<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 28, 1996
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
THE COASTAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 74-1734212
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
COASTAL TOWER
NINE GREENWAY PLAZA
HOUSTON, TEXAS 77046-0995
(713) 877-1400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
AUSTIN M. O'TOOLE, ESQ.
SENIOR VICE PRESIDENT AND SECRETARY
THE COASTAL CORPORATION
COASTAL TOWER
NINE GREENWAY PLAZA
HOUSTON, TEXAS 77046-0995
(713) 877-1400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPY TO:
GERALD S. TANENBAUM, ESQ.
CAHILL GORDON & REINDEL
80 PINE STREET
NEW YORK, NEW YORK 10005
(212) 701-3000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1)(2) PER UNIT(3) PRICE(2)(3)(4) FEE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities..................
- ---------------------------------
Preferred Stock (par value
$.33-1/3 per share)............. $500,000,000 100% $500,000,000 $172,414
- ---------------------------------
Common Stock (par value $.33-1/3
per share)......................
- ---------------------------------
Common Stock Warrants............
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(1) There are being registered hereunder a presently indeterminate number of
shares of Common Stock, including shares of Common Stock into which
certain series of Debt Securities and Preferred Stock may be converted and
for which no separate consideration will be received and for which Common
Stock Warrants may be exercised.
(2) In U.S. dollars or the equivalent thereof in foreign currency or currency
units.
(3) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended.
(4) Exclusive of accrued interest or dividends, if any.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT CONTAINS A COMBINED PROSPECTUS THAT ALSO RELATES TO $100,000,000 OF
OTHER SECURITIES REGISTERED ON FORM S-3, FILE NO. 33-48435, WHICH WAS DECLARED
EFFECTIVE ON JUNE 15, 1992 (THE "PREVIOUSLY REGISTERED SECURITIES"), WHICH
HAVE NOT BEEN OFFERED OR SOLD AS OF THE DATE OF THE FILING OF THIS
REGISTRATION STATEMENT. THIS REGISTRATION STATEMENT CONSTITUTES POST-EFFECTIVE
AMENDMENT NO. 1 TO REGISTRATION STATEMENT FILE NO. 33-48435, PURSUANT TO WHICH
THE TOTAL AMOUNT OF UNSOLD PREVIOUSLY REGISTERED SECURITIES REGISTERED ON
REGISTRATION STATEMENT FILE NO. 33-48435, WITHOUT LIMITATION AS TO CLASS OF
SECURITIES, MAY BE OFFERED AND SOLD AS DEBT SECURITIES, PREFERRED STOCK,
COMMON STOCK AND COMMON STOCK WARRANTS. IN THE EVENT THE PREVIOUSLY REGISTERED
SECURITIES ARE OFFERED AND SOLD PRIOR TO THE EFFECTIVE DATE OF THIS
REGISTRATION STATEMENT, THE AMOUNT OF PREVIOUSLY REGISTERED SECURITIES SO SOLD
WILL NOT BE INCLUDED IN THE PROSPECTUS HEREUNDER.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 28, 1996
PROSPECTUS
THE COASTAL CORPORATION
[LOGO OF COASTAL
CORP. APPEARS HERE]
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
COMMON STOCK WARRANTS
-----------
The Coastal Corporation ("Coastal" or the "Company") may from time to time
offer (i) its unsecured senior debt securities (the "Senior Debt Securities"),
(ii) its unsecured subordinated debt securities (the "Subordinated Debt
Securities" and, together with the Senior Debt Securities, the "Debt
Securities"), which may be convertible into shares of common stock, par value
33 1/3c per share of the Company (the "Common Stock"), (iii) shares of its
preferred stock, par value 33 1/3c per share (the "Preferred Stock"), which may
be convertible into shares of Common Stock or exchangeable for Debt Securities,
(iv) shares of its Common Stock and (v) warrants to purchase shares of its
Common Stock (the "Common Stock Warrants"). The Preferred Stock and the Common
Stock are collectively referred to as the "Equity Securities," and the Debt
Securities, the Equity Securities and the Common Stock Warrants are
collectively referred to as the "Securities." The Securities offered pursuant
to this Prospectus may be offered separately or together in one or more series
up to an aggregate public offering price of $600,000,000 (or the equivalent
thereof in foreign currency or currency units) at individual prices and on
terms to be determined at the time of the offering and set forth in one or more
supplements to this Prospectus (each, a "Prospectus Supplement").
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and,
among other things, will include, where applicable, (i) in the case of Debt
Securities, the specific designation, aggregate principal amount offered,
ranking, rate or rates of interest or the provisions for determining such rate
or rates and the time of payment thereof, maturity, currency of payment, terms
relating to redemption (whether mandatory, at the option of the Company or the
holder), terms for sinking fund payments, terms for conversion into Common
Stock, additional covenants and the initial public offering price, (ii) in the
case of shares of Preferred Stock, the number of shares, specific title and
stated value, any dividend, liquidation, redemption, conversion, exchange,
voting and other rights and restrictions and the initial public offering price,
(iii) in the case of shares of Common Stock, the number of shares of Common
Stock and the terms of the offering and sale thereof and (iv) in the case of
Common Stock Warrants, the duration, aggregate amount, exercise price and
initial public offering price.
The applicable Prospectus Supplement will also contain information, where
applicable, about certain U.S. Federal income taxes, accounting and other
considerations relating to, and any listing on a securities exchange of, the
Securities covered by such Prospectus Supplement.
The Securities may be sold directly by the Company, through agents designated
by the Company from time to time or through underwriters or dealers designated
by the Company from time to time. If any agents of the Company or any dealers
or underwriters are involved in the sale of the Securities in respect of which
this Prospectus is being delivered, the names of such agents, dealers or
underwriters and any applicable agent's commission, dealer's purchase price or
underwriter's discount will be as set forth in or may be calculated from the
applicable Prospectus Supplement. The net proceeds to the Company from such
sale will be the purchase price of such Securities less such commission in the
case of an agent, the purchase price of such Securities in the case of a dealer
or the public offering price of such Securities less such discount in the case
of an underwriter and less, in each case, other attributable issuance expenses.
See "Plan of Distribution" for indemnification arrangements for agents, dealers
and underwriters.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
The date of this Prospectus is , 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the regional offices of the
Commission located at the following addresses: Seven World Trade Center, 13th
Floor, New York, New York 10048 and Northwest Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be
obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, upon the payment of fees prescribed by
the Commission. In addition, the Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission at
http://www.sec.gov. Similar information concerning the Company can also be
inspected at the offices of the New York Stock Exchange, Inc. located at 20
Broad Street, New York, New York 10005.
This Prospectus does not contain all the information set forth in the
Registration Statement on Form S-3 (together with all amendments, exhibits and
schedules thereto, the "Registration Statement"), of which this Prospectus is
a part, which Coastal has filed with the Commission under the Securities Act
of 1933, as amended (the "Securities Act"). Statements contained herein
concerning the provisions of any contract or other document are necessarily
summaries of such contracts or documents, and each statement is qualified in
its entirety by reference to the copy of the applicable contract or document
filed with the Commission. Copies of the Registration Statement are on file at
the offices of the Commission and may be obtained, upon payment of fees
prescribed by the Commission, or may be examined without charge at the public
reference facilities of the Commission described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Coastal hereby incorporates in this Prospectus by reference the following
documents which have been filed with the Commission pursuant to the Exchange
Act (File No. 1-7176):
(a) Coastal's Annual Report on Form 10-K for the year ended December 31,
1995 (the "1995 Annual Report"); and
(b) Coastal's Quarterly Reports on Form 10-Q for the quarterly periods
ended March 31 and June 30, 1996.
All reports and any definitive proxy or information statements filed by
Coastal pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and prior to the termination of the offering
of the Securities offered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein, or contained in this
Prospectus, shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
Any person, including any beneficial owner, receiving a copy of this
Prospectus may obtain without charge, upon request, a copy of any of the
documents incorporated by reference herein, except for the exhibits to such
documents (unless such exhibits are specifically incorporated by reference in
such documents). Such requests should be directed to The Coastal Corporation,
Coastal Tower, Nine Greenway Plaza, Houston, Texas 77046-0995, Attention:
Corporate Secretary, telephone number: (713) 877-1400.
2
<PAGE>
THE COMPANY
Coastal, acting through its subsidiaries, is a diversified energy holding
company with operations in natural gas marketing, processing, storage and
transmission; petroleum refining, marketing and distribution and chemicals;
gas and oil exploration and production; coal mining; and power. The Company
was incorporated under the laws of Delaware in 1972 to become the successor
parent, through a corporate restructuring, of a corporate enterprise founded
in 1955. The Company's principal office is located at Coastal Tower, Nine
Greenway Plaza, Houston, Texas 77046-0995 (telephone number (713) 877-1400).
USE OF PROCEEDS
Except as otherwise provided in an applicable Prospectus Supplement, the net
proceeds from the sale of the Securities will be used to repay short-term
borrowings and for the repayment of borrowings under revolving credit
agreements, including short-term borrowings and revolving credit agreements of
subsidiaries, and for other general corporate purposes. Prior to such uses,
the net proceeds from the sale of Securities will be invested in certificates
of deposit or other highly liquid investments with short-term maturities.
RATIO OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
A description of the Company's ratio of earnings to fixed charges or
earnings to combined fixed charges and preferred stock dividends, as
applicable, on a consolidated basis, will appear in an applicable Prospectus
Supplement.
DESCRIPTION OF DEBT SECURITIES
Debt Securities may be issued from time to time under one or more
indentures, each dated as of a date on or prior to the issuance of the Debt
Securities to which it relates. Senior Debt Securities and Subordinated Debt
Securities may be issued pursuant to separate indentures (respectively, a
"Senior Indenture" and a "Subordinated Indenture"), in each case between the
Company and a trustee (a "Trustee"), which may be the same Trustee, and in the
form that has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part, subject to such amendments or supplements as may be
adopted from time to time. The Senior Indenture and the Subordinated
Indenture, as amended or supplemented from time to time, are sometimes
referred to individually as an "Indenture" and collectively as the
"Indentures." Each Indenture will be subject to and governed by the Trust
Indenture Act of 1939, as amended (the "TIA"). The statements made hereunder
relating to the Debt Securities and the Indentures are summaries of the
anticipated provisions thereof, do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all of the provisions
of the applicable Indenture, including the definitions therein of certain
terms and those terms made part of such Indenture by reference to the TIA, as
in effect on the date of such Indenture, and to such Debt Securities. Certain
capitalized terms used below and not defined have the respective meanings
assigned to them in the applicable Indenture.
TERMS
The Debt Securities will be unsecured obligations of the Company. The
Indebtedness represented by (i) Senior Debt Securities will rank pari passu in
right of payment with all other unsecured and unsubordinated Indebtedness of
the Company and (ii) Subordinated Debt Securities will be subordinated in
right of payment to the prior payment in full of all Senior Indebtedness (as
defined below) of the Company. See "--Ranking of Debt Securities." The
particular terms of the Debt Securities offered by a Prospectus Supplement
will be described in such Prospectus Supplement, along with any applicable
modifications of or additions to the general terms of the Debt Securities as
described herein and in the applicable Indenture and any applicable U.S.
Federal income tax considerations. Accordingly, for a description of the terms
of any Series of Debt Securities,
3
<PAGE>
reference must be made to both the Prospectus Supplement relating thereto and
the description of the Debt Securities set forth in this Prospectus.
Each Indenture will provide for the issuance by the Company from time to
time of its Debt Securities in one or more Series. The aggregate principal
amount of Debt Securities which may be issued under each Indenture will be
unlimited and each Indenture will set forth the specific terms of any Series
of Debt Securities or provide that such terms shall be set forth in, or
determined pursuant to, an Authorizing Resolution and/or a supplemental
indenture, if any, relating to such Series.
The specific terms of each Series of Debt Securities will be set forth in
the applicable Prospectus Supplement relating thereto, including the
following, as applicable:
1. the title of such Debt Securities and whether such Debt Securities are
Senior Debt Securities or Subordinated Debt Securities;
2. the aggregate principal amount of such Debt Securities and any limit
on such aggregate principal amount;
3. the price (expressed as a percentage of the principal amount thereof)
at which such Debt Securities will be issued and, if other than the
principal amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity thereof, or, if
applicable, the portion of the principal amount of such Debt Securities
that is convertible into Common Stock or the method by which any such
portion shall be determined;
4. if convertible into Common Stock, the terms on which such Debt
Securities are convertible, including the initial conversion price, the
conversion period, any events requiring an adjustment of the applicable
conversion price and any requirements relating to the reservation of such
shares of Common Stock for purposes of conversion;
5. the date or dates, or the method for determining such date or dates,
on which the principal of such Debt Securities will be payable and, if
applicable, the terms on which such maturity may be extended;
6. the rate or rates (which may be fixed or floating), or the method by
which such rate or rates shall be determined, at which such Debt Securities
will bear interest, if any;
7. the date or dates, or the method for determining such date or dates,
from which any such interest will accrue, the dates on which any such
interest will be payable, the record dates for such interest payment dates,
or the method by which such dates shall be determined, the persons to whom
such interest shall be payable, and the basis upon which interest shall be
calculated if other than that of a 360-day year of twelve 30-day months;
8. the place or places where the principal of and interest, if any, on
such Debt Securities will be payable, where such Debt Securities may be
surrendered for registration of transfer or exchange and where notices or
demands to or upon the Company in respect of such Debt Securities and the
applicable Indenture may be served;
9. the period or periods, if any, within which, the price or prices at
which and the other terms and conditions upon which such Debt Securities
may, pursuant to any optional or mandatory redemption provisions, be
redeemed, as a whole or in part, at the option of the Company;
10. the obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities pursuant to any Sinking Fund (as defined in the
applicable Indenture) or analogous provision or at the option of a holder
thereof, and the period or periods within which, the price or prices at
which and the other terms and conditions upon which such Debt Securities
will be redeemed, repaid or purchased, as a whole or in part, pursuant to
such obligations;
11. if other than U.S. dollars, the currency or currencies in which the
principal of and interest, if any, on such Debt Securities are denominated
and payable, which may be a foreign currency or units of two or more
foreign currencies or a composite currency or currencies, and the terms and
conditions relating thereto;
4
<PAGE>
12. whether the amount of payments of principal of or interest, if any,
on such Debt Securities may be determined with reference to an index,
formula or other method (which index, formula or method may, but need not
be, based on the yield on or trading price of other securities, including
United States Treasury securities, or on a currency, currencies, currency
unit or units, or composite currency or currencies) and the manner in which
such amounts shall be determined;
13. whether the principal of or interest, if any, on the Debt Securities
of the Series are to be payable, at the election of the Company or a holder
thereof, in a currency or currencies, currency unit or units or composite
currency or currencies other than that in which such Debt Securities are
denominated or stated to be payable and the period or periods within which,
and the terms and conditions upon which, such election may be made;
14. provisions, if any, granting special rights to the holders of Debt
Securities of the Series upon the occurrence of such events as may be
specified;
15. any deletions from, modifications of or additions to the Events of
Default or covenants of the Company with respect to Debt Securities of the
Series, whether or not such Events of Default (as defined below) or
covenants are consistent with the Events of Default or covenants described
herein;
16. whether Debt Securities of the Series are to be issuable initially in
temporary global form and whether any Debt Securities of the Series are to
be issuable in permanent global form and, if so, whether beneficial owners
of interests in any such security in permanent global form may exchange
such interests for Debt Securities of such Series and of like tenor of any
authorized form and denomination and the circumstances under which any such
exchanges may occur, if other than in the manner provided in the applicable
Indenture, and, if Debt Securities of the Series are to be issuable as a
Global Security (as defined below), the identity of the depository for such
Series;
17. the applicability, if any, of the defeasance and covenant defeasance
provisions of the applicable Indenture to the Debt Securities of the
Series; and
18. any other terms of the Series (which terms shall not be inconsistent
with the provisions of the Indenture under which the Debt Securities are
issued).
If so provided in the applicable Prospectus Supplement, the Debt Securities
may be issued at a discount below their principal amount and provide for less
than the entire principal amount thereof to be payable upon declaration of
acceleration of the maturity thereof ("Original Issue Discount Securities").
In such cases, all material U.S. Federal income tax, accounting and other
considerations applicable to Original Issue Discount Securities will be
described in the applicable Prospectus Supplement.
Except as may be set forth in the applicable Prospectus Supplement, the Debt
Securities will not contain any provisions that would limit the ability of the
Company to incur Indebtedness or that would afford holders of Debt Securities
protection in the event of a highly leveraged transaction involving the
Company or in the event of a change of control. Reference is made to the
applicable Prospectus Supplement for information with respect to any deletions
from, modifications of or additions to the Events of Default or covenants of
the Company that are described below, including any addition of a covenant or
other provision providing event risk or similar protection.
DENOMINATION, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the Debt
Securities of each Series will be issued only in registered form, without
coupons, in denominations of $1,000 and integral multiples thereof, or in such
other currencies or denominations as may be set forth in the applicable
Indenture or specified in, or pursuant to, an Authorizing Resolution and/or
supplemental indenture, if any, relating to such Series of Debt Securities.
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of and interest, if any, on any Series of Debt Securities will be
payable at the corporate trust office of the applicable Trustee, the address
5
<PAGE>
of which will be stated in the applicable Prospectus Supplement; provided
that, at the option of the Company, payment of interest may be made by check
mailed to the address of the person entitled thereto as it appears in the
applicable register for such Debt Securities.
Subject to certain limitations imposed upon Debt Securities issued in book-
entry form, the Debt Securities of any Series will be exchangeable for any
authorized denomination of other Debt Securities of the same Series and of a
like aggregate principal amount and tenor upon surrender of such Debt
Securities at the corporate trust office of the applicable Trustee or at the
office of any registrar designated by the Company for such purpose. In
addition, subject to certain limitations imposed upon Debt Securities issued
in book-entry form, the Debt Securities of any Series may be surrendered for
registration of transfer or exchange thereof at the corporate trust office of
the applicable Trustee or at the office of any registrar designated by the
Company for such purpose. No service charge will be made for any registration
of transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
with certain transfers and exchanges. The Company may act as registrar and may
change any registrar without notice.
CERTAIN COVENANTS
The applicable Prospectus Supplement will describe any material covenants in
respect of a Series of Debt Securities that are not described in this
Prospectus. Unless otherwise indicated in the applicable Prospectus
Supplement, Senior Debt Securities will include the covenants described below.
Definitions
"Attributable Debt" will mean, with respect to any Sale and Leaseback
Transaction as of any particular time, the present value (discounted at the
rate of interest implicit in the terms of the lease) of the obligations of the
lessee under such lease for net rental payments during the remaining term of
the lease (including any period for which such lease has been extended or may,
at the option of the Company, be extended).
"Consolidated Net Tangible Assets" will mean the total assets appearing on a
consolidated balance sheet of the Company and its Subsidiaries, less, without
duplication: (i) current liabilities; (ii) reserves for estimated rate refunds
pending the outcome of a rate proceeding to the extent such refunds have not
been finally determined; (iii) all intangible assets; and (iv) deferred income
tax assets.
"Funded Debt" will mean all Indebtedness maturing one year or more from the
date of the creation thereof, all Indebtedness directly or indirectly
renewable or extendible, at the option of the debtor, by its terms or by the
terms of any instrument or agreement relating thereto, to a date one year or
more from the date of the creation thereof, and all Indebtedness under a
revolving credit or similar agreement obligating the lender or lenders to
extend credit over a period of one year or more, even though such Indebtedness
may also conform to the definition of Short-Term Borrowing (as defined in the
applicable Indenture).
"Indebtedness" will mean (i) any liability of any person (a) for borrowed
money, (b) evidenced by a note, debenture or similar instrument (including a
purchase money obligation) given in connection with the acquisition of any
property or assets (other than inventory or similar property acquired in the
ordinary course of business), including securities, or (c) for the payment of
money relating to a Capitalized Lease Obligation (as defined in the applicable
Indenture); (ii) any guarantee by any person of any liability of others
described in the preceding clause (i); and (iii) any amendment, renewal,
extension or refunding of any liability of the types referred to in clauses
(i) and (ii) above.
"Lien" will mean any mortgage, lien, pledge, charge or other security
interest or encumbrance of any kind.
"Principal Domestic Property of the Company" will mean any property, plant,
equipment or facility of the Company which is located in the United States or
any territory or political subdivision thereof, except any property which the
Board of Directors or management of the Company shall determine to be not
material to the business or operations of the Company and its Subsidiaries,
taken as a whole.
6
<PAGE>
"Sale and Leaseback Transaction" will have the meaning set forth in the
"Restrictions on Sales and Leasebacks" covenant described below.
"Significant Subsidiary" will mean a Subsidiary, including its Subsidiaries,
which meets any of the following conditions:
(a) the Company's and its other Subsidiaries' investments in and advances
to the Subsidiary exceed 10 percent of the total assets of the Company and
its Subsidiaries consolidated as of the end of any two of the three most
recently completed fiscal years;
(b) the Company's and its other Subsidiaries' proportionate share of the
total assets of the Subsidiary exceeds 10 percent of the total assets of
the Company and its Subsidiaries consolidated as of the end of any two of
the three most recently completed fiscal years; or
(c) the Company's and its other Subsidiaries' equity in the income from
continuing operations before income taxes, extraordinary items and
cumulative effect of a change in accounting principles of the Subsidiary
exceeds 10 percent of such income of the Company and its Subsidiaries
consolidated as of the end of any two of the three most recently completed
fiscal years.
"Stated Maturity" when used with respect to any security or any installment
of interest thereon will mean the date specified in such security as the fixed
date on which the principal of such security or such installment of interest
is due and payable.
"Subsidiary" will mean (i) a corporation a majority of whose Capital Stock
with voting power, under ordinary circumstances, to elect directors is at the
time, directly or indirectly, owned by the Company, by the Company and a
Subsidiary (or Subsidiaries) of the Company or by a Subsidiary (or
Subsidiaries) of the Company or (ii) any person (other than a corporation) in
which the Company, a Subsidiary (or Subsidiaries) of the Company or the
Company and a Subsidiary (or Subsidiaries) of the Company, directly or
indirectly, at the date of determination thereof has at least majority
ownership interest; provided that no corporation shall be deemed a Subsidiary
until the Company, a Subsidiary (or Subsidiaries) of the Company or the
Company and a Subsidiary (or Subsidiaries) of the Company acquires more than
50% of the outstanding voting stock thereof and has elected a majority of its
board of directors.
Restrictions on Liens
The Company will not incur, create, assume or otherwise become liable with
respect to any Indebtedness secured by a Lien, or guarantee any Indebtedness
with a guarantee which is secured by a Lien, on any Principal Domestic
Property of the Company or any shares of stock or Indebtedness of any
Significant Subsidiary, without effectively providing that the Debt Securities
of each Series (together with, if the Company shall so determine, any other
Indebtedness of the Company then existing or thereafter created ranking
equally with the Debt Securities of each Series) shall be secured equally and
ratably with (or, at the option of the Company, prior to) such secured
Indebtedness, so long as such secured Indebtedness shall be so secured;
provided, however, that this covenant will not apply to Indebtedness secured
by: (a) Liens existing on the date of the Indenture; (b) Liens in favor of
governmental bodies to secure progress, advance or other payments; (c) Liens
existing on property, shares of stock or Indebtedness at the time of
acquisition thereof (including acquisition through lease, merger or
consolidation) or Liens to secure the payment of all or any part of the
purchase price thereof or the cost of construction, installation, renovation,
improvement or development thereon or thereof or to secure any Indebtedness
incurred prior to, at the time of, or within 360 days after the later of the
acquisition, completion of such construction, installation, renovation,
improvement or development or the commencement of full operation of such
property or within 360 days after the acquisition of such shares or
Indebtedness for the purpose of financing all or any part of the purchase
price thereof; (d) Liens securing Indebtedness in an aggregate amount which,
at the time of incurrence and together with all outstanding Attributable Debt
in respect of Sale and Leaseback Transactions permitted by clause (y) in the
"Restrictions on Sales and Leasebacks" covenant, does not exceed ten percent
of the Consolidated Net Tangible Assets of the Company; (e) Liens securing
Indebtedness
7
<PAGE>
other than Funded Debt; and (f) any extension, renewal or replacement (or
successive extensions, renewals or replacements), as a whole or in part, of
any Lien referred to in the foregoing clauses (a) through (e) inclusive;
provided that such extension, renewal or replacement of such Lien is limited
to all or any part of the same property, shares of stock or Indebtedness that
secured the Lien extended, renewed or replaced (plus improvements on such
property), and that such secured Indebtedness at such time is not increased.
Restrictions on Sales and Leasebacks
The Company will not sell or transfer any Principal Domestic Property of the
Company, with the Company taking back a lease of such Principal Domestic
Property of the Company (a "Sale and Leaseback Transaction"), unless (i) such
Principal Domestic Property of the Company is sold within 360 days from the
date of acquisition of such Principal Domestic Property of the Company or the
date of the completion of construction or commencement of full operations of
such Principal Domestic Property of the Company, whichever is later, or (ii)
the Company, within 120 days after such sale, applies or causes to be applied
to the retirement of Funded Debt of the Company or any Subsidiary (other than
Funded Debt of the Company which by its terms or the terms of the instrument
pursuant to which it was issued is subordinate in right of payment to the Debt
Securities of each Series) an amount not less than the greater of (A) the net
proceeds of the sale of such Principal Domestic Property of the Company or (B)
the fair value (as determined in any manner approved by the Board of
Directors) of such Principal Domestic Property of the Company. The provisions
of this covenant shall not prevent a Sale and Leaseback Transaction (x) if the
lease entered into by the Company in connection therewith is for a period,
including renewals, of not more than 36 months or (y) if the Company would, at
the time of entering into such Sale and Leaseback Transaction, be entitled,
without equally and ratably securing the Debt Securities, to create or assume
a Lien on such Principal Domestic Property of the Company securing
Indebtedness in an amount at least equal to the Attributable Debt in respect
of such Sale and Leaseback Transaction pursuant to clause (d) above in the
"Restrictions on Liens" covenant.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company shall not consolidate with or merge with or into any other
corporation or transfer all or substantially all of its property and assets as
an entirety to any person, unless (i) either the Company shall be the
continuing person, or the person (if other than the Company) formed by such
consolidation or into which the Company is merged or to which all or
substantially all of the properties and assets of the Company as an entirety
are transferred is a corporation organized and existing under the laws of the
United States or any State thereof or the District of Columbia which expressly
assumes all of the obligations of the Company under each Series of Debt
Securities and the Indenture with respect to each such Series and (ii)
immediately before and immediately after giving effect to such transaction, no
Event of Default and no event which, after notice or passage of time or both,
would become an Event of Default shall have occurred and be continuing.
Notwithstanding the foregoing, any Subsidiary may consolidate with, merge with
or into or transfer all or part of its properties and assets to the Company or
any other Subsidiary or Subsidiaries.
RANKING OF DEBT SECURITIES
Senior Debt Securities
The Senior Debt Securities will constitute unsecured senior obligations of
the Company and will rank pari passu in right of payment with all other Senior
Indebtedness (as defined below) of the Company. However, the Senior Debt
Securities will be effectively subordinated in right of payment to all secured
Indebtedness of the Company to the extent of the value of the assets securing
such Indebtedness and will be effectively subordinated to all indebtedness of
the Company's Subsidiaries and all mandatory redemption preferred stock of the
Company's Subsidiaries. As of June 30, 1996, the Company had approximately
$2,381.6 million of Senior Indebtedness outstanding and the Company's
Subsidiaries had outstanding an aggregate of approximately $1,685.3 million of
Indebtedness owed to non-affiliates ($302.4 million of which has been
guaranteed by the Company). Additionally, as of June 30, 1996, the Company had
guaranteed approximately $130.3 million of outstanding Indebtedness of various
joint ventures, partnerships and other parties, and a Subsidiary of the
8
<PAGE>
Company had guaranteed up to $35.0 million of Indebtedness of an affiliate.
Except as otherwise set forth in the applicable Senior Indenture or specified
in an Authorizing Resolution and/or supplemental indenture, if any, relating
to a Series of Senior Debt Securities to be issued, there will be no
limitations in any Senior Indenture on the amount of additional Indebtedness
which may rank pari passu with the Senior Debt Securities or on the amount of
Indebtedness, secured or otherwise, which may be incurred or preferred stock
which may be issued by any of the Company's Subsidiaries; provided that the
incurrence of secured Indebtedness by the Company is subject to the
limitations set forth in the "Restrictions on Liens" covenant.
Subordinated Debt Securities
The Subordinated Debt Securities will constitute unsecured obligations of
the Company. Unless otherwise provided in the applicable Prospectus
Supplement, the payment of principal of, interest on and all other amounts
owing in respect of the Subordinated Debt Securities will be subordinated in
right of payment to the prior payment in full in cash of principal of,
interest on and all other amounts owing in respect of all Senior Indebtedness
of the Company. Upon any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any total or partial liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors or marshaling of
assets of the Company or in a bankruptcy, reorganization, insolvency,
receivership or other similar proceeding relating to the Company or its
property, whether voluntary or involuntary, all principal of, interest on and
all other amounts due or to become due upon all Senior Indebtedness shall
first be paid in full in cash, or such payment duly provided for to the
satisfaction of the holders of Senior Indebtedness, before any payment or
distribution of any kind or character is made on account of any principal of,
interest on or other amounts owing in respect of the Subordinated Debt
Securities, or for the acquisition of any of the Subordinated Debt Securities
for cash, property or otherwise. If any default occurs and is continuing in
the payment when due, whether at maturity, upon any redemption, by declaration
or otherwise, of any principal of, interest on, unpaid drawings for letters of
credit issued in respect of, or regularly accruing fees with respect to, any
Senior Indebtedness, no payment of any kind or character shall be made by or
on behalf of the Company or any other person on its or their behalf with
respect to any principal of, interest on or other amounts owing in respect of
the Subordinated Debt Securities or to acquire any of the Subordinated Debt
Securities for cash, property or otherwise.
In addition, if any other event of default occurs and is continuing with
respect to any Senior Indebtedness, as such event of default is defined in the
instrument creating or evidencing such Senior Indebtedness, permitting the
holders of such Senior Indebtedness then outstanding to accelerate the
maturity thereof and if the Representative (as defined in the applicable
Indenture) for the respective issue of Senior Indebtedness gives written
notice of the event of default to the applicable Trustee (a "Default Notice"),
then, unless and until all events of default have been cured or waived or have
ceased to exist or the applicable Trustee receives notice from the
Representative for the respective issue of Senior Indebtedness terminating the
Blockage Period (as defined below), during the 180 days after the delivery of
such Default Notice (the "Blockage Period"), neither the Company nor any other
person on its behalf shall (x) make any payment of any kind or character with
respect to any principal of, interest on or other amounts owing in respect of
the Subordinated Debt Securities or (y) acquire any of the Subordinated Debt
Securities for cash, property or otherwise. Notwithstanding anything herein to
the contrary, in no event will a Blockage Period extend beyond 180 days from
the date the payment on the Subordinated Debt Securities was due and only one
such Blockage Period may be commenced within any 360 consecutive days. No
event of default which existed or was continuing on the date of the
commencement of any Blockage Period with respect to the Senior Indebtedness
shall be, or be made, the basis for commencement of a second Blockage Period
by the Representative of such Senior Indebtedness whether or not within a
period of 360 consecutive days, unless such event of default shall have been
cured or waived for a period of not less than 90 consecutive days (it being
acknowledged that any subsequent action, or any breach of any financial
covenants for a period commencing after the date of commencement of such
Blockage Period that, in either case, would give rise to an event of default
pursuant to any provisions under which an event of default previously existed
or was continuing shall constitute a new event of default for this purpose).
9
<PAGE>
The Subordinated Indentures will not restrict the amount of Senior
Indebtedness or other Indebtedness of the Company or any Subsidiary. As a
result of the foregoing provisions, in the event of the Company's insolvency,
holders of the Subordinated Debt Securities may recover ratably less than
general creditors of the Company.
"Senior Indebtedness" will be defined in each Subordinated Indenture as
Indebtedness of the Company, whether outstanding on the date of issue of any
Subordinated Debt Securities or thereafter created, incurred, assumed or
guaranteed by the Company, other than the following: (i) any Indebtedness as
to which, by the terms of the instrument creating or evidencing such
Indebtedness, it is expressly provided that such Indebtedness is subordinated
in right of payment to all Indebtedness of the Company not expressly
subordinated to such Indebtedness, (ii) any Indebtedness which, by its terms,
expressly refers to the Subordinated Debt Securities and states that such
Indebtedness shall not be senior, shall be pari passu or shall be subordinated
in right of payment to the Subordinated Debt Securities, (iii) the
Subordinated Debt Securities of the same or another Series and (iv)
Indebtedness of or amounts owed by the Company for compensation to employees,
or for goods, materials and services purchased in the ordinary course of
business.
DISCHARGE
Unless otherwise provided in the applicable Prospectus Supplement, the
Company generally may terminate its obligations under any Series of Debt
Securities and the Indenture with respect to such Series, at any time, (a) by
delivering all outstanding Debt Securities of such Series to the applicable
Trustee for cancellation and paying all sums payable by it under such Debt
Securities and the Indenture with respect to such Series or (b) after giving
notice to the Trustee of its intention to defease all of the Debt Securities
of such Series, by irrevocably depositing with the Trustee or a paying agent
(other than the Company or a Subsidiary) (i) in the case of any Debt
Securities of any Series denominated in U.S. dollars, cash or U.S. Government
Obligations sufficient to pay all principal of and interest on such Debt
Securities and (ii) in the case of any Debt Securities of any Series
denominated in any currency other than U.S. dollars, an amount of the Required
Currency sufficient to pay all principal of and interest on such Debt
Securities; provided that if such irrevocable deposit pursuant to (b) above is
made on or prior to one year from the Stated Maturity for payment of principal
of such Series of Debt Securities, the Company shall have delivered to the
Trustee either an opinion of counsel with no material qualifications or a
favorable ruling of the Internal Revenue Service, in either case to the effect
that holders of such Debt Securities (i) will not recognize income, gain or
loss for Federal income tax purposes as a result of such deposit (and the
defeasance contemplated in connection therewith) and (ii) will be subject to
Federal income tax on the same amounts and in the same manner and at the same
time as would have been the case if such deposit and defeasance had not
occurred.
MODIFICATION AND WAIVER
Modification and amendment of an Indenture will be permitted to be made by
the Company and the Trustee with the consent of the holders of not less than a
majority in principal amount of the outstanding Debt Securities of all Series
affected thereby (voting as a single class); provided that such modification
or amendment may not, without the consent of each holder of the Debt
Securities affected thereby, (i) change the Stated Maturity of the principal
of or any installment of interest with respect to the Debt Securities; (ii)
reduce the principal amount of, or the rate of interest on, the Debt
Securities; (iii) change the currency of payment of principal of or interest
on the Debt Securities; (iv) impair the right to institute suit for the
enforcement of any payment on or with respect to the Debt Securities; (v)
reduce the above-stated percentage of holders of the Debt Securities of any
Series necessary to modify or amend the Indenture relating to such Series;
(vi) modify the foregoing requirements or reduce the percentage of outstanding
Debt Securities necessary to waive any covenant or past default; (vii) in the
case of any Subordinated Indenture, modify the subordination provisions
thereof in a manner adverse to the holders of Subordinated Debt Securities of
any Series then outstanding; or (viii) in the case of any convertible Debt
Securities, adversely affect the right to convert the Debt Securities into
Common Stock in accordance with the provisions of the applicable Indenture.
Holders of not less than a majority in principal amount of the outstanding
Debt Securities of all Series affected thereby (voting as a single class) may
waive certain past
10
<PAGE>
defaults and may waive compliance by the Company with any provision of the
Indenture relating to such Debt Securities (subject to the immediately
preceding sentence); provided that, (i) without the consent of each holder of
Debt Securities affected thereby, no waiver may be made of a default in the
payment of the principal of or interest on any Debt Security and (ii) only the
holders of a majority in principal amount of Debt Securities of a particular
Series may waive compliance with a provision of the Indenture relating to such
Series or the Debt Securities of such Series having applicability solely to
such Series.
EVENTS OF DEFAULT AND NOTICE THEREOF
Unless otherwise provided in the applicable Prospectus Supplement, each
Indenture will provide that the following events are "Events of Default" with
respect to any Series of Debt Securities issued thereunder: (i) failure of the
Company to pay interest on any Debt Securities of such Series within 30 days
of when due or principal of any Debt Securities of such Series when due
(including any Sinking Fund installment); (ii) failure to perform any other
agreement contained in the Debt Securities of such Series or the Indenture
relating to such Series (other than an agreement relating solely to another
Series of Debt Securities) for 60 days after notice; (iii) certain events of
bankruptcy, insolvency or reorganization with respect to the Company.
Additional or different Events of Default, if any, applicable to the Series of
Debt Securities in respect of which this Prospectus is being delivered will be
specified in the applicable Prospectus Supplement.
Each Indenture will provide that the Trustee under such Indenture shall,
within 75 days after the occurrence of any default (the term "default" to
include the events specified above without grace or notice) with respect to
any Series of Debt Securities actually known to it, give to the holders of
such Debt Securities notice of such default; provided that, except in the case
of a default in the payment of principal of or interest on any of the Debt
Securities of such Series or in the payment of any Sinking Fund installment,
the Trustee for such Series shall be protected in withholding such notice if
it in good faith determines that the withholding of such notice is in the
interest of the holders of such Debt Securities. Each Indenture will require
the Company to certify to the Trustee under such Indenture quarterly as to
whether any default exists.
In case an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization) with respect to any Series of Debt
Securities shall occur and be continuing, the Trustee for such Series or the
holders of at least 25% in aggregate principal amount of the Debt Securities
of such Series then outstanding, by notice in writing to the Company (and to
the Trustee for such Series if given by the holders of the Debt Securities of
such Series), will be entitled to declare all unpaid principal of and accrued
interest on such Debt Securities then outstanding to be due and payable
immediately. In case an Event of Default resulting from certain events of
bankruptcy, insolvency or reorganization shall occur, all unpaid principal of
and accrued interest on all Debt Securities of such Series then outstanding
shall be due and payable immediately without any declaration or other act on
the part of the Trustee for such Series or the holders of any Debt Securities
of such Series. Such acceleration may be annulled and past defaults (except,
unless theretofore cured, a default in payment of principal of or interest on
the Debt Securities of such Series) may be waived by the holders of a majority
in principal amount of the Debt Securities of such Series then outstanding
upon the conditions provided in the applicable Indenture.
Each Indenture will provide that no holder of the Debt Securities of any
Series issued thereunder may pursue any remedy under such Indenture unless the
Trustee for such Series shall have failed to act after, among other things,
notice of an Event of Default and request by holders of at least 25% in
principal amount of the Debt Securities of such Series of which the Event of
Default has occurred and the offer to the Trustee for such Series of indemnity
satisfactory to it; provided, however, that such provision does not affect the
right to sue for enforcement of any overdue payment on such Debt Securities.
CONVERSION RIGHTS
The terms and conditions, if any, upon which the Debt Securities of any
Series will be convertible into Common Stock will be set forth in the
Prospectus Supplement relating thereto. Such terms will include the conversion
price (or manner of calculation thereof), the conversion period, provisions as
to whether conversion will be at the option of the holders of such Series of
Debt Securities or at the option of the Company, the events
11
<PAGE>
requiring an adjustment of the conversion price and provisions affecting
conversion in the event of the redemption of such Series of Debt Securities.
THE TRUSTEE
The Trustee for each Series of Debt Securities will be identified in the
applicable Prospectus Supplement. Each Indenture will contain certain
limitations on a right of a Trustee thereunder, as a creditor of the Company,
to obtain payment of claims in certain cases, or to realize on certain
property received in respect of any such claim as security or otherwise. Each
Trustee will be permitted to engage in other transactions; provided, however,
that if it acquires any conflicting interest, it must eliminate such conflict
or resign.
The holders of a majority in principal amount of all outstanding Debt
Securities of a Series (or if more than one Series is affected thereby, of all
Series so affected, voting as a single class) will have the right to direct
the time, method and place of conducting any proceeding for exercising any
remedy or power available to the Trustee for such Series or all such Series so
affected.
In case an Event of Default shall occur (and shall not be cured) under any
Indenture relating to a Series of Debt Securities and is known to the Trustee
for such Series, such Trustee shall exercise such of the rights and powers
vested in it by such Indenture and use the same degree of care and skill in
its exercise as a prudent person would exercise or use under the circumstances
in the conduct of his own affairs. Subject to such provisions, no Trustee will
be under any obligation to exercise any of its rights or powers under the
applicable Indenture at the request of any of the holders of Debt Securities
unless they shall have offered to such Trustee security and indemnity
satisfactory to it.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by the laws of the
State of New York.
GLOBAL SECURITIES; BOOK-ENTRY SYSTEM
The Debt Securities of any Series may be issued in whole or in part in the
form of one or more global securities ("Global Securities") that will be
deposited with, or on behalf of, a depository (the "Depository") identified in
the Prospectus Supplement relating to such Series. Global Securities, if any,
issued in the United States are expected to be deposited with The Depository
Trust Company ("DTC"), as Depository. Global Securities will be issued in
fully registered form and may be issued in either temporary or permanent form.
Unless and until it is exchanged in whole or in part for the individual Debt
Securities represented thereby, a Global Security may not be transferred
except as a whole by the Depository for such Global Security to a nominee of
such Depository or by a nominee of such Depository to such Depository or
another nominee of such Depository or by such Depository or any nominee of
such Depository to a successor Depository or any nominee of such successor.
The specific terms of the depository arrangement with respect to any Series
of Debt Securities will be described in the Prospectus Supplement relating to
such Series. The Company expects that unless otherwise indicated in the
applicable Prospectus Supplement, the following provisions will apply to
depository arrangements.
Upon the issuance of a Global Security, the Depository for such Global
Security or its nominee will credit on its book-entry registration and
transfer system the respective principal amounts of the individual Debt
Securities represented by such Global Security to the accounts of persons that
have accounts with such Depository ("Participants"). Such accounts will be
designated by the underwriters, dealers or agents with respect to such Debt
Securities or by the Company if such Debt Securities are offered directly by
the Company. Ownership of beneficial interests in such Global Security will be
limited to Participants or persons that may hold interests through
Participants.
12
<PAGE>
The Company expects that, pursuant to procedures established by DTC,
ownership of beneficial interests in any Global Security with respect to which
DTC is the Depository will be shown on, and the transfer of that ownership
will be effected only through, records maintained by DTC or its nominee (with
respect to beneficial interests of Participants) and records of Participants
(with respect to beneficial interests of persons who hold through
Participants). Neither the Company nor the Trustee will have any
responsibility or liability for any aspect of the records of DTC or for
maintaining, supervising or reviewing any records of DTC or any of its
Participants relating to beneficial ownership interests in the Debt
Securities. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and laws may impair the ability to own, pledge or transfer beneficial
interest in a Global Security.
So long as the Depository for a Global Security or its nominee is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as described below or in the applicable
Prospectus Supplement, owners of beneficial interest in a Global Security will
not be entitled to have any of the individual Debt Securities represented by
such Global Security registered in their names, will not receive or be
entitled to receive physical delivery of any such Debt Securities in
definitive form and will not be considered the owners or holders thereof under
the applicable Indenture. Beneficial owners of Debt Securities evidenced by a
Global Security will not be considered the owners or holders thereof under the
applicable Indenture for any purpose, including with respect to the giving of
any direction, instructions or approvals to the Trustee thereunder.
Accordingly, each person owning a beneficial interest in a Global Security
with respect to which DTC is the Depository must rely on the procedures of DTC
and, if such person is not a Participant, on the procedures of the Participant
through which such person owns its interests, to exercise any rights of a
holder under the applicable Indenture. The Company understands that, under
existing industry practice, if it requests any action of holders or if an
owner of a beneficial interest in a Global Security desires to give or take
any action which a holder is entitled to give or take under the applicable
Indenture, DTC would authorize the Participants holding the relevant
beneficial interest to give or take such action, and such Participants would
authorize beneficial owners through such Participants to give or take such
actions or would otherwise act upon the instructions of beneficial owners
holding through them.
Payments of principal of, and any interest on, individual Debt Securities
represented by a Global Security registered in the name of a Depository or its
nominee will be made to or at the direction of the Depository or its nominee,
as the case may be, as the registered owner of the Global Security under the
applicable Indenture. Under the terms of the applicable Indenture, the Company
and the Trustee may treat the persons in whose name Debt Securities, including
a Global Security, are registered as the owners thereof for the purpose of
receiving such payments. Consequently, neither the Company nor the Trustee has
or will have any responsibility or liability for the payment of such amounts
to beneficial owners of Debt Securities (including principal and interest).
The Company believes, however, that it is currently the policy of DTC to
immediately credit the accounts of relevant Participants with such payments,
in amounts proportionate to their respective holdings of beneficial interests
in the relevant Global Security as shown on the records of DTC or its nominee.
The Company also expects that payments by Participants to owners of beneficial
interests in such Global Security held through such Participants will be
governed by standing instructions and customary practices, as is the case with
securities held for the account of customers in bearer form or registered in
street name, and will be the responsibility of such Participants. Redemption
notices with respect to any Debt Securities represented by a Global Security
will be sent to the Depository or its nominee. If less than all of the Debt
Securities of any series are to be redeemed, the Company expects the
Depository to determine the amount of the interest of each Participant in such
Debt Securities to be redeemed to be determined by lot. None of the Company,
the Trustee, any Paying Agent or the Registrar for such Debt Securities will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the Global
Security for such Debt Securities or for maintaining any records with respect
thereto.
Neither the Company nor the Trustee will be liable for any delay by the
holders of a Global Security or the Depository in identifying the beneficial
owners of Debt Securities and the Company and the Trustee may
13
<PAGE>
conclusively rely on, and will be protected in relying on, instructions from
the holder of a Global Security or the Depository for all purposes. The rules
applicable to DTC and its Participants are on file with the Securities and
Exchange Commission.
If a Depository for any Debt Securities is at any time unwilling, unable or
ineligible to continue as depository and a successor depository is not
appointed by the Company within 90 days, the Company will issue individual
Debt Securities in exchange for the Global Security representing such Debt
Securities. In addition, the Company may at any time and in its sole
discretion, subject to any limitations described in the Prospectus Supplement
relating to such Debt Securities, determine not to have any of such Debt
Securities represented by one or more Global Securities and in such event will
issue individual Debt Securities in exchange for the Global Security or
Securities representing such Debt Securities. Individual Debt Securities so
issued will be issued in denominations of $1,000 and integral multiples
thereof.
14
<PAGE>
DESCRIPTION OF EQUITY SECURITIES
GENERAL
The Restated Certificate of Incorporation of the Company (the "Certificate
of Incorporation") provides that the aggregate number of shares of all classes
of stock that the Company has authority to issue is 302,700,000 shares,
consisting of 250,000,000 shares of Common Stock, 50,000,000 shares of
Preferred Stock and 2,700,000 shares of Class A common stock, par value
33-1/3c per share ("Class A Common Stock").
As of June 30, 1996, the issued and outstanding Common Stock, Class A Common
Stock and Preferred Stock of the Company was as follows:
<TABLE>
<CAPTION>
CLASS OF STOCK SHARES
-------------- ------
<S> <C>
Common Stock....................................................... 105,162,189
Class A Common Stock............................................... 391,736
Preferred Stock:
$1.19 Cumulative Convertible Preferred Stock, Series A ("Series A
Preferred Stock")............................................... 60,142
$1.83 Cumulative Convertible Preferred Stock, Series B ("Series B
Preferred Stock")............................................... 75,679
$5.00 Cumulative Convertible Preferred Stock, Series C ("Series C
Preferred Stock")............................................... 32,428
$2.125 Cumulative Preferred Stock, Series H ("Series H Preferred
Stock")......................................................... 8,000,000
</TABLE>
All issued and outstanding shares are fully-paid and non-assessable.
PREFERRED STOCK
Terms
The following description of the Preferred Stock summarizes certain general
terms and provisions of each series of Preferred Stock to which any Prospectus
Supplement may relate. Certain other terms of a particular series of Preferred
Stock will be summarized in the Prospectus Supplement relating to such series.
The summaries of the terms of the Preferred Stock below and in any Prospectus
Supplement do not, and will not, purport to be complete and are subject to,
and qualified in their entirety by reference to, the Company's Certificate of
Incorporation and the certificate of designation establishing a series of
Preferred Stock (each, a "Certificate of Designation"), each of which will be
filed with the Commission at or prior to the time of the sale of such series
of Preferred Stock.
The Board of Directors is authorized to provide for issuance of the
Preferred Stock of the Company from time to time, in one or more series, and
to fix the dividend rate, conversion or exchange rights, voting rights, terms
of redemption, redemption price or prices, liquidation preferences and
qualifications, limitations and restrictions thereof with respect to each
series.
An applicable Prospectus Supplement will set forth or describe other
specific terms regarding each series of Preferred Stock offered thereby,
including:
1. the title and stated value of such Preferred Stock;
2. the number of shares of such Preferred Stock offered, the liquidation
preference per share and the initial offering price of such Preferred
Stock;
3. the dividend rate, period and/or payment date, or method of
calculation thereof, applicable to such Preferred Stock;
4. the date from which dividends on such Preferred Stock shall
accumulate, if applicable;
5. the provision for a sinking fund, if any, for such Preferred Stock;
6. the provision for redemption, if applicable, of such Preferred Stock;
15
<PAGE>
7. any listing of such Preferred Stock on any securities exchange;
8. the terms and conditions, if applicable, upon which such Preferred
Stock will be convertible into Common Stock or exchangeable for Debt
Securities, including the conversion price or exchange rate, as the case
may be (or the manner of calculation thereof);
9. a discussion of Federal tax considerations applicable to such
Preferred Stock;
10. the relative ranking and preference of such Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company;
11. any limitations on issuance of any series of Preferred Stock ranking
senior to or on a parity with such series or Preferred Stock as to dividend
rights and rights upon liquidation, dissolution or winding up of the
affairs of the Company;
12. the voting powers, if any, of such Preferred Stock, in addition to
those set forth below; and
13. any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.
Dividends
The holders of the Preferred Stock of each series shall be entitled to
receive, when, as and if declared by the Board of Directors of the Company,
out of the funds of the Company legally available therefor, cash dividends at
the annual rate and on such dates as shall be set forth in the Prospectus
Supplement relating to such series. Each such dividend shall be paid to the
holders of record of shares of such series on such record date as shall be
fixed by the Board of Directors of the Company.
If dividends are not paid in full or declared in full and a sum set apart
for the payment thereof upon the Preferred Stock of a series and any other
Preferred Stock ranking on a parity as to dividends with the Preferred Stock
of such series, all dividends declared upon shares of Preferred Stock of such
series and any other Preferred Stock ranking on a parity as to dividends shall
be declared pro rata so that in all cases the amount of dividends declared per
share on the Preferred Stock of such series and any other Preferred Stock
ranking on a parity as to dividends shall be in the same proportion as the
amount of dividends that would be paid on all shares of Preferred Stock of
such series and such other parity Preferred Stock if all such dividends
(including dividends accrued or in arrears) were paid in full. Except as
provided in the preceding sentence, unless full cumulative dividends on the
Preferred Stock of a series have been paid or declared in full and a sum set
aside for the payment thereof, no dividends shall be declared or paid or set
aside for payment or other distribution made upon the Company's Common Stock,
Class A Common Stock or any other class or series of capital stock of the
Company ranking junior to or on a parity with the Preferred Stock of the
applicable series as to dividends or liquidation rights, nor shall any Common
Stock, Class A Common Stock or any other class or series of capital stock of
the Company ranking junior to or on a parity with the Preferred Stock of such
series as to dividends or liquidation rights be redeemed, purchased or
otherwise acquired for any consideration (or any payment made to or available
for a sinking fund for the redemption of any shares of such stock) by the
Company or any subsidiary of the Company (except by conversion into or
exchange for stock of the Company ranking junior to the Preferred Stock of the
applicable series as to dividends and liquidation rights). Unless otherwise
stated in the applicable Prospectus Supplement, no interest, or sum of money
in lieu of interest, will be payable in respect of any dividend payment or
payments on Preferred Stock of any series which may be in arrears.
Dividends payable on the Preferred Stock of a Series for any period less
than a full quarterly dividend period shall be computed on the basis of a 360-
day year of twelve 30-day months and the actual number of days elapsed in the
period for which payable.
Voting Rights
The holders of the Preferred Stock shall not, except as required by law or
as set forth in the applicable Prospectus Supplement, have any right or power
to vote on any question or in any proceeding or to be
16
<PAGE>
represented at, or to receive notice of, any meeting of stockholders. On any
matters on which the holders of the Preferred Stock shall be entitled to vote,
they shall be entitled to one vote for each share held.
Unless otherwise stated in the applicable Prospectus Supplement, in case at
any time the equivalent of six or more full quarterly dividends (whether
consecutive or not) on any series of Preferred Stock shall be in arrears, then
during the period (the "Voting Period") commencing with such time and ending
with the time when all arrearages in dividends on the Preferred Stock of all
series shall have been paid and the full dividend on the Preferred Stock of
all series for the then current quarterly dividend period shall have been paid
or declared and set apart for payment, at any meeting of the stockholders of
the Company held for the election of directors during the Voting Period, the
holders of a majority of the outstanding shares of Preferred Stock of all
series represented in person or by proxy at said meeting shall be entitled, as
a class, to the exclusion of the holders of all other classes of stock of the
Company, to elect two directors of the Company, each share of Preferred Stock
entitling the holder thereof to one vote.
Any director who shall have been elected by holders of Preferred Stock, or
by any director so elected as herein contemplated, may be removed at any time
during a Voting Period, either for or without cause, by, and only by, the
affirmative votes of the holders of record of a majority of the outstanding
shares of Preferred Stock of all series given at a special meeting of such
stockholders called for the purpose, and any vacancy thereby created may be
filled during such Voting Period by the holders of Preferred Stock of all
series, present in person or represented by proxy at such meeting. Any
director elected by holders of Preferred Stock, or by any director so elected
as herein contemplated, who dies, resigns or otherwise ceases to be a director
shall, except as otherwise provided in the preceding sentence, be replaced by
the remaining director theretofore elected by the holders of Preferred Stock.
At the end of the Voting Period, the holders of Preferred Stock of all series
shall be automatically divested of all voting power vested in them under this
provision but subject always to the subsequent vesting of voting power in the
holders of Preferred Stock in the event of any similar cumulated arrearage in
payment of quarterly dividends occurring thereafter. The term of all directors
elected pursuant to this provision shall in all events expire at the end of
the Voting Period.
The approval of the holders of at least two-thirds of the then outstanding
shares of Preferred Stock of a series will be required to amend the applicable
Certificate of Designation to adversely change the preferences, special rights
or powers of the Preferred Stock of such series or to authorize, create or
increase the authorized amount of any class or series of capital stock of the
Company ranking prior to the Preferred Stock of such series either as to
dividend or liquidation rights; provided that the creation or issuance of any
class or series of capital stock of the Company not ranking prior to the
Preferred Stock of a series as to dividend or liquidation rights shall not
require the consent of the holders of the Preferred Stock of such series.
Ranking
The Preferred Stock to which any Prospectus Supplement may relate will rank
pari passu with the outstanding shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series H Preferred Stock of the
Company with respect to dividend rights and liquidation preference. The
Preferred Stock will rank prior to the Company's Common Stock and Class A
Common Stock. Without the requisite vote of holders of the Preferred Stock, as
described above under "--Voting Rights," no class or series of capital stock
can be created ranking senior to the Preferred Stock as to dividend rights or
liquidation preference.
Liquidation Rights
In the event of any liquidation, dissolution or winding up of the Company,
the holders of shares of the Preferred Stock of each series are entitled to
receive out of assets of the Company available for distribution to
stockholders, before any distribution of assets is made to holders of Common
Stock, Class A Common Stock or any other class or series of capital stock of
the Company (including any Preferred Stock) which is junior as to liquidation
rights to the Preferred Stock of such series, liquidating distributions in the
amount set forth in the applicable Prospectus Supplement, plus dividends
accrued and accumulated but unpaid to the date of such
17
<PAGE>
distribution. If, upon any liquidation, dissolution or winding up of the
Company, the amounts payable with respect to the Preferred Stock of such
series and any other Preferred Stock of the Company ranking as to any such
distribution on a parity with the Preferred Stock of such series are not paid
in full, the holders of the Preferred Stock of such series and of such other
Preferred Stock of the Company will share ratably in any such distribution of
assets in proportion to the full respective preferential amounts to which they
are entitled. After payment of the full amount of the liquidating distribution
to which they are entitled, the holders of shares of the Preferred Stock will
not be entitled to any further participation in any distribution of assets by
the Company. Neither a consolidation or merger of the Company with another
corporation nor a sale or transfer of all or part of the Company's assets for
cash or securities shall be considered a liquidation, dissolution or winding
up of the Company.
Redemption Provisions
The Preferred Stock of each series will have such optional or mandatory
redemption terms, if any, as shall be set forth in the applicable Prospectus
Supplement.
Conversion and Exchange Rights
The terms and conditions, if any, upon which any series of Preferred Stock
is convertible into Common Stock or exchangeable into Debt Securities will be
set forth in the applicable Prospectus Supplement relating to such series of
Preferred Stock. Such terms will include (i) in the case such series of
Preferred Stock is convertible into Common Stock, (A) the number of shares of
Common Stock into which shares of such series of Preferred Stock are
convertible, (B) the conversion price (or manner of calculation thereof), (C)
the conversion period, (D) provisions as to whether conversion will be at the
option of the holders of such series of Preferred Stock or at the option of
the Company, (E) the events requiring an adjustment of the conversion price
and (F) provisions affecting conversion in the event of the redemption of such
series of Preferred Stock and (ii) in the case such series of Preferred Stock
is exchangeable into Debt Securities, (A) the principal amount of Debt
Securities into which shares of such series of Preferred Stock are
exchangeable, (B) the exchange period and (C) provisions as to whether
exchange will be at the option of the holders of such series of Preferred
Stock or at the option of the Company.
Miscellaneous
The Preferred Stock will have no preemptive rights. All of the Preferred
Stock, upon payment in full therefor, will be fully paid and nonassessable.
COMMON STOCK AND CLASS A COMMON STOCK
Dividends
Subject to the preferential rights of the holders of Preferred Stock, all
issued and outstanding shares of Common Stock are entitled to participate
equally in dividends when, as and if declared by the Board of Directors of the
Company out of funds legally available for such purposes. The Directors of the
Company may declare and pay dividends upon the shares of its capital stock
either out of surplus or if there is no surplus, out of net profits for the
fiscal year in which the dividend is declared and/or the preceding fiscal
year, subject to the restrictions contained in certain agreements.
The Board of Directors may fix, in advance, a date as the record date for
purposes of determining stockholders entitled to receive dividends. Such date
may not be more than 60 days prior to the payment of such dividends; however,
if no record date is fixed by the Board of Directors, the record date will be
at the close of business on the day which the Board of Directors adopts the
resolution relating to the dividend.
18
<PAGE>
Meetings of stockholders
A meeting of the stockholders of the Company for the election of Directors
and for the transaction of any other business of the Company as may lawfully
come before the meeting is held annually at a date, time and place designated
by the Board of Directors.
In addition, a special meeting of the stockholders of the Company may be
called by the Board of Directors, the Chairman of the Board or the President
at any time. The Certificate of Incorporation provides that any action
required or permitted to be taken at a meeting of stockholders may be taken
only at a meeting of stockholders.
Voting rights
A majority of the voting power of all outstanding shares of the Company
entitled to vote at a meeting of stockholders constitutes a quorum. Except as
otherwise provided by law or by the Certificate of Incorporation or the By-
laws of the Company, a resolution can be adopted at a meeting provided a
quorum is present.
The holders of Common Stock are entitled to one vote per share on all
matters upon which stockholders generally have the right to vote, while
holders of Class A Common Stock are entitled to 100 votes per share on all
matters on which such holders have the right to vote. All shares presently
outstanding are fully paid and nonassessable.
The shares of Common Stock do not have cumulative voting rights. At every
meeting of the stockholders called for the election of directors, the holders
of Common Stock, voting as a class with the holders of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and any other Series
of Preferred Stock generally entitled to vote therefor (collectively, the
"Voting Preferred"), shall be entitled to elect one-quarter of the number of
directors to be elected at such meeting, and if one-quarter of such number of
directors is not a whole number, then the holders of Common Stock, voting as a
class with the holders of Voting Preferred Stock, shall be entitled to elect
the next higher whole number of directors to be elected at such meeting, and
the holders of Class A Common Stock shall have no voting rights with respect
to the election of such directors. The holders of Class A Common Stock, Common
Stock and Voting Preferred Stock, voting as a single class, shall be entitled
to elect the remaining directors to be elected at such meeting. If, during the
interval between annual meetings of stockholders for the election of
directors, the number of directors who have been elected by either the holders
of Common Stock voting as a class with the holders of Voting Preferred Stock
or by the holders of Class A Common Stock, Common Stock and Voting Preferred
Stock, shall, by reason of resignation, death, retirement, disqualification or
removal, be reduced, the vacancy or vacancies in the directors so created may
be filled by a majority vote of the remaining directors then in office, even
if less than a quorum, or by a sole remaining director. Any director elected
by the remaining directors then in office to fill any vacancy in the
directorships designated by the holders of Common Stock and Voting Preferred
Stock may be removed from office by vote of the holders of a majority of the
shares of Common Stock voting as a class with the holders of Voting Preferred
Stock.
Notice of a stockholders' meeting, stating the place, date, time and the
purpose thereof, must be delivered either personally or by mail to each
stockholder at his address as it appears on the books of the Company unless
otherwise provided by law or the Certificate of Incorporation at least 10 days
but not more than 50 days prior to the date set for the meeting. Stockholders
may exercise their voting rights through proxies as provided in the By-laws.
Provisions Relating To Control Of The Company
The Class A Common Stock carries certain rights, and the Certificate of
Incorporation of the Company contains certain provisions, which affect the
control of the Company, and are described below.
(i) Class A Common Stock
The Class A Common Stock is non-transferable. Each share of Class A Common
Stock carries the right to exercise 100 votes and may be converted into one
share of Common Stock. The Board of Directors may declare
19
<PAGE>
and pay dividends in respect of the Class A Common Stock provided that a
greater dividend is, at the same time, declared and paid in respect of the
Common Stock.
As conversions into shares of Common Stock carrying only one vote per share
occur and the amount of outstanding Class A Common Stock is accordingly
reduced, the voting power attaching to the Class A Common Stock will become
consolidated in the hands of those who continue to hold such stock and
effectively strengthen their ability to influence the composition of the Board
of Directors (subject always to the right of the holders of Common Stock and
Voting Preferred Stock entitled to vote to elect one-quarter of the total
number of directors).
(ii) Board of Directors
(a) The Certificate of Incorporation of the Company provides for a Board of
Directors consisting of a minimum of three and a maximum of eighteen directors
to be divided into three classes (with each of the three classes required to
be as nearly equal as possible) serving staggered three-year terms. The effect
of this provision is that, at each annual meeting of the Company,
approximately one-third of the Board of Directors is elected to succeed those
whose terms expire. The total number of directors and the number of directors
constituting each class may be varied, from time to time, by the Board of
Directors within the authorized limits.
(b) Notwithstanding that the maximum of directors is established at
eighteen, the rights of any holders of Preferred Stock or any other class or
series of stock (other than Common Stock) to elect a specified number of
directors, are governed by the terms of the Certificate of Incorporation
applicable thereto, and such directors shall not be classified as described
above unless so provided.
(c) The directors are also empowered to fill casual vacancies occurring on
the Board. Any director so appointed by the Board would hold office for the
unexpired portion of the term of the director whose place he or she had taken.
Where the Board appoints a director to fill a newly created directorship
resulting from an increase in the number of directors, that director would
hold office until the next election of the class for which he or she was
chosen. If the size of the Board was increased, the additional director or
directors would be apportioned among the three classes to make all classes as
nearly equal as possible.
(d) No person (except a person nominated by or on behalf of the Board) is
eligible for election as a director at any annual or special meeting of
stockholders unless a written request that such person's name be placed in
nomination is received from a stockholder of record by the Secretary of the
Company not less than 30 days prior to the date fixed for the meeting,
together with the written consent of such person to serve as a director.
(iii) Meetings of Stockholders
Stockholder action may be taken only at a stockholders' meeting. Coastal's
stockholders do not have the power to call a special meeting and it may
therefore be more difficult for stockholders to take action opposed by the
Board of Directors. This may have the effect of deterring persons from seeking
to acquire substantial stock positions in or control of the Company, including
an attempt to acquire control of the Company made in response to any attempt
by the Company to acquire securities of, or control of, another corporation.
(iv) Business Combinations
The approval of the holders of 85% of the voting power of the outstanding
shares of stock of the Company is required, in certain circumstances, for the
adoption or authorization of a business combination with any controlling
company (being an entity which either owns, or is controlled by any entity
which owns, 20% of the voting power of the outstanding shares of Coastal's
stock). Delaware law provides that, unless the certificate of incorporation
specifies otherwise, the votes of the holders of a majority of the outstanding
voting stock are sufficient to approve a business combination.
A proposed business combination will not have to meet the 85% vote
requirement where certain fair price and other procedural requirements are
satisfied. These requirements are designed to ensure that the cash or
20
<PAGE>
market value of any other consideration to be received by Coastal's
stockholders in such business combination is fair, to preserve the rights of
the public stockholders of Coastal by ensuring that appropriate representation
on the Board of Directors of the Company will be maintained, to keep public
stockholders fully informed as to the advisability of the proposed business
combination and to ensure that there is no major change in the business or
capital structure of the Company and no reduction in the rate of dividends
payable on the Company's stock without the approval of the Board of Directors.
Pre-emptive Rights
Neither stockholders nor any other person have any pre-emptive subscription
rights.
Liquidation, Dissolution and Reorganization
All shares of Common Stock and Class A Common Stock rank equally upon
liquidation or dissolution of the Company, after payment of all debts and
expenses and satisfaction of the interests of the holders of any shares of
Preferred Stock of the Company then outstanding.
The Certificate of Incorporation provides that if a majority in number
representing three-fourths in value of the creditors or class or creditors,
and/or of the stockholders or class of stockholders of the Company, as the
case may be, agree to any compromise or arrangement and to any reorganization
of the Company at a meeting properly called by a Delaware court, such action,
if sanctioned by the court will be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of the
Company as the case may be and also on the Company.
Transferability of Shares of Common Stock and Class A Common Stock
There are no restrictions in the Certificate of Incorporation or By-Laws of
the Company on the transferability of shares of Common Stock. Shares of Class
A Common Stock are not transferable and upon any attempted transfer or upon
death of the holder thereof are automatically converted into shares of Common
Stock.
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants which may be issued
independently or together with any Securities offered by any Prospectus
Supplement and may be attached to or separate from such Securities. Each
series of Common Stock Warrants will be issued under a separate warrant
agreement (a "Warrant Agreement") to be entered into between the Company and a
bank or trust company, as Warrant Agent (the "Warrant Agent"), all as set
forth in the applicable Prospectus Supplement. The Warrant Agent will act
solely as an agent of the Company in connection with the certificates
representing the Common Stock Warrants (the "Common Stock Warrant
Certificates") and will not assume any obligation or relationship of agency or
trust for or with any holders of Common Stock Warrant Certificates or
beneficial owners of Common Stock Warrants. The Warrant Agreement, including
the form of Common Stock Warrant Certificate representing each series of
Common Stock Warrants, will be filed with the Commission at or prior to the
time of sale of any such series of Common Stock Warrants. The following
summaries of certain provisions of the Warrant Agreement and Common Stock
Warrant Certificate do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the Warrant
Agreement relating to, and the Common Stock Warrant Certificate representing,
a Series of Common Stock Warrants.
GENERAL
An applicable Prospectus Supplement will set forth and describe other
specific terms regarding each series of Common Stock Warrants offered hereby,
including:
1. the offering price;
21
<PAGE>
2. the number of shares of Common Stock purchasable upon exercise of each
such Common Stock Warrant and the price at which such number of shares of
Common Stock may be purchased upon such exercise;
3. the date on which the right to exercise such Common Stock Warrants
shall commence and the date on which such right shall expire (the
"Expiration Date"); and
4. any other terms of such Common Stock Warrants (and the applicable
Prospectus Supplement may state that any of the terms set forth herein are
inapplicable to such series).
Common Stock Warrants for the purchase of Common Stock will be offered and
exercisable for U.S. dollars only and will be in registered form only.
Common Stock Warrant Certificates may be exchanged for new Common Stock
Warrant Certificates of different denominations, may be presented for
registration or transfer, and may be exercised at the corporate trust office
of the Warrant Agent or any other office indicated in the applicable
Prospectus Supplement. Prior to the exercise of any Common Stock Warrants,
holders of such Common Stock Warrants will not have any rights of holders of
the Common Stock purchasable upon such exercise, including the right to
receive payments of dividends, if any, on the Common Stock purchasable upon
such exercise or to exercise any applicable right to vote.
EXERCISE OF COMMON STOCK WARRANTS
Each Common Stock Warrant will entitle the holder thereof to purchase such
shares of Common Stock at such exercise price as shall in each case be set
forth in, or calculable from, the Prospectus Supplement relating to the
offered Common Stock Warrants. After the close of business on the Expiration
Date (or such later date to which such Expiration Date may be extended by the
Company) unexercised Common Stock Warrants will become void.
Common Stock Warrants may be exercised by delivering to the Warrant Agent
payment as provided in the applicable Prospectus Supplement of the amount
required to purchase the Common Stock purchasable upon such exercise, together
with certain information set forth on the reverse side of the Common Stock
Warrant Certificate. Upon receipt of such payment and the Common Stock Warrant
Certificate properly completed and duly executed at the corporate trust office
of the Warrant Agent or any other office indicated in the applicable
Prospectus Supplement, the Company will, as soon as practicable, issue and
deliver the Common Stock purchasable upon such exercise. If fewer than all of
the Common Stock Warrants represented by such Common Stock Warrant Certificate
are exercised, a new Common Stock Warrant Certificate will be issued for the
remaining amount of Common Stock Warrants.
AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENT
The Warrant Agreement for a series of Common Stock Warrants may be amended
or supplemented without the consent of the holders of the Common Stock
Warrants issued thereunder to effect changes that are not inconsistent with
the provisions of the Common Stock Warrants and that do not adversely affect
the interests of the holders of the Common Stock Warrants.
COMMON STOCK WARRANT ADJUSTMENTS
Unless otherwise indicated in the applicable Prospectus Supplement, the
exercise price of, and the number of shares of Common Stock covered by, a
Common Stock Warrant are subject to adjustment in certain events, including:
(i) the issuance of Common Stock as a dividend or distribution on the Common
Stock; (ii) subdivisions and combinations of the Common Stock; (iii) the
issuance to all holders of Common Stock of
22
<PAGE>
certain rights or warrants entitling them to subscribe for or purchase Common
Stock, at less than the Current Market Value (as defined in the Warrant
Agreement for such series of Common Stock Warrants); and (iv) the distribution
to all holders of Common Stock of evidences of indebtedness or assets of the
Company (excluding certain cash dividends and distributions described below).
No adjustment in the exercise price of, and the number of shares of Common
Stock covered by, a Common Stock Warrant will be made for regular quarterly or
other periodic or recurring cash dividends or distributions or for cash
dividends or distributions to the extent paid from retained earnings. No
adjustment will be required unless such adjustment would require a change of
at least one percent in the exercise price and exercise rate then in effect;
provided that any such adjustment not so made will be carried forward and
taken into account in any subsequent adjustment; provided further, that any
such adjustment not so made shall be made no later than three years after the
occurrence of the event requiring such adjustment to be made or carried
forward. Except as stated above, the exercise price of, and the number of
shares of Common Stock covered by, a Common Stock Warrant will not be adjusted
for the issuance of Common Stock or any securities convertible into or
exchangeable for Common Stock, or securities carrying the right to purchase
any of the foregoing.
In the case of (i) a reclassification or change of the Common Stock, (ii) a
consolidation or merger involving the Company or (iii) a sale or conveyance to
another corporation of the property and assets of the Company as an entirety
or substantially as an entirety, in each case as a result of which holders of
the Company's Common Stock shall be entitled to receive stock, securities,
other property or assets (including cash) with respect to or in exchange for
such Common Stock, the holders of the Common Stock Warrants then outstanding
will be entitled thereafter to convert such Common Stock Warrants into the
kind and amount of shares of stock and other securities or property which they
would have received upon such reclassification, change, consolidation, merger,
sale or conveyance had such Common Stock Warrants been exercised immediately
prior to such reclassification, change, consolidation, merger, sale or
conveyance.
PLAN OF DISTRIBUTION
The Company may sell Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to a limited number of institutional
purchasers or to a single purchaser; or (iii) through agents. Any such dealer
or agent, in addition to any underwriter, may be deemed to be an underwriter
within the meaning of the Securities Act. The terms of the offering of the
Securities with respect to which this Prospectus is being delivered will be
set forth in the applicable Prospectus Supplement, including the name or names
of any underwriters, dealers or agents, the purchase price of such Securities
and the proceeds to the Company from such sale, any underwriting discounts and
other items constituting underwriters' compensation, the public offering price
and any discounts or concessions which may be allowed or reallowed or paid to
dealers and any securities exchanges on which the Securities may be listed.
If underwriters are used in the sale of Securities, such Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of
sale. The Securities may be offered to the public either through underwriting
syndicates represented by managing underwriters or directly by one or more
underwriters acting alone. Unless otherwise set forth in the applicable
Prospectus Supplement, the obligations of the underwriters to purchase the
Securities described in the applicable Prospectus Supplement will be subject
to certain conditions precedent, and the underwriters will be obligated to
purchase all such Securities if any are so purchased by them. Any public
offering price and any discounts or concessions allowed or reallowed or paid
to dealers may be changed from time to time.
The Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agents involved in the offer
or sale of the Securities in respect of which this Prospectus is being
delivered, and any commissions payable by the Company to such agents, will be
set forth in the applicable
23
<PAGE>
Prospectus Supplement. Unless otherwise indicated in the applicable Prospectus
Supplement, any such agent will be acting on a best efforts basis for the
period of its appointment.
If dealers are utilized in the sale of any Securities, the Company will sell
the Securities to the dealers, as principals. Any dealer may resell the
Securities to the public at varying prices to be determined by the dealer at
the time of resale. The name of any dealer and the terms of the transaction
will be set forth in the Prospectus Supplement with respect to the Securities
being offered.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by certain
specified institutions to purchase the Securities to which this Prospectus and
the applicable Prospectus Supplement relates from the Company at the public
offering price set forth in the applicable Prospectus Supplement, plus, if
applicable, accrued interest, pursuant to delayed delivery contracts providing
for payment and delivery on a specified date in the future. Such contracts
will be subject only to those conditions set forth in the applicable
Prospectus Supplement, and the applicable Prospectus Supplement will set forth
the commission payable for solicitation of such contracts.
Underwriters will not be obligated to make a market in any Securities. The
Company cannot predict the activity of trading in, or liquidity of, any
Securities.
Agents, dealers and underwriters may be entitled, under agreements entered
into with the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution by the Company to payments they may be required to make in
respect thereof. Agents, dealers and underwriters may be customers of, engage
in transactions with, or perform services for, the Company in the ordinary
course of business.
LEGAL MATTERS
Certain legal matters in connection with the Securities offered hereby will
be passed upon for the Company by Austin M. O'Toole, Esq., Senior Vice
President and Secretary of Coastal, and for any underwriters, agents and
dealers by Cahill Gordon & Reindel (a partnership including a professional
corporation), New York, New York. As of August 1, 1996, Mr. O'Toole
beneficially owned approximately 32,865 shares of Common Stock and 655 shares
of Class A Common Stock of Coastal, including exercisable stock options.
EXPERTS
The annual consolidated financial statements of the Company incorporated in
this Prospectus by reference from the 1995 Annual Report on Form 10-K have
been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
24
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in this Prospectus
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company, by any underwriters, agents or
dealers or by any other person. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, any of the securities offered
hereby to any person or by anyone in any jurisdiction in which such offer or
solicitation may not lawfully be made. Neither the delivery of this Prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that there had been no change in the affairs of the Company since
the date hereof.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
The Company............................................................... 3
Use of Proceeds........................................................... 3
Ratio of Earnings to Fixed Charges and Earnings to Combined Fixed Charges
and Preferred Stock Dividends............................................ 3
Description of Debt Securities............................................ 3
Description of Equity Securities.......................................... 15
Description of Common Stock Warrants...................................... 21
Plan of Distribution...................................................... 23
Legal Matters............................................................. 24
Experts................................................................... 24
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[LOGO OF COASTAL CORP. APPEARS HERE]
THE COASTAL
CORPORATION
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
COMMON STOCK WARRANTS
-----------------
PROSPECTUS
-----------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses, other than underwriting discounts and commissions, in
connection with the offering are as follows (all amounts except for the
Securities and Exchange Commission filing fee are estimated):
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee................... $172,414
Printing and engraving expenses................................. 75,000
Legal fees and expenses......................................... 25,000
Accounting fees and expenses.................................... 50,000
Blue sky qualification fees and expenses........................ 50,000
Miscellaneous................................................... 27,586
--------
Total....................................................... $400,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware grants
each corporation organized thereunder, such as the Registrant, the power to
indemnify directors and officers under certain circumstances. Article FIFTH of
the Registrant's Certificate of Incorporation and Article IX of the
Registrant's By-laws provide for indemnification of directors and officers to
the fullest extent permitted by law.
An Indemnity Agreement was approved on May 27, 1981, at the annual meeting
of the holders of the Common Stock and Preferred Stock of Coastal and is
incorporated herein by reference to the definitive Proxy Statement of Coastal
(Exhibit A) dated April 15, 1981. In April of 1988, the Board of Directors of
Coastal approved a revised and updated Indemnity Agreement which is
incorporated herein by reference to the 1995 Annual Report (Exhibit 28).
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1.1 --Form of Underwriting Agreement with respect to Debt Securities
(including form of Terms Agreement).
1.2 --Form of Underwriting Agreement with respect to Equity Securities
(including form of Terms Agreement).
3.1 --Restated Certificate of Incorporation of the Company (filed as
Module TCC-Artl-Incorp on March 28, 1994).
3.2 --By-Laws of the Company, as amended on January 16, 1990 (Exhibit 3.4
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1989).
4.1 --Form of Indenture for the Senior Debt Securities.
4.2 --Form of Senior Debt Security (included in Exhibit No. 4.1).
4.3 --Form of Indenture for the Subordinated Debt Securities.*
4.4 --Form of Subordinated Debt Security (included in Exhibit No. 4.3).
4.5 --Form of Common Stock Warrant Agreement.*
4.6 --Form of Common Stock Warrant (included in Exhibit No. 4.5).
5 --Opinion of Austin M. O'Toole, Esq., Senior Vice President and
Secretary of the Registrant, as to the legality of the securities
being registered.
23.1 --Independent Auditors' Consent.
23.2 --Consent of Austin M. O'Toole, Esq. (included in Exhibit No. 5).
24 --Powers of Attorney (included on the signature pages hereof).
</TABLE>
- --------
*To be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-1
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions described under Item 15 above,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the prospectus any fact or events arising after the effective
date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement; (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement; provided, however, that paragraphs (1)(i) and
(1)(ii) do not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration
Statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the applicable trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act of 1939 in accordance
with the rules and regulations of the Securities and Exchange Commission under
Section 305(b)(2) of the Securities Act of 1933.
II-2
<PAGE>
POWERS OF ATTORNEY
Each person whose signature appears below hereby appoints David A. Arledge,
Coby C. Hesse and Austin M. O'Toole and each of them, any one of whom may act
without the joinder of the others, as his attorney-in-fact to sign on his
behalf and in the capacity stated below and to file all amendments and post-
effective amendments to this Registration Statement, which amendment or
amendments may make such changes and additions in this Registration Statement
as such attorney-in-fact may deem necessary or appropriate.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS, ON AUGUST 28, 1996.
THE COASTAL CORPORATION
(Registrant)
/s/ David A. Arledge
By __________________________________
David A. Arledge
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ O. S. Wyatt, Jr. Chairman of the Board August 28, 1996
- ------------------------------------
O. S. Wyatt, Jr.
/s/ David A. Arledge President, Chief Executive
- ------------------------------------ Officer, Chief Financial
David A. Arledge Officer and Director
(Principal Executive
Officer and Principal
Financial Officer) August 28, 1996
/s/ Coby C. Hesse Senior Vice President and
- ------------------------------------ Controller (Principal
Coby C. Hesse Accounting Officer) August 28, 1996
/s/ John M. Bissell Director August 28, 1996
- ------------------------------------
John M. Bissell
/s/ George L. Brundrett, Jr. Director August 28, 1996
- ------------------------------------
George L. Brundrett, Jr.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Harold Burrow Director August 28, 1996
- ------------------------------------
Harold Burrow
/s/ Roy D. Chapin, Jr. Director August 28, 1996
- ------------------------------------
Roy D. Chapin, Jr.
/s/ James F. Cordes Director August 28, 1996
- ------------------------------------
James F. Cordes
/s/ Roy L. Gates Director August 28, 1996
- ------------------------------------
Roy L. Gates
/s/ Kenneth O. Johnson Director August 28, 1996
- ------------------------------------
Kenneth O. Johnson
/s/ Jerome S. Katzin Director August 28, 1996
- ------------------------------------
Jerome S. Katzin
/s/ Thomas R. McDade Director August 28, 1996
- ------------------------------------
Thomas R. McDade
/s/ L. D. Wooddy, Jr. Director August 28, 1996
- ------------------------------------
L. D. Wooddy, Jr.
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 --Form of Underwriting Agreement with respect to Debt Securities
(including form of Terms Agreement).
1.2 --Form of Underwriting Agreement with respect to Equity Securities
(including form of Terms Agreement).
3.1 --Restated Certificate of Incorporation of the Company (filed as
Module TCC-Artl-Incorp on March 28, 1994).
3.2 --By-Laws of the Company, as amended on January 16, 1990 (Exhibit 3.4
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1989) .
4.1 --Form of Indenture for the Senior Debt Securities.
4.2 --Form of Senior Debt Security (included in Exhibit No. 4.1).
4.3 --Form of Indenture for the Subordinated Debt Securities.*
4.4 --Form of Subordinated Debt Security (included in Exhibit No. 4.3).
4.5 --Form of Common Stock Warrant Agreement.*
4.6 --Form of Common Stock Warrant (included in Exhibit No. 4.5).
5 --Opinion of Austin M. O'Toole, Esq., Senior Vice President and
Secretary of the Registrant, as to the legality of the securities
being registered.
23.1 --Independent Auditors' Consent.
23.2 --Consent of Austin M. O'Toole, Esq. (included in Exhibit No. 5).
24 --Powers of Attorney (included on the signature pages hereof).
</TABLE>
- --------
*To be filed by amendment.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE COASTAL CORPORATION
[LOGO OF COASTAL
CORP. APPEARS HERE]
and
---------------------
UNDERWRITING AGREEMENT
DATED
AND
TERMS AGREEMENT
DATED
---------------------
$
% DUE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE COASTAL CORPORATION
UNDERWRITING AGREEMENT
, 19
[Name and Address of Lead Underwriters]
Dear Sirs:
The Coastal Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell from time to time certain of its senior unsecured debt
securities referred to below (the "Senior Securities") and its subordinated
unsecured debt securities referred to below (the "Subordinated Securities" and
together with the Senior Securities, the "Securities") registered under the
registration statement referred to below. The Senior Securities will be issued
under an Indenture, as amended from time to time (the "Senior Indenture")
dated as of [ ], 1996 between the Company and [ ], as Trustee (the
"Senior Trustee"), and will have varying designations, interest rates and
times of payment of any interest, maturities, redemption provisions,
currencies and other terms, with all such terms for any particular series of
Senior Securities being determined at the time of sale. The Subordinated
Securities will be issued under an Indenture, as amended from time to time
(the "Subordinated Indenture" and together with the Senior Indenture, the
"Indentures"), dated as of [ ], 1996, between the Company and
[ ], as Trustee (the "Subordinated Trustee" and together with the
Senior Trustee, the "Trustees"), and will have varying designations, interest
rates and times of payment of any interest, maturities, redemption provisions,
currencies and other terms, with all such terms for any particular series of
the Securities being determined at the time of the sale. Particular series of
the Securities may be sold to you, and to other firms on whose behalf you may
act, for resale in accordance with the terms of offering determined at the
time of sale. The Securities involved in any such offering are hereinafter
referred to as the "Purchased Securities", and the firm or firms which agree
to purchase the same are hereinafter referred to as the "Underwriters" of such
Purchased Securities and the representative or representatives of the
Underwriters, if any, specified in a "Terms Agreement" are hereinafter
referred to as the "Representatives"; provided, however, that if the Terms
Agreement does not specify any representative of the Underwriters, the term
"Representatives" as used in this Agreement shall mean the Underwriters. The
terms and conditions herein shall constitute a separate agreement between the
Company and the respective Underwriters in regard to each offering of
Purchased Securities.
This Agreement shall not limit or affect the right of the Company to offer
or sell any of the Securities through any other underwriters or agents or
through any other arrangements specified by the Company from time to time, and
this Agreement shall apply only to Securities in respect of which a Terms
Agreement shall have been executed as referred to herein.
This is to confirm the agreement concerning the purchase of the Securities
from the Company by the Underwriters.
1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to,
and agrees with each Underwriter that:
(a) A registration statement on Form S-3 (File No. 333- ), prepared
by the Company in conformity with the requirements of the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), has been filed with the Securities
and Exchange Commission (the "Commission") and has become effective for the
registration under the Securities Act of the Securities. Copies of such
registration statement and any amendments thereto, and all forms of the
related prospectuses relating to the Securities contained therein, have
been delivered to each Underwriter. Such registration statement, including
the documents incorporated by reference therein and all
1
<PAGE>
financial schedules and exhibits thereto, as amended at the date of any
Terms Agreement, is herein referred to as the "Registration Statement". As
used in this Agreement, the term "Prospectus" means such prospectus
included in the Registration Statement, supplemented by a Prospectus
Supplement as contemplated by Section 2 hereof to reflect the terms of the
Purchased Securities and the plan of distribution thereof. Any reference
herein to the Registration Statement or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act, as of the date of
the Prospectus, and any reference herein to the terms "amend", "amendment"
or "supplement" with respect to any Prospectus shall be deemed to refer to
and include any documents filed with the Commission after such date under
the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder (collectively, the
"Exchange Act"), and so incorporated by reference (all such incorporated
documents being herein called the "Incorporated Documents").
(b) As of the date of any Terms Agreement, when the Prospectus is first
filed pursuant to Rule 424(b) under the Securities Act and when, prior to
the Closing Date (as defined in Section 2 hereof), any amendment to the
Registration Statement becomes effective (including the filing of any
document incorporated by reference in the Registration Statement) and at
the Closing Date, the Registration Statement and the Prospectus, as amended
or supplemented, shall comply in all material respects with the
requirements of the Securities Act and the Trust Indenture Act of 1939, as
amended, and the rules and regulations promulgated by the Commission
thereunder (collectively, the "Trust Indenture Act"). No such document
shall contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except that the foregoing shall not
apply to statements in or omissions from any such document in reliance upon
and in conformity with written information furnished to the Company by any
Underwriter specifically for use in the preparation thereof or to the part
of the Registration Statement which constitutes the Statement of
Eligibility of each Trustee under the Trust Indenture Act on Form T-1
(each, a "Form T-1"), except statements or omissions in either Form T-1
made in reliance on information furnished in writing to the Trustee by or
on behalf of the Company for use in preparation thereof. There is no
contract or document required to be described in the Registration Statement
or the Prospectus or required to be filed as an exhibit to the Registration
Statement that is not described or filed as required.
(c) Deloitte & Touche LLP, whose report is incorporated by reference in
the Prospectus, are independent certified public accountants as required by
the Securities Act. The financial statements and schedules (including the
related notes) included or incorporated by reference in the Registration
Statement and the Prospectus, present fairly, in all material respects, the
financial condition, the results of operations and cash flows of the
entities purported to be shown thereby at the dates and for the periods
indicated and have been prepared in accordance with generally accepted
accounting principles.
(d) The Incorporated Documents, when they became effective or were filed
with the Commission, as the case may be, complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as
applicable, and any documents so filed and incorporated by reference
subsequent to the date of the Prospectus shall, when they are filed with
the Commission, conform in all material respects to the requirements of the
Securities Act and the Exchange Act, as applicable.
(e) Each of the Company and its Subsidiaries has been duly organized and
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with full power and authority (corporate
and other) to own or lease its properties and conduct its business as
described in the Prospectus, and is duly qualified to do business and is in
good standing in each jurisdiction in which the character of the business
conducted by it or the location of the properties owned or leased by it
makes such qualification necessary, except where the failure to so qualify
would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
(f) All of the outstanding capital stock or other equity securities of
each of the Subsidiaries of the Company have been duly and validly
authorized and issued, are fully paid and nonassessable, and are owned
2
<PAGE>
by the Company free and clear of any mortgage, pledge (other than any
negative pledge agreement to which the Company or any of its Subsidiaries
may be a party), security interest or restrictions on transferability or
voting.
(g) Except as described in or contemplated by the Prospectus, there has
not been any material adverse change in, or any adverse development which
materially affects, the condition (financial or other), results of
operation, business, prospects, net worth or assets of the Company and its
Subsidiaries taken as a whole, from the date as of which information is
given in the Prospectus.
(h) Neither the Company nor any of its Subsidiaries is, nor with the
giving of notice or lapse of time or both would be, in violation of or in
default under, nor will the execution or delivery hereof or consummation of
the transactions contemplated hereby result in a violation of, or
constitute a default under, the certificate of incorporation, by-laws or
other governing documents of the Company or any of its Subsidiaries, or any
agreement, indenture or other instrument to which the Company or any of its
Subsidiaries is a party or by which any of them is bound, or to which any
of their properties is subject where the effect of such violation or
default would have a material adverse effect on the Company and its
Subsidiaries taken as a whole. The execution and delivery of this
Agreement, the applicable Terms Agreement, the Indentures and any Delayed
Delivery Contract (as defined in Section 2(c) hereof), the authorization,
issuance and sale of the Purchased Securities, the fulfillment of this
Agreement, the applicable Terms Agreement, the Indentures, the Purchased
Securities and any Delayed Delivery Contract and the consummation of the
transactions contemplated by each such agreement will not conflict with or
constitute a breach of, or default (with the passage of time or otherwise)
under, or result in the imposition of a lien on any properties of the
Company or its Subsidiaries or an acceleration of indebtedness pursuant to,
the certificate of incorporation or by-laws, or other governing documents
of the Company or any of its Subsidiaries, or any bond, debenture, note or
any other evidence of indebtedness or any indenture, mortgage, deed or
trust or any other material agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which it or any of them is bound
or to which any of the property or assets of the Company or any of its
Subsidiaries is subject, or any law, administrative regulation or order of
any court or governmental agency or authority applicable to the Company or
any of its Subsidiaries. Except for the orders of the Commission declaring
the Registration Statement effective under the Securities Act and
qualifying the Indentures under the Trust Indenture Act, and permits and
similar authorizations required under the securities or Blue Sky laws of
certain jurisdictions, no consent, approval, authorization or order of any
court, governmental agency or body or financial institution is required in
connection with the consummation of the transactions contemplated by this
Agreement or the applicable Terms Agreement.
(i) This Agreement and the applicable Terms Agreement have been duly
authorized, executed and delivered by the Company and each constitutes the
legal, valid and binding obligation of the Company.
(j) The Purchased Securities have been duly authorized and when executed,
authenticated and delivered in accordance with the terms of the applicable
Indenture will be legal, valid and binding obligations of the Company
enforceable in accordance with their terms, except that (i) the
enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceedings therefor may be brought and (iii) the waiver as to
usury may be unenforceable. The Purchased Securities will be entitled to
the benefits of the applicable Indenture, and will conform in all material
respects to the description thereof in the Prospectus.
(k) The Indentures have been duly authorized and when executed and
delivered by the Company will be the legal, valid and binding agreement of
the Company enforceable in accordance with its terms, except that (i) the
enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, (ii) the remedy of specific
3
<PAGE>
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceedings therefor may be brought and (iii) the waiver as to
usury may be unenforceable. Each Indenture conforms in all material
respects to its description in the Prospectus.
(l) The Delayed Delivery Contracts, if any, have been duly authorized and
when executed and delivered by the Company will be the legal, valid and
binding agreements of the Company enforceable in accordance with their
terms, except that (i) the enforceability thereof may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and (ii)
the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceedings therefor may be brought.
(m) Subsequent to the respective dates as of which information is given
in the Registration Statement and Prospectus and prior to the Closing Date,
neither the Company nor any of its Subsidiaries has incurred or will have
incurred any liabilities or obligations for borrowed money, direct or
contingent, or entered into any transactions, not in the ordinary course of
business and material to the business of the Company and its Subsidiaries
taken as a whole, and there has not been and will not have been any
material change in the capital stock or long-term indebtedness of the
Company or any of its Subsidiaries, or any material adverse change in the
business, prospects, financial position, net worth or assets or results of
operations of the Company and its Subsidiaries taken as a whole.
(n) The Company and its Subsidiaries have such interests in their
respective real (including leasehold interests) and personal properties
that they reasonably believe are necessary, in the aggregate, to use such
properties in the manner presently used or proposed to be used by the
Company and its Subsidiaries.
(o) Except as described in the Prospectus, there is no litigation or
governmental proceeding to which the Company or any of its Subsidiaries is
a party or to which any property of the Company or any of its Subsidiaries
is subject or which is pending or, to the knowledge of the Company,
contemplated against the Company or any of its Subsidiaries which might
result in any material adverse change in the condition (financial or
other), results of operations, business, prospects, net worth or assets of
the Company and its Subsidiaries taken as a whole.
(p) Neither the Company nor any Subsidiary is in violation of any law,
ordinance, governmental rule or regulation or court decree to which it may
be subject which violation might have a material adverse effect on the
condition (financial or other), results of operations, business, prospects,
net worth or assets of the Company and its Subsidiaries taken as a whole.
(q) The conditions for use of Form S-3, set forth in the General
Instructions thereto, have been satisfied.
2. PURCHASE AND OFFERING.
(a) The obligations of the Underwriters to purchase the Purchased
Securities will be evidenced by an exchange of telegraphic or other written
communications substantially in the form attached as Exhibit A hereto (a
"Terms Agreement") at each time the Company determines to sell Purchased
Securities, with such other provisions which the Representatives and the
Company shall agree upon. Each Terms Agreement shall specify the firms
which will be Underwriters (who shall become bound by the terms hereof when
the Terms Agreement has been entered into), the principal amount to be
purchased by each Underwriter, the purchase price to be paid by the
Underwriters and the terms of the Purchased Securities not already
specified in the applicable Indenture, including, but not limited to,
interest rates, maturities, redemption provisions and sinking fund
requirements. Each Terms Agreement shall also specify the date of delivery
and payment for the Purchased Securities other than any Contract Securities
(as defined in Section 2(c)
4
<PAGE>
hereof) and any details of the terms of offering which should be reflected
in the Prospectus Supplement relating to the offering of the Purchased
Securities. Such Prospectus Supplement shall set forth the terms contained
in the Terms Agreement and such other information that you and the Company
agree at the time the Terms Agreement is entered into should be included in
the Prospectus Supplement. Insofar as any provision of this Agreement is
inconsistent with any provision of the applicable Terms Agreement, the
Terms Agreement shall be deemed to control. Purchased Securities to be
purchased by Underwriters are herein referred to as "Underwriters'
Securities", and any Purchased Securities to be purchased pursuant to
Delayed Delivery Contracts as hereinafter provided are herein referred to
as "Contract Securities". The obligations of the Underwriters to purchase
the Underwriters' Securities shall be several and not joint. It is
understood that the Underwriters propose to offer the Purchased Securities
for sale as set forth in such Prospectus Supplement.
(b) Payment of the purchase price for the Underwriters' Securities shall
be made to the Company or its order in New York Clearing House funds, by
certified or official bank check, against delivery of the Underwriters'
Securities to you for the respective accounts of the Underwriters;
provided, however, that at the request of the Company, payment will be made
in immediately available funds, in which case the Company will reimburse
you for your cost of obtaining such funds. Such payment and delivery shall
be made at 10:00 A.M. New York time on the date of delivery specified in
the Terms Agreement (unless another time not later than 10:00 A.M. New York
time on the fifth Business Day thereafter shall be agreed to by you and the
Company or unless postponed in accordance with the provisions of Section 7
hereof). The time and date that such payment and delivery are actually made
is herein sometimes referred to as the "Closing Date". The Underwriters'
Securities shall be delivered to you in definitive form, in temporary or
final form, and in such names and denominations as you shall request at
least one Business Day prior to the Closing Date by written notice to the
Company. For the purpose of expediting the checking and packaging of the
Underwriters' Securities by you, the Company agrees to make them available
to you for such purpose before the close of business on the Business Day
prior to the Closing Date.
(c) If any Terms Agreement provides for sales of Purchased Securities
pursuant to Delayed Delivery Contracts, the Company authorizes the
Underwriters to solicit offers to purchase Contract Securities pursuant to
Delayed Delivery Contracts substantially in the form of Schedule I attached
hereto (the "Delayed Delivery Contracts") with such changes therein as the
Company may approve. Delayed Delivery Contracts are to be with
institutional investors, including commercial and savings banks, insurance
companies, pension funds, investment companies and educational and
charitable institutions. At the time of purchase the Company will pay you
as compensation, for the accounts of the Underwriters, the compensation set
forth in such Terms Agreement in respect of the principal amount of
Contract Securities. The Underwriters will not have any responsibility in
respect of the validity or the performance of Delayed Delivery Contracts.
If the Company executes and delivers Delayed Delivery Contracts, the
Contract Securities shall be deducted from the Purchased Securities to be
purchased by the several Underwriters and the aggregate principal amount of
Purchased Securities to be purchased by each Underwriter shall be reduced
pro rata in proportion to the principal amount of Purchased Securities set
forth opposite each Underwriter's name in such Terms Agreement, except to
the extent that you determine that such reduction shall be otherwise
allocated and so advise the Company.
3. COVENANTS. The Company covenants and agrees with each Underwriter that
they will furnish to counsel for the Underwriters, without charge, one signed
copy of the Registration Statement, including all exhibits, in the form it
became effective and of all amendments thereto and that, in connection with
each offering of Securities:
(a) The Company shall notify you promptly of any request by the
Commission for any amendment of or supplement to the Registration Statement
or the Prospectus, or for additional information; the Company shall prepare
and file with the Commission, promptly upon your request, any amendments of
or supplements to the Registration Statement or the Prospectus which, in
your opinion after consultation with the Company, may be necessary or
advisable in connection with the distribution of the Securities
5
<PAGE>
and the Company shall not file any amendment or supplement to the
Registration Statement or the Prospectus or file any document under the
Exchange Act before the termination of the offering of the Securities if
such document would be deemed to be incorporated by reference therein which
is not approved by you after reasonable notice thereof, such approval not
to be unreasonably withheld or delayed. The Company shall notify you
promptly of the filing with the Commission of the Prospectus supplemented
by the Prospectus Supplement relating to the Purchased Securities. The
Company shall advise you promptly of the issuance by the Commission or any
State or other regulatory body of any stop order or other order suspending
the effectiveness of the Registration Statement, suspending or preventing
the use of the Prospectus, or suspending the qualification of the
Securities for offering or sale in any jurisdiction, or of the institution
of any proceedings for any such purpose; and the Company shall use its best
efforts to prevent the issuance of any stop order or other such order and,
should a stop order or other such order be issued, to obtain as soon as
possible the lifting thereof.
(b) The Company shall furnish to you, from time to time and without
charge, copies of the Registration Statement of which each Representative
shall receive a conformed copy and which shall include exhibits and all
amendments and supplements to any of such documents (including any
Incorporated Documents), in each case as soon as available and in such
quantities as you may from time to time reasonably request.
(c) If any event occurs as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary to amend the Registration Statement or
supplement the Prospectus to comply with the Securities Act, the Company
shall promptly notify you and shall amend the Registration Statement or
supplement the Prospectus or file such document (at the expense of the
Company) so as to correct such statement or omission or effect such
compliance.
(d) The Company shall take or cause to be taken all necessary action and
furnish to whomever you may direct such information as may be required in
qualifying the Purchased Securities for sale under the laws of such
jurisdictions as the Representative shall designate and to continue such
qualifications in effect for as long as may be necessary for the
distribution of the Purchased Securities; except that in no event shall the
Company be obligated in connection therewith to qualify as a foreign
corporation, or to execute a general consent for service of process.
(e) The Company shall make generally available to holders of the
Purchased Securities, in the manner contemplated by Rule 158(b) under the
Securities Act or otherwise, as soon as practicable after the date of the
applicable Terms Agreement, but in any event not later than 45 days after
the end of its fiscal quarter in which the first anniversary date of the
date of the Terms Agreement occurs (or 90 days if such fiscal quarter is
the last fiscal quarter of its fiscal year), an earnings statement
satisfying the requirements of Section 11(a) of the Securities Act and
covering a period of at least 12 consecutive months beginning after the
effective date of the Registration Statement.
(f) The Company shall apply the net proceeds of the sale of Purchased
Securities as set forth in the Prospectus.
(g) Whether or not this Agreement becomes effective or is terminated or
the sale of the Purchased Securities to you is consummated, the Company
shall pay or cause to be paid (A) all expenses (including transfer taxes)
incurred in connection with the delivery to the Underwriters of the
Purchased Securities, (B) all fees and expenses (including, without
limitation, fees and expenses of the Company's accountants and counsel, but
excluding fees and expenses of counsel to the Underwriters except as set
forth in (C)) in connection with the preparation, printing, filing,
delivery and shipping of the Registration Statement (including the
financial statements therein and all amendments and exhibits thereto) and
the Prospectus as amended or supplemented, and the printing, delivery and
shipping of this Agreement, any Terms Agreement, any agreement among or
between Underwriters and other underwriting documents, including the Blue
Sky Survey and any legal investment survey, (C) all filing fees and fees
and
6
<PAGE>
disbursements of counsel to the Underwriters incurred in connection with
the qualification of the Purchased Securities under state securities laws
as provided in Section 3(d) hereof, (D) the filing fee of the National
Association of Securities Dealers, Inc., if any, (E) any applicable listing
fees, (F) the cost of printing the Indenture and certificates representing
the Purchased Securities, (G) the cost and charges of each of the Trustees,
(H) any fees payable to rating agencies in connection with the rating of
the Purchased Securities and (I) all other costs and expenses incident to
the performance of its obligations hereunder which are not otherwise
provided for in this Section. It is understood however, that, except as
provided in this Section 3(g), Section 5 and Section 6 hereof, each of the
Underwriters shall pay all of its own costs and expenses including the fees
of its counsel (except as set forth in (C) above) and any advertising
expenses connected with any offers it may make. If the sale of the
Purchased Securities provided for herein is not consummated by reason or
acts of the Company pursuant to Section 6 hereof which prevent this
Agreement or any Terms Agreement from becoming effective, or by reason of
any failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed or because any other condition of the
Underwriters' obligations hereunder is not fulfilled, the Company shall
reimburse each of the Underwriters for all reasonable out-of-pocket
disbursements (including fees and disbursements of counsel) incurred by the
Underwriters in connection with your investigation of or any preparation by
them in respect of marketing the Purchased Securities or in contemplation
of performing their respective obligations hereunder.
(h) Prior to the Closing Date, the Company, at your request, shall
furnish to you as soon as they have been prepared by the Company a copy of
any unaudited interim consolidated financial statements of the Company and
its Subsidiaries for any period subsequent to the period covered by the
financial statements appearing in the Registration Statement and the
Prospectus.
4. CONDITIONS OF YOUR OBLIGATIONS. Your obligations are subject to the
accuracy, as of the date hereof and the Closing Date (as if made at such
Closing Date), of the representations and warranties of the Company contained
herein, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) The Company shall have filed with the Commission on a timely basis
pursuant to Rule 424(b) under the Securities Act, the Prospectus as
supplemented by the Prospectus Supplement covering the Purchased
Securities. No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
be pending, threatened or contemplated by the Commission or any state
securities or Blue Sky authority.
(b) You shall not have advised the Company that the Registration
Statement, any Prospectus, or any amendment or supplement thereto, contains
an untrue statement of fact which, in your opinion, is material or omits to
state a fact which, in your opinion, is material and is required to be
stated therein or is necessary to make the statements therein not
misleading.
(c) You shall have received an opinion of Austin M. O'Toole, Esq., Senior
Vice President, Secretary and Deputy General Counsel of the Company, dated
the Closing Date and satisfactory to Cahill Gordon & Reindel, your counsel,
to the effect that:
(i) each of the Company and its Subsidiaries has been duly
incorporated and is a validly existing corporation in good standing
under the laws of its respective jurisdiction of incorporation with
full corporate power and authority to own and occupy its properties and
carry on its business as presently conducted and as described in the
Prospectus, and the Company and each of its Subsidiaries is registered
or qualified to conduct business and is in good standing in each
jurisdiction in which, to the best of such counsel's knowledge, their
failure to so register or qualify would have a material adverse effect
on the Company and its Subsidiaries taken as a whole; all of the
outstanding capital stock or other equity securities of each of the
Subsidiaries of the Company have been duly and validly authorized and
issued, are fully paid and nonassessable, and are owned by the Company
7
<PAGE>
free and clear of any mortgage, pledge (other than any negative pledge
agreement to which the Company or any of its Subsidiaries may be a
party), security interest or restrictions on transferability or voting,
other than certain equity securities of Colorado Interstate Gas
Company, which has outstanding capital stock held by entities not
affiliated with the Company but which Subsidiary the Company, directly
or indirectly, has control of its voting power and management, and
other than the capital stock of the first tier subsidiaries of Coastal
Natural Gas Company which has been pledged to secure certain
borrowings;
(ii) this Agreement, the Terms Agreement and the Indentures have been
duly authorized, executed and delivered by the Company, and this
Agreement, the Terms Agreement and the Indenture are legal, valid and
binding agreements of the Company enforceable in accordance with their
respective terms, except that (a) the enforceability hereof and thereof
may be subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors'
rights generally, (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceedings therefor may be brought, (c) rights to indemnity and
contribution hereunder may be limited by Federal and state securities
laws or the policies underlying such laws and (d) the waiver as to
usury in the Indentures may be unenforceable;
(iii) the Delayed Delivery Contracts, if any, have been duly
authorized, executed and delivered by the Company and (assuming that
they have been duly authorized, executed and delivered by the
purchasers thereunder) are valid and binding agreements of the Company;
(iv) to the best knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened to which the Company or
any of its Subsidiaries is a party, or of which the business or
properties of the Company or any of its Subsidiaries is the subject,
which are required to be disclosed in the Registration Statement and
the Prospectus and are not so disclosed and there is no contract or
document concerning the Company or any of its Subsidiaries of a
character required to be described in the Prospectus or to be filed as
an exhibit to the Registration Statement which is not described or
filed as required;
(v) the execution and delivery of this Agreement, the Terms Agreement
and any Delayed Delivery Contract, the authorization, issuance and sale
of the Purchased Securities, the fulfillment of the terms of the
Indentures, this Agreement, the Terms Agreement and any Delayed
Delivery Contract, and the consummation of the transactions
contemplated by the Indentures, this Agreement, the Terms Agreement and
any Delayed Delivery Contract, will not conflict with or constitute a
breach of, or default (with the passage of time or otherwise) under, or
result in the imposition of a lien on any properties of the Company or
its Subsidiaries or an acceleration of indebtedness pursuant to, the
certificate of incorporation and by-laws, or other equivalent
instruments of the Company or any of its Subsidiaries or, to the best
of such counsel's knowledge, any bond, debenture, note or any other
evidence of indebtedness or any indenture, mortgage, deed of trust, or
any other material agreement or instrument to which the Company or any
of its Subsidiaries is subject where such breach or default would have
a material adverse effect on the Company and its Subsidiaries taken as
a whole, or any law, administrative regulation or court or governmental
agency or authority ruling or decree known to such counsel to be
applicable to the Company or any of its Subsidiaries or any of their
properties or assets; and all legally required proceedings in
connection with the authorization, issuance and sale of the Securities
in accordance with the terms of this Agreement, the Terms Agreement and
the Indentures have been taken and, except for permits and similar
authorizations required under the securities or Blue Sky laws of
certain jurisdictions (as to which such counsel need express no
opinion), all consents, approvals, authorizations or other orders of
any regulatory body, administrative agency or other governmental body
legally required for the valid issuance and sale of the Purchased
Securities or any transactions contemplated hereunder have been
obtained;
8
<PAGE>
(vi) the Underwriters' Securities have been duly authorized and when
executed and authenticated in accordance with the terms of the
Indenture and delivered to, and paid for by, you will be legal, valid
and binding obligations of the Company; the Contract Securities have
been duly authorized and when executed and authenticated in accordance
with the terms of the applicable Indenture and when issued and
delivered against payment as provided in the Delayed Delivery
Contracts, will have been duly issued and will constitute legal, valid
and binding obligations of the Company, enforceable in accordance with
their terms and the Underwriters' Securities are, and the Contract
Securities will be, entitled to the benefits provided by the applicable
Indenture, except that (a) the enforceability thereof may be subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought and (c) the waiver as to
usury in the Indentures may be unenforceable;
(vii) the Registration Statement has become effective under the
Securities Act, and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or
are pending or contemplated;
(viii) the Indentures have been qualified under the Trust Indenture
Act;
(ix) the Purchased Securities, the Delayed Delivery Contracts (if
any) and the Indenture conform in all material respects to the
descriptions thereof in the Prospectus; and
(x) except as to financial statements and schedules and other
financial or statistical data included therein, and the exhibits
thereto including each Form T-1, as to which such counsel need not
express any opinion, (a) the Registration Statement and the Prospectus
and any supplements or amendments thereto comply as to form in all
material respects with the Securities Act, (b) the Indentures comply as
to form in all material respects with the Trust Indenture Act, and (c)
the Incorporated Documents comply as to form in all material respects
with the requirements of the Exchange Act and, to the best knowledge of
such counsel, no such Incorporated Document contains an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company and
you at which the contents of the Registration Statement and Prospectus and
related matters were discussed and, although such counsel is not passing
upon and does not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement and
Prospectus (except to the extent stated in paragraph (ix) above), on the
basis of the foregoing (relying as to materiality to a large extent upon
the opinions of officers and other representatives of the Company), no
facts have come to the attention of such counsel that lead him to believe
that either the Registration Statement or any amendment thereto at the time
such Registration Statement or amendment became effective contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus as of its date or any supplement
thereto as of its date, and as of the Closing Date, contained an untrue
statement of a material fact or omitted to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading (it being understood that such
counsel need not comment as to the financial statements, schedules and
other statistical and financial data included in the Registration Statement
or Prospectus or the exhibits (including each Form T-1) to the Registration
Statement).
(d) You shall have received on the Closing Date from Cahill Gordon &
Reindel, your counsel, an opinion to the effect set forth in clauses (ii),
(iii), (vi), (vii), (viii), (ix), (x)(a) (except with respect to the
Incorporated Documents) and (x)(b) of Section 4(c) hereof. In addition,
such counsel shall state that
9
<PAGE>
such counsel has participated in conferences with officers and other
representatives of the Company, counsel for the Company, representatives of
the independent public accountants for the Company and your representatives
at which the contents of the Registration Statement and Prospectus and
related matters were discussed and, although such counsel is not passing
upon and does not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement and
Prospectus (except to the extent provided in paragraph (ix) of Section 4(c)
hereof), on the basis of the foregoing (relying as to materiality to a
large extent upon the opinions of officers and other representatives of the
Company), no facts have come to the attention of such counsel that lead
them to believe that either the Registration Statement or any amendment
thereto at the time such Registration Statement or amendment became
effective contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus as of its date
or any supplement thereto as of its date contained an untrue statement of a
material fact or omitted to state a material fact necessary in order the
make the statements therein, in the light of the circumstances under which
they were made, not misleading (it being understood that such counsel need
express no comment with respect to the financial statements, schedules and
other financial or statistical data included or incorporated by reference
in the Registration Statement or Prospectus or the exhibits (including each
Form T-1) to the Registration Statement).
(e) There shall have been furnished to you a certificate, dated the
Closing Date and addressed to you, signed by the President, or any Vice
President and the Chief Financial Officer, any financial Vice President or
the Treasurer of the Company to the effect that: (i) the representations
and warranties of the Company contained in this Agreement are true and
correct, as if made at and as of the Closing Date, and the Company has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing Date; (ii) no
stop order suspending the effectiveness of the Registration Statement has
been issued, and no proceedings for that purpose have been initiated or
threatened; (iii) all filings required by Rule 424 of the Securities Act
have been made; (iv) the signers of said certificate have carefully
examined the Registration Statement and the Prospectus, and any amendments
or supplements thereto (including any documents filed under the Exchange
Act and deemed to be incorporated by reference therein), and such documents
contain all statements and information required to be included therein, and
do 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 (v) since the execution of the Terms
Agreement, there has occurred no event required to be set forth in an
amendment or supplement to the Registration Statement or the Prospectus
which has not been so set forth; and there has been no document required to
be filed under the Exchange Act that upon such filing would be deemed to be
incorporated by reference into the Prospectus that has not been so filed.
(f) Since the execution of the Terms Agreement, neither the Company nor
any of its Subsidiaries shall have sustained any loss by fire, flood,
accident or other calamity, or shall have become a party to or be subject
to any litigation, which is material to the Company and its Subsidiaries
taken as a whole, nor shall there have been a material adverse change in
the general affairs, business, key personnel, capitalization, financial
position or net worth of the Company and its Subsidiaries taken as a whole,
whether or not arising in the ordinary course of business, which loss,
litigation or change, in your judgment, shall render it inadvisable to
proceed with the delivery of the Purchased Securities.
(g) On the date of execution of the Terms Agreement and the Closing Date
you shall have received a letter of Deloitte & Touche LLP, dated the date
of execution of the Terms Agreement and the Closing Date, as the case may
be, and addressed to you, confirming that they are independent certified
public accountants, within the meaning of the Securities Act, and stating,
as of the date of such letter (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given or incorporated in the Prospectus, and a
date not more than five days prior to the date of such letter), the
conclusions and findings of such firm with respect to the financial
information and other matters
10
<PAGE>
requested to be covered by its letter delivered to you concurrently with
the execution of the Terms Agreement and, with respect to the letter
delivered on the Closing Date, confirming the conclusions and findings set
forth in such prior letter.
(h) That the Company shall have accepted Delayed Delivery Contracts in
any case where sales of Contract Securities arranged by the Underwriters
have been approved by the Company.
(i) You shall have been furnished with such additional documents and
certificates as you may reasonably request.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and to counsel for the
Underwriters. The Company shall furnish to you such conformed copies of
such opinions, certificates, letters and other documents as you shall
reasonably request. If any of the conditions specified in this Section 4
shall not have been fulfilled when and as required by this Agreement, this
Agreement and the applicable Terms Agreement and all obligations of the
Underwriters hereunder and thereunder may be cancelled at, or at any time
prior to, the Closing Date, by you. Any such cancellation shall be without
liability of the Underwriters to the Company. Notice of such cancellation
shall be given to the Company in writing, or by telegraph or telephone and
confirmed in writing.
5. INDEMNIFICATION AND CONTRIBUTION. (a) The Company shall indemnify and
hold harmless each of the Underwriters against any loss, claim, damage or
liability to which the Underwriters may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage or liability (or action
in respect thereof) arises out of or is based upon (i) any untrue statement or
alleged untrue statement made by the Company in Section 1 hereof, or (ii) any
untrue statement or alleged untrue statement of a material fact contained (A)
in the Registration Statement or the Prospectus or any amendment or supplement
thereto, or (B) in any Blue Sky application or other document executed by the
Company specifically for the purpose or based upon any written information
furnished by the Company filed in any state or other jurisdiction in order to
qualify any or all of the Purchased Securities under the securities laws
thereof (any such application, document or information being hereinafter
called "Blue Sky Information"), or (iii) the omission or alleged omission to
state in the Registration Statement or the Prospectus or any amendment or
supplement thereto or in any Blue Sky Information a material fact required to
be stated therein or necessary to make the statements therein not misleading;
and shall reimburse each of the Underwriters for any legal or other reasonable
expenses as incurred by the Underwriters in connection with investigating or
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action, notwithstanding the possibility
that payments for such expenses might later be held to be improper, in which
case the person receiving them shall promptly refund them; provided, however,
that the Company shall not be liable to an Underwriter in any such case to the
extent, but only to the extent, that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Company by such Underwriter specifically
for use in the preparation of the Registration Statement, Prospectus or any
amendment or supplement thereto, or any Blue Sky Information.
(b) Each of the Underwriters, severally but not jointly, shall indemnify and
hold harmless the Company against any loss, claim, damage or liability to
which the Company may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage or liability (or action in respect
thereof) arises out of or is based upon (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in the Registration
Statement or the Prospectus or any amendment or supplement thereto, or (B) in
any Blue Sky Information, or (ii) the omission or alleged omission to state in
the Registration Statement or the Prospectus or any amendment or supplement
thereto or in any Blue Sky Information a material fact required to be stated
therein or necessary to make the statements therein not misleading; and shall
reimburse any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending against any such loss, claim,
damage, liability or action, notwithstanding the possibility that payments for
such expenses might
11
<PAGE>
later be held to be improper, in which case the Company shall promptly refund
them; provided, however, that such indemnification and expense reimbursement
shall be available from an Underwriter to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter specifically for use in the
preparation thereof.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however,
that the failure to notify the indemnifying party shall not relieve it from
any liability which it may have to an indemnified party otherwise than under
such subsection. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party,
to assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under such
subsection for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; except that you shall have the right to employ counsel
to represent you in connection with any claim in respect of which indemnity
may be sought by the Underwriters against the Company under such subsection
if, in your reasonable judgment, it is advisable for you to be represented by
separate counsel, and in that event the reasonable fees and expenses of such
separate counsel shall be paid by the Company.
(d) If the indemnification provided for in this Section 5 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in subsection (a) or (b) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the
offering of the Purchased Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering of the
Purchased Securities (before deducting expenses) received by the Company bear
to the total underwriting discounts and commissions received by the
Underwriters as set forth in the Prospectus Supplement covering the Purchased
Securities. Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
subsection (d) were to be determined by pro rata allocation or by any other
method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this subsection (d). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending against any
action or claim which is the subject of this subsection (d). Notwithstanding
the provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Purchased Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to
12
<PAGE>
contribution from any person who was not guilty of such fraudulent
misrepresentation. Each party entitled to contribution agrees that upon the
service of a summons or other initial legal process upon it in any action
instituted against it in respect of which contribution may be sought, it shall
promptly give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom contribution
may be sought from any obligation it may have hereunder or otherwise.
(e) The obligations of the Company under this Section 5 shall be in addition
to any liability which the Company may otherwise have, and shall extend, upon
the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Securities Act and the Exchange Act; and
the obligations of the Underwriters under this Section 5 shall be in addition
to any liability that the respective Underwriters may otherwise have, and
shall extend, upon the same terms and conditions, to each director of the
Company (including any person who, with his or her consent, is named in the
Registration Statement as about to become a director of the Company), to each
officer of the Company who has signed the Registration Statement and to each
person, if any, who controls the Company within the meaning of the Securities
Act.
6. EFFECTIVE DATE AND TERMINATION OF TERMS AGREEMENT. This Agreement shall
become effective (a) at 11:00 A.M., New York City time, on the first full
Business Day following the date of the Terms Agreement or (b) at such earlier
time after the date of the Terms Agreement as you shall first release the
Purchased Securities for sale to the public. You shall notify the Company
immediately after you have taken any action which causes this Agreement to
become effective. Until this Agreement is effective, it may be terminated by
the Company by giving notice as hereinafter provided to you or by you by
giving notice as hereinafter provided to the Company, except that the
provisions of Section 3(g) and Section 5 shall at all times be effective.
Your obligations under any Terms Agreement may be terminated by you by
giving notice as hereinafter provided to the Company, if (i) the Company shall
have failed, refused or been unable, at or prior to the Closing Date to
perform any agreement on its part to be performed hereunder, (ii) any other
condition of the obligations of the Underwriters hereunder is not fulfilled,
(iii) trading in securities generally on the New York Stock Exchange ("NYSE")
or the American Stock Exchange or the over-the-counter market shall have been
suspended or minimum prices shall have been established on either of such
exchanges or such market by the Commission or by such exchange or other
regulatory body or governmental authority having jurisdiction, (iv) a general
banking moratorium shall have been declared by Federal or state authorities,
(v) the United States engages in hostilities or there is an escalation of
hostilities involving the United States or there is a declaration of war or
national emergency by the United States after the date hereof which, in your
judgment, makes it inadvisable or impracticable to proceed with the delivery
of the Purchased Securities, or (vi) there shall have been such a material
change in general economic, political or financial conditions or if the effect
of international conditions on the financial markets in the United States
shall be such as, in your judgment, makes it inadvisable or impracticable to
proceed with the delivery of the Purchased Securities. Any termination of this
Agreement pursuant to this Section 6 shall be without liability on the part of
the Company or the Underwriters except as otherwise provided in Sections 3(g)
and 5 hereof.
Any notice referred to above may be given at the address specified in
Section 9 hereof in writing or by telegraph or telephone, and if by telegraph
or telephone, shall be immediately confirmed in writing.
7. INCREASE IN UNDERWRITERS' COMMITMENTS. If any Underwriter shall default
in its obligation to take up and pay for the Purchased Securities to be
purchased by it under any Terms Agreement and if the principal amount of
Purchased Securities which all Underwriters so defaulting shall have so failed
to take up and pay for does not exceed 10% of the total principal amount of
Purchased Securities agreed to be purchased pursuant to such Terms Agreement,
the non-defaulting Underwriters shall take up and pay for (in addition to the
principal amount of Purchased Securities they are obligated to purchase
pursuant to such Terms Agreement) the principal amount of Purchased Securities
agreed to be purchased by all such defaulting Underwriters, as hereinafter
13
<PAGE>
provided. Such Purchased Securities shall be taken up and paid for by such
non-defaulting Underwriter or Underwriters in such amount or amounts as you
may designate with the consent of each Underwriter so designated or, in the
event no such designation is made, such Purchased Securities shall be taken up
and paid for by all non-defaulting Underwriters pro rata in proportion to the
principal amount of Purchased Securities they have agreed to purchase under
such Terms Agreement.
Without relieving any defaulting Underwriter from its obligations hereunder,
the Company agrees with the non-defaulting Underwriters that it will not sell
any Purchased Securities under any Terms Agreement unless all of the
Underwriters' Securities under any such Terms Agreement are purchased by the
Underwriters (or by substituted underwriters selected by you with the approval
of the Company or selected by the Company with your approval).
If a new underwriter or underwriters are substituted by the Underwriters or
by the Company for a defaulting Underwriter or Underwriters in accordance with
the foregoing provision, the Company or you shall have the right to postpone
the Closing Date for a period not exceeding five full business days in order
that necessary changes in the Registration Statement and Prospectus and other
documents may be effected.
The term Underwriter as used in this Agreement shall refer to and include
any underwriter substituted under this Section 7.
8. SURVIVAL OF INDEMNITIES, CONTRIBUTIONS, WARRANTIES AND REPRESENTATIONS.
The indemnity and contribution agreements contained in Section 5 and the
representations, warranties and agreements of the Company in Sections 1 and 3
shall survive the delivery of the Purchased Securities to the Underwriters
hereunder and shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement or any investigation made by or
on behalf of any indemnified party.
9. NOTICES. Except as otherwise provided in this Agreement, (a) whenever
notice is required by the provisions of this Agreement to be given to the
Company, such notice shall be in writing addressed to the Company at The
Coastal Corporation, Coastal Tower, Nine Greenway Plaza, Houston, Texas 77046-
0995, Attention: Director--Financial Administration, with a copy to Austin M.
O'Toole, Esq.; and (b) whenever notice is required by the provisions of this
Agreement to be given to the Underwriters, such notice shall be in writing and
addressed to the Underwriters at their respective addresses furnished to the
Company in writing for the purpose of communications hereunder.
10. INFORMATION FURNISHED BY UNDERWRITERS. The statements with respect to
the public offering of the Purchased Securities on the cover page of the
Prospectus Supplement covering the Purchased Securities and under the caption
"Plan of Distribution", if any in such Prospectus Supplement constitute the
only information furnished to the Company in writing on behalf of or by you
expressly for use in the Registration Statement, the Prospectus, or any
amendment or supplement thereto referred to in this Agreement.
11. PARTIES. This Agreement shall inure to the benefit of and be binding
upon the Underwriters, the Company, any officer, director or controlling
person referred to in Section 5 hereof, and their respective successors and
assigns, and no other person shall acquire or have any right by virtue of this
Agreement. The term "successors and assigns", as used in this Agreement, shall
not include any purchaser of any of the Purchased Securities from the
Underwriters merely by reason of such purchase.
12. DEFINITION OF "BUSINESS DAY" AND "SUBSIDIARY". For purposes of this
Agreement, (a) "Business Day" means any day on which the NYSE is open for
trading, and (b) "Subsidiary" has the meaning set forth in Rule 405 of the
Securities Act.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
THE CHOICE OF LAW OR CONFLICT OF LAWS PRINCIPLES THEREOF.
14
<PAGE>
14. COUNTERPART. This Agreement may be signed in one or more counterparts,
each of which shall constitute an original and all of which together shall
constitute one and the same agreement.
Please confirm, by signing and returning to us four counterparts of this
Agreement, that the foregoing correctly sets forth the Agreement between you
and the Company.
Very truly yours,
THE COASTAL CORPORATION
By: _________________________________
Confirmed and accepted as of
the date first above mentioned:
[Lead Underwriters]
By:
By: _________________________________
15
<PAGE>
SCHEDULE A
TO
TERMS AGREEMENT
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF PURCHASED
NAME SECURITIES
---- ----------------
<S> <C>
$
------------
------------
Total................................................ $
============
</TABLE>
<PAGE>
EXHIBIT A
TERMS AGREEMENT
[TITLE OF SECURITIES]
[Date]
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Dear Sirs:
The Coastal Corporation (the "Company") and [Lead Underwriters] [as
representatives of the underwriters named on Schedule A hereto] (the
"Underwriters") have entered into an Underwriting Agreement (the "Underwriting
Agreement"), dated , relating to the issuance from time to time by the
Company of its [senior] [subordinated] unsecured debt securities under an
indenture (the "Indenture"), dated as of [ ], 1996, as amended from time to
time, between the Company and [ ], as Trustee. This Terms Agreement,
relating to the Purchased Securities referred to below, is being entered into
pursuant to the Underwriting Agreement. Capitalized terms used herein, not
otherwise defined, have the meanings given them in the Underwriting Agreement,
except for terms which are not used in the Underwriting Agreement, which terms
shall have the meanings given them in the Indenture.
The Underwriters understand that the Company proposes to issue and sell
$ aggregate principal amount of [Title of Securities] (the
"Purchased Securities"). Subject to the terms, conditions, representations and
warranties set forth or incorporated by reference herein, the Company agrees
to sell to the Underwriters and the Underwriters agree, severally but not
jointly, to purchase from the Company the Purchased Securities in the
respective principal amounts set forth next to their names in Schedule A
hereto, at % of the principal amount thereof. The Prospectus Supplement
with respect to the Purchased Securities is dated and includes the
Prospectus dated .
The Underwriters will pay for such Purchased Securities upon delivery
thereof in New York City at 10:00 A.M. (New York time) on (the
"Closing Date") in New York Clearing House funds, or at such other time on the
Closing Date as shall be agreed upon by the Company and the Underwriters.
The Purchased Securities shall have the following terms, in addition to
those set forth in the Indenture:
<TABLE>
<S> <C>
(a) Interest: % per annum
(b) Maturity:
(c) Initial Public Of- % of the principal amount of the Purchased
fering Price: Securities.
(d) Interest Payment and of each year, commencing
Dates: .
(e) Redemption:
</TABLE>
All provisions contained in the Underwriting Agreement are incorporated by
reference herein in their entirety and shall be deemed to be part of this
Agreement to the same extent as if such provisions had been set forth in full
herein.
1
<PAGE>
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW OR
CONFLICT OF LAWS PRINCIPLES THEREOF.
This instrument may be signed by the parties in counterparts which together
shall constitute one and the same agreement between the parties and shall
become effective at such time as each of the parties shall have signed such
counterparts and shall have notified the other party thereof.
Please confirm your agreement herewith by having an authorized officer sign
a copy of this Agreement in the space provided below.
Very truly yours,
[Lead Underwriters]
By:
By: _________________________________
Name:
Title:
Accepted and Agreed to
as of the date first
above written
The Coastal Corporation
By: _________________________________
Name:
Title:
2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE COASTAL CORPORATION
LOGO
and
---------------------
UNDERWRITING AGREEMENT
DATED
AND
TERMS AGREEMENT
DATED
---------------------
[TITLE OF EQUITY SECURITIES]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE COASTAL CORPORATION
UNDERWRITING AGREEMENT
, 199
[Name and Address of Lead Underwriters]
Dear Sirs:
The Coastal Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell from time to time certain of its Preferred Stock, par value
$.33 1/3 per share (the "Preferred Stock"), Common Stock, par value $.33 1/3
per share (the "Common Stock") and/or Common Stock Warrants (the "Warrants")
referred to below (collectively, the "Securities") registered under the
registration statement referred to below. The Preferred Stock may be issued in
one or more series, may have varying dividend and liquidation preferences,
voting rights and redemption provisions, and may be convertible, as described
in the certificate of designations relating to such Preferred Stock (the
"Certificate of Designations"), into shares of the Common Stock. The Warrants
are to be issued pursuant to a Warrant Agreement dated as of [ ], 1996 (the
"Warrant Agreement") between the Company and [ ] as Warrant Agent (the
"Warrant Agent"). The Securities may be sold to you, and to other firms on
whose behalf you may act, for resale in accordance with the terms of offering
determined at the time of sale. The Securities involved in any such offering
are hereinafter referred to as the "Purchased Securities", and the firm or
firms which agree to purchase the same are hereinafter referred to as the
"Underwriters" of such Purchased Securities and the representative or
representatives of the Underwriters, if any, specified in a "Terms Agreement"
are hereinafter referred to as the "Representatives"; provided, however, that
if the Terms Agreement does not specify any representative of the
Underwriters, the term "Representatives" as used in this Agreement shall mean
the Underwriters. The terms and conditions herein shall constitute a separate
agreement between the Company and the respective Underwriters in regard to
each offering of Purchased Securities.
This Agreement shall not limit or affect the right of the Company to offer
or sell any of the Securities through any other underwriters or agents or
through any other arrangements specified by the Company from time to time, and
this Agreement shall apply only to Securities in respect of which a Terms
Agreement shall have been executed as referred to herein.
This is to confirm the agreement concerning the purchase of the Securities
from the Company by the Underwriters.
1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to,
and agrees with each Underwriter that:
(a) A registration statement on Form S-3 (File No. 333- ), prepared
by the Company in conformity with the requirements of the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), has been filed with the Securities
and Exchange Commission (the "Commission") and has become effective for the
registration under the Securities Act of the Securities. Copies of such
registration statement and any amendments thereto, and all forms of the
related prospectuses relating to the Securities contained therein, have
been delivered to each Underwriter. Such registration statement, including
the documents incorporated by reference therein and all financial schedules
and exhibits thereto, as amended at the date of any Terms Agreement, is
herein referred to as the "Registration Statement". As used in this
Agreement, the term "Prospectus" means such prospectus included in the
Registration Statement, supplemented by a Prospectus Supplement as
contemplated by Section 2 hereof to reflect the terms of the Purchased
Securities and the plan of distribution thereof. Any reference herein to
the Registration Statement or the Prospectus shall be deemed to refer to
1
<PAGE>
and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act, as of the date of the
Prospectus, and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to any Prospectus shall be deemed to refer to and
include any documents filed with the Commission after such date under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission promulgated thereunder (collectively, the "Exchange
Act"), and so incorporated by reference (all such incorporated documents
being herein called the "Incorporated Documents").
(b) As of the date of any Terms Agreement, when the Prospectus is first
filed pursuant to Rule 424(b) under the Securities Act and when, prior to
the Closing Date (as defined in Section 2 hereof), any amendment to the
Registration Statement becomes effective (including the filing of any
document incorporated by reference in the Registration Statement) and at
the Closing Date, the Registration Statement and the Prospectus, as amended
or supplemented, shall comply in all material respects with the
requirements of the Securities Act. No such document shall contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, except that the foregoing shall not apply to statements in
or omissions from any such document in reliance upon and in conformity with
written information furnished to the Company by any Underwriter
specifically for use in the preparation thereof. There is no contract or
document required to be described in the Registration Statement or the
Prospectus or required to be filed as an exhibit to the Registration
Statement that is not described or filed as required.
(c) Deloitte & Touche LLP, whose report is incorporated by reference in
the Prospectus, are independent certified public accountants as required by
the Securities Act. The financial statements and schedules (including the
related notes) included or incorporated by reference in the Registration
Statement and the Prospectus, present fairly, in all material respects, the
financial condition, the results of operations and cash flows of the
entities purported to be shown thereby at the dates and for the periods
indicated and have been prepared in accordance with generally accepted
accounting principles.
(d) The Incorporated Documents, when they became effective or were filed
with the Commission, as the case may be, complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as
applicable, and any documents so filed and incorporated by reference
subsequent to the date of the Prospectus shall, when they are filed with
the Commission, conform in all material respects to the requirements of the
Securities Act and the Exchange Act, as applicable.
(e) Each of the Company and its Subsidiaries has been duly organized and
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with full power and authority (corporate
and other) to own or lease its properties and conduct its business as
described in the Prospectus, and is duly qualified to do business and is in
good standing in each jurisdiction in which the character of the business
conducted by it or the location of the properties owned or leased by it
makes such qualification necessary, except where the failure to so qualify
would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
(f) All of the outstanding capital stock or other equity securities of
each of the Subsidiaries of the Company have been duly and validly
authorized and issued, are fully paid and nonassessable, and are owned by
the Company free and clear of any mortgage, pledge (other than any negative
pledge agreement to which the Company or any of its Subsidiaries may be a
party), security interest or restrictions on transferability or voting.
(g) Since the date of the latest consolidated financial statements of the
Company and its subsidiaries included in the Registration Statement and the
Prospectus, there has not been any change in the Company's issued capital
stock or options, except (I) as set forth in or expressly contemplated by
the Registration Statement and the Prospectus, (II) pursuant to the
exercise of options or the conversion, exchange or
2
<PAGE>
exercise of outstanding convertible, exchangeable or exercisable securities
of the Company and (III) issuances of shares of Common Stock and options to
acquire Common Stock issued after the date of such financial statements
pursuant to the Company's employee benefit plans as in effect on the date
hereof. Except as described in or contemplated by the Prospectus, there has
not been any material adverse change in, or any adverse development which
materially affects, the condition (financial or other), results of
operation, business, prospects, net worth or assets of the Company and its
Subsidiaries taken as a whole, from the date as of which information is
given in the Prospectus.
(h) Neither the Company nor any of its Subsidiaries is, nor with the
giving of notice or lapse of time or both would be, in violation of or in
default under, nor will the execution or delivery hereof or consummation of
the transactions contemplated hereby result in a violation of, or
constitute a default under, the certificate of incorporation, by-laws or
other governing documents of the Company or any of its Subsidiaries, or any
agreement, indenture or other instrument to which the Company or any of its
Subsidiaries is a party or by which any of them is bound, or to which any
of their properties is subject where the effect of such violation or
default would have a material adverse effect on the Company and its
Subsidiaries taken as a whole. The execution and delivery of this
Agreement, the applicable Terms Agreement, the Warrant Agreement and any
Delayed Delivery Contract (as defined in Section 2(c) hereof), the
authorization, issuance and sale of the Purchased Securities, the
fulfillment of this Agreement, the applicable Terms Agreement, the Warrant
Agreement, the Certificate of Designations, the Purchased Securities and
any Delayed Delivery Contract and the consummation of the transactions
contemplated by each such agreement will not conflict with or constitute a
breach of, or default (with the passage of time or otherwise) under, or
result in the imposition of a lien on any properties of the Company or its
Subsidiaries or an acceleration of indebtedness pursuant to, the
certificate of incorporation or by-laws, or other governing documents of
the Company or any of its Subsidiaries, or any bond, debenture, note or any
other evidence of indebtedness or any indenture, mortgage, deed or trust or
any other material agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which it or any of them is bound or to
which any of the property or assets of the Company or any of its
Subsidiaries is subject, or any law, administrative regulation or order of
any court or governmental agency or authority applicable to the Company or
any of its Subsidiaries. Except for the orders of the Commission declaring
the Registration Statement effective under the Securities Act and permits
and similar authorizations required under the securities or Blue Sky laws
of certain jurisdictions, no consent, approval, authorization or order of
any court, governmental agency or body or financial institution is required
in connection with the consummation of the transactions contemplated by
this Agreement or the applicable Terms Agreement, if applicable, the
issuance of the Common Stock upon conversion, exchange or exercise of the
Purchased Securities or the filing of the Certificate of Designation with
the Secretary of State of the State of Delaware.
(i) This Agreement and the applicable Terms Agreement have been duly
authorized, executed and delivered by the Company and each constitutes the
legal, valid and binding obligation of the Company.
(j) As of the date of the Prospectus Supplement, the Company has the
authorized, issued and outstanding capitalization set forth in the
Prospectus under "Capitalization." The authorized capital stock of the
Company conforms as to legal matters to the description thereof contained
in the Registration Statement and the Prospectus, and all of the
outstanding shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and non-assessable and are
not subject to any preemptive or similar rights.
(k) All corporate action required to be taken for the authorization,
issuance and sale of the Purchased Securities pursuant to this Agreement
and the Terms Agreement has been validly and sufficiently taken. The
Purchased Securities have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and the Terms Agreement and, when
issued and delivered by the Company pursuant to this Agreement and the
Terms Agreement against payment of the consideration set forth in the Terms
Agreement (and, with respect to the Warrants, executed and authenticated in
accordance with the Warrant Agreement), the Purchased Securities will be
validly issued and fully paid and nonassessable (or, with respect to the
Warrants, legal, valid and binding obligations of the Company, enforceable
in accordance with their terms); no holder thereof will be subject to
personal liability solely by reason of being such a holder; the Purchased
3
<PAGE>
Securities will not be subject to the preemptive rights of any stockholder
of the Company. If the Purchased Securities are convertible into, or
exchangeable or exercisable for, Common Stock, the Purchased Securities are
convertible into, or exchangeable or exercisable for, Common Stock in
accordance with their terms and/or the terms of the Warrant Agreement or
the Certificate of Designation.
(l) If the Purchased Securities are convertible into or exchangeable or
exercisable for Common Stock, the Common Stock issuable upon conversion,
exchange or exercise of the Purchased Securities pursuant to the terms of
the Warrant Agreement or the Certificate of Designations has been duly
authorized and validly reserved for issuance upon such conversion, exchange
or exercise by all necessary corporate action and such Common Stock, when
duly issued upon such conversion, exchange or exercise, will be validly
issued and fully paid and nonassessable; no holder thereof will be subject
to personal liability solely by reason of being such a holder; and the
issuance of such Common Stock upon such conversion, exchange or exercise
will not be subject to preemptive rights.
(m) The Warrant Agreement has been duly authorized and when executed and
delivered by the Company will be the legal, valid and binding agreement of
the Company enforceable in accordance with its terms, except that (i) the
enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceedings therefor may be brought and (iii) the waiver as to
usury may be unenforceable. The Warrant Agreement and the Warrants conform
in all material respects to their description in the Prospectus.
(n) The Delayed Delivery Contracts, if any, have been duly authorized and
when executed and delivered by the Company will be the legal, valid and
binding agreements of the Company enforceable in accordance with their
terms, except that (i) the enforceability thereof may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and (ii)
the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceedings therefor may be brought.
(o) Subsequent to the respective dates as of which information is given
in the Registration Statement and Prospectus and prior to the Closing Date,
neither the Company nor any of its Subsidiaries has incurred or will have
incurred any liabilities or obligations for borrowed money, direct or
contingent, or entered into any transactions, not in the ordinary course of
business and material to the business of the Company and its Subsidiaries
taken as a whole, and there has not been and will not have been any
material change in the capital stock or long-term indebtedness of the
Company or any of its Subsidiaries, or any material adverse change in the
business, prospects, financial position, net worth or assets or results of
operations of the Company and its Subsidiaries taken as a whole.
(p) The Company and its Subsidiaries have such interests in their
respective real (including leasehold interests) and personal properties
that they reasonably believe are necessary, in the aggregate, to use such
properties in the manner presently used or proposed to be used by the
Company and its Subsidiaries.
(q) Except as described in the Prospectus, there is no litigation or
governmental proceeding to which the Company or any of its Subsidiaries is
a party or to which any property of the Company or any of its Subsidiaries
is subject or which is pending or, to the knowledge of the Company,
contemplated against the Company or any of its Subsidiaries which might
result in any material adverse change in the condition (financial or
other), results of operations, business, prospects, net worth or assets of
the Company and its Subsidiaries taken as a whole.
(r) Neither the Company nor any Subsidiary is in violation of any law,
ordinance, governmental rule or regulation or court decree to which it may
be subject which violation might have a material adverse effect on the
condition (financial or other), results of operations, business, prospects,
net worth or assets of the Company and its Subsidiaries taken as a whole.
(s) The conditions for use of Form S-3, set forth in the General
Instructions thereto, have been satisfied.
4
<PAGE>
2. PURCHASE AND OFFERING.
(a) The obligations of the Underwriters to purchase the Purchased
Securities will be evidenced by an exchange of telegraphic or other written
communications substantially in the form attached as Exhibit A hereto (a
"Terms Agreement") at each time the Company determines to sell Purchased
Securities, with such other provisions which the Representatives and the
Company shall agree upon. Each Terms Agreement shall specify the firms
which will be Underwriters (who shall become bound by the terms hereof when
the Terms Agreement has been entered into), the principal amount to be
purchased by each Underwriter, the purchase price to be paid by the
Underwriters and the terms of the Purchased Securities not already
specified in the Warrant Agreement or the Certificate of Designations,
including, but not limited to, dividend rates, maturities, redemption
provisions and sinking fund requirements. Each Terms Agreement shall also
specify the date of delivery and payment for the Purchased Securities other
than any Contract Securities (as defined in Section 2(c) hereof) and any
details of the terms of offering which should be reflected in the
Prospectus Supplement relating to the offering of the Purchased Securities.
Such Prospectus Supplement shall set forth the terms contained in the Terms
Agreement and such other information that you and the Company agree at the
time the Terms Agreement is entered into should be included in the
Prospectus Supplement. Insofar as any provision of this Agreement is
inconsistent with any provision of the applicable Terms Agreement, the
Terms Agreement shall be deemed to control. Purchased Securities to be
purchased by Underwriters are herein referred to as "Underwriters'
Securities", and any Purchased Securities to be purchased pursuant to
Delayed Delivery Contracts as hereinafter provided are herein referred to
as "Contract Securities". The obligations of the Underwriters to purchase
the Underwriters' Securities shall be several and not joint. It is
understood that the Underwriters propose to offer the Purchased Securities
for sale as set forth in such Prospectus Supplement.
(b) Payment of the purchase price for the Underwriters' Securities shall
be made to the Company or its order in New York Clearing House funds, by
certified or official bank check, against delivery of the Underwriters'
Securities to you for the respective accounts of the Underwriters;
provided, however, that at the request of the Company, payment will be made
in immediately available funds, in which case the Company will reimburse
you for your cost of obtaining such funds. Such payment and delivery shall
be made at 10:00 A.M. New York time on the date of delivery specified in
the Terms Agreement (unless another time not later than 10:00 A.M. New York
time on the fifth Business Day thereafter shall be agreed to by you and the
Company or unless postponed in accordance with the provisions of Section 7
hereof). The time and date that such payment and delivery are actually made
is herein sometimes referred to as the "Closing Date". The Underwriters'
Securities shall be delivered to you in definitive form, in temporary or
final form, and in such names and denominations as you shall request at
least one Business Day prior to the Closing Date by written notice to the
Company. For the purpose of expediting the checking and packaging of the
Underwriters' Securities by you, the Company agrees to make them available
to you for such purpose before the close of business on the Business Day
prior to the Closing Date.
(c) If any Terms Agreement provides for sales of Purchased Securities
pursuant to Delayed Delivery Contracts, the Company authorizes the
Underwriters to solicit offers to purchase Contract Securities pursuant to
Delayed Delivery Contracts substantially in the form of Schedule I attached
hereto (the "Delayed Delivery Contracts") with such changes therein as the
Company may approve. Delayed Delivery Contracts are to be with
institutional investors, including commercial and savings banks, insurance
companies, pension funds, investment companies and educational and
charitable institutions. At the time of purchase the Company will pay you
as compensation, for the accounts of the Underwriters, the compensation set
forth in such Terms Agreement in respect of the principal amount of
Contract Securities. The Underwriters will not have any responsibility in
respect of the validity or the performance of Delayed Delivery Contracts.
If the Company executes and delivers Delayed Delivery Contracts, the
Contract Securities shall be deducted from the Purchased Securities to be
purchased by the several Underwriters and the aggregate principal amount of
Purchased Securities to be purchased by each Underwriter shall be reduced
pro rata in proportion to the principal amount of Purchased Securities set
forth opposite each Underwriter's name in such Terms Agreement, except to
the extent that you determine that such reduction shall be otherwise
allocated and so advise the Company.
5
<PAGE>
3. COVENANTS. The Company covenants and agrees with each Underwriter that
they will furnish to counsel for the Underwriters, without charge, one signed
copy of the Registration Statement, including all exhibits, in the form it
became effective and of all amendments thereto and that, in connection with
each offering of Securities:
(a) The Company shall notify you promptly of any request by the
Commission for any amendment of or supplement to the Registration Statement
or the Prospectus, or for additional information; the Company shall prepare
and file with the Commission, promptly upon your request, any amendments of
or supplements to the Registration Statement or the Prospectus which, in
your opinion after consultation with the Company, may be necessary or
advisable in connection with the distribution of the Securities and the
Company shall not file any amendment or supplement to the Registration
Statement or the Prospectus or file any document under the Exchange Act
before the termination of the offering of the Securities if such document
would be deemed to be incorporated by reference therein which is not
approved by you after reasonable notice thereof, such approval not to be
unreasonably withheld or delayed. The Company shall notify you promptly of
the filing with the Commission of the Prospectus supplemented by the
Prospectus Supplement relating to the Purchased Securities. The Company
shall advise you promptly of the issuance by the Commission or any State or
other regulatory body of any stop order or other order suspending the
effectiveness of the Registration Statement, suspending or preventing the
use of the Prospectus, or suspending the qualification of the Securities
for offering or sale in any jurisdiction, or of the institution of any
proceedings for any such purpose; and the Company shall use its best
efforts to prevent the issuance of any stop order or other such order and,
should a stop order or other such order be issued, to obtain as soon as
possible the lifting thereof.
(b) The Company shall furnish to you, from time to time and without
charge, copies of the Registration Statement of which each Representative
shall receive a conformed copy and which shall include exhibits and all
amendments and supplements to any of such documents (including any
Incorporated Documents), in each case as soon as available and in such
quantities as you may from time to time reasonably request.
(c) If any event occurs as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary to amend the Registration Statement or
supplement the Prospectus to comply with the Securities Act, the Company
shall promptly notify you and shall amend the Registration Statement or
supplement the Prospectus or file such document (at the expense of the
Company) so as to correct such statement or omission or effect such
compliance.
(d) The Company shall take or cause to be taken all necessary action and
furnish to whomever you may direct such information as may be required in
qualifying the Purchased Securities (and the Common Stock, if applicable)
for sale under the laws of such jurisdictions as the Representative shall
designate and to continue such qualifications in effect for as long as may
be necessary for the distribution of the Purchased Securities (and the
Common Stock, if applicable); except that in no event shall the Company be
obligated in connection therewith to qualify as a foreign corporation, or
to execute a general consent for service of process.
(e) The Company shall make generally available to holders of the
Purchased Securities, in the manner contemplated by Rule 158(b) under the
Securities Act or otherwise, as soon as practicable after the date of the
applicable Terms Agreement, but in any event not later than 45 days after
the end of its fiscal quarter in which the first anniversary date of the
date of the Terms Agreement occurs (or 90 days if such fiscal quarter is
the last fiscal quarter of its fiscal year), an earnings statement
satisfying the requirements of Section 11(a) of the Securities Act and
covering a period of at least 12 consecutive months beginning after the
effective date of the Registration Statement.
(f) The Company shall apply the net proceeds of the sale of Purchased
Securities as set forth in the Prospectus.
(g) Whether or not this Agreement becomes effective or is terminated or
the sale of the Purchased Securities to you is consummated, the Company
shall pay or cause to be paid (A) all expenses (including
6
<PAGE>
transfer taxes) incurred in connection with the delivery to the
Underwriters of the Purchased Securities, (B) all fees and expenses
(including, without limitation, fees and expenses of the Company's
accountants and counsel, but excluding fees and expenses of counsel to the
Underwriters except as set forth in (C)) in connection with the
preparation, printing, filing, delivery and shipping of the Registration
Statement (including the financial statements therein and all amendments
and exhibits thereto) and the Prospectus as amended or supplemented, and
the printing, delivery and shipping of this Agreement, any Terms Agreement,
any agreement among or between Underwriters and other underwriting
documents, including the Blue Sky Survey and any legal investment survey,
(C) all filing fees and fees and disbursements of counsel to the
Underwriters incurred in connection with the qualification of the Purchased
Securities (and the Common Stock, if applicable) under state securities
laws as provided in Section 3(d) hereof, (D) the filing fee of the National
Association of Securities Dealers, Inc., if any, (E) any applicable listing
fees, (F) the cost of printing the Warrant Agreement and certificates
representing the Purchased Securities, (G) the cost and charges of the
Warrant Agent, (H) any fees payable to rating agencies in connection with
the rating of the Purchased Securities and (I) all other costs and expenses
incident to the performance of its obligations hereunder which are not
otherwise provided for in this Section. It is understood however, that,
except as provided in this Section 3(g), Section 5 and Section 6 hereof,
each of the Underwriters shall pay all of its own costs and expenses
including the fees of its counsel (except as set forth in (C) above) and
any advertising expenses connected with any offers it may make. If the sale
of the Purchased Securities provided for herein is not consummated by
reason or acts of the Company pursuant to Section 6 hereof which prevent
this Agreement or any Terms Agreement from becoming effective, or by reason
of any failure, refusal or inability on the part of the Company to perform
any agreement on its part to be performed or because any other condition of
the Underwriters' obligations hereunder is not fulfilled, the Company shall
reimburse each of the Underwriters for all reasonable out-of-pocket
disbursements (including fees and disbursements of counsel) incurred by the
Underwriters in connection with your investigation of or any preparation by
them in respect of marketing the Purchased Securities or in contemplation
of performing their respective obligations hereunder.
(h) Prior to the Closing Date, the Company, at your request, shall
furnish to you as soon as they have been prepared by the Company a copy of
any unaudited interim consolidated financial statements of the Company and
its Subsidiaries for any period subsequent to the period covered by the
financial statements appearing in the Registration Statement and the
Prospectus.
(i) To use its best efforts to effect the listing of the Purchased
Securities (including, if applicable, the shares of Common Stock issuable
upon the conversion, exchange or exercise of the Purchased Securities) on
the New York Stock Exchange on the date of the Terms Agreement.
(j) To reserve and keep available at all times, free of preemptive
rights, sufficient shares of Common Stock to satisfy any obligations to
issue shares of Common Stock upon conversion, exchange or exercise of all
of the Purchased Securities that are convertible into or exchangeable or
exercisable for the Common Stock.
4. CONDITIONS OF YOUR OBLIGATIONS. Your obligations are subject to the
accuracy, as of the date hereof and the Closing Date (as if made at such
Closing Date), of the representations and warranties of the Company contained
herein, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) The Company shall have filed with the Commission on a timely basis
pursuant to Rule 424(b) under the Securities Act, the Prospectus as
supplemented by the Prospectus Supplement covering the Purchased
Securities. No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
be pending, threatened or contemplated by the Commission or any state
securities or Blue Sky authority.
(b) You shall not have advised the Company that the Registration
Statement, any Prospectus, or any amendment or supplement thereto, contains
an untrue statement of fact which, in your opinion, is material
7
<PAGE>
or omits to state a fact which, in your opinion, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(c) You shall have received an opinion of Austin M. O'Toole, Esq., Senior
Vice President, Secretary and Deputy General Counsel of the Company, dated
the Closing Date and satisfactory to Cahill Gordon & Reindel, your counsel,
to the effect that:
(i) each of the Company and its Subsidiaries has been duly
incorporated and is a validly existing corporation in good standing
under the laws of its respective jurisdiction of incorporation with
full corporate power and authority to own and occupy its properties and
carry on its business as presently conducted and as described in the
Prospectus, and the Company and each of its Subsidiaries is registered
or qualified to conduct business and is in good standing in each
jurisdiction in which, to the best of such counsel's knowledge, their
failure to so register or qualify would have a material adverse effect
on the Company and its Subsidiaries taken as a whole; all of the
outstanding capital stock or other equity securities of each of the
Subsidiaries of the Company have been duly and validly authorized and
issued, are fully paid and nonassessable, and are owned by the Company
free and clear of any mortgage, pledge (other than any negative pledge
agreement to which the Company or any of its Subsidiaries may be a
party), security interest or restrictions on transferability or voting,
other than certain equity securities of Colorado Interstate Gas
Company, which has outstanding capital stock held by entities not
affiliated with the Company but which Subsidiary the Company, directly
or indirectly, has control of its voting power and management, and
other than the capital stock of the first tier subsidiaries of Coastal
Natural Gas Company which has been pledged to secure certain
borrowings;
(ii) this Agreement, the Terms Agreement and the Warrant Agreement
have been duly authorized, executed and delivered by the Company, and
this Agreement, the Terms Agreement and the Warrant Agreement are
legal, valid and binding agreements of the Company enforceable in
accordance with their respective terms, except that (a) the
enforceability hereof and thereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceedings therefor may be
brought and (c) rights to indemnity and contribution hereunder may be
limited by Federal and state securities laws or the policies underlying
such laws;
(iii) the Delayed Delivery Contracts, if any, have been duly
authorized, executed and delivered by the Company and (assuming that
they have been duly authorized, executed and delivered by the
purchasers thereunder) are valid and binding agreements of the Company;
(iv) to the best knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened to which the Company or
any of its Subsidiaries is a party, or of which the business or
properties of the Company or any of its Subsidiaries is the subject,
which are required to be disclosed in the Registration Statement and
the Prospectus and are not so disclosed and there is no contract or
document concerning the Company or any of its Subsidiaries of a
character required to be described in the Prospectus or to be filed as
an exhibit to the Registration Statement which is not described or
filed as required;
(v) the execution and delivery of this Agreement, the Terms Agreement
and any Delayed Delivery Contract, the authorization, issuance and sale
of the Purchased Securities, the fulfillment of the terms of the
Warrant Agreement, this Agreement, the Certificate of Designation, the
Terms Agreement and any Delayed Delivery Contract, and the consummation
of the transactions contemplated by the Warrant Agreement, this
Agreement, the Certificate of Designation, the Terms Agreement and any
Delayed Delivery Contract, will not conflict with or constitute a
breach of, or default (with the passage of time or otherwise) under, or
result in the imposition of a lien on any properties of the Company or
its Subsidiaries or an acceleration of indebtedness pursuant to, the
certificate of incorporation and by-laws, or other equivalent
instruments of the Company or any of its Subsidiaries or, to the best
of such counsel's knowledge, any bond, debenture, note or any other
evidence of indebtedness or any
8
<PAGE>
indenture, mortgage, deed of trust, or any other material agreement or
instrument to which the Company or any of its Subsidiaries is subject
where such breach or default would have a material adverse effect on
the Company and its Subsidiaries taken as a whole, or any law,
administrative regulation or court or governmental agency or authority
ruling or decree known to such counsel to be applicable to the Company
or any of its Subsidiaries or any of their properties or assets; and
all legally required proceedings in connection with the authorization,
issuance and sale of the Purchased Securities in accordance with the
terms of this Agreement, the Terms Agreement and the Warrant Agreement
have been taken and, except for permits and similar authorizations
required under the securities or Blue Sky laws of certain jurisdictions
(as to which such counsel need express no opinion), all consents,
approvals, authorizations or other orders of any regulatory body,
administrative agency or other governmental body legally required for
the valid issuance and sale of the Purchased Securities or any
transactions contemplated hereunder, if applicable, the issuance of the
Common Stock upon conversion, exchange or exercise of the Purchased
Securities or the filing of the Certificate of Designation with the
Secretary of State of the State of Delaware have been obtained;
(vi) the Underwriters' Securities have been duly authorized and, with
respect to the Warrants, when executed and authenticated in accordance
with the terms of the Warrant Agreement and delivered to, and paid for
by, you will be validly issued and fully paid and non-assessable or,
with respect to the Warrants, legal, valid and binding obligations of
the Company; the Contract Securities have been duly authorized and,
with respect to the Warrants, when executed and authenticated in
accordance with the terms of the Warrant Agreement and when issued and
delivered against payment as provided in the Delayed Delivery
Contracts, will be validly issued and fully paid and non-assessable or,
with respect to the Warrants, legal, valid and binding obligations of
the Company, enforceable in accordance with their terms;
(vii) the Registration Statement has become effective under the
Securities Act, and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or
are pending or contemplated;
(viii) the number of authorized shares of capital stock of the
Company is as set forth in the Prospectus under "Capitalization" and
the authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(ix) the Purchased Securities, the Delayed Delivery Contracts (if
any) and the Warrant Agreement conform in all material respects to the
descriptions thereof in the Prospectus;
(x) except as to financial statements and schedules and other
financial or statistical data included therein, and the exhibits
thereto, as to which such counsel need not express any opinion, (a) the
Registration Statement and the Prospectus and any supplements or
amendments thereto comply as to form in all material respects with the
Securities Act and (b) the Incorporated Documents comply as to form in
all material respects with the requirements of the Exchange Act and, to
the best knowledge of such counsel, no such Incorporated Document
contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(xi) the issuance of the Purchased Securities is not subject to
preemptive rights arising by operation of law or under the charter or
by-laws of the Company; and no holder of the Purchased Securities will
be subject to personal liability solely by reason of being such a
holder; and
(xii) if the Purchased Securities are convertible into or
exchangeable or exercisable for Common Stock, upon issuance and
delivery of the Purchased Securities, the Purchased Securities shall be
convertible, exchangeable or exercisable at the option of the holder
thereof into or for Common Stock in accordance with the terms of the
Purchased Securities and the Certificate of Designation or Warrant
Agreement; the Common Stock issuable upon conversion, exchange or
exercise of the Purchased Securities has been duly authorized and
validly reserved for issuance upon such conversion, exchange
9
<PAGE>
or exercise by all necessary corporate action, and such Common Stock,
when issued upon such conversion, exchange or exercise, will be validly
issued, fully paid and non-assessable; no holder of the Common Stock
will be subject to personal liability solely by reason of being such a
holder; and the issuance of such shares upon such conversion, exchange
or exercise will not be subject to preemptive rights arising by
operation of law or under the charter or by-laws of the Company.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company and
you at which the contents of the Registration Statement and Prospectus and
related matters were discussed and, although such counsel is not passing
upon and does not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement and
Prospectus (except to the extent stated in paragraph (ix) above), on the
basis of the foregoing (relying as to materiality to a large extent upon
the opinions of officers and other representatives of the Company), no
facts have come to the attention of such counsel that lead him to believe
that either the Registration Statement or any amendment thereto at the time
such Registration Statement or amendment became effective contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus as of its date or any supplement
thereto as of its date, and as of the Closing Date, contained an untrue
statement of a material fact or omitted to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading (it being understood that such
counsel need not comment as to the financial statements, schedules and
other statistical and financial data included in the Registration Statement
or Prospectus or the exhibits to the Registration Statement).
(d) You shall have received on the Closing Date from Cahill Gordon &
Reindel, your counsel, an opinion to the effect set forth in clauses (ii),
(iii), (vi), (vii), (ix), (x)(a) (except with respect to the Incorporated
Documents) and (x)(b) of Section 4(c) hereof. In addition, such counsel
shall state that such counsel has participated in conferences with officers
and other representatives of the Company, counsel for the Company,
representatives of the independent public accountants for the Company and
your representatives at which the contents of the Registration Statement
and Prospectus and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and Prospectus (except to the extent provided in
paragraph (ix) of Section 4(c) hereof), on the basis of the foregoing
(relying as to materiality to a large extent upon the opinions of officers
and other representatives of the Company), no facts have come to the
attention of such counsel that lead them to believe that either the
Registration Statement or any amendment thereto at the time such
Registration Statement or amendment became effective contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus as of its date or any supplement thereto
as of its date contained an untrue statement of a material fact or omitted
to state a material fact necessary in order the make the statements
therein, in the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no comment
with respect to the financial statements, schedules and other financial or
statistical data included or incorporated by reference in the Registration
Statement or Prospectus or the exhibits to the Registration Statement).
(e) There shall have been furnished to you a certificate, dated the
Closing Date and addressed to you, signed by the President, or any Vice
President and the Chief Financial Officer, any financial Vice President or
the Treasurer of the Company to the effect that: (i) the representations
and warranties of the Company contained in this Agreement are true and
correct, as if made at and as of the Closing Date, and the Company has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing Date; (ii) no
stop order suspending the effectiveness of the Registration Statement has
been issued, and no proceedings for that purpose have been initiated or
threatened; (iii) all filings required by Rule 424 of the Securities Act
have been made; (iv) the signers of said certificate have carefully
examined the Registration Statement and the Prospectus, and any amendments
or supplements thereto
10
<PAGE>
(including any documents filed under the Exchange Act and deemed to be
incorporated by reference therein), and such documents contain all
statements and information required to be included therein, and do 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 (v) since the execution of the Terms
Agreement, there has occurred no event required to be set forth in an
amendment or supplement to the Registration Statement or the Prospectus
which has not been so set forth; and there has been no document required to
be filed under the Exchange Act that upon such filing would be deemed to be
incorporated by reference into the Prospectus that has not been so filed.
(f) Since the execution of the Terms Agreement, neither the Company nor
any of its Subsidiaries shall have sustained any loss by fire, flood,
accident or other calamity, or shall have become a party to or be subject
to any litigation, which is material to the Company and its Subsidiaries
taken as a whole, nor shall there have been a material adverse change in
the general affairs, business, key personnel, capitalization, financial
position or net worth of the Company and its Subsidiaries taken as a whole,
whether or not arising in the ordinary course of business, which loss,
litigation or change, in your judgment, shall render it inadvisable to
proceed with the delivery of the Purchased Securities.
(g) On the date of execution of the Terms Agreement and the Closing Date
you shall have received a letter of Deloitte & Touche LLP, dated the date
of execution of the Terms Agreement and the Closing Date, as the case may
be, and addressed to you, confirming that they are independent certified
public accountants, within the meaning of the Securities Act, and stating,
as of the date of such letter (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given or incorporated in the Prospectus, and a
date not more than five days prior to the date of such letter), the
conclusions and findings of such firm with respect to the financial
information and other matters requested to be covered by its letter
delivered to you concurrently with the execution of the Terms Agreement
and, with respect to the letter delivered on the Closing Date, confirming
the conclusions and findings set forth in such prior letter.
(h) That the Company shall have accepted Delayed Delivery Contracts in
any case where sales of Contract Securities arranged by the Underwriters
have been approved by the Company.
(i) You shall have been furnished with such additional documents and
certificates as you may reasonably request.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and to counsel for the
Underwriters. The Company shall furnish to you such conformed copies of
such opinions, certificates, letters and other documents as you shall
reasonably request. If any of the conditions specified in this Section 4
shall not have been fulfilled when and as required by this Agreement, this
Agreement and the applicable Terms Agreement and all obligations of the
Underwriters hereunder and thereunder may be cancelled at, or at any time
prior to, the Closing Date, by you. Any such cancellation shall be without
liability of the Underwriters to the Company. Notice of such cancellation
shall be given to the Company in writing, or by telegraph or telephone and
confirmed in writing.
5. INDEMNIFICATION AND CONTRIBUTION. (a) The Company shall indemnify and
hold harmless each of the Underwriters against any loss, claim, damage or
liability to which the Underwriters may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage or liability (or action
in respect thereof) arises out of or is based upon (i) any untrue statement or
alleged untrue statement made by the Company in Section 1 hereof, or (ii) any
untrue statement or alleged untrue statement of a material fact contained (A)
in the Registration Statement or the Prospectus or any amendment or supplement
thereto, or (B) in any Blue Sky application or other document executed by the
Company specifically for the purpose or based upon any written information
furnished by the Company filed in any state or other jurisdiction in order to
qualify any or all of the Purchased Securities under the securities laws
thereof (any such application, document or information being hereinafter
called "Blue Sky Information"), or (iii) the omission or alleged omission to
state in the Registration Statement
11
<PAGE>
or the Prospectus or any amendment or supplement thereto or in any Blue Sky
Information a material fact required to be stated therein or necessary to make
the statements therein not misleading; and shall reimburse each of the
Underwriters for any legal or other reasonable expenses as incurred by the
Underwriters in connection with investigating or defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action, notwithstanding the possibility that payments for
such expenses might later be held to be improper, in which case the person
receiving them shall promptly refund them; provided, however, that the Company
shall not be liable to an Underwriter in any such case to the extent, but only
to the extent, that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter specifically for use
in the preparation of the Registration Statement, Prospectus or any amendment
or supplement thereto, or any Blue Sky Information.
(b) Each of the Underwriters, severally but not jointly, shall indemnify and
hold harmless the Company against any loss, claim, damage or liability to
which the Company may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage or liability (or action in respect
thereof) arises out of or is based upon (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in the Registration
Statement or the Prospectus or any amendment or supplement thereto, or (B) in
any Blue Sky Information, or (ii) the omission or alleged omission to state in
the Registration Statement or the Prospectus or any amendment or supplement
thereto or in any Blue Sky Information a material fact required to be stated
therein or necessary to make the statements therein not misleading; and shall
reimburse any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending against any such loss, claim,
damage, liability or action, notwithstanding the possibility that payments for
such expenses might later be held to be improper, in which case the Company
shall promptly refund them; provided, however, that such indemnification and
expense reimbursement shall be available from an Underwriter to the extent,
but only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by such Underwriter
specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however,
that the failure to notify the indemnifying party shall not relieve it from
any liability which it may have to an indemnified party otherwise than under
such subsection. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party,
to assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under such
subsection for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; except that you shall have the right to employ counsel
to represent you in connection with any claim in respect of which indemnity
may be sought by the Underwriters against the Company under such subsection
if, in your reasonable judgment, it is advisable for you to be represented by
separate counsel, and in that event the reasonable fees and expenses of such
separate counsel shall be paid by the Company.
(d) If the indemnification provided for in this Section 5 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in subsection (a) or (b) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the
offering of the Purchased Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the
12
<PAGE>
Company on the one hand and the Underwriters on the other in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Purchased Securities (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters as set forth in the Prospectus
Supplement covering the Purchased Securities. Relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were to be
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to in the
first sentence of this subsection (d). The amount paid by an indemnified party
as a result of the losses, claims, damages or liabilities referred to in the
first sentence of this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection
with investigating or defending against any action or claim which is the
subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Purchased
Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Each party entitled to contribution agrees that
upon the service of a summons or other initial legal process upon it in any
action instituted against it in respect of which contribution may be sought,
it shall promptly give written notice of such service to the party or parties
from whom contribution may be sought, but the omission so to notify such party
or parties of any such service shall not relieve the party from whom
contribution may be sought from any obligation it may have hereunder or
otherwise.
(e) The obligations of the Company under this Section 5 shall be in addition
to any liability which the Company may otherwise have, and shall extend, upon
the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Securities Act and the Exchange Act; and
the obligations of the Underwriters under this Section 5 shall be in addition
to any liability that the respective Underwriters may otherwise have, and
shall extend, upon the same terms and conditions, to each director of the
Company (including any person who, with his or her consent, is named in the
Registration Statement as about to become a director of the Company), to each
officer of the Company who has signed the Registration Statement and to each
person, if any, who controls the Company within the meaning of the Securities
Act.
6. EFFECTIVE DATE AND TERMINATION OF TERMS AGREEMENT. This Agreement shall
become effective (a) at 11:00 A.M., New York City time, on the first full
Business Day following the date of the Terms Agreement or (b) at such earlier
time after the date of the Terms Agreement as you shall first release the
Purchased Securities for sale to the public. You shall notify the Company
immediately after you have taken any action which causes this Agreement to
become effective. Until this Agreement is effective, it may be terminated by
the Company by giving notice as hereinafter provided to you or by you by
giving notice as hereinafter provided to the Company, except that the
provisions of Section 3(g) and Section 5 shall at all times be effective.
Your obligations under any Terms Agreement may be terminated by you by
giving notice as hereinafter provided to the Company, if (i) the Company shall
have failed, refused or been unable, at or prior to the Closing Date to
perform any agreement on its part to be performed hereunder, (ii) any other
condition of the obligations of the Underwriters hereunder is not fulfilled,
(iii) trading in securities generally on the New York Stock Exchange ("NYSE")
or the American Stock Exchange or the over-the-counter market shall have been
suspended or minimum prices shall have been established on either of such
exchanges or such market by the Commission or by such exchange or other
regulatory body or governmental authority having jurisdiction, (iv) a general
13
<PAGE>
banking moratorium shall have been declared by Federal or state authorities,
(v) the United States engages in hostilities or there is an escalation of
hostilities involving the United States or there is a declaration of war or
national emergency by the United States after the date hereof which, in your
judgment, makes it inadvisable or impracticable to proceed with the delivery
of the Purchased Securities, or (vi) there shall have been such a material
change in general economic, political or financial conditions or if the effect
of international conditions on the financial markets in the United States
shall be such as, in your judgment, makes it inadvisable or impracticable to
proceed with the delivery of the Purchased Securities. Any termination of this
Agreement pursuant to this Section 6 shall be without liability on the part of
the Company or the Underwriters except as otherwise provided in Sections 3(g)
and 5 hereof.
Any notice referred to above may be given at the address specified in
Section 9 hereof in writing or by telegraph or telephone, and if by telegraph
or telephone, shall be immediately confirmed in writing.
7. INCREASE IN UNDERWRITERS' COMMITMENTS. If any Underwriter shall default
in its obligation to take up and pay for the Purchased Securities to be
purchased by it under any Terms Agreement and if the number of Purchased
Securities which all Underwriters so defaulting shall have so failed to take
up and pay for does not exceed 10% of the total number of Purchased Securities
agreed to be purchased pursuant to such Terms Agreement, the non-defaulting
Underwriters shall take up and pay for (in addition to the number of Purchased
Securities they are obligated to purchase pursuant to such Terms Agreement)
the number of Purchased Securities agreed to be purchased by all such
defaulting Underwriters, as hereinafter provided. Such Purchased Securities
shall be taken up and paid for by such non-defaulting Underwriter or
Underwriters in such amount or amounts as you may designate with the consent
of each Underwriter so designated or, in the event no such designation is
made, such Purchased Securities shall be taken up and paid for by all non-
defaulting Underwriters pro rata in proportion to the number of Purchased
Securities they have agreed to purchase under such Terms Agreement.
Without relieving any defaulting Underwriter from its obligations hereunder,
the Company agrees with the non-defaulting Underwriters that it will not sell
any Purchased Securities under any Terms Agreement unless all of the
Underwriters' Securities under any such Terms Agreement are purchased by the
Underwriters (or by substituted underwriters selected by you with the approval
of the Company or selected by the Company with your approval).
If a new underwriter or underwriters are substituted by the Underwriters or
by the Company for a defaulting Underwriter or Underwriters in accordance with
the foregoing provision, the Company or you shall have the right to postpone
the Closing Date for a period not exceeding five full business days in order
that necessary changes in the Registration Statement and Prospectus and other
documents may be effected.
The term Underwriter as used in this Agreement shall refer to and include
any underwriter substituted under this Section 7.
8. SURVIVAL OF INDEMNITIES, CONTRIBUTIONS, WARRANTIES AND REPRESENTATIONS.
The indemnity and contribution agreements contained in Section 5 and the
representations, warranties and agreements of the Company in Sections 1 and 3
shall survive the delivery of the Purchased Securities to the Underwriters
hereunder and shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement or any investigation made by or
on behalf of any indemnified party.
9. NOTICES. Except as otherwise provided in this Agreement, (a) whenever
notice is required by the provisions of this Agreement to be given to the
Company, such notice shall be in writing addressed to the Company at The
Coastal Corporation, Coastal Tower, Nine Greenway Plaza, Houston, Texas 77046-
0995, Attention: Director--Financial Administration, with a copy to Austin M.
O'Toole, Esq.; and (b) whenever notice is required by the provisions of this
Agreement to be given to the Underwriters, such notice shall be in writing and
addressed to the Underwriters at their respective addresses furnished to the
Company in writing for the purpose of communications hereunder.
14
<PAGE>
10. INFORMATION FURNISHED BY UNDERWRITERS. The statements with respect to
the public offering of the Purchased Securities on the cover page of the
Prospectus Supplement covering the Purchased Securities and under the caption
"Plan of Distribution", if any in such Prospectus Supplement constitute the
only information furnished to the Company in writing on behalf of or by you
expressly for use in the Registration Statement, the Prospectus, or any
amendment or supplement thereto referred to in this Agreement.
11. PARTIES. This Agreement shall inure to the benefit of and be binding
upon the Underwriters, the Company, any officer, director or controlling
person referred to in Section 5 hereof, and their respective successors and
assigns, and no other person shall acquire or have any right by virtue of this
Agreement. The term "successors and assigns", as used in this Agreement, shall
not include any purchaser of any of the Purchased Securities from the
Underwriters merely by reason of such purchase.
12. DEFINITION OF "BUSINESS DAY" AND "SUBSIDIARY". For purposes of this
Agreement, (a) "Business Day" means any day on which the NYSE is open for
trading, and (b) "Subsidiary" has the meaning set forth in Rule 405 of the
Securities Act.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
THE CHOICE OF LAW OR CONFLICT OF LAWS PRINCIPLES THEREOF.
14. COUNTERPART. This Agreement may be signed in one or more counterparts,
each of which shall constitute an original and all of which together shall
constitute one and the same agreement.
Please confirm, by signing and returning to us four counterparts of this
Agreement, that the foregoing correctly sets forth the Agreement between you
and the Company.
Very truly yours,
THE COASTAL CORPORATION
By: _________________________________
Confirmed and accepted as of
the date first above mentioned:
[Lead Underwriters]
By:
By: _________________________________
15
<PAGE>
SCHEDULE A
TO
TERMS AGREEMENT
<TABLE>
<CAPTION>
NUMBER
OF
PURCHASED
NAME SECURITIES
---- -----------
<S> <C>
-----------
Total.....................................................
===========
</TABLE>
<PAGE>
EXHIBIT A
TERMS AGREEMENT
[TITLE OF SECURITIES]
[Date]
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Dear Sirs:
The Coastal Corporation (the "Company") and [Lead Underwriters] [as
representatives of the underwriters named in Schedule A hereto] (the
"Underwriters") have entered into an Underwriting Agreement (the "Underwriting
Agreement"), dated , relating to the issuance from time to time by the
Company of its [Title of Securities]. This Terms Agreement, relating to the
Purchased Securities referred to below, is being entered into pursuant to the
Underwriting Agreement. Capitalized terms used herein, not otherwise defined,
have the meanings given them in the Underwriting Agreement.
The Underwriters understand that the Company proposes to issue and sell
[ ] of [Title of Securities] (the "Purchased Securities"). Subject to the
terms, conditions, representations and warranties set forth or incorporated by
reference herein, the Company agrees to sell to the Underwriters and the
Underwriters agree, severally but not jointly, to purchase from the Company
the Purchased Securities in the respective numbers set forth next to their
names in Schedule A hereto, at [ ]. The Prospectus Supplement with
respect to the Purchased Securities is dated and includes the
Prospectus dated .
The Underwriters will pay for such Purchased Securities upon delivery
thereof in New York City at 10:00 A.M. (New York time) on (the
"Closing Date") in New York Clearing House funds, or at such other time on the
Closing Date as shall be agreed upon by the Company and the Underwriters.
The Purchased Securities shall have the following terms, in addition to
those set forth in the Indenture:
<TABLE>
<S> <C>
(a) Dividends: % per annum
(b) Conversion:
(c) Initial Public Of-
fering Price:
(d) Dividend Payment and of each year, commencing
Dates: .
(e) Redemption:
(f) Exercise Price:
</TABLE>
All provisions contained in the Underwriting Agreement are incorporated by
reference herein in their entirety and shall be deemed to be part of this
Agreement to the same extent as if such provisions had been set forth in full
herein.
1
<PAGE>
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW OR
CONFLICT OF LAWS PRINCIPLES THEREOF.
This instrument may be signed by the parties in counterparts which together
shall constitute one and the same agreement between the parties and shall
become effective at such time as each of the parties shall have signed such
counterparts and shall have notified the other party thereof.
Please confirm your agreement herewith by having an authorized officer sign
a copy of this Agreement in the space provided below.
Very truly yours,
[Lead Underwriters]
By:
By: _________________________________
Name:
Title:
Accepted and Agreed to
as of the date first
above written
The Coastal Corporation
By: _________________________________
Name:
Title:
2
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
THE COASTAL CORPORATION
[LOGO OF COASTAL AND
CORP. APPEARS HERE] , TRUSTEE
--------------------
INDENTURE
DATED AS OF , 199
--------------------
SENIOR DEBT SECURITIES
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
INDENTURE
TIA SECTION SECTION
----------- ---------
<C> <S> <C>
Section 310 (a)(1).......................................... 7.10
(a)(2).......................................... 7.10
(a)(3).......................................... N.A.
(a)(4).......................................... N.A.
(a)(5).......................................... 7.08
(b)............................................. 7.08; 7.10; 10.02
(c)............................................. N.A.
Section 311 (a)............................................. 7.11
(b)............................................. 7.11
(c)............................................. N.A.
Section 312 (a)............................................. 2.06
(b)............................................. 10.03
(c)............................................. 10.03
Section 313 (a)............................................. 7.06
(b)(1).......................................... N.A.
(b)(2).......................................... 7.06
(c)............................................. 7.06; 10.02
(d)............................................. 7.06
Section 314 (a)............................................. 4.06; 10.02
(b)............................................. N.A.
(c)(1).......................................... 10.04
(c)(2).......................................... 10.04
(c)(3).......................................... N.A.
(d)............................................. N.A.
(e)............................................. 10.05
(f)............................................. N.A.
Section 315 (a)............................................. 7.01(b)
(b)............................................. 7.05; 10.02
(c)............................................. 7.01(a)
(d)............................................. 7.01(c)
(e)............................................. 6.11
Section 316 (a)(last sentence).............................. 2.10
(a)(1)(A)....................................... 6.05
(a)(1)(B)....................................... 6.04
(a)(2).......................................... N.A.
(b)............................................. 6.07
(c)............................................. 9.04
Section 317 (a)(1).......................................... 6.08
(a)(2).......................................... 6.09
(b)............................................. 2.05
Section 318 (a)............................................. 10.01
</TABLE>
- ---------
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of this Indenture.
<PAGE>
i
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Recitals of the Company................................................... 1
ARTICLE 1
Definitions and Incorporation by Reference
Section 1.01. Definitions.............................................. 1
Section 1.02. Incorporation by Reference of Trust Indenture Act........ 8
Section 1.03. Rules of Construction.................................... 8
ARTICLE 2
The Securities
Section 2.01. Form of Securities....................................... 9
Section 2.02. Title and Terms.......................................... 10
Section 2.03. Execution and Authentication............................. 12
Section 2.04. Registrar and Paying Agent............................... 15
Section 2.05. Paying Agent to Hold Money in Trust...................... 15
Section 2.06. Securityholder Lists..................................... 15
Section 2.07. Transfer and Exchange.................................... 16
Section 2.08. Replacement Securities................................... 18
Section 2.09. Outstanding Securities................................... 18
Section 2.10. Treasury Securities...................................... 19
Section 2.11. Temporary Securities..................................... 19
Section 2.12. Cancellation............................................. 20
Section 2.13. Defaulted Interest....................................... 20
Section 2.14. Persons Deemed Owners.................................... 20
ARTICLE 3A
Redemption
Section 3A.01. Right of Redemption...................................... 21
Section 3A.02. Applicability of Article................................. 21
Section 3A.03. Election to Redeem; Notice to Trustee.................... 21
Section 3A.04. Selection by Trustee of Securities to be Redeemed........ 21
Section 3A.05. Notice of Redemption..................................... 22
Section 3A.06. Deposit of Redemption Price.............................. 23
Section 3A.07. Securities Payable on Redemption Date.................... 23
Section 3A.08. Securities Redeemed in Part.............................. 23
</TABLE>
<PAGE>
ii
ARTICLE 3B
Sinking Fund
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Section 3B.01. Sinking Fund Payments.................................... 24
Section 3B.02. Satisfaction of Sinking Fund Payments with Securities.... 24
Section 3B.03. Redemption of Securities for Sinking Fund................ 25
ARTICLE 4
Covenants
Section 4.01. Payment of Securities.................................... 25
Section 4.02. Maintenance of Office or Agency.......................... 26
Section 4.03. Corporate Existence...................................... 26
Section 4.04. Liquidation.............................................. 27
Section 4.05. Compliance Certificate................................... 28
Section 4.06. SEC Reports.............................................. 28
Section 4.07. Waiver of Stay, Extension or Usury Laws.................. 29
Section 4.08. Restrictions on Liens.................................... 29
Section 4.09. Restrictions on Sales and Leasebacks..................... 30
ARTICLE 5
Successor Corporation
Section 5.01. When Company May Merge, etc. ............................ 31
Section 5.02. Successor Corporation Substituted........................ 32
ARTICLE 6
Default and Remedies
Section 6.01. Events of Default........................................ 32
Section 6.02. Acceleration............................................. 33
Section 6.03. Other Remedies........................................... 34
Section 6.04. Waiver of Past Defaults.................................. 35
Section 6.05. Control by Majority...................................... 35
Section 6.06. Limitation on Suits...................................... 35
</TABLE>
<PAGE>
iii
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Section 6.07. Rights of Holders to Receive Payment..................... 36
Section 6.08. Collection Suit by Trustee............................... 36
Section 6.09. Trustee May File Proofs of Claim......................... 36
Section 6.10. Priorities............................................... 37
Section 6.11. Undertaking for Costs.................................... 37
ARTICLE 7
Trustee
Section 7.01. Duties of Trustee........................................ 38
Section 7.02. Rights of Trustee........................................ 39
Section 7.03. Individual Rights of Trustee............................. 39
Section 7.04. Trustee's Disclaimer..................................... 40
Section 7.05. Notice of Defaults....................................... 40
Section 7.06. Reports by Trustee to Holders............................ 40
Section 7.07. Compensation and Indemnity............................... 40
Section 7.08. Replacement of Trustee................................... 41
Section 7.09. Successor Trustee by Merger, etc......................... 42
Section 7.10. Eligibility; Disqualification............................ 42
Section 7.11. Preferential Collection of Claims Against Company........ 43
ARTICLE 8
Discharge of Indenture
Section 8.01. Termination of Company's Obligations..................... 43
Section 8.02. Application of Trust Money............................... 44
Section 8.03. Repayment to Company..................................... 45
Section 8.04. Reinstatement............................................ 45
Section 8.05. Indemnity for U.S. Government Obligations................ 45
ARTICLE 9
Amendments, Supplements and Waivers
Section 9.01. Without Consent of Holders............................... 46
Section 9.02. With Consent of Holders.................................. 46
Section 9.03. Compliance With Trust Indenture Act...................... 48
Section 9.04. Revocation and Effect of Consents........................ 48
Section 9.05. Notation On or Exchange of Securities.................... 49
Section 9.06. Trustee to Sign Amendments, etc.......................... 49
</TABLE>
<PAGE>
iv
ARTICLE 10
Miscellaneous
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Section 10.01. Trust Indenture Act Controls............................ 49
Section 10.02. Notices................................................. 49
Section 10.03. Communications by Holders With Other Holders............ 50
Section 10.04. Certificate and Opinion as to Conditions Precedent...... 50
Section 10.05. Statements Required in Certificate or Opinion........... 50
Section 10.06. Rules by Trustee, Paying Agent, Registrar............... 51
Section 10.07. Legal Holidays.......................................... 51
Section 10.08. Governing Law........................................... 51
Section 10.09. No Adverse Interpretation of Other Agreements........... 51
Section 10.10. No Recourse Against Others.............................. 51
Section 10.11. Successors.............................................. 52
Section 10.12. Duplicate Originals..................................... 52
Section 10.13. Separability............................................ 52
Section 10.14. Action of Holders When Securities are Denominated in
Different Currencies................................... 53
Section 10.15. Monies of Different Currencies to be Segregated......... 53
Section 10.16. Payment to be in Proper Currency........................ 53
Signatures.............................................................. 54
Exhibit A--Form of Security............................................. A-1
</TABLE>
- ---------
NOTE: This Table of Contents shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
INDENTURE, dated as of , 199 between The Coastal Corporation, a Dela-
ware corporation (the "Company"), and , as Trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this Indenture
to provide for the issuance from time to time of its unsecured notes, deben-
tures or other evidences of indebtedness (collectively, the "Securities"), to
be issued from time to time in one or more series (a "Series") as provided in
this Indenture and as shall be provided, in respect of any Series, in or pur-
suant to the Authorizing Resolution hereinafter referred to and/or in the in-
denture supplemental hereto (if any) relating to such Series.
ARTICLE 1
Definitions and Incorporation by Reference
Section 1.01. Definitions.
"Affiliate" of any specified person means any other person directly or indi-
rectly controlling or controlled by or under direct or indirect common control
with such specified person. For the purposes of this definition, "control"
when used with respect to any person means the power to direct the management
and policies of such person, directly or indirectly, whether through the own-
ership of voting securities, by contract or otherwise; and the terms "control-
ling" and "controlled" have meanings correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Attributable Debt" means, with respect to any Sale and Leaseback Transaction
as of any particular time, the present value (discounted at the rate of inter-
est implicit in the terms of the lease) of the obligations of the lessee under
such lease for net rental payments during the remaining term of the lease (in-
cluding any period for which such lease has been extended or may, at the op-
tion of the Company, be extended).
"Authorizing Resolution" means a Board Resolution providing for the issuance
of a Series of Securities.
<PAGE>
2
"Bankruptcy Law" shall have the meaning provided in Section 6.01.
"Board of Directors" means the Board of Directors of the Company or any duly
authorized committee of the Board.
"Board Resolution" means a copy of a resolution certified by the Secretary or
an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such certifica-
tion, and delivered to the Trustee (except as provided in Section 2.03).
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means, with respect to any person, any and all shares, inter-
ests, participations or other equivalents (however designated) of corporate
stock of such person other than Mandatory Redemption Preferred Stock.
"Capitalized Lease Obligation" means Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting pur-
poses in accordance with generally accepted accounting principles and the
amount of such Indebtedness shall be the capitalized amount of such obliga-
tions determined in accordance with such principles.
"Company" means the party named as such in this Indenture until a successor
replaces it pursuant to this Indenture and thereafter means the successor.
"Company Request" and "Company Order" mean, respectively, a written request
or order signed in the name of the Company by two Officers of the Company or
by an Officer and the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, and delivered to the Trustee in respect of the Series to
which the Company Request or Company Order shall relate.
"Consolidated Net Tangible Assets" means the total assets appearing on a con-
solidated balance sheet of the Company and its Subsidiaries less, without du-
plication: (i) current liabilities; (ii) reserves for estimated rate refunds
pending the outcome of a rate proceeding to the extent such refunds have not
been finally determined; (iii) all intangible assets; and (iv) deferred income
tax assets.
<PAGE>
3
"Consolidated Subsidiary" means a Subsidiary which for financial reporting
purposes is accounted for by the Company as a consolidated subsidiary.
"Corporate Trust Office" or other similar term means the principal office of
the Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date hereof is located at ; the
Trustee will notify the Company of any change thereof.
"Custodian" shall have the meaning provided in Section 6.01.
"Default" means any event which is, or after notice or passage of time or
both would become, an Event of Default.
"Depository" means, with respect to the Securities of any Series issuable or
issued in the form of one or more Global Securities, the Person designated as
Depository by the Company pursuant to Section 2.02, initially The Depository
Trust Company, until a successor Depository shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Depository" shall
mean or include each person who is then a Depository hereunder, and, if at any
time there is more than one such person, "Depository" as used with respect to
the Securities of any such Series shall mean the Depository with respect to
the Global Securities of such Series.
"Event of Default" shall have the meaning provided in Section 6.01.
"Extendible Securities" means Securities of any Series issued hereunder the
final maturity of which is extendible for a stated period of time, as shall be
provided in, or pursuant to, the Authorizing Resolution and/or supplemental
indenture (if any) relating to such Series.
"Funded Debt" means all Indebtedness maturing one year or more from the date
of the creation thereof, all Indebtedness directly or indirectly renewable or
extendible, at the option of the debtor, by its terms or by the terms of any
instrument or agreement relating thereto, to a date one year or more from the
date of the creation thereof, and all Indebtedness under a revolving credit or
similar agreement obligating the lender or lenders to extend credit over a pe-
riod of one year or more, even though such Indebtedness may also conform to
the definition of Short-Term Borrowing.
"Global Security" means a Security evidencing all or a part of a Series of
Securities issued to and registered in the name of the Depository for such Se-
ries, or its nominee, in accordance with Section 2.02, and bearing the legend
prescribed in Section 2.03.
<PAGE>
4
"Holder" or "Securityholder" means, with respect to any Security, the person
in whose name such Security is registered on the Security Register.
"Indebtedness" means (i) any liability of any person (a) for borrowed money,
(b) evidenced by a note, debenture or similar instrument (including a purchase
money obligation) given in connection with the acquisition of any property or
assets (other than inventory or similar property acquired in the ordinary course
of business), including securities, or (c) for the payment of money relating to
a Capitalized Lease Obligation; (ii) any guarantee by any person of any liabil-
ity of others described in the preceding clause (i); and (iii) any amendment,
renewal, extension or refunding of any liability of the types referred to in
clauses (i) and (ii) above.
"Indenture" means this Indenture as amended or supplemented from time to time
and shall include the forms and terms of particular Series of Securities es-
tablished as contemplated hereunder.
"Interest Payment Date" means, for any Series of Securities issued and out-
standing hereunder, the date or dates in each year on which any interest on
such Series is paid or made available for payment.
"Legal Holiday" shall have the meaning provided in Section 10.07.
"Lien" means any mortgage, lien, pledge, charge, or other security interest
or encumbrance of any kind.
"Mandatory Redemption Preferred Stock" means, with respect to any person, any
and all shares of preferred stock of such person now outstanding or hereafter
issued, subject to mandatory redemption provisions.
"Maturity" when used with respect to any Security means the date on which the
principal of such Security becomes due and payable as therein or herein pro-
vided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"Maturity Date" means the date specified in each Security on which the prin-
cipal thereof is due and payable in full.
"Officer" means the Principal Executive Officer, Principal Financial Officer
or Principal Accounting Officer of the Company.
"Officers' Certificate" means a certificate signed by two Officers or by an
Officer and the Treasurer or an Assistant Treasurer or the Secretary or an As-
sistant Secretary of the Company and delivered to the Trustee. See Sections
10.04 and 10.05.
<PAGE>
5
"Opinion of Counsel" means a written opinion from legal counsel who is ac-
ceptable to the Trustee. The counsel may be an employee of or counsel to the
Company. See Sections 10.04 and 10.05.
"Original Issue Date" means the date on which a Security is issued to the
original purchaser thereof, as specified in such Security.
"Original Issue Discount Securities" means Securities which provide for an
amount less than 100% of the principal amount thereof to be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to Section
6.02.
"Paying Agent" shall have the meaning provided in Section 2.04, except that
for the purposes of Article 8 and Section 4.04 the Paying Agent shall not be
the Company or any Subsidiary.
"person" means any individual, corporation, partnership, joint venture, asso-
ciation, joint-stock company, trust, unincorporated organization or government
or other agency or political subdivision thereof.
"principal" of a debt security means the principal of the security plus, when
appropriate, the premium, if any, on the security.
"Principal Domestic Property of the Company" shall mean any property, plant,
equipment or facility of the Company which is located in the United States or
any territory or political subdivision thereof, except any property which the
Board of Directors or management of the Company shall determine to be not ma-
terial to the business or operations of the Company and its Subsidiaries,
taken as a whole.
"Redeemable Securities" means Securities of any Series which may be redeemed,
at the option of the Company, prior to the Stated Maturity thereof, on the
terms specified in or pursuant to the Authorizing Resolution and/or supplemen-
tal indenture relating to such Series and in accordance with Article 3A here-
in.
"Redemption Date" when used with respect to any Security of any Series to be
redeemed means the date fixed for such redemption by or pursuant to the provi-
sions of such Security, this Indenture and the Authorizing Resolution and/or
supplemental indenture (if any) relating to such Security.
"Redemption Price" when used with respect to any Security of any Series to be
redeemed means the price at which it is to be redeemed pursuant to the provi-
sions of such Security, this Indenture and the Authorizing Resolution and/or
supplemental indenture relating to such Security.
"Registrar" shall have the meaning provided in Section 2.04.
<PAGE>
6
"Regular Record Date" means, for the interest payable on any Interest Payment
Date in respect of any Series of Securities, except as provided in, or pursu-
ant to, the Authorizing Resolution and/or supplemental indenture (if any) re-
lating thereto, the day (whether or not a Business Day) that is fifteen days
preceding the applicable Interest Payment Date.
"Required Currency" shall have the meaning provided in Section 10.16.
"Sale and Leaseback Transaction" shall have the meaning provided in Section
4.09.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities, as amended or supplemented from time to
time pursuant to the terms of this Indenture, of the Company of any Series
that are issued under this Indenture.
"Security Register" shall have the meaning provided in Section 2.04.
"Series" means, with respect to Securities issued hereunder, the Securities
issued pursuant to any particular Authorizing Resolution and/or supplemental
indenture (if any), subject to the right of the Board of Directors to specify
in such Authorizing Resolution and/or supplemental indenture (if any) that
such Securities shall constitute more than one Series.
"Short-Term Borrowing" means all Indebtedness in respect of borrowed money
maturing on demand or within one year from the date of the creation thereof
and not directly or indirectly renewable or extendible, at the option of the
debtor, by its terms or by the terms of any instrument or agreement relating
thereto, to a date one year or more from the date of the creation thereof;
provided, that Indebtedness in respect of borrowed money arising under a re-
volving credit or similar agreement which obligates the lender or lenders to
extend credit over a period of one year or more shall constitute Funded Debt
and not Short-Term Borrowing even though the same matures on demand or within
one year from the date as of which such Short-Term Borrowing is to be deter-
mined.
"Significant Subsidiary" means a Subsidiary, including its Subsidiaries,
which meets any of the following conditions:
(a) the Company's and its other Subsidiaries' investments in and advances
to the Subsidiary exceed 10 percent of the total assets of the Company and
its Subsidiaries consolidated as of the end of any two of the three most re-
cently completed fiscal years; or
(b) the Company's and its other Subsidiaries' proportionate share of the
total assets of the Subsidiary exceeds 10 percent of the total assets of the
<PAGE>
7
Company and its Subsidiaries consolidated as of the end of any two of the
three most recently completed fiscal years; or
(c) the Company's and its other Subsidiaries' equity in the income from
continuing operations before income taxes, extraordinary items and cumula-
tive effect of a change in accounting principles of the Subsidiary exceeds
10 percent of such income of the Company and its Subsidiaries consolidated
as of the end of any two of the three most recently completed fiscal years.
"Sinking Fund" means, with respect to any Sinking Fund Securities, a sinking
fund provided for in Article 3B.
"Sinking Fund Securities" means Securities of any Series which are required
to be redeemed from time to time prior to the Stated Maturity thereof in whole
or in part under a Sinking Fund, on the terms specified in the Authorizing
Resolution and/or supplemental indenture (if any) relating to such Series and
in accordance with Article 3B herein.
"Special Record Date" shall have the meaning provided in Section 2.13.
"Stated Maturity" when used with respect to any Security or any installment
of interest thereon means the date specified in such Security as the fixed
date on which the principal of such Security or such installment of interest
is due and payable.
"Subsidiary" means (i) a corporation a majority of whose Capital Stock with
voting power, under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by the Company, by the Company and a Subsidiary
(or Subsidiaries) of the Company or by a Subsidiary (or Subsidiaries) of the
Company or (ii) any other person (other than a corporation) in which the Com-
pany, a Subsidiary (or Subsidiaries) of the Company or the Company and a Sub-
sidiary (or Subsidiaries) of the Company, directly or indirectly, at the date
of determination thereof has at least majority ownership interest; provided,
that no corporation shall be deemed a Subsidiary until the Company, a Subsidi-
ary (or Subsidiaries) of the Company or the Company and a Subsidiary (or Sub-
sidiaries) of the Company acquires more than 50% of the outstanding voting
stock thereof and has elected a majority of its board of directors.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-
77bbbb) as in effect on the date of this Indenture except as provided in Sec-
tion 9.03.
"Trustee" means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture and thereafter
means and includes the person or each person who is then a Trustee hereunder,
and if at any time there is more than one such person, "Trustee" as used with
<PAGE>
8
respect to the Securities of any Series shall mean the Trustee with respect to
Securities of that Series.
"Trust Officer" means any officer or assistant officer of the Trustee as-
signed by the Trustee to administer its corporate trust matters.
"U.S. Government Obligations" shall have the meaning provided in Section
8.01.
"Yield to Maturity" means, with respect to any Series of Securities, the
yield to maturity thereof, calculated at the time of issuance thereof, or, if
applicable, at the most recent redetermination of interest thereon, and calcu-
lated in accordance with accepted financial practice.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company or any other obli-
gor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA, de-
fined by TIA reference to another statute or defined by SEC rule and not oth-
erwise defined herein have the meanings assigned to them therein.
Section 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it
in accordance with generally accepted accounting principles in effect in the
United States, and any other reference in this Indenture to "generally ac-
cepted accounting principles" refers to generally accepted accounting prin-
ciples in effect in the United States;
<PAGE>
9
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural in-
clude the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof," "hereunder" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section or
other subdivision; and
(7) "include," "included," and "including" as used herein shall be deemed
in each case to be folowed by the phrase "without limitation."
ARTICLE 2
The Securities
Section 2.01. Form of Securities.
The Securities of each Series and the certificate of authentication thereon
shall be in substantially the forms set forth in Exhibit A or in such other
forms as shall be specified in, or pursuant to, the Authorizing Resolution
and/or in the indenture supplemental hereto (if any) relating to such Series,
with such appropriate insertions, omissions, substitutions and other varia-
tions as are required or permitted by this Indenture or the said Authorizing
Resolution and/or supplemental indenture (if any).
The definitive Securities of each Series shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, or, if they shall
not be listed on any securities exchange, in any other manner consistent here-
with, all as shall be determined by the officers executing such Securities, as
evidenced by their execution of such Securities. The Securities may have nota-
tions, legends or endorsements required by law, stock exchange rule or usage.
The Company shall approve the form of the Securities and any notation, legend
or endorsement on them.
The terms and provisions contained in the Securities, annexed hereto as Ex-
hibit A or such other forms as specified in the Authorizing Resolution and/or
supplemental indenture (if any) relating thereto, shall constitute, and are
hereby expressly made, a part of this Indenture.
<PAGE>
10
Section 2.02. Title and Terms.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more Series. The terms of each Series
shall be as provided in an Authorizing Resolution and/or supplemental inden-
ture (if any) or shall be determined in the manner specified therein. The
terms to be specified in respect of each Series in the Authorizing Resolution
and/or supplemental indenture (if any), or by such person and/or procedures as
shall be provided therein, shall include the following:
(1) the title of the Securities of such Series, which shall distinguish
such Series from all other Series;
(2) any limit upon the aggregate principal amount of the Securities of such
Series which may be authenticated and delivered under this Indenture (except
for Securities of such Series authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities pursuant
to Section 2.07, 2.08, 2.11, 3A.08 or 9.05);
(3) the date or dates on which the principal of the Securities of such Se-
ries is payable, and, if the Series shall be Extendible Securities, the
terms on which the Company or any other person shall have the option to ex-
tend the Maturity of such Securities and the rights, if any, of the Holders
to require payment of the Securities;
(4) the rate or rates at which the Securities of such Series shall bear in-
terest, if any (whether floating or fixed), the provisions, if any, for de-
termining such interest rate or rates and adjustments thereto, the date or
dates from which such interest shall accrue, the provisions, if any, for de-
termining such date or dates, the Interest Payment Dates therefor and the
Regular Record Dates (if different from those provided in the form of Secu-
rity herein set forth) for the determination of Holders of the Securities of
such Series to whom interest is payable and the basis upon which interest,
if any, shall be calculated if other than that of a 360-day year of twelve
30-day months;
(5) the place or places where the principal of and interest on Securities
of such Series shall be payable (if other than as provided in Section 4.02),
where Securities of such Series may be surrendered for registration of
transfer or exchange and where notices or demands to or upon the Company in
respect of Securities of such Series and this Indenture may be served;
(6) the price or prices at which, the period or periods within which and
the terms and conditions upon which the Securities of such Series may be re-
deemed, in whole or in part, at the option of the Company, pursuant to a
Sinking Fund or otherwise;
<PAGE>
11
(7) the obligation, if any, of the Company to redeem, purchase or repay Se-
curities of such Series, in whole or in part, pursuant to a Sinking Fund or
otherwise or at the option of a Holder thereof, and the price or prices at
which, the period or periods within which and the terms and conditions upon
which such redemption, purchase or repayment shall be made;
(8) any deletions from, modifications of or additions to the Events of De-
fault provided for herein with respect to the Securities of such Series, and
any deletions from, modifications of or additions to the covenants or obli-
gations provided for herein of the Company to the Holders of the Securities
of such Series;
(9) if less than 100% of the principal amount of the Securities of such Se-
ries is payable on acceleration under Section 6.02 or in bankruptcy under
Section 6.09 at any time, a schedule of or the manner of computing the
amounts which are so payable from time to time;
(10) the form of the Securities of such Series (which may be, but which
need not be, consistent with the form set forth in Exhibit A attached here-
to), including whether the Securities of such Series shall be issued in
whole or in part in the form of one or more Global Securities and, in such
case, the Depository with respect to such Global Security or Securities and
the circumstances under which any Global Security may be registered for
transfer or exchange, or authenticated and delivered, in the name of a Per-
son other than such Depository or its nominee, if other than as set forth in
Section 2.07;
(11) if other than United States dollars, the currency(ies) in which pay-
ment of the principal of or interest, if any, on the Securities of such Se-
ries shall be payable;
(12) if the principal of or interest, if any, on the Securities of such Se-
ries is to be payable, at the election of the Company or a Holder thereof,
in a currency or currencies other than that in which the Securities are
stated to be payable, the period or periods within which, and the terms and
conditions upon which, such election may be made;
(13) if the amount of payments of principal of or interest, if any, on the
Securities of such Series may be determined with reference to an index based
on a currency or currencies other than that in which the Securities are
stated to be payable, the manner in which such amounts shall be determined;
(14) whether and under what circumstances the Company will pay any addi-
tional amounts on the Securities of such Series in respect of any tax, as-
sessment or governmental charge and, if so, whether the Company will have
the option to redeem the Securities of such Series in lieu of making such
payment;
(15) any provision relating to the issuing of the Securities of such Series
as Original Issue Discount Securities (including, without limitation, the
issue price thereof, the rate or rates at which such original issue discount
shall
<PAGE>
12
accrue, if any, and the date or dates from or to which, or period or periods
during which, such original issue discount shall accrue at such rate or
rates;
(16) if other than denominations of $1,000 and any integral multiple there-
of, the denominations in which Securities of such Series shall be issued;
and
(17) any other terms of the Securities of such Series; provided, that such
other terms shall not be inconsistent with any express terms of this Inden-
ture or in conflict with any express terms of any other Series of Securities
which shall be issued and outstanding.
All Securities of any one Series shall be substantially identical in form ex-
cept as to denomination and except as may be otherwise provided in and pursu-
ant to the Authorizing Resolutions and/or supplemental indenture (if any) re-
lating thereto. All Securities of any one Series need not be issued at the
same time and may be issued from time to time, consistent with this Indenture,
if so provided by or pursuant to such Authorizing Resolutions and/or supple-
mental indenture (if any) relating thereto.
Any such Authorizing Resolution with respect to the Securities of any Series
filed with the Trustee on or before the initial issuance of the Securities of
such Series shall be incorporated herein by reference with respect to Securi-
ties of such Series and shall thereafter be deemed to be a part of this Inden-
ture for all purposes relating to the Securities of such Series as if such Au-
thorizing Resolution were set forth herein in full.
Section 2.03. Execution and Authentication.
Two Officers or an Officer and the Secretary of the Company shall sign the
Securities for the Company by manual or facsimile signature. The Company's
seal shall be reproduced on the Securities and may be in facsimile form.
If an Officer or a Secretary whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until the Trustee manually signs the certifi-
cate of authentication on the Security. The signature shall be conclusive evi-
dence that the Security has been authenticated under this Indenture.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any Series executed by the
Company to the Trustee, together with a Company Order for the authentication
<PAGE>
13
and delivery of such Securities. The Company Order may provide that the Secu-
rities which are the subject thereof shall be authenticated and delivered by
the Trustee upon the telephonic, written or other order of persons designated
in the Company Order, and that such persons are authorized to specify the
terms and conditions of such Securities, to the extent permitted by the Autho-
rizing Resolution and/or supplemental indenture (if any) relating thereto. The
Trustee shall execute and deliver the supplemental indenture (if any) relating
to said Securities and the Trustee shall authenticate and deliver said Securi-
ties as specified in such Company Order; provided that, prior to authentica-
tion and delivery of the first Securities of any Series, the Trustee shall
have received:
(1) a copy of the Authorizing Resolution, with a copy of the form of Secu-
rity approved thereby attached thereto, or a supplemental indenture in re-
spect of the issuance of the Series, executed on behalf of the Company;
(2) an Officers' Certificate to the effect that the Securities of such Se-
ries comply or will comply with the requirements of this Indenture and the
said Authorizing Resolution and/or supplemental indenture (if any);
(3) an Opinion of Counsel (a) to the effect that (i) the Securities of such
Series, the Authorizing Resolution and/or the supplemental indenture (if
any) relating thereto comply or will comply with the requirements of this
Indenture, and (ii) the Securities of such Series, when authenticated and
delivered by the Trustee in accordance with the said Company Order, will
constitute valid and binding obligations of the Company enforceable in ac-
cordance with their terms, subject to (A) bankruptcy and other laws affect-
ing creditors' rights generally as in effect from time to time, (B) limita-
tions of generally applicable equitable principles and (C) other exceptions
acceptable to the Trustee and its counsel; and (b) relating to such other
matters as may reasonably be requested by the Trustee or its counsel; and
(4) if the Securities to be issued are Original Issue Discount Securities,
an Officers' Certificate setting forth the Yield to Maturity for the Securi-
ties or other information sufficient to compute amounts due on acceleration,
or specifying the manner in which such amounts are to be determined, pro-
vided that such Yield to Maturity and other facts are not specified in the
form of the Securities.
Subject to Section 7.01 hereof, the Trustee shall be fully protected in rely-
ing upon the documents delivered to it as provided above in connection with
the issuance of any Series of Securities.
The Trustee shall have the right to decline to authenticate and deliver any
Securities under this Section 2.03 if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if the Trustee in
good faith by a committee of its Trust Officers shall determine that such ac-
tion would
<PAGE>
14
expose the Trustee to liability to Holders of previously issued and outstand-
ing Securities.
Each Security shall be dated the date of its authentication unless otherwise
specified in the Authorizing Resolution and/or supplemental indenture relating
thereto.
The Trustee may appoint an authenticating agent reasonably acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An au-
thenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company
The Securities of each Series shall be issuable only in registered form with-
out coupons and only in denominations of $1,000 and any integral multiple
thereof, or in such other currencies or denominations as may be specified in,
or pursuant to, the Authorizing Resolution and/or supplemental indenture (if
any) relating to the Series.
If Securities of any Series are to be issued in the form of one or more
Global Securities, then the Company shall deliver such Global Security or Se-
curities executed by the Company to the Trustee, together with a Company Order
for the authentication and delivery of such Global Security or Securities, and
the Trustee shall, in accordance with this Section 2.03 and such Company Or-
der, authenticate and deliver such Global Security or Securities that (i)
shall represent and shall be denominated in an amount equal to the aggregate
principal amount of all of the Securities of such Series to be issued in the
form of such Global Security or Securities and not yet cancelled, (ii) shall
be registered in the name of the Depository for such Global Security or Secu-
rities or the nominee of such Depository, (iii) shall be delivered by the
Trustee to such Depository or pursuant to such Depository's instructions and
(iv) shall bear a legend substantially to the following effect: "Unless and
until this Security is exchanged in whole or in part for Securities in certif-
icated form, this Security may not be transferred except as a whole by the De-
pository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or
its nominee to a successor Depository or its nominee."
Each Depository designated must, at the time of its designation and at all
times while it serves as Depository, be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, and any other applicable statute
or regulation.
<PAGE>
15
Section 2.04. Registrar and Paying Agent.
The Company shall cause to be kept a register (the "Security Register") at an
office or agency where Securities may be presented for registration of trans-
fer or for exchange ("Registrar") and an office or agency where Securities may
be presented for payment ("Paying Agent"). The Company may have one or more
co-Registrars and one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture. The agreement shall implement the provisions of
this Indenture that relate to such Agent. The Company shall give prompt writ-
ten notice to the Trustee of the name and address of any such Agent and the
Trustee shall have the right to inspect the Security Register at all reason-
able times and to obtain copies thereof. If the Registrar shall not be the
Trustee in respect of any Series, the Company shall promptly notify the Regis-
trar as to the amounts and terms of each Security of such Series which shall
be authenticated and delivered hereunder, and as to the names in which such
Securities shall be registered. If the Company fails to maintain a Registrar
or Paying Agent, the Trustee shall act as such and shall be entitled to appro-
priate compensation therefor pursuant to Section 7.07.
The Company initially appoints the Trustee as Registrar and Paying Agent.
Section 2.05. Paying Agent to Hold Money In Trust.
Each Paying Agent shall hold in trust for the benefit of Securityholders or
the Trustee all money held by the Paying Agent for the payment of principal of
or interest on the Securities (whether such money has been paid to it by the
Company or any other obligor on the Securities), and shall notify the Trustee
of any default by the Company (or any other obligor on the Securities) in mak-
ing any such payment. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate the money and hold it as a separate trust fund. The Company at
any time may require a Paying Agent to pay all money held by it to the Trustee
and account for any funds disbursed and the Trustee may at any time during the
continuance of any payment default, upon written request to a Paying Agent,
require such Paying Agent to pay all money held by it to the Trustee and to
account for any funds disbursed. Upon doing so the Paying Agent shall have no
further liability for the money.
Section 2.06. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably practicable
the most recent list furnished to it of the names and addresses of Security-
holders. If
<PAGE>
16
the Trustee is not the Registrar, the Company shall furnish to the Trustee ten
days before each Interest Payment Date and at such other times as the Trustee
may request in writing a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Holders of Securities of
any Series and the Company shall otherwise comply with Section 312(a) of the
TIA.
The Trustee shall be entitled to rely upon a certificate of the Registrar,
the Company or such other Paying Agent, as the case may be, as to the names
and addresses of the Holders of Securities of any Series and the principal
amounts and serial numbers of such Securities.
Section 2.07. Transfer and Exchange.
When Securities are presented to the Registrar or a co-Registrar with a re-
quest to register the transfer or to exchange them for an equal principal
amount of Securities of the same Series and Stated Maturity of other autho-
rized denominations, the Registrar shall register the transfer or make the ex-
change as requested if its requirements for such transactions are met. To per-
mit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Securities at the Registrar's request. No serv-
ice charge shall be made to any Holder for any registration of transfer or ex-
change, but the Company or the Trustee may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental charge
payable upon exchanges pursuant to Section 2.11, 3A.08 or 9.05 in which case
such transfer taxes or similar governmental charges shall be paid by the Com-
pany).
The Company shall not be required (i) to issue, register the transfer of or
exchange any Security of any Series during a period beginning at the opening
of the day which is 15 Business Days before the day of the mailing of a notice
of redemption of Securities of such Series selected for redemption under Sec-
tion 3A.04 or 3B.01 and ending at the close of business on the day of such
mailing, or (ii) to register the transfer of or exchange any Security so se-
lected for redemption in whole or in part, except, in the case of any Security
to be redeemed in part, the portion thereof not to be redeemed.
Notwithstanding any other provision of this Section 2.07, unless and until it
is exchanged in whole or in part for Securities, a Global Security represent-
ing all or part of the Securities of a Series may not be transferred except as
a whole by the Depository for such Series to a nominee of such Depository or
by a nominee
<PAGE>
17
of such Depository to such Depository or another nominee of such Depository or
by such Depository or any such nominee to a successor Depository for such Se-
ries or a nominee of such successor Depository.
If at any time the Depository for any Securities of a Series represented by
one or more Global Securities notifies the Company that it is unwilling or un-
able to continue as Depository for such Series or if at any time the Deposi-
tory for such Series shall no longer be eligible under Section 2.03, the Com-
pany shall appoint a successor Depository with respect to such Series. If a
successor Depository for such Series is not appointed by the Company within 90
days after the Company receives such notice or becomes aware of such ineligi-
bility, the Company's election that the Securities be represented by one or
more Global Securities pursuant to Section 2.02 shall no longer be effective
and the Company shall deliver Securities of such Series executed by the Com-
pany to the Trustee, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee shall, in accordance with Section
2.03 and such Company Order, authenticate and deliver Securities of such Se-
ries, in any authorized denominations, in an aggregate principal amount equal
to the principal amount of the Global Security or Securities representing such
Series in exchange for such Global Security or Securities.
The Company may at any time and in its sole discretion determine that the Se-
curities of any Series issued in the form of one or more Global Securities
shall no longer be represented by a Global Security or Securities. In such
event the Company shall deliver Securities of such Series executed by the Com-
pany to the Trustee, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee shall, in accordance with Section
2.03 and such Company Order, authenticate and deliver Securities of such Se-
ries, in any authorized denominations, in an aggregate principal amount equal
to the principal amount of the Global Security or Securities representing such
Series, in exchange for such Global Security or Securities.
If specified by the Company in the Authorizing Resolution and/or supplemental
indenture (if any) relating to the Securities of a Series represented by a
Global Security, the Depository for such Series may surrender such Global Se-
curity in exchange in whole or in part for Securities of the same Series on
such terms as are acceptable to the Company and the Depository. Thereupon, the
Company shall deliver Securities of such Series executed by the Company to the
Trustee, together with a Company Order for the authentication and delivery of
such
<PAGE>
18
Securities, and the Trustee shall, in accordance with Section 2.03 and such
Company Order, authenticate and deliver, without charge,
(1) to the person specified by such Depository, a new Security or Securi-
ties of the same Series, in any authorized denominations as requested by
such person, in an aggregate principal amount equal to and in exchange for
such person's beneficial interest in the Global Security; and
(2) to such Depository a new Global Security in a denomination equal to the
difference, if any, between the principal amount of the surrendered Global
Security and the aggregate principal amount of Securities authenticated and
delivered pursuant to clause (1) above.
Upon the exchange of a Global Security for the Securities of a Series repre-
sented thereby, in authorized denominations, such Global Security shall be
cancelled by the Trustee or an Agent of the Company or the Trustee. Securities
of a Series issued in exchange for a Global Security pursuant to this Section
2.07 shall be registered in such names and in such authorized denominations as
the Depository for such Global Security, pursuant to instructions from its di-
rect or indirect participants or otherwise, shall instruct the Trustee or an
Agent of the Company or the Trustee. The Trustee or such Agent shall deliver
at its office such Securities to or as directed by the persons in whose names
such Securities are so registered.
Section 2.08. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully tak-
en, the Company shall issue and the Trustee shall authenticate a replacement
Security of like tenor, Series and principal amount, bearing a number not as-
signed to any Security of the same Series then outstanding, if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be sufficient in the judgment of the Trustee to protect the Company,
the Trustee or any Agent from any loss which any of them may suffer if a Secu-
rity is replaced. The Company may charge such Holder for its expenses in re-
placing a Security.
Every replacement Security is an additional obligation of the Company.
Section 2.09. Outstanding Securities.
Securities, or Securities of any particular Series, outstanding at any time
are all such Securities that have been authenticated and delivered by the
Trustee except for those cancelled by it, those delivered to it for cancella-
tion and those
<PAGE>
19
described in this Section as not outstanding. A Security does not cease to be
outstanding because the Company or one of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.08, it ceases to be outstand-
ing unless the Trustee receives proof satisfactory to it that the replaced Se-
curity is held by a bona fide purchaser.
If the Trustee or Paying Agent (other than the Company or a Subsidiary) holds
on the Maturity Date or Redemption Date money sufficient to pay Securities
payable on such date, then on and after that date such Securities cease to be
outstanding and interest on them ceases to accrue; provided that, if such Se-
curities are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory to the Trustee
has been made.
Section 2.10. Treasury Securities.
In determining whether the Holders of the required principal amount of Secu-
rities of any Series have concurred in any direction, waiver or consent (a)
the principal amount of an Original Issue Discount Security, if any, of such
Series that shall be deemed to be outstanding for such purposes shall be the
amount that would be due and payable as of the date of determination upon a
declaration of acceleration thereof pursuant to Section 6.02 and (b) Securi-
ties of such Series owned by the Company or an Affiliate of the Company shall
be disregarded, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or con-
sent, only Securities of such Series which the Trustee actually knows are so
owned shall be so disregarded. Upon the request of the Trustee, the Company
shall furnish to the Trustee an Officers' Certificate identifying all Securi-
ties of such Series, if any, known by the Company to be owned by it or any of
its Affiliates.
Section 2.11. Temporary Securities.
Until definitive Securities of any Series are ready for delivery, the Company
may prepare and execute and, upon compliance with the requirements of Section
2.03, the Trustee shall authenticate temporary Securities of such Series. Tem-
porary Securities of any Series shall be substantially in the form of defini-
tive Securities of such Series but may have variations that the Company con-
siders appropriate for temporary Securities. In the case of Securities of any
Series, such temporary Securities may be in global form. Except in the case of
temporary Global Securities (which shall be exchanged as otherwise provided
herein or as otherwise provided in or pursuant to an Authorizing Resolution
and/or supplemental indenture, (if any), without unreasonable delay, the Com-
pany shall pre-
<PAGE>
20
pare and the Trustee shall authenticate definitive Securities for such Series
in exchange for temporary Securities of such Series in an exchange pursuant to
Section 2.07.
Section 2.12. Cancellation.
The Company at any time may deliver Securities to the Trustee for cancella-
tion. The Registrar and the Paying Agent shall forward to the Trustee any Se-
curities surrendered to them for transfer, exchange or payment. The Trustee
and no one else shall cancel all Securities surrendered for transfer, ex-
change, payment or cancellation or for credit against any Sinking Fund Payment
in respect of such Series pursuant to Section 3B.02. The Company may not issue
new Securities to replace Securities it has paid or delivered to the Trustee
for cancellation.
Section 2.13. Defaulted Interest.
If the Company defaults in a payment of interest on the Securities of any Se-
ries, it shall pay the defaulted interest, plus any interest payable on the
defaulted interest, to the persons who are Holders of such Securities on a
subsequent special record date ("Special Record Date") and such term, as used
in this Section 2.13 with respect to the payment of any defaulted interest,
shall mean the fifteenth day next preceding the date fixed by the Company for
the payment of defaulted interest, whether or not such day is a Business Day.
At least 15 days before the Special Record Date, the Company shall mail to
each holder of such Securities a notice that states the Special Record Date,
the payment date and the amount of defaulted interest to be paid.
Section 2.14. Persons Deemed Owners.
The Company, the Trustee and any Agent may treat the person in whose name any
Security is registered as the owner of such Security for the purpose of re-
ceiving payment of principal of and (subject to Section 2.13) interest on such
Security and for all other purposes whatsoever, whether or not such Security
shall have matured, and neither the Company, the Trustee nor any Agent shall
be affected by any notice to the contrary.
<PAGE>
21
ARTICLE 3A
Redemption
Section 3A.01. Right of Redemption.
Redeemable Securities may be redeemed otherwise than through the operation of
the Sinking Fund provided for in Article 3B at the election of the Company at
the times, on the conditions and at the Redemption Prices specified therein,
in (or pursuant to) the Authorizing Resolution relating thereto or in the sup-
plemental indenture (if any) executed in connection with the issuance of such
Securities to the extent provided therein, any Redemption Price to be accompa-
nied by accrued interest to the Redemption Date.
Section 3A.02. Applicability of Article.
Redemption of Securities at the election of the Company or otherwise, as per-
mitted or required by any provision referred to in Section 3A.01, shall be
made in accordance with such provision and this Article.
Section 3A.03. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities of any Series shall be
evidenced by a Board Resolution or set forth in an Officers' Certificate which
states that such election has been duly authorized by all requisite corporate
action on the part of the Company. In case of any redemption at the election
of the Company of less than all of the Securities of such Series the Company
shall, at least 60 days prior to the Redemption Date fixed by the Company (un-
less a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Securities of
the Series or the several Series, as the case may be, to be redeemed. In the
case of any redemption of Securities prior to the expiration of any restric-
tion on such redemption provided in the Securities or elsewhere in this Inden-
ture, the Company shall furnish the Trustee with an Officers' Certificate evi-
dencing compliance with such restriction.
Section 3A.04. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities of any Series are to be redeemed, the partic-
ular Securities of such Series to be redeemed shall be selected not more than
90 days prior to the Redemption Date by the Trustee, from the outstanding Se-
curities of
<PAGE>
22
such Series not previously called for redemption, in compliance with the re-
quirements of the principal national securities exchange, if any, on which
such Securities are listed or, if the Securities are not listed on a national
securities exchange, on a pro rata basis or by lot, as the Trustee deems ap-
propriate in its sole discretion. The Trustee may select for redemption por-
tions (equal to the minimum authorized denomination of the Series or any inte-
gral multiple thereof) of the principal amount of such Securities of a denomi-
nation larger than such minimum denomination. If the Company shall so specify,
Securities held by the Company or any of its Subsidiaries or Affiliates shall
not be included in the Securities selected for redemption.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for par-
tial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been or is to be redeemed.
Section 3A.05. Notice of Redemption.
Notice of redemption shall be given by first class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the Se-
curity Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all outstanding Securities of the Series are to be re-
deemed, the identification (and, in the case of partial redemption, the
principal amount) of the particular Securities to be redeemed;
(4) that on the Redemption Date the Redemption Price will become due and
payable upon each such Security, and that interest thereon shall cease to
accrue on and after said date;
(5) that the redemption is for a Sinking Fund, if such is the case; and
(6) the place or places where such Securities are to be surrendered for
payment of the Redemption Price.
<PAGE>
23
Notice of redemption of Securities to be redeemed at the election of the Com-
pany shall be given by the Company or, at the Company's request, by the
Trustee in the name of and at the expense of the Company.
Section 3A.06. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 2.05) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) any accrued interest on, all the Secu-
rities or portions thereof which are to be redeemed on that date.
Section 3A.07. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemp-
tion Price thereof and from and after such date (unless the Company shall de-
fault in the payment of the Redemption Price and accrued interest) such Secu-
rities shall cease to bear interest. Upon surrender of any such Security for
redemption in accordance with said notice such Security shall be paid by the
Company at the Redemption Price, together with accrued interest to the Redemp-
tion Date; provided, however, that installments of interest whose Stated Matu-
rity is on or prior to the Redemption Date shall be payable to the Holders of
such Securities registered as such on the relevant Regular or Special Record
Date according to their terms and the provisions of such Security and Section
2.13.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid or duly provided for,
bear interest from the Redemption Date at the rate borne by the Security or,
in the case of Original Issue Discount Securities, at a rate equal to the
Yield to Maturity thereof.
Section 3A.08. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at the
office or agency of the Company maintained for that purpose pursuant to Sec-
tion 4.02 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company
and the Trustee duly executed by, the Holder thereof or his attorney duly au-
thorized in
<PAGE>
24
writing), and the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security, without service charge, a new Security
or Securities of the same Series, of any authorized denomination as requested
by such Holder in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
ARTICLE 3B
Sinking Fund
Section 3B.01. Sinking Fund Payments.
As and for a Sinking Fund for the retirement of Sinking Fund Securities, the
Company will, until all such Securities are paid or payment thereof is duly
provided for, deposit in accordance with Section 3A.06, at such times and sub-
ject to such terms and conditions as shall be specified in the provisions of
such Securities and the Authorizing Resolution and/or supplemental indenture
(if any) relating thereto, such amounts in cash or such other Required Cur-
rency as shall be required or permitted under such provisions in order to re-
deem Securities on the specified Redemption Dates at a Redemption Price equal
to their principal amounts, less in each such case the amount of any credit
against such payment received by the Company under Section 3B.02. Each such
Sinking Fund payment shall be applied to the redemption of Securities on the
specified Redemption Date as herein provided.
Section 3B.02. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Securities of the same Series (other than any Se-
curities of such Series previously called for redemption pursuant to the Sink-
ing Fund or theretofore applied as a credit against a Sinking Fund payment)
and (2) may apply as a credit Securities of the same Series redeemed at the
election of the Company pursuant to Section 3A.01 or through the operation of
the Sinking Fund in any period in excess of the minimum amount required for
such period under Section 3B.01 and not theretofore applied as a credit
against a Sinking Fund payment, in each case in satisfaction of all or any
part of any Sinking Fund payment required to be made pursuant to Section
3B.01. Each such Security so delivered or applied shall be credited for such
purpose by the Trustee at a Redemption Price equal to its principal amount or,
in the case of an Original Issue Discount Security, its then accreted value,
and the required amount of such Sinking Fund payment in respect of such Series
shall be reduced accordingly.
<PAGE>
25
Section 3B.03. Redemption of Securities for Sinking Fund.
If in any year the Company shall elect to redeem in excess of the minimum
principal amount of Securities of any Series required to be redeemed pursuant
to Section 3B.01 or to satisfy all or any part of any Sinking Fund payment by
delivering or crediting Securities of the same Series pursuant to Section
3B.02, then at least 45 days prior to the date on which the Sinking Fund pay-
ment in question shall be due, the Company shall deliver to the Trustee an Of-
ficers' Certificate specifying the amount of the Sinking Fund payment and the
portions thereof which are to be satisfied by payment of cash or such other
Required Currency, by delivery of Securities of such Series or by crediting
Securities of such Series, and, at least 45 days prior to the Sinking Fund
payment date (or such shorter period as shall be approved by the Trustee),
will also deliver to the Trustee the Securities of such Series to be so deliv-
ered. Such Officers' Certificate shall also state that the Securities forming
the basis of any such credit do not include any Securities which have been re-
deemed through the operation of the Sinking Fund in the minimum amount re-
quired under Section 3B.01 or previously credited against any Sinking Fund
payment. The Trustee shall, upon the receipt of such Officers' Certificate
(or, if it shall not have received such an Officers' Certificate at least 45
days prior to the Sinking Fund payment date, then following such 45th day),
select the Securities of such Series to be redeemed upon the next Sinking Fund
payment date, in the manner specified in Section 3A.04, and cause notice of
the redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 3A.05. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in
the manner stated in Sections 3A.06, 3A.07 and 3A.08.
ARTICLE 4
Covenants
Section 4.01. Payment of Securities.
The Company shall pay the principal of and interest on the Securities of each
Series on the dates and in the manner provided in the Securities and in this
Indenture. An installment of principal or interest shall be considered paid on
the date due if the Trustee or Paying Agent (other than the Company or a Sub-
sidiary) holds on that date money designated for and sufficient to pay the in-
stallment.
<PAGE>
26
The Company shall pay interest on overdue principal at the respective rates
borne by such Securities or, in the case of Original Issue Discount Securi-
ties, at rates equal to the respective Yields to Maturity thereof; it shall
pay interest on overdue installments of interest at the respective rates borne
by such Securities to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
Except as otherwise provided in the Authorizing Resolutions and/or supplemen-
tal indenture (if any) relating to any Series, the Company will maintain in
The City of New York, an office or agency where Securities may be surrendered
for registration of transfer or exchange or for presentation for payment and
where notices and demands to or upon the Company in respect to the Securities
and this Indenture may be served. The Company will give prompt written notice
to the Trustee of the location, and any change in the location, of such office
or agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address there-
of, such presentations, surrenders, notices and demands may be made or served
at the Corporate Trust Office.
The Company may also from time to time designate one or more other offices or
agencies where the Securities of any Series or a particular Series may be pre-
sented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an of-
fice or agency in The City of New York, for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescis-
sion and of any change in the location of any such other office or agency.
The Company hereby initially designates the Trustee in The City of New York,
as an agency of the Company in accordance with Section 2.04.
Section 4.03. Corporate Existence.
Subject to Article 5 and Section 4.04, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the rights (charter and statutory) and material fran-
chises of the Company; provided, however, that the Company shall not be re-
quired to preserve any such right or franchise if the Board of Directors or
management of the Company shall determine that the preservation thereof is no
longer desirable in
<PAGE>
27
the conduct of the business of the Company and its Subsidiaries, taken as a
whole, and if the loss thereof is not, and will not be, adverse in any mate-
rial respect to the Holders.
Section 4.04. Liquidation.
The Board of Directors or the stockholders of the Company may not adopt a
plan of liquidation which provides for, contemplates or the effectuation of
which is preceded by (i) the sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company otherwise than substan-
tially as an entirety (Article 5 of this Indenture being the Article which
governs any such sale, lease, conveyance or other disposition substantially as
an entirety) and (ii) the distribution of all or substantially all of the pro-
ceeds of such sale, lease, conveyance or other disposition and of the remain-
ing assets of the Company to the holders of Capital Stock of the Company, un-
less the Company shall in connection with the adoption of such plan make pro-
visions for, or agree that prior to making any liquidating distributions it
will make provisions for, the satisfaction of the Company's obligations here-
under and under the Securities of each Series as to the payment of principal
and interest. The Company shall be deemed to make provision for such payments
only if (a) the Company delivers in trust to the Trustee or Paying Agent
(other than the Company or a Subsidiary) (i) in the case of any Securities of
any Series denominated in United States dollars, an amount of cash sufficient
to pay principal of and interest on such outstanding securities at their re-
spective Stated Maturities or U.S. Government Obligations in an aggregate
principal amount equal to the unpaid principal amount of such Securities and
having maturities and interest payment dates that shall coincide, as nearly as
may be practicable, with the dates that the principal of and interest on such
Securities are due and (ii) in the case of any Securities of any Series denom-
inated in any currency other than United States dollars, an amount of the Re-
quired Currency sufficient to pay principal of and interest on such outstand-
ing Securities at their respective Stated Maturities or (b) there is an ex-
press assumption of the due and punctual payment of the Company's obligations
hereunder and under the Securities of each Series and the performance and ob-
servance of all covenants and conditions to be performed by the Company here-
under, by the execution and delivery of a supplemental indenture in form sat-
isfactory to the Trustee by a person which acquires or will acquire (otherwise
than pursuant to a lease) a portion of the assets of the Company, and which
person will have assets (immediately after the acquisition) and aggregate net
earnings (for such person's four full fiscal quarters immediately preceding
the acquisition) equal to not less
<PAGE>
28
than the assets of the Company (immediately preceding the acquisition) and the
aggregate net earnings of the Company (for its four full fiscal quarters imme-
diately preceding such acquisition), respectively, and which is organized and
existing under the laws of the United States, any State thereof or the Dis-
trict of Columbia; provided, however, that the Company shall not make any liq-
uidating distribution until after the Company shall have certified to the
Trustee with an Officers' Certificate and an Opinion of Counsel at least five
days prior to the making of any liquidating distribution that it has complied
with the provisions of this Section 4.04.
Section 4.05. Compliance Certificate.
The Company shall deliver to the Trustee within 90 days after the end of each
fiscal quarter of the Company an Officers' Certificate stating whether or not
the signers know of the existence of any Default or Event of Default by the
Company and whether all of the conditions and covenants of the Company are be-
ing complied with regardless of any period of grace or requirement of notice
provided under the Indenture. If they do know of such a Default or Event of
Default, the certificate shall describe the Default or Event of Default, as
the case may be, and its status. The first Officers' Certificate to be deliv-
ered pursuant to this Section 4.05 shall be for the fiscal quarter ending im-
mediately after the Original Issue Date.
Section 4.06. SEC Reports.
(a) The Company shall file with the Trustee within 15 days after it files
them with the SEC copies of the annual reports and of the information, docu-
ments and other reports (or copies of such portions of any of the foregoing as
the SEC may by rules and regulations prescribe) which the Company is required
to file with the SEC pursuant to Section 13 or 15(d) of the Securities Ex-
change Act of 1934, as amended. The Company also shall comply with the other
provisions of TIA (S) 314(a).
(b) So long as the Securities of any Series remain outstanding, the Company
shall cause its annual report to stockholders and any quarterly or other fi-
nancial reports furnished by it to stockholders to be mailed to the Holders of
Securities outstanding at their adresses appearing in the Security Register.
<PAGE>
29
Section 4.07. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it will
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law or any usury law or
other law, which would prohibit or forgive the Company from paying all or any
portion of the principal of and/or interest on the Securities of any Series as
contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this Indenture; and
(to the extent that it may lawfully do so) the Company hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hin-
der, delay or impede the execution of any power herein granted to the Trustee,
but will suffer and permit the execution of every such power as though no such
law had been enacted.
Section 4.08. Restrictions on Liens.
The Company will not incur, create, assume or otherwise become liable in re-
spect of any Indebtedness secured by a Lien, or guarantee any Indebtedness
with a guarantee which is secured by a Lien, on any Principal Domestic Prop-
erty of the Company or any shares of stock or Indebtedness of any Significant
Subsidiary, without effectively providing that the Securities of each Series
(together with, if the Company shall so determine, any other Indebtedness of
the Company then existing or thereafter created ranking equally with the Secu-
rities of each Series) shall be secured equally and ratably with (or, at the
option of the Company, prior to) such secured Indebtedness, so long as such
secured Indebtedness shall be so secured; provided, however, that this Section
4.08 shall not apply to Indebtedness secured by:
(1) Liens existing on the date of this Indenture;
(2) Liens in favor of governmental bodies to secure progress, advance or
other payments;
(3) Liens existing on property, shares of stock or Indebtedness at the time
of acquisition thereof (including acquisition through lease, merger or con-
solidation) or Liens to secure the payment of all or any part of the pur-
chase price thereof or the cost of construction, installation, renovation,
improvement or development thereon or thereof or to secure any Indebtedness
incurred prior to, at the time of, or within 360 days after the later of the
acquisition, completion of such construction, installation, renovation, im-
provement or development or the commencement of full operation of such prop-
erty or within 360 days after the acquisition of such shares or Indebtedness
for the purpose of financing all or any part of the purchase price thereof;
<PAGE>
30
(4) Liens securing Indebtedness in an aggregate amount which, at the time
of incurrence and together with all outstanding Attributable Debt in respect
of Sale and Leaseback Transactions permitted by clause (y) of the second
paragraph of Section 4.09, does not exceed ten percent of the Consolidated
Net Tangible Assets of the Company;
(5) Liens to secure Indebtedness other than Funded Debt; and
(6) any extension, renewal or replacement (or successive extensions, renew-
als or replacements), as a whole or in part, of any Lien referred to in the
foregoing clauses (1) to (5) inclusive; provided, that such extension, re-
newal or replacement of such Lien is limited to all or any part of the same
property, shares of stock or Indebtedness that secured the Lien extended,
renewed or replaced (plus improvements on such property), and that such se-
cured Indebtedness at such time is not increased.
If at any time the Company shall incur, create, assume or otherwise become
liable in respect of any Indebtedness secured by a Lien, or guarantee any In-
debtedness with a guarantee which is secured by a Lien, on any Principal Do-
mestic Property of the Company or any shares of stock or Indebtedness of any
Significant Subsidiary other than as permitted under clauses (1) through (6)
of this Section 4.08, the Company shall promptly deliver to the Trustee (i) an
Officers' Certificate stating that the covenant of the Company to secure the
Securities equally and ratably with such secured Indebtedness pursuant to this
Section 4.08 has been complied with and (ii) an Opinion of Counsel that such
covenant has been complied with and that any instruments executed by the Com-
pany in performance of such covenant comply with the requirements of such cov-
enant.
Section 4.09. Restrictions on Sales and Leasebacks.
The Company will not sell or transfer any Principal Domestic Property of the
Company, with the Company taking back a lease of such Principal Domestic Prop-
erty of the Company (a "Sale and Leaseback Transaction"), unless (i) such
Principal Domestic Property of the Company is sold within 360 days from the
date of acquisition of such Principal Domestic Property of the Company or the
date of the completion of construction or commencement of full operations on
such Principal Domestic Property of the Company, whichever is later, or (ii)
the Company, within 120 days after such sale, applies or causes to be applied
to the retirement of Funded Debt of the Company or any Subsidiary (other than
Funded Debt of the Company which by its terms or the terms of the instrument
pursuant to which it was issued is subordinate in right of payment to the Se-
curities of each Series) an amount not less than the greater of (A) the net
proceeds of the sale of
<PAGE>
31
such Principal Domestic Property of the Company or (B) the fair value (as de-
termined in any manner approved by the Board of Directors) of such Principal
Domestic Property of the Company.
The provisions of this Section 4.09 shall not prevent a Sale and Leaseback
Transaction (x) if the lease entered into by the Company in connection there-
with is for a period, including renewals, of not more than 36 months or (y) if
the Company would, at the time of entering into such Sale and Leaseback Trans-
action, be entitled, without equally and ratably securing the Securities, to
create or assume a Lien on such Principal Domestic Property of the Company se-
curing Indebtedness in an amount at least equal to the Attributable Debt in
respect of such Sale and Leaseback Transaction pursuant to clause (4) of Sec-
tion 4.08.
ARTICLE 5
Successor Corporation
Section 5.01. When Company May Merge, etc.
The Company shall not consolidate with or merge with or into any other corpo-
ration or transfer all or substantially all of its properties and assets as an
entirety to any person, unless:
(1) either the Company shall be the continuing person, or the person (if
other than the Company) formed by such consolidation or into which the Com-
pany is merged or to which all or substantially all of the properties and
assets of the Company as an entirety are transferred shall be a corporation
organized and existing under the laws of the United States or any State
thereof or the District of Columbia and shall expressly assume, by an inden-
ture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the
Securities of each Series and this Indenture;
(2) immediately before and immediately after giving effect to such transac-
tion, no Event of Default and no Default shall have occurred and be continu-
ing; and
(3) the Company shall have delivered to the Trustee an Officers' Certifi-
cate and an Opinion of Counsel, each stating that such consolidation, merger
or transfer and such supplemental indenture comply with this Article and
that all conditions precedent herein provided for relating to such transac-
tions have been complied with.
Notwithstanding the foregoing, any Subsidiary may consolidate with, merge
with or into or transfer all or part of its properties and assets to the Com-
pany or any other Subsidiary or Subsidiaries.
<PAGE>
32
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any transfer of all or substantially all
of the properties and assets of the Company in accordance with Section 5.01,
the successor corporation formed by such consolidation or into which the Com-
pany is merged or to which such transfer is made shall succeed to, and be sub-
stituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation had been
named as the Company herein.
ARTICLE 6
Default and Remedies
Section 6.01. Events of Default.
An "Event of Default" occurs if, with respect to any Series of Securities,
unless it is either inapplicable to a particular Series or it is specifically
deleted or modified in the Authorizing Resolution and/or supplemental inden-
ture (if any) in respect of such Series, and upon any other events which may
be specified as Events of Default in the Authorizing Resolution and/or supple-
mental indenture (if any) in respect of such Series:
(1) the Company defaults in the payment of interest on any Securities of
such Series when the same becomes due and payable and the default continues
for a period of 30 days;
(2) the Company defaults in the payment of the principal of any Securities
of such Series when the same becomes due and payable at its Maturity or oth-
erwise or defaults in the deposit of any Sinking Fund installment in respect
of such Series, when and as payable by the terms of Section 3B.01 hereof;
(3) the Company fails to comply with any of its other agreements contained
in the Securities of such Series or this Indenture (other than an agreement
relating exclusively to another Series of Securities) and the default con-
tinues for the period and after the notice specified below;
(4) the Company pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order for relief against it in an invol-
untary case or proceeding,
(C) consents to the appointment of a Custodian of it or for all or sub-
stantially all of its property, or
<PAGE>
33
(D) makes a general assignment for the benefit of its creditors; or
(5) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case or proceed-
ing,
(B) appoints a Custodian of the Company for all or substantially all of
its properties, or
(C) orders the liquidation of the Company,
and in each case the order or decree remains unstayed and in effect for 60
days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal or
state law for the relief of debtors. The term "Custodian" means any receiver,
trustee, assignee, liquidator, sequestrator or similar official under any
Bankruptcy Law.
A Default under clause (3) is not an Event of Default until the Trustee noti-
fies the Company, or the Holders of at least 25% in principal amount of the
outstanding Securities of such Series notify the Company and the Trustee, of
the Default and the Company does not cure the Default within 60 days after re-
ceipt of the notice. The notice must specify the Default, demand that it be
remedied and state that the notice is a "Notice of Default." When a Default is
cured, it ceases. Such notice shall be given by the Trustee if so requested by
the Holders of at least 25% in principal amount of the Securities of such Se-
ries then outstanding.
Subject to the provisions of Sections 7.01 and 7.02, the Trustee shall not be
charged with knowledge of any Event of Default unless written notice thereof
shall have been given to a Trust Officer at the corporate trust office of the
Trustee by the Company, the Paying Agent, any Holder or an agent of any Hold-
er.
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in Section
6.01(4) or (5)) with respect to Securities of any Series occurs and is contin-
uing, the Trustee may, by notice to the Company, or the Holders of at least
25% in principal amount of such Securities of such Series then outstanding
may, by notice to the Company and the Trustee, and the Trustee shall, upon the
request of such Holders, declare all unpaid principal (or, if such Securities
are Original Issue Discount Securities, such portion of the principal amount
as may then be
<PAGE>
34
payable on acceleration as provided in the terms thereof) and accrued interest
to the date of acceleration on all such Securities of such Series then out-
standing (if not then due and payable) to be due and payable and, upon any
such declaration, the same shall become and be immediately due and payable. If
an Event of Default specified in Section 6.01(4) or (5) occurs, all unpaid
principal (or, if any Securities are Original Issue Discount Securities, such
portion of the principal amount as may then be payable on acceleration as pro-
vided in the terms thereof) and accrued interest on all Securities of every
Series then outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Securityholder. Upon payment of such principal amount and interest, all of the
Company's obligations under such Securities of such Series and this Indenture
with respect to such Securities of such Series, other than obligations under
Section 7.07, shall terminate. The Holders of a majority in principal amount
of the Securities of such Series then outstanding by notice to the Trustee may
rescind an acceleration and its consequences if (i) all existing Events of De-
fault, other than the non-payment of the principal of the Securities of such
Series which has become due solely by such declaration of acceleration, have
been cured or waived, (ii) to the extent the payment of such interest is law-
ful, interest on overdue installments of interest and overdue principal, which
has become due otherwise than by such declaration of acceleration, has been
paid, (iii) the rescission would not conflict with any judgment or decree of a
court of competent jurisdiction and (iv) all payments due to the Trustee and
any predecessor Trustee under Section 7.07 have been made. Anything herein
contained to the contrary notwithstanding, in the event of any acceleration
pursuant to this Section 6.02, the Company shall not be obligated to pay any
premium in connection with any repayment arising from an Event of Default.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal of or interest on the Securities of the Series as to which the Event
of Default shall have occurred or to enforce the performance of any provision
of such Securities or the Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the
Securities of the Series as to which the Event of Default shall have occurred
or does not produce any of them in the proceeding. A delay or omission by the
Trustee or any Securityholder in exercising any right or remedy accruing upon
<PAGE>
35
an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of
any other remedy. All available remedies are cumulative to the extent permit-
ted by law.
Section 6.04. Waiver of Past Defaults.
Subject to Sections 6.07 and 9.02, the Holders of a majority in principal
amount of the outstanding Securities of a Series by written notice to the
Trustee may waive an existing Default or Event of Default and its conse-
quences, except a Default in the payment of principal of or interest on any
such Security as specified in clauses (1) and (2) of Section 6.01. When a De-
fault or Event of Default is waived, it is cured and ceases.
Section 6.05. Control by Majority.
The Holders of a majority in principal amount of the outstanding Securities
of a Series (or, if more than one Series is affected, of all such Series vot-
ing as a single class) may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with any law or this Indenture that the Trustee determines may
be unduly prejudicial to the rights of another Securityholder, or that may in-
volve the Trustee in personal liability; provided that the Trustee may take
any other action deemed proper by the Trustee which is not inconsistent with
such direction.
Section 6.06. Limitation on Suits.
A Securityholder may not pursue any remedy with respect to this Indenture or
the Securities of the applicable Series unless:
(1) the Holder gives to the Trustee written notice of a continuing Event of
Default;
(2) the Holders of at least 25% in principal amount of the outstanding Se-
curities of the Series in respect of which the Event of Default has occurred
make a written request to the Trustee to pursue a remedy;
(3) such Holder or Holders offer to the Trustee indemnity satisfactory to
the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after re-
ceipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in principal amount
of the outstanding Securities of such Series do not give the Trustee a di-
rection which, in the opinion of the Trustee, is inconsistent with the re-
quest.
<PAGE>
36
A Holder of Securities of any Series may not use this Indenture to prejudice
the rights of any other Holders of Securities of that Series or to obtain a
preference or priority over any other Holders of Securities of that Series.
Section 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of and interest on the Security, on or
after the respective due dates expressed in such Security, or to bring suit
for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default in payment of interest or principal specified in Sec-
tion 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment
in its own name and as trustee of an express trust against the Company or any
other obligor on the Securities of the Series in respect of which the Event of
Default has occurred for the whole amount of principal and accrued interest
remaining unpaid, together with interest overdue on principal or, in the case
of Original Issue Discount Securities, the then accreted value, and to the ex-
tent that payment of such interest is lawful, interest on overdue installments
of interest, in each case at the rate per annum borne by such Securities or,
in the case of Original Issue Discount Securities, at a rate equal to the
Yield to Maturity thereof, and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable compensa-
tion, expenses, disbursements and advances of the Trustee, its agents and
counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee (in-
cluding any claim for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel) and the Securityholders al-
lowed in any judicial proceedings relative to the Company (or any other obli-
gor upon the Securities), its creditors or its property and shall be entitled
and empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian
in any such judicial proceedings is hereby authorized by each Securityholder
to make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of
<PAGE>
37
such payments directly to the Securityholders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07. Nothing herein contained shall be deemed to autho-
rize the Trustee to authorize or consent to or accept or adopt on behalf of
any Securityholder any plan of reorganization, arrangement, adjustment or com-
position affecting the Securities of any Series or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money or property pursuant to this Article 6 with
respect to Securities of a Series, it shall pay out the money or property in
the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for amounts due and unpaid on the Securities of such Se-
ries in respect of which monies have been collected for principal and inter-
est, ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal and interest, re-
spectively; and
Third: to the Company.
The Trustee, upon prior written notice to the Company, may fix a record date
and payment date for any payment to Securityholders pursuant to this Section
6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party liti-
gant in the suit of an undertaking to pay the costs of the suit, and the court
in its discretion may assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in the suit, having due regard to the merits
and good faith of the claims or defenses made by the party litigant. This Sec-
tion 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant
to Section 6.07, or a suit by any Holder or a group of Holders of more than
10% in principal amount of the outstanding Securities of all Series (or, if
the matter in issue does not relate to all Series of Securities, then the
Holders of 10% in principal amount of the outstanding Securities of all Series
to which such issue relates) (treated as a single class).
<PAGE>
38
ARTICLE 7
Trustee
Section 7.01. Duties of Trustee.
(a) The Trustee, except during the continuance of an Event of Default known
to it pursuant to Section 6.01, undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture. If an Event of
Default known to the Trustee pursuant to Section 6.01 has occurred and is con-
tinuing, the Trustee shall exercise such of the rights and powers vested in it
by this Indenture and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the con-
duct of his own affairs.
(b) Except during the continuance of an Event of Default known to the Trustee
pursuant to Section 6.01:
(1) the Trustee need perform only those duties as are specifically set
forth in this Indenture and no others and no implied covenants or obliga-
tions shall be read into this Indenture against the Trustee;
(2) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee
and conforming to the requirements of this Indenture; however, the Trustee
shall examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent ac-
tion, its own negligent failure to act, or its own willful misconduct, except
that:
(1) this paragraph does not limit the effect of paragraphs (a) and (b) of
this Section 7.01;
(2) the Trustee shall not be liable for any error of judgment made in good
faith by a Trust Officer, unless it is proved that the Trustee was negligent
in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action it takes or
omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.05.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the perfor-
mance of any of its duties hereunder or in the exercise of any of its rights
or powers if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not reason-
ably assured to it.
<PAGE>
39
(e) Every provision of this Indenture that in any way relates to the Trustee
is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money received by it
except as the Trustee may agree with the Company in writing. Money held in
trust by the Trustee need not be segregated from other funds except to the ex-
tent required by law.
Section 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) the Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper person; the Trustee need not
investigate any fact or matter stated in the document;
(b) before the Trustee acts or refrains from acting, it may require an Of-
ficers' Certificate or an Opinion of Counsel, which shall conform to Section
10.05; the Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on such certificate or opinion;
(c) the Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care;
(d) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized or within
its rights or powers;
(e) the Trustee may consult with counsel and the advice or opinion of such
counsel as to matters of law shall be full and complete authorization and
protection in respect of any action taken, omitted or suffered by it hereun-
der in good faith and in accordance with the advice or opinion of such coun-
sel; and
(f) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of the
Holders, including, without limitation, the duties, rights and powers speci-
fied in Section 6.02 hereof, unless such Holders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by the Trustee in compliance with such request or
action.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or its Affili-
ates with the same rights it would have if it were not Trustee. Any Agent may
do the same with like rights. However, the Trustee is subject to Sections 7.10
and 7.11.
<PAGE>
40
Section 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Securities of any Series, it shall not be accountable for the
recitals contained in this Indenture or for the Company's use of the proceeds
from the Securities of any Series, and it shall not be responsible for any
statement in the Securities of any Series, or in any prospectus used to sell
the Securities of any Series, other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or an Event of Default occurs and is continuing with respect of
any Series of Securities, and if it is actually known to the Trustee pursuant
to Section 6.01 hereof, the Trustee shall mail to each Holder of the Securi-
ties of such Series notice of the Default or Event of Default within 75 days
after it occurs. Except in the case of a Default or an Event of Default in
payment of principal of or interest on any Security or in the payment of any
Sinking Fund installment, the Trustee may withhold such notice if and so long
as a committee of its Trust Officers in good faith determines that withholding
the notice is in the interest of Securityholders.
Section 7.06. Reports by Trustee to Holders.
The Trustee shall transmit to the Holder such reports concerning, among other
things, the Trustee and its action under this Indenture as may be required
pursuant to the TIA at the time and in compliance with TIA (S) 313(a). The
Trustee also shall comply with TIA (S) 313(b)(2) and 313(c).
A copy of each such report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange, if any, on which the Se-
curities of any Series are listed.
The Company shall notify the Trustee if the Securities of any Series become
listed on any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such compensation as
shall be agreed upon in writing by the Company and the Trustee. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of
an express trust. The Company shall reimburse the Trustee upon request for
<PAGE>
41
all reasonable disbursements, expenses and advances incurred or made by it.
Such expenses shall include the reasonable compensation, disbursements and ex-
penses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless against,
any loss or liability incurred by it in connection with the administration of
this trust and its duties hereunder, including the reasonable expenses of de-
fending itself against any claim of liability arising hereunder. The Trustee
shall notify the Company promptly of any claim asserted against the Trustee
for which it may seek indemnity. The Company need not pay for any settlement
made without its written consent, which consent shall not be unreasonably
withheld. The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section 7.07, the Trustee
shall have a lien prior to the Securities of each Series on all money or prop-
erty held or collected by the Trustee, in its capacity as Trustee, except
money or property held in trust to pay principal of or interest on particular
Securities.
When the Trustee incurs expenses or renders services after an Event of De-
fault specified in Section 6.01(4) or (5) occurs, the expenses and the compen-
sation for the services are intended to constitute expenses of administration
under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing. The Holders of
a majority in principal amount of the outstanding Securities of all Series
(voting as a single class) may remove the Trustee by so notifying the Trustee
in writing and may appoint a successor Trustee with the Company's consent.
Pursuant to a Company Order, the Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of
Trustee for any reason, the Company shall promptly appoint a successor Trust-
ee. Within one year after the successor Trustee takes office, the Holders of a
majority
<PAGE>
42
in principal amount of the Securities of all Series (voting as a single class)
may appoint a successor Trustee to replace the successor Trustee appointed by
the Company.
A successor Trustee shall deliver a written acceptance of its appointment to
the retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer, after payment of all sums then owing to the Trustee
pursuant to Section 7.07, all property and documentation held by it as Trustee
to the successor Trustee, subject to the lien provided in Section 7.07, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its succession
to each Securityholder.
If a successor Trustee does not take office within 60 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company or the Hold-
ers of at least 10% in principal amount of the outstanding Securities of all
Series (voting as a single class) may petition any court of competent juris-
diction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may pe-
tition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee. Any successor Trustee shall comply
with TIA (S) 310(a)(5).
Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the
Company's obligations under Section 7.07 shall continue for the benefit of the
retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the resulting, surviving or transferee corporation without any further act
shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the requirements of
TIA (S) 310(a)(1). The Trustee shall have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall comply with TIA (S) 310(b), including the provi-
sion permitted by the second sentence of TIA (S) 310(b).
<PAGE>
43
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA (S) 311(a), excluding from the operation of
(S) 311(a) any creditor relationship listed in TIA (S) 311(b). A Trustee who
has resigned or been removed shall be subject to TIA (S) 311(a) to the extent
indicated.
ARTICLE 8
Discharge of Indenture
Section 8.01. Termination of Company's Obligations.
The Company may terminate its obligations under the Securities of any Series
and this Indenture with respect to such Series, except those obligations re-
ferred to in the immediately succeeding paragraph, (a) if all Securities of
such Series previously authenticated and delivered (other than destroyed, lost
or stolen Securities of such Series which have been replaced or paid or Secu-
rities of such Series for whose payment money or securities have theretofore
been held in trust and thereafter repaid to the Company, as provided in Sec-
tion 8.03) have been delivered to the Trustee for cancellation and the Company
has paid all sums payable by it hereunder, or (b) if, following the date on
which the Company shall have given notice to the Trustee of its intention to
defease all of the Securities of such Series, the Company has irrevocably de-
posited or caused to be deposited with the Trustee or a Paying Agent (other
than the Company or a Subsidiary), under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee and any such Pay-
ing Agent, as trust funds in trust solely for the benefit of the Holders for
that purpose, (i) in the case of any Securities of any Series denominated in
United States dollars, an amount of cash sufficient to pay principal of and
interest on such outstanding Securities at their respective Stated Maturities,
or direct non-callable obligations of, or non-callable obligations guaranteed
by, the United States of America for the payment of which guarantee or obliga-
tion the full faith and credit of the United States is pledged, including but
not limited to depository receipts issued by a bank as custodian with respect
to any such security held by the custodian for the benefit of the holder of
such depository receipt ("U.S. Government Obligations"), maturing as to prin-
cipal and interest in such amounts and at such times as are sufficient without
consideration of any reinvestment of such interest, to pay principal of and
interest on such outstanding Securities at their respective Stated Maturities
and (ii) in the case of any Securities of any Series denominated in any cur-
rency other than United States dollars, an amount of the Required Currency
sufficient
<PAGE>
44
to pay principal of and interest on such outstanding Securities at their re-
spective Stated Maturities; provided that the Trustee or such Paying Agent
shall have been irrevocably instructed to apply such cash, the proceeds of
such U.S. Government Obligations or the Required Currency, as the case may be,
to the payment of said principal and interest with respect to the Securities
of such Series; and provided further, that if such irrevocable deposit in
trust with the Trustee of cash, U.S. Government Obligations or the Required
Currency, as the case may be, is made on or prior to one year from the Stated
Maturity for payment of principal of the Securities of the applicable Series,
the Company shall have delivered to the Trustee either an Opinion of Counsel
with no material qualifications in form and substance satisfactory to the
Trustee to the effect that Holders of such Securities (i) will not recognize
income, gain or loss for Federal income tax purposes as a result of such de-
posit (and the defeasance contemplated in connection therewith) and (ii) will
be subject to Federal income tax on the same amounts and in the same manner
and at the same times as would have been the case if such deposit and defea-
sance had not occurred, or an applicable favorable ruling to that effect re-
ceived from or published by the Internal Revenue Service.
Notwithstanding the foregoing paragraph, the Company's obligations in Sec-
tions 2.04, 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07, 7.08, 8.03 and 8.04, and
except as otherwise provided in the Authorizing Resolution and/or the supple-
mental indenture (if any) in respect of any Series, shall survive until the
Securities are no longer outstanding. Thereafter, the Company's obligations in
Sections 7.07, 8.03 and 8.04 shall survive.
After any such irrevocable deposit the Trustee upon request shall acknowledge
in writing the discharge of the Company's obligations under the Securities of
the applicable Series and this Indenture with respect to such Series except
for those surviving obligations specified above.
Section 8.02. Application of Trust Money.
The Trustee or Paying Agent shall hold in trust cash, U.S. Government Obliga-
tions or the Required Currency, as the case may be, deposited with it pursuant
to Section 8.01, and shall apply the deposited cash, the money from U.S. Gov-
ernment Obligations or the Required Currency, as the case may be, in accor-
dance with this Indenture to the payment of principal of and interest on the
Securities.
<PAGE>
45
Section 8.03. Repayment to Company.
Subject to Section 8.01, the Trustee and the Paying Agent shall promptly pay
to the Company upon request any excess money held by them at any time. Subject
to the provisions of applicable law, the Trustee and the Paying Agent shall
pay to the Company upon request any money held by them for the payment of
principal or interest that remains unclaimed for two years; provided, however,
the Trustee or such Paying Agent before being required to make any payment may
at the expense of the Company cause to be published once in a newspaper of
general circulation in The City of New York or mail to each Holder entitled to
such money notice that such money remains unclaimed and that, after a date
specified therein which shall be at least 30 days from the date of such publi-
cation or mailing, any unclaimed balance of such money then remaining will be
repaid to the Company. After payment to the Company, the Trustee shall be re-
leased from all further liability with respect to such money and
Securityholders entitled to money must look to the Company for payment as gen-
eral creditors unless an applicable abandoned property law designates another
person.
Section 8.04. Reinstatement.
If the Trustee or Paying Agent is unable to apply any cash, U.S. Government
Obligations or the Required Currency, as the case may be, in accordance with
Section 8.01 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or oth-
erwise prohibiting such application, the Company's obligations under this In-
denture (with respect to the applicable Series) and the Securities of the ap-
plicable Series shall be revived and reinstated as though no deposit had oc-
curred pursuant to Section 8.01 until such time as the Trustee or Paying Agent
is permitted to apply all such cash, U.S. Government Obligations and Required
Currency, as the case may be, in accordance with Section 8.01; provided, how-
ever, that if the Company has made any payment of interest on or principal of
any Securities of any Series because of the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Securi-
ties to receive such payment from the cash, U.S. Government Obligations or the
Required Currency, as the case may be, held by the Trustee or Paying Agent.
Section 8.05. Indemnity for U.S. Government Obligations.
The Company shall pay, and shall indemnify the Trustee against, any tax, fee
or other charge imposed on or assessed against U.S. Government Obligations
<PAGE>
46
deposited pursuant to Section 8.01 or the principal and interest received on
such U.S. Government Obligations.
ARTICLE 9
Amendments, Supplements and Waivers
Section 9.01. Without Consent of Holders.
The Company, when authorized by a Board Resolution, and the Trustee may amend
or supplement this Indenture or the Securities of any Series without notice to
or consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to certificated
Securities;
(4) to secure the Securities in connection with Section 4.08;
(5) to make any change that does not adversely affect the rights of any
Securityholder of such Series;
(6) to provide for the issuance and the terms of any particular Series of
Securities, the rights and obligations of the Company and the Holders of the
Securities of such Series, the form or forms of the Securities of such Se-
ries and such other matters in connection therewith as the Board of Direc-
tors of the Company shall authorize, including, without limitation, provi-
sions for (a) additional or different covenants, restrictions or conditions
applicable to such Series, (b) additional or different Events of Default in
respect of such Series, (c) a longer or shorter period of grace and/or no-
tice in respect of any provision applicable to such Series than is provided
in Section 6.01, (d) immediate enforcement of any Event of Default in re-
spect of such Series or (e) limitations upon the remedies available in re-
spect of any Events of Default in respect of such Series or upon the rights
of the holders of Securities of such Series to waive any such Event of De-
fault; provided, that this paragraph (6) shall not be deemed to require the
execution of a supplemental indenture to provide for the issuance of any Se-
ries of Securities unless the same shall be provided for in the Authorizing
Resolution relating thereto; or
(7) to provide for a separate Trustee for one or more Series.
Section 9.02. With Consent of Holders.
Subject to Section 6.07, with the written consent of the Holders of at least
a majority in principal amount of the outstanding Securities of all Series af-
fected
<PAGE>
47
thereby (voting as a single class), the Company, when authorized by a Board
Resolution, and the Trustee may amend or supplement this Indenture or such Se-
curities without notice to any Securityholder. Subject to Section 6.07, the
Holders of a majority in principal amount of the outstanding Securities of all
Series affected thereby (voting as a single class) may waive compliance by the
Company with any provision of this Indenture or such Securities without notice
to any Securityholder; provided, that, only the holders of a majority in prin-
cipal amount of Securities of a particular Series may waive compliance with a
provision of this Indenture or the Securities of such Series having applica-
bility solely to such Series. However, without the consent of each
Securityholder affected, an amendment, supplement or waiver, including a
waiver pursuant to Section 6.04, may not:
(1) reduce the amount of Securities of such Series or all Series (voting as
a single class), as the case may be, whose Holders must consent to an amend-
ment, supplement or waiver;
(2) reduce the rate or change the Stated Maturity for payment of interest
on any Security;
(3) reduce the principal or any premium payable upon the redemption of or
change the Stated Maturity of any Security;
(4) waive a Default in the payment of the principal of or interest on any
Security;
(5) make any changes in Section 6.04, 6.07 or the third sentence of this
Section 9.02; or
(6) make any Security payable in money other than that stated in the Secu-
rity.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular Series of Securities, or which modifies the
rights of the Holders of Securities of such Series with respect to such cove-
nant or other provision, shall be deemed not to affect the rights under the
Indenture of the Holders of Securities of any other Series.
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment, supplement or waiv-
er, but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes effec-
tive, the Company shall mail to the Holders affected thereby a notice briefly
<PAGE>
48
describing the amendment, supplement or waiver. Any failure of the Company to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Securities shall
comply with the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a Holder
is a continuing consent by the Holder and every subsequent Holder of such Se-
curity or portion of such Security that evidences the same debt as the con-
senting Holder's Security, even if notation of the consent is not made on any
Security. However, any such Holder or subsequent Holder may revoke in writing
the consent as to his Security or portion of a Security. Such revocation shall
be effective only if the Trustee receives the written notice of revocation be-
fore the date the amendment, supplement or waiver becomes effective.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment, sup-
plement or waiver which shall be at least 30 days prior to the first solicita-
tion of such consent. If a record date is fixed, then notwithstanding the last
two sentences of the immediately preceding paragraph, those persons who were
Holders at such record date (or their duly designated proxies), and only those
persons, shall be entitled to consent to such amendment, supplement or waiver
or to revoke any consent previously given, whether or not such persons con-
tinue to be Holders after such record date. No such consent shall be valid or
effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall bind ev-
ery Holder of a Security of such Series, unless it makes a change described in
any of clauses (1) through (6) of Section 9.02. In that case the amendment,
supplement or waiver shall bind each Holder of a Security who has consented to
it and every subsequent Holder of a Security or portion of a Security of the
same Series that evidences the same debt as the consenting Holder's Security.
<PAGE>
49
Section 9.05. Notation On or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the
changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Security shall is-
sue and the Trustee shall authenticate a new Security of the same Series that
reflects the changed terms.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall be entitled to receive, and shall be fully protected in re-
lying upon, an Officers' Certificate and an Opinion of Counsel stating that
the execution of any amendment, supplement or waiver authorized pursuant to
this Article 9 is authorized or permitted by this Indenture. The Trustee may,
but shall not be obligated to, execute any such amendment, supplement or
waiver which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
ARTICLE 10
Miscellaneous
Section 10.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies, or conflicts with an-
other provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
Section 10.02. Notices.
Any notice or communication shall be sufficiently given if in writing and de-
livered in person or mailed by first-class mail addressed as follows:
if to the Company:
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Attention: Director, Financial Administration
<PAGE>
50
if to the Trustee:
The Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed to him
at his address as it appears on the Security Register and shall be suffi-
ciently given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders.
Except for a notice to the Trustee, which is deemed given only when received,
if a notice or communication is mailed in the manner provided above, it is
duly given, whether or not the addressee receives it.
Section 10.03. Communications by Holders With Other Holders.
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the Secu-
rities of an applicable Series. The Company, the Trustee, the Registrar and
any other person shall have the protection of TIA (S) 312(c).
Section 10.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any ac-
tion under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating to
the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
Section 10.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture, other than the Officers' Certificate
required by Section 4.05, shall include:
(1) a statement that the person making such certificate or opinion has read
such covenant or condition;
<PAGE>
51
(2) a brief statement as to the nature and scope of the examination or in-
vestigation upon which the statements or opinions contained in such certifi-
cate or opinion are based;
(3) a statement that, in the opinion of such person, he has made such exam-
ination or investigation as is necessary to enable him to express an in-
formed opinion as to whether or not such covenant or condition has been com-
plied with; and
(4) a statement as to whether or not, in the opinion of such person, such
condition or covenant has been complied with; provided, however, that with
respect to matters of fact an Opinion of Counsel may rely on an Officers'
Certificate or certificates of public officials.
Section 10.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Paying Agent or Registrar may make reasonable rules for
its functions.
Section 10.07. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking institu-
tions in New York, New York are not required to be open. If a payment date is
a Legal Holiday at a place of payment, payment may be made at that place on
the next succeeding day that is not a Legal Holiday, and no interest shall ac-
crue for the intervening period.
Section 10.08. Governing Law.
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND THE SECURI-
TIES WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Section 10.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any of its Subsidiaries. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
Section 10.10. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Securities
or the
<PAGE>
52
Indenture or for any claim based on, in respect of or by reason of such obli-
gations or their creation. Each Securityholder by accepting a Security waives
and releases all such liability.
Section 10.11. Successors.
All agreements of the Company in this Indenture and the Securities shall bind
its successor. All agreements of the Trustee in this Indenture shall bind its
successor.
Section 10.12. Duplicate Originals.
The parties may sign any number of copies of this Indenture. Each signed copy
shall be an original, but all of them together represent the same agreement.
Section 10.13. Separability.
In case any provision in this Indenture or in the Securities shall be inval-
id, illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby, and
a Holder shall have no claim therefor against any party hereto.
Section 10.14. Action of Holders when Securities are Denominated in Different
Currencies.
Whenever any action is to be taken hereunder by the Holders of two or more
Series of Securities denominated in different currencies, then, for the pur-
poses of determining the principal amount of Securities held by such Holders,
the aggregate principal amount of the Securities denominated in a currency
other than United States dollars shall be deemed to be that amount of United
States dollars that could be obtained for such principal amount on the basis
of the spot rate of exchange for such currency as determined by the Company or
by an authorized exchange rate agent and evidenced to the Trustee by an Offi-
cers' Certificate as of the date the taking of such action by the Holders of
the requisite percentage in principal amount of the Securities is evidenced to
the Trustee. An exchange rate agent may be authorized in advance or from time
to time by the Company, and may be the Trustee or its Affiliate. Any such de-
termination by the Company or by any such exchange rate agent shall be conclu-
sive and binding on all Holders and the Trustee, and neither the Company nor
such exchange rate agent shall be liable therefor in the absence of bad faith.
<PAGE>
53
Section 10.15. Monies of Different Currencies to be Segregated.
The Trustee shall segregate monies, funds, and accounts held by the Trustee
hereunder in one currency from any monies, funds or accounts in any other cur-
rencies, notwithstanding any provision herein which would otherwise permit the
Trustee to commingle such amounts.
Section 10.16. Payment to be in Proper Currency.
Each reference in any Security, or in the Authorizing Resolution and/or sup-
plemental indenture, if any, relating thereto, to any currency shall be of the
essence. In the case of any Security denominated in any currency (the "Re-
quired Currency") other than United States dollars, except as otherwise pro-
vided therein or in the related Authorizing Resolution and/or supplemental in-
denture, if any, the obligation of the Company to make any payment of princi-
pal of or interest thereon shall not be discharged or satisfied by any tender
by the Company, or recovery by the Trustee, in any currency other than the Re-
quired Currency, except to the extent that such tender or recovery shall re-
sult in the Trustee timely holding the full amount of the Required Currency.
The costs and risks of any such exchange, including without limitations, the
risks of delay and exchange rate fluctuation, shall be borne by the Company;
the Company shall remain fully liable for any shortfall or delinquency in the
full amount of Required Currency then due and payable, and in no circumstances
shall the Trustee be liable therefor. The Company hereby waives any defense of
payment based upon any such tender or recovery which is not in the Required
Currency, or which, when exchanged for the Required Currency by the Trustee,
is less than the full amount of Required Currency then due and payable.
<PAGE>
54
SIGNATURES
In Witness Whereof, the parties hereto have caused this Indenture to be duly
executed, and their respective corporate seals to be hereunto affixed and at-
tested, all as of the date first written above.
The Coastal Corporation
[SEAL]
By: ________________________________________
Attest:_________________________
_________________________________________
[SEAL]
By: ________________________________________
Attest:_________________________
<PAGE>
EXHIBIT A
[Form of Face of Security]
[If the Holder of this Security (as indicated below) is The Depository Trust
Company ("DTC") or a nominee of DTC, this Security is a Global Security and
the following two legends apply:
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DE-
POSITORY TRUST COMPANY ("DTC"), 55 WATER STREET, NEW YORK, NEW YORK TO THE IS-
SUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND SUCH
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REG-
ISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO
A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY
DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR.]
[The following is to be included if the Security is an Original Issue Dis-
count Security:]
[FOR PURPOSES OF SECTION 1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE
CODE OF 1986, AS AMENDED: (I) THE ISSUE DATE OF THIS SECURITY IS ;
(II) THE YIELD TO MATURITY IS %; (III) THE ORIGINAL ISSUE DISCOUNT PER
$ FACE AMOUNT AT WHICH THE SECURITY IS ISSUED IS $ ; AND (IV) THE
[EXACT] [APPROXIMATE] METHOD HAS BEEN USED TO DETERMINE YIELD FOR THE ACCRUAL
PERIOD BEGINNING AND ENDING AND THE AMOUNT OF THE
ORIGINAL ISSUE DISCOUNT PER $ FACE AMOUNT ALLOCABLE TO THE ACCRUAL PE-
RIOD BEGINNING AND ENDING IS $ ].
<PAGE>
A-2
The Coastal Corporation
[title of Security]
<TABLE>
<CAPTION>
RATE OF INTEREST MATURITY DATE ORIGINAL ISSUE DATE
- ---------------- ------------- -------------------
<S> <C> <C>
No. $
</TABLE>
The Coastal Corporation, a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "Company"), for value re-
ceived, hereby promises to pay to or registered assigns, the principal
sum of on the Maturity Date shown above, and to pay interest thereon, at
the annual rate of interest shown above, from the Original Issue Date shown
above or from the most recent Interest Payment Date (as hereinafter defined)
to which interest has been paid or duly provided for, payable semi-annually on
and of each year and at maturity (an "Interest Payment Date"),
commencing on the first such date after the Original Issue Date, except that
if the Original Issue Date is on or after a Regular Record Date but before the
next Interest Payment Date, interest payments will commence on the second In-
terest Payment Date following the Original Issue Date.
[reference to currency[ies] of payment and currency exchange arrangements, if
applicable.]
The interest so payable, and punctually paid or duly provided for, on any In-
terest Payment Date will, as provided in the Indenture, be paid to the person
in whose name this [name of Security] is registered at the close of business
on the Regular Record Date for any such Interest Payment Date, which shall be
the fifteenth calendar day (whether or not a Business Day) preceding the ap-
plicable Interest Payment Date. Any such interest not so punctually paid or
duly provided for, and any interest payable on such defaulted interest (to the
extent lawful), will forthwith cease to be payable to the Holder on such Regu-
lar Record Date and shall be paid to the person in whose name this [name of
Security] is registered at the close of business on a special record date for
the payment of such defaulted interest to be fixed by the Company, notice of
which shall be given to Holders of [name of Series] not less than 15 days
prior to such special record date. Payment
<PAGE>
A-3
of the principal of and interest on this [name of Security] will be made at
the agency of the Company maintained for that purpose in [New York, New York
or other place of payment] and at any other office or agency maintained by the
Company for such purpose, in [reference to United States dollars or other cur-
rency of payment]; provided, however, that at the option of the Company pay-
ment of interest, other than interest due on the Maturity Date, may be made by
check mailed to the address of the person entitled thereto as such address
shall appear in the Security Register. [Include the following, if applicable:]
Payments on the Maturity Date will be made in immediately available funds
against presentment of this [name of Security].
Reference is hereby made to the further provisions of this [name of Security]
set forth on the reverse hereof, which further provisions shall for all pur-
poses have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this [name of
Security] shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
In Witness Whereof, The Coastal Corporation has caused this instrument to be
executed in its corporate name by the facsimile signature of its duly autho-
rized officers and has caused a facsimile of its corporate seal to be affixed
hereunto or imprinted hereon.
The Coastal Corporation
Attest: ________________________ By: ________________________________________
[Assistant] Secretary [Title of Officer]
<PAGE>
A-4
DATED:
Trustee's Certificate of Authentication
This is one of the [name of Series] referred to in the within-mentioned In-
denture.
By: ________________________________________
Authorized Signatory
[Reverse Side]
The Coastal Corporation
[Name of Security]
This [name of Security] is one of a duly authorized issue of [name of Securi-
ties] of the Company (which term includes any successor corporation under the
Indenture hereinafter referred to) designated as its [title of Series] (the
"[name of Series]"), issued or to be issued pursuant to an Indenture,
dated as of , 199 (the "Indenture"), between the Company and , as
Trustee (the "Trustee," which term includes any successor trustee under the
Indenture); and under [reference to Authorizing Resolution and/or supplemental
indenture (if any) relating to the Series]. The terms of this [name of Securi-
ty] include those stated in the Indenture and [reference to Authorizing Reso-
lution and/or supplemental indenture (if any) relating to the Series] and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as in effect on the date of the Indenture. Reference is hereby made to
the Indenture and all [further] supplemental indentures thereto for a state-
ment of the respective rights, limitation of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders and of the terms upon
which the [name of Security] are, and are to be, authenticated and delivered.
This [name of Series] is a Series of Securities issued or to be issued by the
Company under the Indenture, and this Series is limited in aggregate principal
amount to $ . The Indenture provides that the Securities of the Com-
<PAGE>
A-5
pany referred to therein ("Securities"), including the [name of Series], may
be issued in one or more Series, which different Series may be issued in such
aggregate principal amounts and on such terms (including, but not limited to,
terms relating to interest rate or rates, provisions for determining such in-
terest rate or rates and adjustments thereto, maturity, redemption (optional
and mandatory), sinking fund, covenants and Events of Default) as may be pro-
vided in or pursuant to the Authorizing Resolutions and/or supplemental inden-
ture (if any) relating to the several Series.
[The following to be included if the Securities are not redeemable prior to
maturity.]
This [name of Security] may not be redeemed prior to its Maturity Date.
[The following paragraph, or other appropriate redemption provisions, to be
included if the Securities are Redeemable Securities:]
The [name of Series] are subject to redemption upon not less than 30 nor more
than 60 days' notice by mail, [the following clause to be included if there is
a Sinking Fund:] [ (1) on [annual Sinking Fund Redemption Date] in each year
commencing with the year [year of first Sinking Fund payment] through opera-
tion of the Sinking Fund at a Redemption Price equal to their principal amount
and (2)] [at any time or from time to time] in whole or in part, at the elec-
tion of the Company at a Redemption Price equal to the percentage set forth
below of the principal amount to be redeemed for the respective twelve-month
periods beginning [ ] of the years indicated:
[Schedule of Redemption Prices]
and thereafter at 100% of the principal amount thereof, together in each case
with accrued interest to the Redemption Date.
<PAGE>
A-6
[The following paragraph, or other appropriate Sinking Fund provision, to be
included if there is a Sinking Fund for the Series:]
The Sinking Fund provides for the redemption on [first Sinking Fund Redemp-
tion Date] and on [annual Sinking Fund Redemption Date] in each year thereaf-
ter through [year of final Sinking Fund date] of not less than [minimum re-
quired Sinking Fund redemption amount] principal amount nor more than [maximum
permitted Sinking Fund redemption amount] principal amount of [name of Se-
ries]. [name of Series] purchased, acquired or redeemed by the Company other-
wise than by redemption through the Sinking Fund may be credited against Sink-
ing Fund requirements to the extent not previously so credited.
[The following paragraph to be included if the Securities are Redeemable Se-
curities or Sinking Fund Securities:]
If an event of redemption of this [name of Security] in part only, a new
[name of Security] or [name of Series] for the unredeemed portion hereof shall
be issued in the name of the Holder hereof upon the surrender hereof.
[The following paragraph to be included if the Securities are not Original
Issue Discount Securities:]
If an Event of Default, as defined in the Indenture and in the Authorizing
Resolution and/or supplemental indenture (if any) relating to the [name of Se-
ries] (if there shall be any additional Events of Default specified in respect
of the [name of Series]), shall occur and be continuing, the principal of all
the [name of Series] may be declared due and payable in the manner and with
the effect provided in the Indenture.
[If the Securities are Original Issue Discount Securities, insert schedule as
to amounts which are payable on acceleration under Section 6.02 and provable
in bankruptcy under Section 6.09 from time to time.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the [name of Series] under the Inden-
ture at any time by the Company and the Trustee with the consent of the Hold-
ers of a majority in aggregate principal amount of the Securities affected
thereby, voting as a single class (which may include the [name of Series]), at
the time outstanding. The Indenture also contains provisions permitting the
Holders of specified percentages in aggregate principal amount of the Securi-
ties at the time outstand-
<PAGE>
A-7
ing to waive compliance by the Company with certain provisions of the Inden-
ture and certain past defaults under the Indenture and their consequences. Any
such consent or waiver by the Holder of this [name of Security] shall be con-
clusive and binding upon such Holder and upon all future Holders of this [name
of Security] and of any [name of Security] issued upon the registration of
transfer hereof or in exchange herefor in lieu hereof, whether or not notation
of such consent or waiver is made upon this [name of Security].
The Indenture provides that no Holder may pursue any remedy under the Inden-
ture unless the Trustee shall have failed to act after notice of an Event of
Default and written request by Holders of at least 25% in principal amount of
the [name of Securities] of the applicable Series and the offer to the Trustee
of indemnity satisfactory to it; however, such provision does not affect the
right to sue for enforcement of any overdue payment on any Security.
No reference herein to the Indenture and no provision of this [name of Secu-
rity] or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on
this [name of Security] at the times, places and rates, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this [name of Security] is registrable in the Security
Register upon surrender of this [name of Security] for registration of trans-
fer at the agency of the Company provided for that purpose duly endorsed by,
or accompanied by a written instrument of transfer in substantially the form
accompanying this [name of Security] duly executed by, the Holder hereof or
his attorney duly authorized in writing, and thereupon one or more new [name
of Series], of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The [name of Series] are issuable only in registered form without coupons in
denominations of [currency and minimum denomination] and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations
therein set forth, the [name of Series] are exchangeable for a like aggregate
principal amount of [name of Series] of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or ex-
change, but the Company may require payment of a sum sufficient to cover
<PAGE>
A-8
any transfer tax or similar governmental charge payable in connection there-
with (other than any such transfer taxes or similar governmental charge pay-
able upon exchanges pursuant to Section 2.11, 3A.08 or 9.05 in which case such
transfer taxes or similar governmental charges shall be paid by the Company).
Prior to due presentment of this [name of Security] for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the person in whose name this [name of Security] is registered as
the owner hereof for all purposes, whether or not this [name of Security] be
overdue, and neither the Company, the Trustee nor any such agent shall be af-
fected by notice to the contrary.
[Reference to Foreign Currencies]
All terms used in this [name of Security] which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
Customary abbreviations may be used in the name of a [name of Security]
holder or any assignee, such as: TEN COM ( = tenants in common), TEN ENT
( = tenants by the entireties), JT TEN ( = joint tenants with right of survi-
vorship and not as tenants in common), CUST ( = Custodian) and U/G/M/A
( = Uniform Gifts to Minors Act).
The Company will furnish to any [name of Security] holder of record, upon
written request, without charge, a copy of the Indenture. Requests may be made
to: The Coastal Corporation, Coastal Tower, Nine Greenway Plaza, Houston,
Texas 77046-0995, Attention: Corporate Secretary.
<PAGE>
A-9
ASSIGNMENT FORM
If you the holder want to assign this [name of Security], fill in the form
below and have your signature guaranteed:
I or we assign and transfer this [name of Security] to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(PRINT OR TYPE NAME, ADDRESS AND ZIP CODE AND
SOCIAL SECURITY OR TAX ID NUMBER OF ASSIGNEES)
and irrevocably appoint, _________________________agent to transfer this [name
of Security] on the books of the Company. The agent may substitute another to
act for him.
Dated: _________________________ Signed: __________________________________
__________________________________________
(SIGN EXACTLY AS NAME APPEARS ON THE
OTHER SIDE OF THIS [NAME OF SECURITY] )
SIGNATURE GUARANTEE: __________________________________________________________
Notice: Signature(s) must be guaranteed by a member firm of the New York
Stock Exchange or a commercial bank or trust company.
<PAGE>
August 28, 1996
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Gentlemen:
I have acted as counsel to The Coastal Corporation, a Delaware corporation
(the "Company"), in connection with the offering by the Company of up to $500
million aggregate public offering price of: (i) unsecured senior debt
securities (the "Senior Debt Securities"), (ii) unsecured subordinated debt
securities (the "Subordinated Debt Securities" and, together with the Senior
Debt Securities, the "Debt Securities"), which may be convertible into shares
of Common Stock, par value 33 1/3 cents per share, of the Company (the "Common
Stock"), (iii) shares of its Preferred Stock, par value 33 1/3 cents per share
(the "Preferred Stock"), which may be convertible into shares of Common Stock
or exchangeable for Debt Securities, (iv) shares of its Common Stock and/or
(v) warrants to purchase shares of Common Stock (the "Common Stock Warrants")
pursuant to a registration statement on Form S-3 (the "Registration
Statement"), filed by the Company with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act"). The Debt Securities,
the Common Stock, the Preferred Stock and the Common Stock Warrants are
referred to as the "Securities" and individually as a "Security."
The Senior Debt Securities are proposed to be issued under an indenture (the
"Senior Indenture") to be executed between the Company and a trustee to be
selected by the Company. The Subordinated Debt Securities are proposed to be
issued under an indenture (the "Subordinated Indenture") to be executed
between the Company and a trustee to be selected by the Company. The Common
Stock Warrants are proposed to be issued under a warrant agreement (the
"Warrant Agreement") to be executed between the Company and a bank or trust
company as Warrant Agent to be selected by the Company. In this connection, I
have examined such corporate proceedings of the Company and I have also
examined such statutes, corporate records and other instruments and documents
which I have deemed it necessary to examine for the purposes of this opinion.
Based on the foregoing, I am of the opinion that:
1. The Company has been duly organized and is validly existing under the
laws of the State of Delaware.
2. With respect to shares of Common Stock, when certificates representing
the shares of Common Stock have been duly executed, countersigned,
registered and delivered either (a) in accordance with the applicable
definitive purchase, underwriting or similar agreement approved by the
Board of Directors or the Executive Committee of the Board of Directors
of the Company (the "Board") upon payment of the consideration therefor
(not less than the par value of the Common Stock) provided for therein,
or (b) upon conversion, exchange or exercise of any other Security
(including the Common Stock Warrants) in accordance with the terms of
such Security or the instrument governing such Security providing for
such conversion, exchange or exercise as approved by the Board, for the
consideration approved by the Board (not less than the par value of the
Common Stock), the shares of Common Stock will be duly authorized,
validly issued, fully paid and nonassessable.
3. With respect to shares of Preferred Stock, when certificates
representing the shares of Preferred Stock have been duly executed,
countersigned, registered and delivered either (a) in accordance with
the applicable definitive purchase, underwriting or similar agreement
approved by the Board upon payment of the consideration therefor (not
less than the par value of the Preferred Stock) provided for therein, or
(b) upon conversion, exchange or exercise of any other Security in
accordance with the terms of such Security or the instrument governing
such Security providing for such conversion, exchange or exercise as
approved by the Board, for the consideration approved by the Board (not
less than the par
<PAGE>
value of the Preferred Stock), the shares of Preferred Stock will be
duly authorized, validly issued, fully paid and nonassessable.
4. With respect to the Senior Debt Securities to be issued under the Senior
Indenture, when (i) the Senior Indenture has been duly executed by the
Company and the Trustee and has been duly qualified under the Trust
Indenture Act of 1939, as amended; (ii) the Board has taken all
necessary corporate action to approve the issuance and terms of such
Senior Debt Securities, the terms of the offering thereof and related
matters; and (iii) such Senior Debt Securities have been duly executed,
authenticated, issued and delivered in accordance with the provisions of
the Senior Indenture and in accordance with the applicable definitive
purchase, underwriting or similar agreement approved by the Board upon
payment of the consideration therefor provided for therein, such Debt
Securities will be legally issued and will constitute valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except as such enforcement is subject to
any applicable bankruptcy, insolvency, reorganization, fraudulent
transfer or other law relating to or affecting creditors' rights
generally and general principles of equity and will be entitled to the
benefits of the Senior Indenture and except that the waiver as to usury
in the Senior Indenture may be unenforceable.
5. With respect to the Subordinated Debt Securities to be issued under the
Subordinated Indenture, when (i) the Subordinated Indenture has been
duly executed by the Company and the Trustee and has been duly qualified
under the Trust Indenture Act of 1939, as amended; (ii) the Board has
taken all necessary corporate action to approve the issuance and terms
of such Subordinated Debt Securities, the terms of the offering thereof
and related matters; and (iii) such Subordinated Debt Securities have
been duly executed, authenticated, issued and delivered in accordance
with the provisions of the Subordinated Indenture and in accordance with
the applicable definitive purchase, underwriting or similar agreement
approved by the Board upon payment of the consideration therefor
provided for therein, such Subordinated Debt Securities will be legally
issued and will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except
as such enforcement is subject to any applicable bankruptcy, insolvency,
reorganization, fraudulent transfer or other law relating to or
affecting creditors' rights generally and general principles of equity
and will be entitled to the benefits of the Subordinated Indenture and
except that the waiver as to usury in the Subordinated Indenture may be
unenforceable.
6. With respect to the Common Stock Warrants, when (i) the Board has taken
all necessary corporate action to approve the issuance of such Common
Stock Warrants, the terms of the offering thereof and related matters;
and (ii) such Common Stock Warrants have been duly executed, issued and
delivered in accordance with the provisions of the Warrant Agreement and
in accordance with the applicable definitive purchase, underwriting or
similar agreement, if any, approved by the Board and upon payment of any
consideration therefor provided for therein, such Common Stock Warrants
will be legally issued and will constitute valid and binding obligations
of the Company, enforceable against the Company in accordance with their
terms, except as such enforcement is subject to any applicable
bankruptcy, insolvency, reorganization, fraudulent transfer or other law
relating to or affecting creditors' rights generally and general
principles of equity and will be entitled to the benefits of the Warrant
Agreement.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to the undersigned under the
caption therein entitled "Legal Matters."
Very truly yours,
/s/ Austin M. O'Toole
Austin M. O'Toole
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of The Coastal Corporation on Form S-3 of our report dated February 1, 1996,
appearing in the Annual Report on Form 10-K of The Coastal Corporation for the
year ended December 31, 1995, and to the reference to us under the heading
"Experts" in the Prospectus, which is a part of this Registration Statement.
DELOITTE & TOUCHE LLP
Houston, Texas
August 28, 1996
