EXHIBIT 1.2
ENSERCH CORPORATION
PREFERRED STOCK AND COMMON STOCK
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 shares of its equity securities of the type, in the
quantities and with the terms set forth or referred to on Schedule B (the "Firm
Shares"). The Firm Shares may consist of shares of the Company's Common Stock
("Firm Common Shares"), $4.45 par value (the "Common Stock"), and/or shares of
its preferred stock ("Firm Preferred Shares") of one or more series (the
"Preferred Stock"). The Company proposes to issue and sell to the Underwriters,
at the option of the Underwriters, an additional number of shares of Common
Stock and/or Preferred Stock specified in Schedule B ("Optional Common Shares"
and "Optional Preferred Shares", respectively, and collectively, the "Optional
Shares") as provided in Section 3 hereof. Firm Common Shares and Optional
Common Shares are collectively called "Common Shares", Firm Preferred Shares and
Optional Preferred Shares are collectively called "Preferred Shares", and Firm
Shares and Optional Shares are collectively called the "Shares".
If Schedule B so provides, Preferred Shares may be deposited by the Company
against delivery of receipts (the "Depositary Receipts") to be issued by the
depositary (the "Depositary") named in the deposit agreement specified in
Schedule B (the "Deposit Agreement"), between the Company, the Depositary and
the holders from time to time of the Depositary Receipts issued thereunder
evidencing such Preferred Shares (the "Depositary Shares"). Each Depositary
Share will represent the number of or fraction of the number of deposited
Preferred Shares specified in Schedule B. If no Preferred Shares are
represented by Depositary Receipts, then all references herein to Depositary
Receipts and Depositary Shares of any kind and any agreements, instruments or
persons related thereto shall be disregarded and all
representations, conditions, opinions and other documents relating to the
foregoing shall not apply to this Agreement.
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 Shares, 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") 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 Shares
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
Shares 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
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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 each Closing Date (as hereinafter defined), conformed or will conform in
all material respects with the requirements of the 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 each 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 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).
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(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.
(f) The Company's authorized capitalization is as set forth in the
Prospectus and all outstanding shares of Common Stock of the Company and
any Common Shares to be issued and sold by the Company hereunder have been
duly authorized and are, or when issued as contemplated hereby will be,
validly issued, fully paid and non-assessable and conform, or when so
issued will conform, to the description thereof in the Prospectus, and the
shareholders of the Company have no preemptive rights with respect to such
Common Shares.
(g) Any Preferred Shares to be issued and sold by the Company
hereunder have been duly authorized, and, when a Statement of Resolution
fixing and determining the terms and conditions thereof is duly executed
and filed with the office of the Secretary of State of the State of Texas
and such Preferred Shares are duly executed, countersigned, issued and
delivered and paid for pursuant to this Agreement, such Preferred Shares
will be validly issued, fully paid and non-assessable and will conform to
the description thereof in the Prospectus, and the shareholders of the
Company have no preemptive rights with respect to such Preferred Shares;
and, as to any Preferred Shares which are convertible into Common Stock,
("Convertible Preferred Shares"), such Convertible Preferred Shares, when
issued as contemplated hereby, will be convertible into Common Stock in
accordance with their terms, the shares of Common Stock initially issuable
upon conversion of any Convertible Preferred Shares 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.
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(h) When Depositary Receipts evidencing any Depositary Shares are
issued and delivered against deposit of Preferred Shares and against
payment for the Depositary Shares pursuant to this Agreement and the
Deposit Agreement, the Depositary Receipts will be legally issued and will
entitle the holders thereof to the rights specified in the Depositary
Receipts and the Deposit Agreement.
(i) The Deposit Agreement has been duly authorized and, when executed
and delivered by a duly authorized officer of the Company, will have been
duly executed and delivered and will constitute the valid and legally
binding obligation of the Company enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(j) 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.
(k) 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 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.
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(l) 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 or the Exchange Act or by the rules and regulations of the
Commission thereunder that have not been so filed.
(m) The performance of this Agreement 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 Shares by the Company, except
such as may be required under the Act or state securities laws and such as
have been, or will have been prior to the First Closing Date, made with the
Secretary of State of the State of Texas; and the Company has full power
and authority to authorize, issue and sell the Shares as contemplated by
this Agreement.
(n) 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 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
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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 respective number of Firm Common Shares and/or Firm Preferred Shares set
forth opposite the name of such Underwriter in Schedule A hereto.
If provided for in Schedule B, the Underwriters have the right (an
"Over-allotment Option") to purchase at their election up to the number of
Optional Common Shares and/or Optional Preferred Shares set forth in Schedule B,
at the terms set forth in the first paragraph of this Section 3, for the sole
purpose of covering over-allotments in the sale of the Firm Shares. Any such
election to purchase Optional Shares may be exercised only by written notice to
the Company, given within a period specified in Schedule B, setting forth the
aggregate number of Optional Common Shares and/or Optional Preferred Shares to
be purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Closing Date (as
defined in this Section 3) or, unless you and the Company otherwise agree in
writing, earlier than or later than the respective number of business days after
the date of such notice set forth in Schedule B.
The number of Optional Common Shares to be added to the number of the
Firm Common Shares to be purchased by each Underwriter as set forth in Schedule
A shall be, in each case, the number of Optional Common Shares which the Company
has been advised by you have been attributed to such Underwriter, provided that,
if
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the Company has not been so advised, the number of Optional Common Shares to be
so added shall be, in each case, that proportion of Optional Common Shares which
the number of Firm Common Shares to be purchased by such Underwriter bears to
the aggregate number of Firm Common Shares (rounded as you may determine to the
nearest share). The total number of Common Shares to be purchased by all the
Underwriters shall be the aggregate number of Firm Common Shares set forth in
Schedule A plus the aggregate number of the Optional Common Shares which the
Underwriters elect to purchase.
The number of Optional Preferred Shares to be added to the number of
the Firm Preferred Shares to be purchased by each Underwriter as set forth in
Schedule A shall be, in each case, the number of Optional Preferred Shares which
the Company has been advised by you have been attributed to such Underwriter,
provided that, if the Company has not been so advised, the number of Optional
Preferred Shares to be so added shall be, in each case, that proportion of
Optional Preferred Shares which the number of Firm Preferred Shares to be
purchased by such Underwriter bears to the aggregate number of Firm Preferred
Shares (rounded as you may determine to the nearest share). The total number of
Preferred Shares to be purchased by all the Underwriters shall be the aggregate
number of Firm Preferred Shares set forth in Schedule A plus the aggregate
number of the Optional Preferred Shares which the Underwriters elect to
purchase.
Certificates for the Firm Shares and Optional Shares to be purchased
by each Underwriter, in definitive form to the extent practicable, and in such
authorized denominations and registered in such names as you may request upon at
least forty-eight hours' prior notice to the Company, shall be delivered by or
on behalf of the Company to you or the Depositary, as the case may be, for the
account of such Underwriter, against payment by such Underwriter or on its
behalf 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 in Schedule B (it being understood that any Preferred Shares to be
issued in connection with any Depositary Shares shall be transferred and
delivered by or on behalf of the Company to the Depositary for deposit pursuant
to the Deposit Agreement against issuance to you for the account of the
Underwriters of one or more Depositary Receipts evidencing the Depositary Shares
to be purchased by each Underwriter hereunder). The place, time and date of
delivery of and payment for Firm Shares and Optional Shares shall be as
specified in Schedule B or at such other place, time and date as you and the
Company may agree upon in writing. Such time and date for delivery of Firm
Shares is herein called the "First Closing Date", such time and date for
delivery of Optional Shares, if not the First Closing Date, is herein called the
"Second Closing Date", and each such time and date is herein called the "Closing
Date".
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Depositary Receipts evidencing any Depositary Shares to be purchased
hereunder, in definitive form to the extent practicable and registered in such
names as provided above, shall be made available for checking and packaging at
least 48 hours prior to the respective Closing Date at the offices of the
Depositary. Such Depositary Receipts shall be available for release at the
respective Closing Date at such office.
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 Shares to be purchased by such
Underwriter. Any such payment by you shall not relieve any such Underwriter of
any of its obligations hereunder.
The Company will pay to you, at each Closing Date, for the account of
each Underwriter any commission or other compensation with respect to the Shares
purchased on such Closing Date that is specified in Schedule B hereto. Unless
otherwise specified in Schedule B, 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
Shares 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 Shares 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
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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 Shares 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.
(c) Within the time during which a prospectus relating to the Shares
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 Shares 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 Shares 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 Shares, 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 Shares 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 Shares is required
to be delivered under the Act (including all
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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.
(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
(i) the expenses of printing all documents relating to the offering
including, without limitation, any cost of preparing certificates
representing the Preferred Stock, Depositary Receipts evidencing Depositary
Shares and/or Common Stock, (ii) the costs and expenses of the deposit of
Preferred Stock under any Deposit Agreement in exchange for Depositary
Receipts issued thereunder, including the charges of the Depositary in
connection therewith, (iii) to the extent set forth in any Deposit
Agreement, the fees of the Depositary and any agent appointed under the
Deposit Agreement, and (iv) the cost and charges of any transfer agent or
registrar or dividend disbursing agent, 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 Shares for
any fees charged by investment rating agencies for rating Preferred Stock
or Depositary Shares. If the sale of Shares 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 Shares 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.
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(h) The Company will apply the net proceeds from the sale of the
Shares as set forth in the Prospectus.
(i) The Company will not, directly or indirectly, offer or sell, or
determine to offer or sell, any Common Stock other than Common Stock issued
under employee benefit and stock option plans or any equity securities that
are substantially similar to any Preferred Shares to be issued and sold by
the Company hereunder (except under prior contractual commitments) during
the period ending on the earlier of the last 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 Firm Shares on the First Closing
Date and the Optional Shares on the Second Closing Date as provided herein shall
be subject to the accuracy, as of the date hereof and such Closing Date (as if
made at such 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
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
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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 Shares to be purchased
on such Closing Date 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 such 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 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 Company's authorized capitalization is as set forth in
the Prospectus and all outstanding shares of Common Stock of the
Company and any Common Shares to be delivered on such Closing Date
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 Common Shares;
(iii) Any Preferred Shares to be purchased by the Underwriter
hereunder have been duly authorized; any Preferred Shares purchased by
the Underwriters on such Closing Date have been validly issued and are
fully paid and non-assessable and conform to the description thereof
in the Prospectus; as to any Convertible Preferred Shares purchased by
the Underwriters such Convertible Preferred Shares are convertible
into Common Stock in accordance with their terms, the shares of Common
Stock initially
13
issuable upon conversion of any Convertible Preferred Shares 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 shareholders of the Company have no preemptive rights with
respect to any Preferred Shares to be purchased by the Underwriters
hereunder;
(iv) When Depositary Receipts evidencing Depositary Shares are
issued and delivered against deposit of Preferred Shares and against
payment for the Depositary Shares pursuant to this Agreement and the
Deposit Agreement, the Depositary Receipts will be legally issued and
will entitle the holders thereof to the rights specified in the
Depositary Receipts and the Deposit Agreement;
(v) The Depositary Agreement has been duly authorized, executed
and delivered and constitutes, the valid and legally binding
obligation of the Company, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(vi) 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;
(vii) 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 such
Closing Date, complied as to form in all material respects with the
requirements of the 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 such 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
14
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;
(viii) 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 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
15
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;
(ix) This Agreement has been duly authorized, executed and
delivered by the Company; the performance of this Agreement 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 Shares by the Company, except such as have been obtained under
the Act and such as may be required under state securities laws in
connection with the purchase and distribution of the Shares by the
Underwriters and, with respect to any Preferred Stock or Depositary
Shares, the filing of a Statement of Resolution with the Secretary of
State of the State of Texas; and
(x) The Company is not a "holding company" or a "subsidiary
company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(e) You shall have received from Mudge Rose Guthrie Alexander &
Ferdon, counsel for the Underwriters, such opinion or opinions, dated such
Closing Date, with respect to the incorporation of the Company, the
validity of the Shares being delivered on such Closing Date, the
Registration Statement, the Prospectus as amended and supplemented and
other related matters as you may reasonably request, and such counsel shall
have received such papers and information as they request to enable then to
pass upon such matters. 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.
16
(f) You shall have received a letter from Deloitte & Touche, dated
such Closing Date, to the effect set forth in Exhibit I 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 such 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 such 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 such 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
(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
17
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 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
18
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 Shares 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 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 Shares (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 Shares. 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
19
excess of the amount by which the total price at which the Shares 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
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 Shares.
8. SUBSTITUTION OF UNDERWRITERS. (a) If any Underwriter or
Underwriters shall fail to take up and pay for the number of Shares agreed by
such Underwriter or Underwriters to be purchased hereunder on any Closing Date,
upon tender of such Shares in accordance with the terms hereof, and the number
of Shares not purchased does not aggregate more than 10% of the total number of
Shares which the Underwriters are obligated to purchase on such Closing Date,
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 Shares to
be purchased on such Closing Date that the withdrawing or defaulting Underwriter
or Underwriters agreed but failed to purchase.
20
(b) If any Underwriter or Underwriters shall fail to take up and pay
for the number of Shares agreed by such Underwriter or Underwriters to be
purchased hereunder on any Closing Date, upon tender of such Shares in
accordance with the terms hereof, and the number of Shares not purchased
aggregates more than 10% of the total number of Shares which the Underwriters
are obligated to purchase on such Closing Date, and arrangements satisfactory to
you and the Company for the purchase of such Shares 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 in respect of Shares not purchased on such Closing Date or at a
prior Closing Date (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 number of Shares 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 any Closing Date, to terminate
this Agreement if (i) the Company shall have failed, refused or been unable, at
or prior to each 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 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
Shares to be purchased by the Underwriters on such Closing Date. Any such
termination shall be without liability of any party to any other party in
respect of Shares not purchased on such Closing Date or at a prior Closing Date,
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.
21
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.
22
_______________
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
Number of
Firm Common
Shares to be
Underwriter Purchased
----------- ------------
________________________________ ...................... ----------
________________________________ ...................... ----------
________________________________ ...................... ----------
Total..................................... ==========
Number of
Firm Preferred
Shares to be
Underwriter Purchased
----------- --------------
________________________________ ...................... ----------
________________________________ ...................... ----------
________________________________ ...................... ----------
Total..................................... ==========
SCHEDULE B
Underwriting Agreement dated: __________________________________________________
Registration Statement No. 33-___________________
If Shares of Common Stock are to be issued -
Number of Firm Common Shares: _____________________________________________
Maximum Number of Optional Common Shares: _________________________________
Initial Offering Price to Public: _________________________________________
Purchase Price by Underwriters: ___________________________________________
If Shares of Preferred Stock are to be issued -
Board Resolution Fixing the Terms and Conditions of the Preferred Stock
dated: _______________
Title of Preferred Stock: _________________________________________________
Number of Firm Preferred Shares: __________________________________________
Maximum Number of Optional Preferred Shares: ______________________________
If Depositary Shares are to be issued -
Each Depositary Share will represent one-___ ( ) of a share of
Preferred Stock.
Name of Depositary: __________________________________________________
Depositary Agreement dated: __________________________________________
Initial Offering Price to Public: _________________________________________
Purchase Price by Underwriters: ___________________________________________
Particular terms of the Preferred Shares -
Dividend Rate: _______________________________________________________
Dividend Payment Dates: ______________________________________________
Dividend Rights: _____________________________________________________
Voting Rights: _______________________________________________________
Liquidation Value: ___________________________________________________
Preemptive Rights: ___________________________________________________
Redemption Provisions: _______________________________________________
Sinking Fund Provisions: _____________________________________________
Other terms: _________________________________________________________
First Closing Date: ____________________________________________________________
Closing Location: ______________________________________________________________
Specified Funds for Payment of Purchase Price: _________________________________
Address for Notices per Section 10: ____________________________________________
Name of Underwriter to act per Section 11: _____________________________________
ii
EXHIBIT I
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