FORM OF PREFERRED
SECURITIES GUARANTEE
====================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
NorAm Financing [I] [II]
Dated as of October __, 1995
====================================
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . 5
SECTION 2.2 Lists of Holders of Securities . . . . . . 5
SECTION 2.3 Reports by the Preferred Guarantee Trust-
ee . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.4 Periodic Reports to Preferred Guarantee
Trustee . . . . . . . . . . . . . . . . . 6
SECTION 2.5 Evidence of Compliance with Conditions
Precedent . . . . . . . . . . . . . . . . 6
SECTION 2.6 Events of Default; Waiver . . . . . . . . 6
SECTION 2.7 Event of Default; Notice . . . . . . . . . 7
SECTION 2.8 Conflicting Interests . . . . . . . . . . 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guar-
xxxxx Trustee . . . . . . . . . . . . . . 7
SECTION 3.2 Certain Rights of Preferred Guarantee
Trustee . . . . . . . . . . . . . . . . . 9
SECTION 3.3. Not Responsible for Recitals or Issuance
of Guarantee . . . . . . . . . . . . . . . 11
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility. . 12
SECTION 4.2 Appointment, Removal and Resignation of
Preferred Guarantee Trustees . . . . . . . 12
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee . . . . . . . . . . . . . . . . 13
SECTION 5.2 Waiver of Notice and Demand . . . . . . . 13
SECTION 5.3 Obligations Not Affected . . . . . . . . . 14
SECTION 5.4 Rights of Holders . . . . . . . . . . . . 15
Page
SECTION 5.5 Guarantee of Payment . . . . . . . . . . . 15
SECTION 5.6 Subrogation . . . . . . . . . . . . . . . 15
SECTION 5.7 Independent Obligations . . . . . . . . . 15
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions . . . . . . . . 16
SECTION 6.2 Ranking . . . . . . . . . . . . . . . . . 16
ARTICLE VII
TERMINATION
SECTION 7.1 Termination . . . . . . . . . . . . . . . 17
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation . . . . . . . . . . . . . . . 17
SECTION 8.2 Indemnification . . . . . . . . . . . . . 17
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns . . . . . . . . . . 18
SECTION 9.2 Amendments . . . . . . . . . . . . . . . . 18
SECTION 9.3 Notices . . . . . . . . . . . . . . . . . 18
SECTION 9.4 Benefit . . . . . . . . . . . . . . . . . 19
SECTION 9.5 Governing Law . . . . . . . . . . . . . . 19
ii
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities
Guarantee"), dated as of October __, 1995, is executed and deliv-
ered by NorAm Energy Corp., a Delaware corporation (the "Guaran-
tor"), and [Name of Preferred Guarantee Trustee], as trustee (the
"Preferred Guarantee Trustee"), for the benefit of the Holders
(as defined herein) from time to time of the Preferred Securities
(as defined herein) of NorAm Financing [I] [II], a Delaware
statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declara-
tion of Trust (the "Declaration"), dated as of ________, 1995,
among the trustees of the Issuer named therein, the Guarantor, as
sponsor, and the holders from time to time of undivided benefi-
cial interests in the assets of the Issuer, the Issuer is issuing
on the date hereof [ ] convertible preferred securi-
ties, having an aggregate liquidation amount of $[
], designated the _____% Convertible Trust Originated Preferred
Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the
Preferred Securities, the Guarantor desires irrevocably and
unconditionally to agree, to the extent set forth in this Pre-
ferred Securities Guarantee, to pay to the Holders of the Pre-
ferred Securities the Guarantee Payments (as defined herein) and
to make certain other payments on the terms and conditions set
forth herein.
WHEREAS, the Guarantor is also executing and delivering
a guarantee agreement (the "Common Securities Guarantee") in
substantially identical terms to this Preferred Securities
Guarantee for the benefit of the holders of the Common Securities
(as defined herein), except that if an Event of Default (as
defined in the Indenture), has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee
Payments under the Common Securities Guarantee are subordinated
to the rights of Holders of Preferred Securities to receive
Guarantee Payments under this Preferred Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by
each Holder of Preferred Securities, which purchase the Guarantor
hereby agrees shall benefit the Guarantor, the Guarantor executes
and delivers this Preferred Securities Guarantee for the benefit
of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guarantee, unless the
context otherwise requires:
(a) Capitalized terms used in this Preferred Secur-
ities Guarantee but not defined in the preamble
above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Preferred Secur-
ities Guarantee has the same meaning throughout;
(c) all references to "the Preferred Securities Guar-
xxxxx" or "this Preferred Securities Guarantee"
are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to
time;
(d) all references in this Preferred Securities Guar-
xxxxx to Articles and Sections are to Articles and
Sections of this Preferred Securities Guarantee,
unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Preferred Secur-
ities Guarantee, unless otherwise defined in this
Preferred Securities Guarantee or unless the con-
text otherwise requires; and
(f) a reference to the singular includes the plural
and vice versa.
"Affiliate" has the same meaning as given to that term
in Rule 405 of the Securities Act of 1933, as amended, or any
successor rule thereunder.
"Business Day" means any day other than a day on which
banking institutions in the City of New York, New York are
authorized or required by any applicable law to close.
"Common Securities" means the convertible common
securities representing common undivided beneficial interests in
the assets of the Issuer.
2
"Preferred Guarantee Trustee" means [Name of Preferred
Guarantee Trustee], until a Successor Preferred Guarantee Trustee
has been appointed and has accepted such appointment pursuant to
the terms of this Preferred Securities Guarantee and thereafter
means each such Successor Preferred Guarantee Trustee.
"Corporate Trust Office" means the office of the
Preferred Guarantee Trustee at which the corporate trust business
of the Preferred Guarantee Trustee shall, at any particular time,
be principally administered, which office at the date of execu-
tion of this Agreement is located at [address].
"Covered Person" means any Holder or beneficial owner
of Preferred Securities.
"Debentures" means the series of convertible junior
subordinated debt securities of the Guarantor designated the ___%
Junior Subordinated Debentures due [ ] held by the Insti-
tutional Trustee (as defined in the Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on
any of its payment or other obligations under this Preferred
Securities Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred
Securities, to the extent not paid or made by the Issuer: (i)
any accrued and unpaid Distributions (as defined in the Declara-
tion) that are required to be paid on such Preferred Securities
to the extent the Issuer shall have funds available therefor,
(ii) the redemption price, including all accrued and unpaid Dis-
tributions to the date of redemption (the "Redemption Price") to
the extent the Issuer has funds available therefor, with respect
to any Preferred Securities called for redemption by the Issuer,
and (iii) upon a voluntary or involuntary dissolution, winding-up
or termination of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Pre-
ferred Securities as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accrued and
unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Issuer shall have funds available
therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the
Issuer (in either case, the "Liquidation Distribution"). If an
event of default under the Indenture has occurred and is continu-
ing, the rights of holders of the Common Securities to receive
payments under the Common Securities Guarantee Agreement are
3
subordinated to the rights of Holders of Preferred Securities to
receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the
books and records of the Issuer of any Preferred Securities;
provided, however, that, in determining whether the holders of
the requisite percentage of Preferred Securities have given any
request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee
Trustee, any Affiliate of the Preferred Guarantee Trustee, or any
officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Preferred
Guarantee Trustee.
"Indenture" means the Indenture dated as of ________,
1995, among the Guarantor (the "Debenture Issuer") and The Bank
of New York, N.A., as trustee, and any indenture supplemental
thereto pursuant to which certain subordinated debt securities of
the Debenture Issuer are to be issued to the Property Trustee of
the Issuer.
"Majority in liquidation amount of the Securities"
means, except as provided by the Trust Indenture Act, a vote by
Holder(s) of Preferred Securities, voting separately as a class,
of more than 50% of the liquidation amount (including the stated
amount that would be paid on redemption, liquidation or other-
wise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all Preferred
Securities.
"Officers' Certificate" means, with respect to any
Person, a certificate signed by two Authorized Officers of such
Person. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this
Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Offi-
cers' Certificate has read the covenant or condition and the
definition relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in
rendering the Officers' Certificate;
4
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion,
is necessary to enable such officer to express an informed
opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied
with.
"Person" means a legal person, including any individu-
al, corporation, estate, partnership, joint venture, association,
joint stock company, limited liability company, trust, unincorpo-
rated association, or government or any agency or political
subdivision thereof, or any other entity of whatever nature.
"Responsible Officer" means, with respect to the
Preferred Guarantee Trustee, any officer within the Corporate
Trust Office of the Preferred Guarantee Trustee, including any
vice-president, any assistant vice-president, any assistant
secretary, the treasurer, any assistant treasurer or other
officer of the Corporate Trust Office of the Preferred Guarantee
Trustee customarily performing functions similar to those per-
formed by any of the above designated officers and also means,
with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a succes-
sor Preferred Guarantee Trustee possessing the qualifications to
act as Preferred Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Preferred Securities Guarantee is subject to
the provisions of the Trust Indenture Act that are required to be
part of this Preferred Securities Guarantee and shall, to the
extent applicable, be governed by such provisions; and
5
(b) if and to the extent that any provision of this
Preferred Securities Guarantee limits, qualifies or conflicts
with the duties imposed by Section 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Preferred Guaran-
tee Trustee with a list, in such form as the Preferred Guarantee
Trustee may reasonably require, of the names and addresses of the
Holders of the Preferred Securities ("List of Holders") as of
such date, (i) within 1 Business Day after January 1 and June 30
of each year, and (ii) at any other time within 30 days of re-
ceipt by the Guarantor of a written request for a List of Holders
as of a date no more than 14 days before such List of Holders is
given to the Preferred Guarantee Trustee provided, that the
Guarantor shall not be obligated to provide such List of Holders
at any time the List of Holders does not differ from the most
recent List of Holders given to the Preferred Guarantee Trustee
by the Guarantor. The Preferred Guarantee Trustee may destroy
any List of Holders previously given to it on receipt of a new
List of Holders.
(b) The Preferred Guarantee Trustee shall comply with
its obligations under Sections 311(a), 311(b) and Section 312(b)
of the Trust Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee
Within 60 days after May 15 of each year, the Preferred
Guarantee Trustee shall provide to the Holders of the Preferred
Securities such reports as are required by Section 313 of the
Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Pre-
ferred Guarantee Trustee shall also comply with the requirements
of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
The Guarantor shall provide to the Preferred Guarantee
Trustee such documents, reports and information as required by
Section 314 (if any) and the compliance certificate required by
Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture
Act.
6
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guarantee
Trustee such evidence of compliance with any conditions xxxxx-
xxxx, if any, provided for in this Preferred Securities Guarantee
that relate to any of the matters set forth in Section 314(c) of
the Trust Indenture Act. Any certificate or opinion required to
be given by an officer pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Pre-
ferred Securities may, by vote, on behalf of the Holders of all
of the Preferred Securities, waive any past Event of Default and
its consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured, for every purpose of this
Preferred Securities Guarantee, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair
any right consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90
days after the occurrence of an Event of Default, transmit by
mail, first class postage prepaid, to the Holders of the Pre-
ferred Securities, notices of all Events of Default actually
known to a Responsible Officer of the Preferred Guarantee Trust-
ee, unless such defaults have been cured before the giving of
such notice, provided, that, the Preferred Guarantee Trustee
shall be protected in withholding such notice if and so long as a
Responsible Officer of the Preferred Guarantee Trustee in good
faith determines that the withholding of such notice is in the
interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be
deemed to have knowledge of any Event of Default unless the
Preferred Guarantee Trustee shall have received written notice,
or of which a Responsible Officer of the Preferred Guarantee
Trustee charged with the administration of the Declaration shall
have obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically
described in this Preferred Securities Guarantee for the purposes
7
of clause (i) of the first proviso contained in Section 310(b) of
the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trus-
tee
(a) This Preferred Securities Guarantee shall be held
by the Preferred Guarantee Trustee for the benefit of the Holders
of the Preferred Securities, and the Preferred Guarantee Trustee
shall not transfer this Preferred Securities Guarantee to any
Person except a Holder of Preferred Securities exercising his or
her rights pursuant to Section 5.4(b) or to a Successor Preferred
Guarantee Trustee on acceptance by such Successor Preferred Guar-
xxxxx Trustee of its appointment to act as Successor Preferred
Guarantee Trustee. The right, title and interest of the Pre-
ferred Guarantee Trustee shall automatically vest in any Succes-
sor Preferred Guarantee Trustee, and such vesting and cessation
of title shall be effective whether or not conveyancing documents
have been executed and delivered pursuant to the appointment of
such Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Respon-
sible Officer of the Preferred Guarantee Trustee has occurred and
is continuing, the Preferred Guarantee Trustee shall enforce this
Preferred Securities Guarantee for the benefit of the Holders of
the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occur-
rence of any Event of Default and after the curing of all Events
of Default that may have occurred, shall undertake to perform
only such duties as are specifically set forth in this Preferred
Securities Guarantee, and no implied covenants shall be read into
this Preferred Securities Guarantee against the Preferred Guaran-
tee Trustee. In case an Event of Default has occurred (that has
not been cured or waived pursuant to Section 2.6) and is actually
known to a Responsible Officer of the Preferred Guarantee Trust-
ee, the Preferred Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Preferred Securities
Guarantee, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs.
8
(d) No provision of this Preferred Securities Guaran-
tee shall be construed to relieve the Preferred Guarantee Trustee
from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of De-
fault that may have occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the
express provisions of this Preferred Securities Guaran-
tee, and the Preferred Guarantee Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this
Preferred Securities Guarantee, and no implied cove-
nants or obligations shall be read into this Preferred
Securities Guarantee against the Preferred Guarantee
Trustee; and
(B) in the absence of bad faith on the part of
the Preferred Guarantee Trustee, the Preferred Guaran-
tee Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions
furnished to the Preferred Guarantee Trustee and con-
forming to the requirements of this Preferred Secu-
rities Guarantee; but in the case of any such certifi-
xxxxx or opinions that by any provision hereof are
specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee
shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be
liable for any error of judgment made in good faith by a
Responsible Officer of the Preferred Guarantee Trustee,
unless it shall be proved that the Preferred Guarantee
Trustee was negligent in ascertaining the pertinent facts
upon which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be
liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction
of the Holders of not less than a Majority in liquidation
amount of the Preferred Securities relating to the time,
9
method and place of conducting any proceeding for any remedy
available to the Preferred Guarantee Trustee, or exercising
any trust or power conferred upon the Preferred Guarantee
Trustee under this Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guaran-
tee shall require the Preferred Guarantee Trustee to expend
or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Preferred
Guarantee Trustee shall have reasonable grounds for believ-
ing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Preferred
Securities Guarantee or indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining
from acting upon, any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be
genuine and to have been signed, sent or presented by the
proper party or parties.
(ii) Any direction or act of the Guarantor contemplated
by this Preferred Securities Guarantee shall be sufficiently
evidenced by a Direction or an Officers' Certificate.
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall
deem it desirable that a matter be proved or established
before taking, suffering or omitting any action hereunder,
the Preferred Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad
faith on its part, request and conclusively rely upon an
Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty
to see to any recording, filing or registration of any
10
instrument (or any rerecording, refiling or registration
thereof).
(v) The Preferred Guarantee Trustee may consult with
counsel, and the written advice or opinion of such counsel
with respect to legal matters shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Preferred Guarantee
Trustee shall have the right at any time to seek instruc-
tions concerning the administration of this Preferred Secu-
rities Guarantee from any court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Preferred Securities Guarantee at the request or
direction of any Holder, unless such Holder shall have pro-
vided to the Preferred Guarantee Trustee such security and
indemnity, reasonably satisfactory to the Preferred Guar-
xxxxx Trustee, against the costs, expenses (including attor-
neys' fees and expenses and the expenses of the Preferred
Guarantee Trustee's agents, nominees or custodians) and lia-
bilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as
may be requested by the Preferred Guarantee Trustee; pro-
vided that, nothing contained in this Section 3.2(a)(vi)
shall be taken to relieve th Preferred Guarantee Trustee,
upon the occurrence of an Event of Default, of its obliga-
tion to exercise the rights and powers vested in it by this
Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be
bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instru-
ment, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Preferred Guarantee
Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute
any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, nominees,
custodians or attorneys, and the Preferred Guarantee Trustee
shall not be responsible for any misconduct or negligence on
11
the part of any agent or attorney appointed with due care by
it hereunder.
(ix) Any action taken by the Preferred Guarantee Trust-
ee or its agents hereunder shall bind the Holders of the
Preferred Securities, and the signature of the Preferred
Guarantee Trustee or its agents alone shall be sufficient
and effective to perform any such action. No third party
shall be required to inquire as to the authority of the
Preferred Guarantee Trustee to so act or as to its compli-
ance with any of the terms and provisions of this Preferred
Securities Guarantee, both of which shall be conclusively
evidenced by the Preferred Guarantee Trustee's or its a-
gent's taking such action.
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall
deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action
hereunder, the Preferred Guarantee Trustee (i) may request
instructions from the Holders of a Majority in liquidation
amount of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in accordance
with such instructions.
(b) No provision of this Preferred Securities Guaran-
tee shall be deemed to impose any duty or obligation on the Pre-
ferred Guarantee Trustee to perform any act or acts or exercise
any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the
Preferred Guarantee Trustee shall be unqualified or incompetent
in accordance with applicable law, to perform any such act or
acts or to exercise any such right, power, duty or obligation.
No permissive power or authority available to the Preferred
Guarantee Trustee shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Guar-
xxxxx
The recitals contained in this Guarantee shall be taken
as the statements of the Guarantor, and the Preferred Guarantee
Trustee does not assume any responsibility for their correctness.
The Preferred Guarantee Trustee makes no representation as to the
validity or sufficiency of this Preferred Securities Guarantee.
12
ARTICLE IV
Preferred Guarantee TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Preferred Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State
or Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and Ex-
change Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital
and surplus of at least 50 million U.S. dollars (-
$50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authori-
ty. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above,
then, for the purposes of this Section 4.1(a)(ii), the com-
bined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.
(b) If at any time the Preferred Guarantee Trustee
shall cease to be eligible to so act under Section 4.1(a), the
Preferred Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section
310(b) of the Trust Indenture Act, the Preferred Guarantee
Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred
Guarantee Trustees
(a) Subject to Section 4.2(b), the Preferred Guarantee
Trustee may be appointed or removed without cause at any time by
the Guarantor.
13
(b) The Preferred Guarantee Trustee shall not be
removed in accordance with Section 4.2(a) until a Successor
Preferred Guarantee Trustee has been appointed and has accepted
such appointment by written instrument executed by such Successor
Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to
office shall hold office until a Successor Preferred Guarantee
Trustee shall have been appointed or until its removal or resig-
nation. The Preferred Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instru-
ment in writing executed by the Preferred Guarantee Trustee and
delivered to the Guarantor, which resignation shall not take
effect until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by instrument in
writing executed by such Successor Preferred Guarantee Trustee
and delivered to the Guarantor and the resigning Preferred
Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall
have been appointed and accepted appointment as provided in this
Section 4.2 within 60 days after delivery to the Guarantor of an
instrument of resignation, the resigning Preferred Guarantee
Trustee may petition any court of competent jurisdiction for
appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for
the acts or omissions to act of any Successor Preferred Guarantee
Trustee.
(f) Upon termination of this Preferred Securities
Guarantee or removal or resignation of the Preferred Guarantee
Trustee pursuant to this Section 4.2, the Guarantor shall pay to
the Preferred Guarantee Trustee all amounts accrued to the date
of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to
pay in full to the Holders the Guarantee Payments (without
duplication of amounts theretofore paid by the Issuer), as and
14
when due, regardless of any defense, right of set-off or counter-
claim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders
or by causing the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of
this Preferred Securities Guarantee and of any liability to which
it applies or may apply, presentment, demand for payment, any
right to require a proceeding first against the Issuer or any
other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption
and all other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of
the Guarantor under this Preferred Securities Guarantee shall in
no way be affected or impaired by reason of the happening from
time to time of any of the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any
express or implied agreement, covenant, term or condition relat-
ing to the Preferred Securities to be performed or observed by
the Issuer;
(b) the extension of time for the payment by the
Issuer of all or any portion of the Distributions, Redemption
Price, Liquidation Distribution or any other sums payable under
the terms of the Preferred Securities or the extension of time
for the performance of any other obligation under, arising out
of, or in connection with, the Preferred Securities (other than
an extension of time for payment of Distributions, Redemption
Price, Liquidation Distribution or other sum payable that results
from the extension of any interest payment period on the Deben-
tures or any extension of the maturity date of the Debentures
permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence
on the part of the Holders to enforce, assert or exercise any
right, privilege, power or remedy conferred on the Holders
pursuant to the terms of the Preferred Securities, or any action
on the part of the Issuer granting indulgence or extension of any
kind;
15
(d) the voluntary or involuntary liquidation, dissolu-
tion, sale of any collateral, receivership, insolvency, bank-
ruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other
similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of
a guarantor, it being the intent of this Section 5.3 that the
obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.
There shall be no obligation of the Holders to give
notice to, or obtain consent of, the Guarantor with respect to
the happening of any of the foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of
the Preferred Securities have the right to direct the time,
method and place of conducting of any proceeding for any remedy
available to the Preferred Guarantee Trustee in respect of this
Preferred Securities Guarantee or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Pre-
ferred Securities Guarantee.
(b) If the Preferred Guarantee Trustee fails to
enforce this Preferred Securities Guarantee, any Holder of Pre-
ferred Securities may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Preferred
Securities Guarantee, without first instituting a legal proceed-
ing against the Issuer, the Preferred Guarantee Trustee or any
other Person.
SECTION 5.5 Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee
of payment and not of collection.
SECTION 5.6 Subrogation
16
The Guarantor shall be subrogated to all (if any)
rights of the Holders of Preferred Securities against the Issuer
in respect of any amounts paid to such Holders by the Guarantor
under this Preferred Securities Guarantee; provided, however,
that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise
any right that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a
result of payment under this Preferred Securities Guarantee, if,
at the time of any such payment, any amounts are due and unpaid
under this Preferred Securities Guarantee. If any amount shall
be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders
and to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereun-
der are independent of the obligations of the Issuer with respect
to the Preferred Securities, and that the Guarantor shall be
liable as principal and as debtor hereunder to make Guarantee
Payments pursuant to the terms of this Preferred Securities
Guarantee notwithstanding the occurrence of any event referred to
in subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Preferred Securities remain outstanding,
if there shall have occurred an Event of Default or an event of
default under the Declaration, then (a) the Guarantor shall not
declare or pay any dividend on, make any distributions with re-
spect to, or redeem, purchase, acquire or make a liquidation
payment with respect to, any of its capital stock, (b) the
Guarantor shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt secu-
rities (including guarantees) issued by the Guarantor which rank
pari passu with or junior to the Debentures or (c) the Guarantor
shall not make any guarantee payments with respect to the forego-
ing (other than pursuant to the Preferred Securities Guarantee
Agreement); provided, however, the Guarantor may declare and pay
a stock dividend where the dividend stock is the same stock as
that on which the dividend is being paid.
17
SECTION 6.2 Ranking
This Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordi-
nate and junior in right of payment to all other liabilities of
the Guarantor, (ii) pari passu with the most senior Preferred or
preference stock now or hereafter issued by the Guarantor and
with any guarantee now or hereafter entered into by the Guarantor
in respect of any Preferred or preference stock of any Affiliate
of the Guarantor, and (iii) senior to the Guarantor's common
stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Preferred Securities Guarantee shall terminate
upon (i) full payment of the Redemption Price of all Preferred
Securities, (ii) upon the distribution of the Guarantor's common
stock to the Holders in respect of the conversion of the Pre-
ferred Securities into the Guarantor's common stock or upon the
distribution of the Debentures to the Holders of all of the
Preferred Securities or (iii) upon full payment of the amounts
payable in accordance with the Declaration upon liquidation of
the Issuer. Notwithstanding the foregoing, this Preferred
Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of
Preferred Securities must restore payment of any sums paid under
the Preferred Securities or under this Preferred Securities
Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible
or accountable in damages or otherwise to the Guarantor or any
Covered Person for any loss, damage or claim incurred by reason
of any act or omission performed or omitted by such Indemnified
Person in good faith in accordance with this Preferred Securities
Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on
such Indemnified Person by this Preferred Securities Guarantee or
18
by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to such
acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Guarantor and upon
such information, opinions, reports or statements presented to
the Guarantor by any Person as to matters the Indemnified Person
reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable
care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts perti-
nent to the existence and amount of assets from which Distribu-
tions to Holders of Preferred Securities might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified
Person for, and to hold each Indemnified Person harmless against,
any loss, liability or expense incurred without negligence or bad
faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder,
including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against, or investigating, any
claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the
termination of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Prefer-
red Securities Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and
shall inure to the benefit of the Holders of the Preferred
Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not adverse-
ly affect the rights of Holders (in which case no consent of
Holders will be required), this Preferred Securities Guarantee
19
may only be amended with the prior approval of the Holders of at
least a Majority in liquidation amount (including the stated
amount that would be paid on redemption, liquidation or other-
wise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all the outstand-
ing Preferred Securities. The provisions of Section 12.2 of the
Declaration with respect to meetings of Holders of the Securities
apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Preferred Securities
Guarantee shall be in writing, duly signed by the party giving
such notice, and shall be delivered, telecopied or mailed by
registered or certified mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at
the Preferred Guarantee Trustee's mailing address set forth below
(or such other address as the Preferred Guarantee Trustee may
give notice of to the Holders of the Preferred Securities):
[Name of Preferred Guarantee Trustee]
[Address]
Attention:
(b) If given to the Guarantor, at the Guarantor's
mailing address set forth below (or such other address as the
Guarantor may give notice of to the Holders of the Preferred
Securities):
NorAm Energy Corp.
0000 Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention:__________
(c) If given to any Holder of Preferred Securities, at
the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given
when received in person, telecopied with receipt confirmed, or
mailed by first class mail, postage prepaid except that if a
notice or other document is refused delivery or cannot be deliv-
ered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.
20
SECTION 9.4 Benefit
This Preferred Securities Guarantee is solely for the
benefit of the Holders of the Preferred Securities and, subject
to Section 3.1(a), is not separately transferable from the
Preferred Securities.
SECTION 9.5 Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
21
THIS PREFERRED SECURITIES GUARANTEE is executed as of
the day and year first above written.
NorAm Energy Corp., as Guarantor
By:_______________________________
Name:
Title:
[Name of Preferred Guarantee Trust-
ee], as Preferred Guarantee Trustee
By:______________________________
Name:
Title:
22
