EXHIBIT 1.1
REI Trust I
7.20% Trust Originated Preferred Securities, Series C
guaranteed to the extent set forth in the Guarantee by
Houston Industries Incorporated d/b/a
Reliant Energy, Incorporated
__________________________
Underwriting Agreement
__________________________
February 23, 1999
▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇
& ▇▇▇▇▇ Incorporated
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC
PaineWebber Incorporated
Prudential Securities Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
As Representatives
c/▇ ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇
& ▇▇▇▇▇ Incorporated
World Financial Center
North Tower
New York, New York 10281
Ladies and Gentlemen:
REI Trust I, a statutory business trust created under the laws of the State of
Delaware and formerly known as HI Trust I (the "Trust"), and Houston Industries
Incorporated d/b/a Reliant Energy, Incorporated, a Texas corporation, as sponsor
of the Trust and as guarantor (the "Guarantor"), propose, subject to the terms
and conditions stated herein, that the Trust issue and sell to the Underwriters
named in Schedule I hereto (the "Underwriters") an aggregate of $375,000,000
liquidation amount of 7.20% Trust Originated Preferred Securities, Series C
(liquidation amount $25 per preferred security) (the "Securities") representing
undivided beneficial interests in the assets of the Trust, guaranteed by the
Guarantor as to the payment of distributions, and as to payments on
liquidation or redemption, to the extent set forth in a guarantee agreement (the
"Guarantee") among the Guarantor and The Bank of New York, as trustee (the
"Guarantee Trustee"). The proceeds of the sale of the Securities and an
aggregate of $11,598,000 liquidation amount of the Trust's Common Securities
(liquidation amount $25 per common security) (the "Common Securities") are to be
invested by the Trust in 7.20% Junior Subordinated Debentures due 2048 (the
"Subordinated Debentures") of the Guarantor to be issued pursuant to a Junior
Subordinated Indenture, dated as of February 15, 1999, among the Guarantor and
The Bank of New York, as trustee (the "Debenture Trustee"), as supplemented by
Supplemental Indenture No. 1 (as so supplemented, the "Indenture").
1. Representations and Warranties of the Guarantor and the Trust.
The Guarantor and the Trust jointly and severally represent and
warrant to, and agree with, each of the Underwriters that:
(i) A registration statement on Form S-3, as amended, with respect
to the Securities, the Subordinated Debentures and the Guarantee (File
Nos. 333-70665, ▇▇▇-▇▇▇▇▇-▇▇ and 333-70665-02) including a prospectus
(any preliminary prospectus included in such registration statement
being hereinafter referred to as a "Preliminary Prospectus"), copies
of which have been delivered to you, has been prepared and filed by
the Guarantor and the Trust with the Securities and Exchange
Commission (the "Commission") and has been declared effective under
the Securities Act of 1933, as amended (the "Act"). No stop order
suspending the effectiveness of such registration statement, as
amended, has been issued and no proceeding for that purpose has been
initiated or, to the best knowledge of the Guarantor and the Trust,
threatened by the Commission. Such registration statement (including
all documents filed as part thereof or incorporated by reference
therein, but excluding any Forms T-1, as amended), as amended and
supplemented at the date of this Agreement is hereinafter referred to
as to the "Registration Statement." The Prospectus contained in the
Registration Statement at the time that the Registration Statement was
declared effective is hereinafter referred to as the "Basic
Prospectus."
The prospectus included in the Registration Statement, as amended
and supplemented to the date of this Agreement (including all
documents then incorporated by reference therein and including the
Preliminary Supplemented Prospectus (hereinafter defined) as further
supplemented by the Final Supplemented Prospectus (hereinafter
defined)), is hereinafter referred to as the "Prospectus". Any
reference herein to the Registration Statement, the Prospectus, a
Preliminary Prospectus, the Basic Prospectus, the Preliminary
Supplemented Prospectus or the Final Supplemented Prospectus shall be
deemed to refer to and include the documents incorporated by reference
therein, or deemed to be incorporated by reference therein, and filed
under the Securities Exchange Act of 1934, as
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amended (the "Exchange Act"), on or before the date of such
Registration Statement, Prospectus, Preliminary Prospectus, Basic
Prospectus, Preliminary Supplemented Prospectus or Final Supplemented
Prospectus. Any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement or the
Prospectus shall be deemed to refer to and include, without
limitation, the filing of any document under the Exchange Act deemed
to be incorporated therein by reference after the date of such
Registration Statement or Prospectus.
A prospectus supplement, subject to completion, dated February
18, 1999 (the "Preliminary Supplemented Prospectus") has been prepared
and was filed pursuant to Rule 424(b) under the Act ("Rule 424(b)") on
February 18, 1999. A prospectus supplement, dated the date hereof,
setting forth the terms of the Securities and of their sale and
distribution (the "Final Supplemented Prospectus") has been prepared
and will be filed pursuant to Rule 424(b).
(ii) On the effective date of the Registration Statement, the
Registration Statement, as amended and supplemented at that time,
conformed in all material respects to the requirements of the Act and
the Trust Indenture Act of 1939, as amended (the "TIA"), and the
applicable rules and regulations of the Commission thereunder, and did
not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading; on the date of the Preliminary
Supplemented Prospectus, the Preliminary Supplemented Prospectus
conformed in all material respects to the requirements of the Act and
the applicable rules and regulations of the Commission thereunder, and
did not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading; and on the date of this
Agreement, the Registration Statement and the Prospectus conform, and
at the Time of Delivery (hereinafter defined) they will conform, in
all material respects to the requirements of the Act and the TIA and
the applicable rules and regulations of the Commission thereunder, and
on the date of this Agreement do not, and on the Time of Delivery will
not, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading;
(iii) Each document filed or to be filed pursuant to the
Exchange Act and incorporated by reference, or deemed to be
incorporated by reference in the Prospectus (including any document to
be filed pursuant to the Exchange Act which will constitute an
amendment to the Prospectus) conformed or, when so filed, will conform
in all material respects to the requirements of the Exchange Act and
the applicable rules and regulations of the Commission thereunder, and
none of such documents included or, when so filed, will include any
untrue statement of
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a material fact or omitted or, when so filed, will omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(iv) The Trust has been duly created and is validly existing in
good standing as a business trust under the laws of the State of
Delaware, with trust power and authority to own, lease and operate its
properties and conduct its business as described in the Prospectus
and, based on expected operations and law in effect on the date
hereof, the Trust will be classified as a grantor trust and will not
be classified as an association taxable as a corporation for United
States federal income tax purposes;
(v) This Agreement has been duly authorized, executed and
delivered by the Guarantor and the Trust;
(vi) The Securities have been duly authorized by the Declaration
(as defined below), and, when issued and delivered pursuant to this
Agreement, such Securities will be duly and validly issued and,
subject to the qualifications set forth herein, fully paid and non-
assessable undivided beneficial interests in the assets of the Trust
entitled to the benefits provided by the Amended and Restated
Declaration of Trust of REI Trust I (the "Declaration") among the
Guarantor and the Trustees named therein (the "Trustees") (subject to
the terms of the Declaration); provided that the holders of the
Securities (the "Securityholders") may be obligated, pursuant to the
Declaration, to (a) provide indemnity and/or security in connection
with and pay taxes or governmental charges arising from transfers or
exchanges of Securities certificates and the issuance of replacement
Securities certificates and (b) provide security and indemnity in
connection with requests of or directions to the Property Trustee (as
defined in the Declaration) to exercise its rights and remedies under
the Declaration; and the Securities conform to the description thereof
contained in the Final Supplemented Prospectus;
(vii) The Securityholders will be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of
the State of Delaware;
(viii) The Common Securities have been duly authorized by the
Declaration, and upon delivery by the Trust to the Guarantor against
payment therefor as set forth in the Declaration, will be duly and
validly issued undivided beneficial interests in the assets of the
Trust and conform to the description thereof contained in the Final
Supplemented Prospectus; the issuance of the Common Securities is not
subject to preemptive or other similar rights; and at the Time of
Delivery, all of the issued and outstanding Common Securities will be
directly owned by the Guarantor
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free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity;
(ix) The Guarantee, the Declaration, the Subordinated Debentures
and the Indenture (the Guarantee, the Declaration, the Subordinated
Debentures and the Indenture being collectively referred to as the
"Guarantor Agreements") have each been duly authorized by the
Guarantor and when validly executed and delivered by the Guarantor
and, in the case of the Guarantee, by the Guarantee Trustee, in the
case of the Declaration, by the Trustees and, in the case of the
Indenture, by the Debenture Trustee, and, in the case of the
Subordinated Debentures, when validly issued by the Guarantor and duly
authenticated and delivered by the Debenture Trustee, will constitute
valid and legally binding obligations of the Guarantor, enforceable in
accordance with their respective terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to
general equity principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law); the Subordinated
Debentures when validly issued by the Guarantor and duly authenticated
and delivered by the Debenture Trustee, will be entitled to the
benefits of the Indenture; and the Guarantor Agreements conform to the
descriptions thereof in the Final Supplemented Prospectus;
(x) The issue and sale of the Securities by the Trust, the
compliance by the Trust with all of the provisions of this Agreement,
the Securities and the Declaration, the purchase of the Subordinated
Debentures by the Trust, the execution, delivery and performance by
the Trust of the Declaration and the consummation of the transactions
contemplated herein and therein will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Trust is
a party or by which the Trust is bound or to which any of the property
or assets of the Trust is subject, nor will such action result in any
violation of the provisions of the Declaration or any existing statute
or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Trust or any of its properties;
the Commission has issued an order under the Act declaring the
Registration Statement effective and qualifying the Guarantee, the
Declaration and the Indenture under the TIA and no other consent,
approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the
issue and sale of the Securities and the Common Securities by the
Trust, the purchase of the Subordinated Debentures by the Trust or the
consummation by the Trust of the transactions contemplated by this
Agreement, except such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky
5
laws in connection with the purchase and distribution of the
Securities by the Underwriters;
(xi) The issuance by the Guarantor of the Guarantee and the
Subordinated Debentures, the compliance by the Guarantor with all of
the provisions of this Agreement, the Guarantee, the Subordinated
Debentures, the Declaration and the Indenture, the execution, delivery
and performance by the Guarantor of the Guarantor Agreements, and the
consummation of the transactions contemplated herein and therein will
not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument for borrowed money to which the Guarantor or any
Significant Subsidiary (as defined by Regulation S-X) of the Guarantor
(each, a "Significant Subsidiary") is a party or by which the
Guarantor or any Significant Subsidiary is bound or to which any of
the property or assets of the Guarantor or any Significant Subsidiary
is subject, nor will such action result in any violation of the
provisions of the Restated Articles of Incorporation or Amended and
Restated By-laws of the Guarantor or any existing statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Guarantor or any of its or its
Significant Subsidiaries' properties; the Commission has issued an
order under the Act declaring the Registration Statement effective and
qualifying the Guarantee, the Declaration and the Indenture under the
TIA and no other consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the issue of the Guarantee or the Subordinated
Debentures or the consummation by the Guarantor of the other
transactions contemplated by this Agreement or the Guarantor
Agreements, except such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the issuance by the
Guarantor of the Guarantee and the Subordinated Debentures;
(xii) The Trust is not and, after giving effect to the offering
and sale of the Securities, will not be an "investment company", or an
entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
2. Sale and Delivery.
(a) Subject to the terms and conditions herein set forth, the
Guarantor and the Trust agree to issue and sell to each of the Underwriters, and
each of the Underwriters agrees, severally and not jointly, to purchase from the
Trust, at the price per Security set forth in Schedule II hereto, the
liquidation amount of Securities set forth opposite the name of such
Underwriters in Schedule I hereto.
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(b) As compensation to the Underwriters for their commitments
hereunder, and in view of the fact that the proceeds of the sale of the
Securities will be used by the Trust to purchase the Subordinated Debentures of
the Guarantor, the Guarantor hereby agrees to pay at the Time of Delivery to
▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("ML"), for the accounts of
the several Underwriters, a commission per Security as set forth on Schedule II
for the Securities to be delivered at the Time of Delivery by wire transfer of
Federal (same-day) funds. The total aggregate amount of the Underwriters'
compensation is $11,812,500, assuming no sales of 10,000 or more Securities are
made to a single purchaser.
(c) The Securities to be purchased by each Underwriter hereunder will
be represented by one or more definitive global Securities in book-entry form
which will be deposited by or on behalf of the Trust with The Depository Trust
Company ("DTC") or its designated custodian. The Trust will deliver the
Securities to ML, for the account of each Underwriter, against payment by or on
behalf of such Underwriter of the purchase price therefor by wire transfer of
Federal (same day) funds to a commercial bank account located in the United
States and designated in writing at least forty-eight hours prior to the Time of
Delivery by the Guarantor to ML, by causing DTC to credit the Securities to the
account of ML. The Trust will cause the global certificates representing the
Securities to be made available to ML for checking at least twenty-four hours
prior to the Time of Delivery at the office of DTC or its designated custodian
(the "Designated Office"). The time and date of such delivery and payment shall
be 9:30 a.m., New York City time, on February 26, 1999 or such other time and
date as ML and the Guarantor may agree upon in writing. Such time and date are
herein called the "Time of Delivery".
(d) The documents to be delivered at the Time of Delivery by or on
behalf of the parties hereto pursuant to Section 5 hereof, including the cross-
receipt for the Securities and any additional documents requested by the
Underwriters pursuant to Section 5(l) hereof, will be delivered at such time and
date at the offices of ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., 910 Louisiana, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ or such other location as ML and the Guarantor may agree in writing (the
"Closing Location"), and the Securities will be delivered at the Designated
Office, all at the Time of Delivery. A meeting will be held at the Closing
Location at 1:00 p.m., New York City time, or such other time as ML and the
Guarantor may agree in writing on the New York Business Day next preceding the
Time of Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 2, "New York Business Day"
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
3. Covenants and Agreements. The Guarantor and the Trust jointly and
severally covenant and agree with each of the Underwriters:
(a) That the Guarantor will furnish without charge to the Underwriters
a copy of the Registration Statement, including all documents incorporated
by reference therein and exhibits filed with the Registration Statement
(other than exhibits which are incorporated by reference and have
previously been so
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furnished), and, during the period mentioned in paragraph (c) below, as
many copies of the Prospectus, the Preliminary Supplemented Prospectus and
the Final Supplemented Prospectus, any documents incorporated by reference
therein at or after the date thereof (including documents from which
information has been so incorporated) and any supplements and amendments
thereto as each Underwriter may reasonably request so long as such
Underwriter is required to deliver a prospectus;
(b) That the Guarantor will cause the Final Supplemented Prospectus to
be filed pursuant to, and in compliance with, Rule 424(b) and will promptly
advise the Underwriters (i) when any amendment to the Registration
Statement shall have been filed; provided, that, with respect to documents
filed pursuant to the Exchange Act and incorporated by reference into the
Registration Statement, such notice shall only be required during such time
as the Underwriters are required in the reasonable opinion of ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, to deliver a prospectus, (ii)
of any request by the Commission for any amendment of the Registration
Statement, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose, and (iv) of
the receipt by the Guarantor or the Trust of any notification with respect
to the suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. So long as any Underwriter is required in the reasonable opinion
of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP to deliver a prospectus, the Guarantor will not
file any amendment to the Registration Statement or supplement to the
Prospectus unless the Guarantor has furnished one copy of such amendment or
supplement to ML and to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, and, if such amendment or
supplement is to be filed on or prior to the Time of Delivery, or under
circumstances where the Underwriters are required in the reasonable opinion
of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, to deliver a Prospectus, the Underwriters or ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ LLP, shall not reasonably have objected thereto. If the
Commission shall issue a stop order suspending the effectiveness of the
Registration Statement, the Guarantor will take such steps to obtain the
lifting of that order as in the best judgment of the Guarantor are not
contrary to the interests of the Guarantor;
(c) That if, at any time when in the reasonable opinion of ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ LLP the Prospectus is required by law to be delivered by an
Underwriter or a dealer, any event shall occur as a result of which it is
necessary, in the reasonable opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP or counsel for
the Guarantor, to amend or supplement the Prospectus or modify the
information incorporated by reference therein in order to make the
statements therein, in light of the circumstances existing when the
Prospectus is delivered to a purchaser, not misleading, or if it shall be
necessary in the reasonable opinion of any such counsel, to amend or
supplement the Prospectus or modify such information to comply with law,
the Guarantor will forthwith (i) prepare and furnish, at its own expense,
to the Underwriters and to the dealers (whose names and addresses the
Underwriters will furnish to the Guarantor) to whom Securities may have
been
8
sold by the Underwriters and to any other dealers upon reasonable request,
either amendments or supplements to the Prospectus or (ii) file with the
Commission documents incorporated by reference in the Prospectus, which
shall be so supplied to the Underwriters and such dealers, in either case
so that the statements in the Prospectus as so amended, supplemented or
modified will not, in light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus will
comply with law;
(d) That the Guarantor will endeavor to qualify, at its expense, the
Securities, and, to the extent required or advisable, the Guarantee and the
Subordinated Debentures, for offer and sale under the securities or Blue
Sky laws of such jurisdictions as the Underwriters shall reasonably request
and to pay all filing fees, reasonable expenses and legal fees in
connection therewith and in connection with the determination of the
eligibility for investment of the Securities; provided, that the Guarantor
shall not be required to qualify as a foreign corporation or a dealer in
securities or to file any consents to service of process under the laws of
any jurisdiction;
(e) That the Guarantor will make generally available to its security
holders and the Securityholders as soon as practicable an earning statement
of the Guarantor covering a twelve-month period beginning after the Time of
Delivery which shall satisfy the provisions of Section 11(a) of the Act and
the rules and regulations of the Commission thereunder (including Rule 158
under the Act).
(f) That during the period beginning on the date of this Agreement and
continuing to and including the Time of Delivery, the Guarantor and the
Trust will not offer, sell, contract to sell or otherwise dispose of any
Securities, any security convertible into or exchangeable into or
exercisable for Securities or Subordinated Debentures or any debt
securities substantially similar to the Subordinated Debentures or equity
securities substantially similar to the Securities (except for the
Subordinated Debentures and the Securities issued pursuant to this
Agreement), without the prior written consent of ML.
(g) That the Guarantor and the Trust will use best efforts to effect
the listing of the Securities on the New York Stock Exchange within thirty
days of the date hereof; if the Securities are exchanged for Subordinated
Debentures, the Guarantor will use its best efforts to effect the listing
of the Subordinated Debentures on any exchange on which the Securities are
then listed.
4. Expenses. The Guarantor and the Trust jointly and severally covenant and
agree with the several Underwriters that the Guarantor and the Trust will pay or
cause to be paid the following:
(i) all expenses in connection with the preparation, printing
and filing of the Registration Statement as originally filed and of each
amendment thereto;
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(ii) the fees, disbursements and expenses of the Guarantor's or
the Trust's counsel and accountants in connection with the issue of the
Securities and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, the Prospectus, the
Preliminary Supplemented Prospectus, the Final Supplemented Prospectus and
any amendments and supplements thereto and the mailing and delivering of
copies thereof to the Underwriters and dealers;
(iii) all reasonable expenses in connection with the
qualification of the Securities, the Guarantee and the Subordinated
Debentures issuable upon exchange of the Securities, for offering and sale
under state securities laws as provided in Section 3(d) hereof, including
the reasonable fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky and
legal investment surveys;
(iv) any fees charged by securities rating services for rating
the Securities and the Subordinated Debentures;
(v) the cost of preparing the Securities and the Subordinated
Debentures;
(vi) the fees and expenses of the Trustees, the Guarantee
Trustee and the Debenture Trustee and any agent of the Trustees, the
Guarantee Trustee and the Debenture Trustee and the fees and disbursements
of counsel for the Trustees in connection with the Declaration and the
Securities, counsel for the Guarantee Trustee in connection with the
Guarantee and counsel for the Debenture Trustee in connection with the
Indenture and the Subordinated Debentures;
(vii) the fees and disbursements of Delaware counsel to the
Trust; and
(viii) all other costs and expenses incident to the performance
of its obligations hereunder which are not otherwise specifically provided
for in this Section.
It is understood, however, that, except as provided in this Section, and
Sections 6 and 9 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel and any advertising expenses
connected with any offers they may make.
5. Conditions of Underwriters' Obligations. The obligations of the
Underwriter hereunder shall be subject to the accuracy, at and (except as
otherwise stated herein) as of the date hereof and at and as of the Time of
Delivery, of the representations and warranties made herein by the Guarantor and
the Trust, to compliance at and as of the Time of Delivery by the Guarantor and
the Trust with their covenants and agreements herein contained and the other
provisions hereof to be satisfied at or prior to the Time of Delivery, and to
the following additional conditions:
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(a) (i) No stop order suspending the effectiveness of the Registration
Statement shall be in effect, and no proceeding for such purpose shall be
pending before or threatened by the Commission, and the Underwriters shall have
received on and as of the Time of Delivery, a certificate dated such date,
signed by an executive officer (including, without limitation, the Treasurer) of
the Guarantor to the foregoing effect, and (ii) there shall have been no
material adverse change in or affecting the business, properties or financial
condition of the Guarantor or the Trust from that set forth in or contemplated
by the Registration Statement at the time it became effective, except as set
forth in or contemplated by the Prospectus, and the Underwriters shall have
received on and as of the Time of Delivery, a certificate dated such date,
signed by an executive officer (including, without limitation, the Treasurer) of
the Guarantor to the foregoing effect. The officers making such certificates may
rely upon the best of his knowledge as to proceedings pending or threatened.
(b) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, shall have
furnished to you such opinion or opinions, dated the Time of Delivery, with
respect to such matters as you may reasonably request, and such counsel shall
have received such papers and information as they may reasonably request to
enable them to pass upon such matters. In giving such opinion, such counsel may
rely (i) as to matters of Texas law and the exemption of the Guarantor under the
Public Utility Holding Company Act of 1935, as amended (the "1935 Act") upon the
opinions of ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P. referred to in (d) below and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or ▇▇▇▇▇ ▇. ▇▇▇▇▇ referred to in (c) below and (ii) as to matters of Delaware
law upon the opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A., referred to in (e)
below.
(c) ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Esq., Executive Vice President, General Counsel and
Corporate Secretary of the Guarantor, or ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., Vice President,
Deputy General Counsel and Assistant Corporate Secretary of the Guarantor, shall
have furnished to you his written opinion, dated the Time of Delivery, in form
and substance satisfactory to you, to the effect that:
(i) The Guarantor has been duly incorporated and is validly
existing in good standing under the laws of the State of Texas and has
corporate power and authority to enter into and perform its obligations
under this Agreement and the Guarantor Agreements;
(ii) No consent, approval, authorization or other order of, or
registration with, any governmental regulatory body (other than such as may
be required under applicable state securities laws, as to which such
counsel need not express an opinion) is required for the issuance and sale
of the Securities being delivered at the Time of Delivery or the issuance
of the Guarantee and the Subordinated Debentures or the consummation by the
Trust or the Guarantor of the transactions contemplated by this Agreement
and the Guarantor Agreements;
(iii) To the best of such counsel's knowledge and other than as
set forth or contemplated in the Prospectus, there are no legal or
11
governmental proceedings pending or threatened to which Guarantor is
subject, which, individually or in the aggregate, are expected to have a
material adverse effect on the financial position, shareholders' equity or
results of operations of the Guarantor;
The issuance by the Guarantor of the Guarantee and the Subordinated
Debentures and the execution, delivery and performance by the Guarantor of
this Agreement and the Guarantor Agreements will not result in the breach
or violation of, or constitute a default under, the Restated Articles of
Incorporation or the Amended and Restated Bylaws of the Guarantor, each as
amended to date, any indenture, mortgage, deed of trust or other agreement
or instrument for borrowed money to which the Guarantor is a party or by
which it is bound or to which its property is subject or any existing law,
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Guarantor or its property, in any manner which
would have a material adverse effect on the business of the Guarantor; and
(iv) The description of statutes and regulations set forth in Part I of
the Guarantor's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 under the captions "Business-Regulation" and "-
Environmental Matters", as updated in the Forms 10-Q for the quarters ended
March 31, June 30 and September 30, 1998, fairly describe in all material
respects the portions of the statutes and regulations addressed thereby.
(d) ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., counsel for the Guarantor and the Trust,
shall have furnished to you their written opinion, dated the Time of Delivery,
in form and substance satisfactory to you, to the effect that:
(i) Such counsel does not know of any contracts or documents of
a character required to be described in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement which
are not so described and filed;
(ii) The statements set forth in the Final Supplemented
Prospectus under the captions "Description of the Preferred Securities",
"Description of the Junior Subordinated Debentures ", and "Description of
the Preferred Securities Guarantee" and in the Basic Prospectus under the
captions "The Trusts", "Description of the Preferred Securities",
"Description of the Junior Subordinated Debt Securities", and "Description
of the Preferred Securities Guarantees" accurately summarize in all
material respects the terms of the Securities, the Declaration, the
Subordinated Debentures and the Guarantee;
(iii) The Securities, the Subordinated Debentures and the
Guarantee conform as to legal matters in all material respects to the
12
descriptions thereof contained in the Final Supplemented Prospectus,
including, without limitation, under the captions "Description of the
Preferred Securities", "Description of the Junior Subordinated Debentures",
and "Description of the Preferred Securities Guarantee" and in the Basic
Prospectus under the captions "The Trusts", "Description of the Preferred
Securities", "Description of the Junior Subordinated Debt Securities", and
"Description of the Preferred Securities Guarantees", respectively;
(iv) The Subordinated Debentures are in the form prescribed in
or pursuant to the Indenture, have been duly and validly authorized by all
necessary corporate action on the part of the Guarantor and, when executed
and delivered by the Guarantor and authenticated by the Debenture Trustee
as specified in or pursuant to the Indenture, will be valid and binding
obligations of the Guarantor, enforceable in accordance with their terms,
except as such enforceability is subject to the effect of any applicable
bankruptcy, insolvency, reorganization or other law relating to or
affecting creditors' rights generally and to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law);
(v) The Guarantee has been duly and validly authorized by all
necessary corporate action on the part of the Guarantor; the Guarantee has
been duly and validly executed and delivered by the Guarantor and (assuming
due authorization, execution and delivery by the Guarantee Trustee)
constitutes the valid and binding obligation of the Guarantor, enforceable
in accordance with its terms, except as such enforceability is subject to
the effect of any applicable bankruptcy, insolvency, reorganization or
other law relating to or affecting creditors' rights generally and to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); the Declaration and the
Indenture have each been duly authorized, executed and delivered by the
Guarantor and, when executed and delivered by the other parties thereto,
will constitute valid and binding obligations of the Guarantor, enforceable
in accordance with their respective terms, except as such enforceability is
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or other law relating to or affecting creditors' rights
generally and to general principles of equity (regardless of whether such
enforceability is considered in proceeding in equity or at law);
(vi) The Guarantee, the Declaration and the Indenture have been
duly qualified under the TIA;
(vii) Pursuant to a Memorandum Opinion and Order Granting
Exemption to Holding Company dated July 24, 1997 issued by the Commission
(Release No. 35-26744), the Guarantor is exempt from
13
regulation as a public utility holding company under Section 3(a)(2) of
the 1935 Act, except the provisions of Section 9(a)(2) thereof;
(viii) The Trust is not and, after giving effect to the offering
and sale of the Securities, will not be an "investment company" or an
entity "controlled" by an "investment company", as such terms are defined
in the Investment Company Act;
(ix) The Registration Statement has become effective under the
Act, and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or any part
thereof has been issued and no proceedings for that purpose have been
instituted and are pending or are threatened by the Commission under the
Act; the Registration Statement, as of its effective date, and the Final
Supplemented Prospectus, as of its date, (except for (A) the operating
statistics, financial statements and financial statement schedules
contained or incorporated by reference therein (including the auditors'
reports on the financial statements and the notes to the financial
statements), (B) the other financial and statistical information contained
or incorporated by reference therein and (C) the exhibits thereto, as to
which such counsel need not express an opinion) complied as to form in all
material respects with the requirements of Form S-3 under the Act and the
applicable rules and regulations of the Commission thereunder, and each
document incorporated by reference therein as originally filed pursuant to
the Exchange Act (except for (A) the operating statistics, financial
statements and financial statement schedules contained or incorporated by
reference therein (including the auditors' reports on the financial
statements and the notes to the financial statements), (B) the other
financial and statistical information contained or incorporated by
reference therein and (C) the exhibits thereto, as to which such counsel
need not express an opinion) when so filed complied as to form in all
material respects with the Exchange Act and the applicable rules and
regulations of the Commission thereunder; and
(x) The execution, delivery and performance by the Guarantor of
this Agreement have been duly authorized by all necessary corporate action
on the part of the Guarantor, and this Agreement has been duly executed
and delivered by the Guarantor.
In addition, such counsel shall state that no facts have come to the attention
of such counsel that lead them to believe that the Registration Statement
(except for (A) the operating statistics, financial statements and financial
statement schedules contained or incorporated by reference therein (including
the auditors' reports on the financial statements and the notes to the financial
statements, except to the extent that such notes describe legal or governmental
proceedings to which the Company is a party and are incorporated by reference
into one or more items of a report that is incorporated by reference in the
Registration Statement or the Prospectus, other than an item that requires
14
that financial statements be provided), (B) the other financial and statistical
information contained or incorporated by reference therein and (C) the exhibits
thereto, as to which such counsel need not comment) as of the time such
Registration Statement became effective, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus, as amended, supplemented or modified by the filing of a document
incorporated by reference therein if so amended, supplemented or modified
(except for (A) the operating statistics, financial statement and financial
statement schedules contained or incorporated by reference therein (including
the auditors' reports on the financial statements and the notes to the financial
statements, except to the extent that such notes describe legal or governmental
proceedings to which the Guarantor is a party and are incorporated by reference
into one or more items of a report that is incorporated by reference in the
Prospectus, other than an item that requires that financial statements be
provided), (B) the other financial and statistical information contained or
incorporated by reference therein and (C) the exhibits thereto, as to which such
counsel need not comment), as of the date of the Final Supplemented Prospectus
contained, or as of the Time of Delivery contains, any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(e) ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, special Delaware counsel for the
Guarantor and the Trust, shall have furnished to you their written opinion,
dated the Time of Delivery, in form and substance satisfactory to you, to the
effect that:
(i) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Business Trust Act,
and all filings required under the laws of the State of Delaware with
respect to the creation and valid existence of the Trust as a business
trust have been made;
(ii) Under the Delaware Business Trust Act and the Declaration,
the Trust has the trust power and authority to own property and conduct
its business, all as described in the Prospectus;
(iii) The Declaration constitutes a valid and legally binding
obligation of the Guarantor and the Trustees, and is enforceable against
the Guarantor and the Trustees, in accordance with its terms, subject,
as to enforcement, to the effect upon the Declaration of (i) bankruptcy,
insolvency, fraudulent transfer and conveyance, reorganization,
moratorium, receivership, liquidation and other similar laws relating to
or affecting the rights and remedies of creditors generally, (ii)
principles of equity, including applicable law relating to fiduciary
duties (regardless of whether considered and applied in a proceeding in
equity or at law), and (iii) the effect of applicable public policy on
the enforceability of provisions relating to indemnification or
contribution;
15
(iv) Under the Delaware Business Trust Act and the Declaration,
the Trust has the trust power and authority to (a) execute and deliver,
and to perform its obligations under this Agreement and (b) issue and
perform its obligations under the Securities and the Common Securities;
(v) Under the Delaware Business Trust Act and the Declaration,
the execution and delivery by the Trust of this Agreement, and the
performance by the Trust of its obligations hereunder, have been duly
authorized by all necessary trust action on the part of the Trust;
(vi) Under the Delaware Business Trust Act and the Declaration,
this Agreement has been duly executed by the Trust;
(vii) The Securities have been duly authorized by the
Declaration and are duly and validly issued and, subject to the
qualifications set forth herein, fully paid and non-assessable undivided
beneficial interests in the assets of the Trust and are entitled to the
benefits provided by the Declaration (subject to the terms of the
Declaration); provided that such counsel may note that the
Securityholders may be obligated, pursuant to the Declaration, to (a)
provide indemnity and/or security in connection with and pay taxes or
governmental charges arising from transfers or exchanges of Securities
certificates and the issuance of replacement Securities certificates and
(b) provide security and indemnity in connection with requests of or
directions to the Property Trustee (as defined in the Declaration) to
exercise its rights and remedies under the Declaration. The
Securityholders, as beneficial owners of the Trust, are entitled to the
same limitation of personal liability extended to stockholders of
private corporations for profit organized under the General Corporation
Law of the State of Delaware;
(viii) The Common Securities of the Trust have been duly
authorized by the Declaration and are validly issued, and fully paid
undivided beneficial interests in the assets of the Trust;
(ix) Under the Delaware Business Trust Act and the Declaration,
the issuance of the Securities and the Common Securities is not subject
to preemptive rights;
(x) The issuance and sale by the Trust of the Securities and the
Common Securities, the execution, delivery and performance by the Trust
of this Agreement, the consummation by the Trust of the transactions
contemplated by this Agreement and the Declaration and compliance by the
Trust with its obligations thereunder do not violate (a) any of the
provisions of the Certificate of Trust of the Trust or the Declaration,
or (b) any applicable Delaware law or administrative regulation;
16
(xi) Such counsel has reviewed the statements in the Final
Supplemented Prospectus under the caption "REI Trust I" and, insofar as
they contain statements of Delaware law, such statements are fairly
presented;
(xii) No authorization, approval, consent or order of any
Delaware court or Delaware governmental authority or Delaware agency is
required to be obtained by the Trust solely in connection with the
issuance and sale of the Securities and the Common Securities. (In
rendering the opinion expressed in this paragraph (xii), such counsel
need express no opinion concerning the securities laws of the State of
Delaware.); and
(xiii) The Securityholders (other than those holders of the
Securities who reside or are domiciled in the State of Delaware) will
have no liability for income taxes imposed by the State of Delaware
solely as a result of their participation in the Trust, and the Trust
will not be liable for any income tax imposed by the State of Delaware.
(f) ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., special tax counsel for the Guarantor and the
Trust, shall have furnished to you their written opinion, dated the Time of
Delivery, in form and substance satisfactory to you, to the effect that such
firm confirms its opinion set forth in the Final Supplemented Prospectus under
the caption "Certain Federal Tax Consequences".
(g) At the Time of Delivery, ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, as counsel to
the Debenture Trustee, Property Trustee and Guarantee Trustee, shall have
furnished to you an opinion, dated the Time of Delivery, addressed to you in
form and substance satisfactory to you.
(h) At the Time of Delivery, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A., as counsel
to the Delaware Trustee, shall have furnished to you an opinion, dated the Time
of Delivery, addressed to you in form and substance satisfactory to you.
(i) At the time of execution of this Agreement, Deloitte & Touche LLP
shall have furnished to you a letter dated the date of such execution,
substantially in the form heretofore supplied and deemed satisfactory to you.
(j) At the Time of Delivery, Deloitte & Touche LLP shall have furnished
you a letter, dated the Time of Delivery, to the effect that such accountants
reaffirm, as of the Time of Delivery and as though made on the Time of Delivery,
the statements made in the letter furnished by such accountants pursuant to
paragraph (i) of this Section 5, except that the specified date referred to in
such letter will be a date not more than five business days prior to the Time of
Delivery.
(k) A Special Event (as defined in the Final Supplemented Prospectus)
shall not have occurred and be continuing.
17
(l) The Guarantor and the Trust shall have furnished or caused to be
furnished to you at the Time of Delivery certificates of officers of the
Guarantor and of trustees of the Trust satisfactory to you as to the accuracy of
the representations and warranties of the Guarantor and the Trust herein at and
as of the Time of Delivery, as to the performance by the Guarantor and the Trust
of all of their respective obligations hereunder to be performed at or prior to
the Time of Delivery, as to the matters set forth in the introductory paragraph
to this Section 5 and subsection (a) of this Section and as to such other
matters as you may reasonably request.
6. Indemnification and Contribution.
(a) The Guarantor and the Trust, jointly and severally, agree to
indemnify and hold harmless each Underwriter, and each person, if any, who
controls each Underwriter within the meaning of the Act or the Exchange Act,
against any losses, claims, damages, liabilities or expenses (including the
reasonable cost of investigating and defending against any claims therefore and
counsel fees incurred in connection therewith), joint or several, which may be
based upon either the Act, or the Exchange Act, or any other statute or at
common law, on the ground or alleged ground that any Preliminary Supplemented
Prospectus, Final Supplemented Prospectus, Preliminary Prospectus, the
Registration Statement, the Basic Prospectus or the Prospectus (or any such
document, as from time to time amended, or deemed to be amended, supplemented or
modified) includes or allegedly includes an untrue statement of material fact or
omits to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, unless such statement or
omission was made in reliance upon, and in conformity with, written information
furnished to the Guarantor or the Trust by any Underwriter through ML
specifically for use in the preparation thereof; provided that in no case is the
Guarantor or the Trust to be liable with respect to any claims made against any
Underwriter or any such controlling person unless such Underwriter or such
controlling person shall have notified the Guarantor in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Underwriter or such controlling person, but failure to notify the Guarantor or
Trust of any such claim shall not relieve it from any liability which it may
have to such Underwriter or such controlling person otherwise than on account of
the indemnity agreement contained in this paragraph; and provided, further, that
the foregoing indemnity with respect to the Preliminary Prospectus, the Basic
Prospectus, the Prospectus, the Preliminary Supplemented Prospectus and the
Final Supplemented Prospectus shall not inure to the benefit of any Underwriter
if a copy of the Preliminary Prospectus, the Basic Prospectus, the Prospectus,
the Preliminary Supplemented Prospectus or the Final Supplemented Prospectus as
amended or supplemented, had not been sent or given by or on behalf of such
Underwriter to the person asserting any such losses, claims, damages or
liabilities concurrently with or prior to delivery of the written confirmation
of the sale of Securities to such person and the untrue statement or omission of
a material fact contained in any such Preliminary Prospectus, Basic Prospectus,
Prospectus, Preliminary Supplemented Prospectus, or Final Supplemented
Prospectus was corrected in the Preliminary Prospectus, the Basic Prospectus,
the Prospectus, the Preliminary Supplemented Prospectus or the Final
Supplemented Prospectus, as amended or supplemented.
18
The Guarantor and the Trust will be entitled to participate at their
own expense in the defense, or, if they so elect, to assume the defense of any
suit brought to enforce any such liability, but, if the Guarantor or the Trust
elects to assume the defense, such defense shall be conducted by counsel chosen
by it. In the event that the Guarantor or the Trust elects to assume the
defense of any such suit and retains such counsel, the Underwriter or
Underwriters or controlling person or persons, defendant or defendants in the
suit, may retain additional counsel but shall bear the fees and expenses of such
counsel unless (i) the Guarantor or the Trust shall have specifically authorized
the retaining of such counsel or (ii) the parties to such suit include the
Underwriter or Underwriters or controlling person or persons and the Underwriter
or Underwriters or controlling person or persons have been advised by such
counsel that one or more legal defenses may be available to it or them which may
not be available to the Guarantor or the Trust, in which case the Guarantor or
the Trust shall not be entitled to assume the defense of such suit on behalf of
such Underwriter or Underwriters or controlling person or persons,
notwithstanding their obligation to bear the reasonable fees and expenses of
such counsel, it being understood, however, that the Guarantor and the Trust
shall not, in connection with any one such suit or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for all such Underwriters and their controlling persons, which firm shall
be designated in writing by ML. The Guarantor and the Trust shall not be liable
to indemnify any person for any settlement of any such claim effected without
the Guarantor's or the Trust's consent. This indemnity agreement will be in
addition to any liability which the Guarantor and the Trust might otherwise
have.
(b) Each Underwriter agrees to indemnify and hold harmless the Guarantor
and the Trust, each of the Guarantor's directors, each of the Guarantor's
officers who have signed the Registration Statement, each of the Trustees who
have signed the Registration Statement and each person, if any, who controls the
Guarantor and the Trust within the meaning of the Act or the Exchange Act,
against any losses, claims, damages, liabilities or expenses (including the
reasonable cost of investigating and defending against any claims therefor and
counsel fees incurred in connection therewith), joint or several, which may be
based upon the Act, or the Exchange Act, or any other statute or at common law,
on the ground or alleged ground that any Preliminary Supplemented Prospectus,
Final Supplemented Prospectus, the Registration Statement, the Preliminary
Prospectus, the Basic Prospectus or the Prospectus (or any such document, as
from time to time amended, or deemed to be amended, supplemented or modified)
includes or allegedly includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, but only insofar as any such
statement or omission was made in reliance upon, and in conformity with, written
information furnished to the Guarantor or the Trust by such Underwriter through
ML specifically for use in the preparation thereof, it being understood and
agreed that the only such information furnished by any Underwriter consists of
the following information in the Prospectus furnished on behalf of each
Underwriter: the sixth paragraph, the last three sentences of the eighth
paragraph and the eleventh, twelfth, thirteenth and fourteenth paragraphs under
the caption "Underwriting"; provided that in no case is such Underwriter to be
liable with
19
respect to any claims made against the Guarantor or the Trust or any such
director, officer, trustee or controlling person unless the Guarantor or the
Trust or any such director, officer, trustee or controlling person shall have
notified such Underwriter in writing within a reasonable time after the summons
or other first legal process giving information of the nature of the claim shall
have been served upon the Guarantor or the Trust or any such director, officer,
trustee or controlling person, but failure to notify such Underwriter of any
such claim shall not relieve it from any liability which it may have to the
Guarantor or the Trust or any such director, officer, trustee or controlling
person otherwise than on account of the indemnity agreement contained in this
paragraph. Such Underwriter will be entitled to participate at its own expense
in the defense, or, if it so elects, to assume the defense of any suit brought
to enforce any such liability, but, if such Underwriter elects to assume the
defense, such defense shall be conducted by counsel chosen by it. In the event
that such Underwriter elects to assume the defense of any such suit and retain
such counsel, the Guarantor or the Trust or any such director, officer, trustee
or controlling person, defendant or defendants in the suit, may retain
additional counsel but shall bear the fees and expenses of such counsel unless
(i) such Underwriter shall have specifically authorized the retaining of such
counsel or (ii) the parties to such suit include the Guarantor or the Trust or
any such director, officer, trustee or controlling person and such Underwriter
and the Guarantor or the Trust or such director, officer, trustee or controlling
person have been advised by such counsel that one or more legal defenses may be
available to it or them which may not be available to such Underwriter, in which
case such Underwriter shall not be entitled to assume the defense of such suit
on behalf of the Guarantor or the Trust or any such director, officer, trustee
or controlling person, notwithstanding its obligation to bear the reasonable
fees and expenses of such counsel, it being understood, however, that such
Underwriter shall not, in connection with any one such suit or proceeding or
separate but substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for all of the Guarantor or the Trust and any such
director, officer, trustee or controlling person, which firm shall be designated
in writing by the Guarantor. Such Underwriter shall not be liable to indemnify
any person for any settlement of any such claim effected without such
Underwriter's consent. This indemnity agreement will be in addition to any
liability which such Underwriter might otherwise have.
(c) If recovery is not available under Section 6(a) or 6(b) hereof, for
any reason other than as specified therein, the parties entitled to
indemnification by the terms thereof shall be entitled to contribution for
liabilities and expenses, except to the extent that contribution is not
permitted under Section 11(f) of the Act. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the relative benefits received by each party from the offering of the
Securities (taking into account the portion of the proceeds of the offering
realized by each), the parties' relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement or omission, and any other
equitable considerations appropriate under the circumstances. The Guarantor and
the Trust and the Underwriters agree that it would not be equitable if the
amount of such contribution were determined by pro rata or per capita allocation
20
(even if the Underwriters were treated as one entity for such purpose). No
Underwriters or any person controlling such Underwriters shall be obligated to
make contribution hereunder which in the aggregate exceeds the total public
offering price of the Securities purchased by such Underwriters under this
Agreement, less the aggregate amount of any damages which such Underwriters and
its controlling persons have otherwise been required to pay in respect of the
same claim or any substantially similar claim. The Underwriters' obligations to
contribute are several in proportion to their respective underwriting
obligations, and not joint.
7. Substitution of Underwriters. If any Underwriter shall default in its
obligation to purchase the Securities which it has agreed to purchase hereunder
and the aggregate liquidation amount of such Securities which such defaulting
Underwriter agreed but failed to purchase does not exceed 10% of the aggregate
liquidation amount of all the Securities, the non-defaulting Underwriters may
make arrangements satisfactory to the Guarantor and Trust for the purchase of
the aggregate liquidation amount of such Securities by other persons, including
the non-defaulting Underwriters, but if no such arrangements are made prior to
the Time of Delivery, the non-defaulting Underwriters shall be obligated
severally in proportion to their respective commitments hereunder, to purchase
the Securities which such defaulting Underwriter agreed but failed to purchase.
If any Underwriter or Underwriters shall so default and the aggregate
liquidation amount of such Securities with respect to which such default or
defaults occur is more than 10% of the aggregate liquidation amount of all the
Securities and arrangements satisfactory to the non-defaulting Underwriters and
the Guarantor and the Trust for the purchase of such Securities by other persons
are not made within 48 hours after such default, this agreement will terminate.
If the non-defaulting Underwriter or substituted underwriter or
underwriters are required hereby or agree to take up all or part of the
Securities of the defaulting Underwriter as provided in this Section 7, (i) the
Guarantor and the Trust shall have the right to postpone the Time of Delivery
for a period of not more than five full business days, in order that the
Guarantor and the Trust may effect whatever changes may thereby be made
necessary in the Registration Statement or Prospectus or in any other documents
or arrangements, and the Guarantor and the Trust agree to promptly file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective aggregate liquidation
amount of Securities which the non-defaulting Underwriters or substituted
purchaser or purchasers shall thereafter be obligated to purchase shall be taken
as the basis of their underwriting obligation for all purposes of this
Agreement. Nothing herein contained shall relieve any defaulting Underwriter of
its liability to the Guarantor and the Trust or the non-defaulting Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 7 shall be without liability on the part of
the non-defaulting Underwriters or the Guarantor or the Trust, other than as
provided in Sections 6 and 9.
8. Survival of Indemnities, Representations, Warranties, etc. The
respective indemnities, agreements, representations, warranties and other
statements of the Guarantor and the Trust and the several Underwriters, as set
forth in this Agreement or
21
made by or on behalf of them, respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of any Underwriter or
any controlling person of any Underwriter, or the Guarantor or the Trust, or any
officer or director or controlling person of the Guarantor or the Trust, and
shall survive delivery of and payment for the Securities.
9. Termination. If this Agreement shall be terminated by the
Underwriters, because of any failure or refusal on the part of the Guarantor or
the Trust to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Guarantor or the Trust shall be unable to
perform its obligations under this Agreement, the respective indemnities shall
remain in full force and effect and the Guarantor or the Trust will reimburse
the Underwriter or such Underwriters as have so terminated this Agreement with
respect to themselves for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by them in connection with
the transactions contemplated by this Agreement.
10. Notices. In all dealings hereunder, you shall act on behalf of each
of the Underwriters, and the parties hereto shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of any Underwriter
made or given by you.
All statements, requests, notices and agreements hereunder shall be
in writing, and (i) if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to you in care of ▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇
& ▇▇▇▇▇ Incorporated, World Financial Center, North Tower, New York, New York
10281-1327, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and (ii) if to the Guarantor or the Trust
shall be delivered or sent by mail, telex or facsimile transmission to the
Guarantor in care of Reliant Energy, Incorporated, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, Attention, Assistant Treasurer.
22
11. Successors. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters, the Guarantor and the Trust and their
respective successors and the directors, trustees, officers and controlling
persons referred to in Section 6 of this Agreement. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person
other than the persons mentioned in the preceding sentence any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained; this Agreement and all conditions and provisions
hereof being intended to be, and being, for the sole and exclusive benefit of
such persons and for the benefit of no other person; except that the
representations, warranties, covenants, agreements and indemnities of the
Guarantor and the Trust contained in this Agreement shall also be for the
benefit of the person or persons, if any, who control any Underwriter within the
meaning of the Act or the Exchange Act, and the representations, warranties,
covenants, agreements and indemnities of the several Underwriters shall also be
for the benefit of each Trustee, each director of the Guarantor, each person who
has signed the Registration Statement and the person or persons, if any, who
control the Guarantor and the Trust within the meaning of the Act.
12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
13. Counterparts. This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which shall be deemed
to be an original, but all such respective counterparts shall together
constitute one and the same instrument.
23
If the foregoing is in accordance with your understanding, please sign
and return to us seven counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement between each of the Underwriters and
the Guarantor and the Trust. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Guarantor and the Trust for examination upon request, but
without warranty on your part as to the authority of the signers thereof.
Very truly yours,
REI Trust I
By: Houston Industries Incorporated, dba Reliant
Energy, Incorporated, as Sponsor
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Treasurer
Houston Industries, Incorporated dba Reliant
Energy, Incorporated
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Treasurer
Accepted as of the date hereof:
▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇
& ▇▇▇▇▇ Incorporated
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC
PaineWebber Incorporated
Prudential Securities Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇
& ▇▇▇▇▇ Incorporated
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Director
On behalf of each of the Underwriters
24
SCHEDULE I
Liquidation Amount of
Underwriters Securities to be Purchased
------------ --------------------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ $ 34,500,000
Incorporated
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. $ 34,250,000
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. $ 34,250,000
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC $ 34,250,000
PaineWebber Incorporated $ 34,250,000
Prudential Securities Incorporated $ 34,250,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. $ 34,250,000
ABN AMRO Incorporated $ 3,750,000
BNY Capital Markets, Inc. $ 3,750,000
BT ▇▇▇▇. ▇▇▇▇▇ Incorporated $ 3,750,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated $ 3,750,000
Bear, ▇▇▇▇▇▇▇ & Co. Inc. $ 3,750,000
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. $ 3,750,000
Chase Securities Inc. $ 3,750,000
Credit Suisse First Boston Corporation $ 3,750,000
▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated $ 3,750,000
EVEREN Securities, Inc. $ 3,750,000
Fleet Securities, Inc. $ 3,750,000
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated $ 3,750,000
▇.▇. ▇▇▇▇▇▇ Securities Inc. $ 3,750,000
Olde & Co., Incorporated $ 3,750,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. $ 3,750,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. $ 3,750,000
▇▇ ▇▇▇▇▇ Securities Corporation $ 3,750,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated $ 3,750,000
Warburg Dillon Read LLC $ 3,750,000
Wheat First Union, a Division of First $ 3,750,000
Union Capital Markets Corp.
Advest, Inc. $ 1,875,000
▇.▇. ▇▇▇▇ & Company $ 1,875,000
▇.▇. ▇▇▇▇▇▇▇▇ & Co. $ 1,875,000
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co. $ 1,875,000
▇▇▇▇▇▇▇▇▇▇ & Co. Inc. $ 1,875,000
Fidelity Capital Markets, A Division of $ 1,875,000
National Financial Services Co.
Fifth Third/The Ohio Company $ 1,875,000
First Albany Corporation $ 1,875,000
25
Liquidation Amount of
Underwriters Securities to be Purchased
------------ --------------------------
Gibraltar Securities Co. $ 1,875,000
Gruntal & Co., L.L.C. $ 1,875,000
J.J.B. ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Inc. $ 1,875,000
▇▇▇▇ ▇▇▇▇▇▇ Investments, Inc. $ 1,875,000
▇▇▇▇▇ ▇▇▇▇▇▇ Investments LLC $ 1,875,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc. $ 1,875,000
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, Polian Inc. $ 1,875,000
McDonald Investments Inc. $ 1,875,000
▇▇▇▇▇▇, ▇▇▇▇▇ & Co., Inc. $ 1,875,000
Mesirow Financial, Inc. $ 1,875,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. $ 1,875,000
▇▇▇▇▇▇/▇▇▇▇▇▇ Incorporated $ 1,875,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ & Co., Inc. $ 1,875,000
The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, LLC $ 1,875,000
▇▇▇▇▇ Capital Markets, A Division of First $ 1,875,000
Chicago Capital Markets, Inc.
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc. $ 1,875,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. $ 1,875,000
▇▇▇▇▇▇▇▇ Inc. $ 1,875,000
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated $ 1,875,000
Stone & ▇▇▇▇▇▇▇▇▇ $ 1,875,000
TD Securities (USA) Inc. $ 1,875,000
Trilon International Inc. $ 1,875,000
▇▇▇▇▇▇▇▇ Capital Partners, L.P. $ 1,875,000
▇▇▇▇▇▇▇▇ Capital Group, L.P. $ 1,875,000
------------
Total $375,000,000
============
26
SCHEDULE II
Initial public offering price per
Preferred Security (and purchase
price per Security to be paid by
the several Underwriters): $25
Compensation per Preferred Security
to be paid by the Guarantor to the
several Underwriters in respect of
their commitments: $ .50 per
Security for sales of 10,000
or more Securities to a single
purchaser; otherwise, $.7875
per Security.
27
