/670-2204) or fax (214/573-3279) by 4:00 p.m.
on (i) whether you intend to submit an offer and (ii) of the
names of any other firms who are participating in your group, if any. It would
also be helpful if you could provide me at that time an example of your
calculation of the all in cost to the Company (after underwriting discount) so
that the Company is in agreement as to the method of calculation. The
calculation should include a sample purchase price, interest rate and all in
cost.
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As counsel to the Underwriters in connection with the sale, Mudge Rose has
estimated its legal fees at $ , Plus an estimated $ for disbursements.
The winning firm(s) will be responsible for such fees and disbursements.
Any prospective Underwriter that wishes to discuss the contents of the
Registration Statement and the Prospectus Supplement may do so by calling me at
any time at 214/670-2204.
Any legal or procedural questions regarding the proposed offering or the
enclosed documents, may be discussed with Robert L. Jay (214/670-2850) of the
Company, or Chris Moore (212/510-7568) or Ted Farris (212/510-7792) of Mudge
Rose.
Very truly yours,
Benjamin A. Brown
Enclosures
cc: Dr. Sanford R. Singer
Mr. Arnold Tracy
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