<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 1998
(REGISTRATION NO. 333- )
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
<TABLE>
<S> <C> <C>
THE COASTAL CORPORATION DELAWARE 74-1734212
COASTAL FINANCE I DELAWARE APPLIED FOR
COASTAL FINANCE II DELAWARE APPLIED FOR
(EXACT NAME OF REGISTRANT (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
AS SPECIFIED IN ITS INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
CHARTER)
</TABLE>
--------------
COASTAL TOWER AUSTIN M. O'TOOLE, ESQ.
NINE GREENWAY PLAZA SENIOR VICE PRESIDENT AND SECRETARY
HOUSTON, TEXAS 77046-0995 THE COASTAL CORPORATION
(713) 877-1400 COASTAL TOWER
(ADDRESS, INCLUDING ZIP CODE, AND NINE GREENWAY PLAZA
TELEPHONE NUMBER, INCLUDING HOUSTON, TEXAS 77046-0995
AREA CODE, OF EACH REGISTRANT'S (713) 877-1400
PRINCIPAL EXECUTIVE OFFICES) (NAME, ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE FOR EACH
REGISTRANT)
--------------
COPIES TO:
GERALD S. TANENBAUM, ESQ.
CAHILL GORDON & REINDEL
80 PINE STREET
NEW YORK, NEW YORK 10005
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the Registration Statement becomes effective.
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 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
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<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>
The Coastal Corporation Debt |
Securities......................|
- ---------------------------------|
The Coastal Corporation Preferred|
Stock (par value $.33 1/3 per |
share)..........................|
- ---------------------------------|
The Coastal Corporation Common |
Stock (par value $.33 1/3 per |
share)..........................|
- ---------------------------------|
The Coastal Corporation Common |
Stock Warrants..................| {$100,000,000 100% 100,000,000 $29,500(7)}
- ---------------------------------|
The Coastal Corporation Subordi- |
nated Deferrable Interest Deben-|
tures ..........................|
- ---------------------------------|
Coastal Finance I Preferred |
Securities......................|
- ---------------------------------|
Coastal Finance II Preferred |
Securities......................|
- ---------------------------------|
The Coastal Corporation Guarantee|
with respect to Preferred Secu- |
rities(5)(6)....................|
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</TABLE>
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--------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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 THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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- -------------------------------------------------------------------------------
<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.
(5) No separate consideration will be received for The Coastal Corporation
Guarantee.
(6) This Registration Statement is deemed to include the obligations of The
Coastal Corporation under The Coastal Corporation Guarantee and certain
back-up undertakings as described herein.
(7) An aggregate of $600,000,000 of Debt Securities, Preferred Stock, Common
Stock and Common Stock Warrants of The Coastal Corporation are being
carried forward from registration statement No. 333-44527. Of such
$600,000,000 an aggregate of $200,000,000 was carried forward from
Registration Statement No. 333-10995. In connection with Registration
Statements Nos. 333-10995 and 333-44527, registration fees of $172,414 and
$118,000, respectively, were previously paid.
----------------
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT CONTAINS A COMBINED PROSPECTUS THAT ALSO RELATES TO $600,000,000 OF
OTHER SECURITIES REGISTERED ON FORM S-3, FILE NO. 333-44527, WHICH WAS
DECLARED EFFECTIVE ON JANUARY 30, 1998 (THE "PREVIOUSLY REGISTERED
SECURITIES"), WHICH HAVE NOT BEEN OFFERED OR SOLD AS OF THE DATE OF THE FILING
OF THIS REGISTRATION STATEMENT. OF SUCH $600,000,000, AN AGGREGATE OF
$200,000,000 WAS CARRIED FORWARD FROM REGISTRATION STATEMENT NO. 333-10995,
WHICH WAS DECLARED EFFECTIVE ON SEPTEMBER 23, 1996. THIS REGISTRATION
STATEMENT CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT
FILE NO. 333-44527, PURSUANT TO WHICH THE TOTAL AMOUNT OF UNSOLD PREVIOUSLY
REGISTERED SECURITIES REGISTERED ON REGISTRATION STATEMENT FILE NO. 333-44527,
WITHOUT LIMITATION AS TO CLASS OF SECURITIES, MAY BE OFFERED AND SOLD AS DEBT
SECURITIES, PREFERRED STOCK, COMMON STOCK, COMMON STOCK WARRANTS, SUBORDINATED
DEFERRABLE INTEREST DEBENTURES, COASTAL FINANCE I PREFERRED SECURITIES AND
COASTAL FINANCE II PREFERRED SECURITIES. 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>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1998)
PREFERRED SECURITIES
COASTAL FINANCE I
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED BY
THE COASTAL CORPORATION
---------------
The % Trust Preferred Securities (the "Preferred Securities") offered
hereby evidence preferred undivided beneficial interests in the assets of
Coastal Finance I, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"). The Coastal Corporation, a Delaware
corporation (the "Company"), will directly or indirectly own all the common
securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities")
(continued on next page)
SEE "RISK FACTORS" COMMENCING ON PAGE S-6 OF THIS PROSPECTUS SUPPLEMENT FOR
CERTAIN INFORMATION RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES,
INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF
DISTRIBUTIONS ON THE PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
The Preferred Securities are expected to be approved for listing, subject to
official notice of issuance, on the New York Stock Exchange, Inc. (the "New
York Stock Exchange") under the symbol " ." Trading of the Preferred
Securities on the New York Stock Exchange is expected to commence within a 30-
day period after the initial delivery of the Preferred Securities. See
"Underwriting."
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES 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.
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<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE (1) COMMISSION (2) TRUST (3)(4)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Security.................... $ (3) $
- --------------------------------------------------------------------------------
Total........................... $ (3) $
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Plus accrued distributions, if any, from , 1998.
(2) The Company and the Trust have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in Subordinated Debt Securities, the Company
has agreed to pay to the Underwriters, as compensation for their arranging
the investment therein of such proceeds, $ per Preferred Security (or
$ in the aggregate); provided, that such compensation for sales
of 10,000 or more Preferred Securities to a single purchaser will be $
per Preferred Security. Therefore, to the extent of such sales, the actual
amount of Underwriters' compensation will be less than the aggregate
amount specified in the preceding sentence. See "Underwriting."
(4) Expenses of the offering which are payable by the Company are estimated to
be $ .
---------------
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Preferred Securities will be made only in book-
entry form through the facilities of The Depository Trust Company on or about
, 1998.
---------------
[UNDERWRITERS]
---------------
The date of this Prospectus Supplement is , 1998.
<PAGE>
(continued from previous page)
representing common undivided beneficial interests in the assets of the Trust.
The Trust exists for the exclusive purposes of issuing and selling the Trust
Securities and investing the proceeds thereof in an equivalent principal
amount of % Subordinated Deferrable Interest Notes due , of the
Company (for the purpose of this prospectus supplement, the "Subordinated Debt
Securities"). The Subordinated Debt Securities will be unsecured obligations
of the Company and will be subordinate and junior in right of payment to
certain other indebtedness of the Company, as described herein. Upon an event
of default under the Declaration (as defined herein), the holders of the
Preferred Securities will have a preference over the holder of the Common
Securities with respect to payments in respect of distributions and payments
upon liquidation, redemption and otherwise.
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of % of the liquidation amount of $25 per
Preferred Security, accruing from , 1998 and payable quarterly in
arrears on , , and of each year, commencing , 1998
("distributions"). The distribution payable on , 1998, which will be
calculated at the above rate and based on a period that is [shorter/longer]
than a full quarter, will be in the amount of $ per Preferred Security.
The distribution rate and the distribution and other payment dates for the
Preferred Securities will correspond to the interest rate and interest and
other payment dates on the Subordinated Debt Securities, which will be the
sole assets of the Trust. As a result, if principal or interest is not paid on
the Subordinated Debt Securities, no amounts will be paid on the Preferred
Securities. The payment of distributions out of moneys held by the Trust, and
payments on liquidation of the Trust or the redemption of Preferred
Securities, as set forth below, are guaranteed by the Company (the "Preferred
Securities Guarantee") if and to the extent the Trust has funds available
therefor. The Company's obligations under the Preferred Securities Guarantee,
taken together with its other obligations described herein, constitute a full
and unconditional guarantee by the Company of payments due on the Preferred
Securities. See "Effect of Obligations Under the Subordinated Debt Securities
and the Preferred Securities Guarantee" and "Description of the Preferred
Securities Guarantee." The obligations of the Company under the Preferred
Securities Guarantee are subordinate and junior in right of payment to all
other liabilities of the Company and will rank pari passu with the most senior
preferred stock issued by the Company from time to time and with any guarantee
that may be entered into by the Company in respect of any preferred stock of
any subsidiary or affiliate of the Company. If the Company does not make
principal or interest payments on the Subordinated Debt Securities, the Trust
will not have sufficient funds to redeem or make distributions on the
Preferred Securities, in which event the Preferred Securities Guarantee will
not apply to such redemptions or distributions until the Trust has sufficient
funds available therefor. The obligations of the Company under the
Subordinated Debt Securities are subordinate and junior in right of payment to
all present and future Senior Indebtedness (as defined herein) of the Company.
The Senior Indebtedness of the Company aggregated approximately $2.5 billion
at December 31, 1997. As of such date, there was no indebtedness ranking pari
passu with the Subordinated Debt Securities. In addition, because the Company
is a holding company, its obligations under the Preferred Securities Guarantee
and the Subordinated Debt Securities will be effectively subordinated to all
existing and future liabilities of the Company's subsidiaries. At December 31,
1997, the subsidiaries of the Company had total indebtedness outstanding of
approximately $1.6 billion and other liabilities of approximately $2.3 billion
(excluding, in each case, indebtedness and other liabilities owed to the
Company and other affiliates, guaranteed indebtedness of subsidiaries that is
included in Senior Indebtedness and deferred income taxes and other deferred
credits).
The Company has the right to defer payments of interest on the Subordinated
Debt Securities by extending the interest payment period on the Subordinated
Debt Securities, at any time, for up to 20 consecutive quarters (each an
"Extension Period"), provided, however, that no Extension Period may extend
beyond the maturity of the Subordinated Debt Securities. If interest payments
are so deferred, distributions on the Preferred Securities will also be
deferred. Despite such deferral, during an Extension Period distributions will
continue to accrue with interest thereon at an annual rate of % per annum,
compounded quarterly (to the extent permitted by applicable law), and holders
of Preferred Securities will be required to include deferred interest income
in their gross income for United States federal income tax purposes in advance
of receipt of the cash interest payments attributable to such deferred income.
There could be multiple Extension Periods of varying lengths throughout the
term of the Subordinated Debt Securities. See "Description of the Subordinated
Debt Securities--Option to
S-2
<PAGE>
Extend Interest Payment Period," "Risk Factors--Option to Extend Interest
Payment Period" and "Certain Federal Income Tax Consequences--Original Issue
Discount, Premium and Market Discount." In the event of any such deferral, the
holders of the Preferred Securities do not have the right to appoint a special
representative or trustee or otherwise act to protect their interests.
The Subordinated Debt Securities are redeemable by the Company (in whole or
in part) from time to time, on or after , , or at any time in certain
circumstances upon the occurrence of a Tax Event (as defined herein) at 100%
of the principal amount of the Subordinated Debt Securities to be redeemed
plus accrued and unpaid interest thereon to the date fixed for redemption. If
the Company redeems Subordinated Debt Securities, the Trust must redeem Trust
Securities on a pro rata basis having an aggregate liquidation amount equal to
the aggregate principal amount of the Subordinated Debt Securities so redeemed
at $25 per Trust Security plus accrued and unpaid distributions thereon (the
"Redemption Price") to the date fixed for redemption. See "Description of the
Preferred Securities--Mandatory and Optional Redemption." The Trust Securities
will be redeemed at the Redemption Price upon maturity of the Subordinated
Debt Securities. The Subordinated Debt Securities mature on , . In
addition, upon the occurrence of a Special Event (as defined herein) arising
from a change in law or a change in legal interpretation, unless the
Subordinated Debt Securities are redeemed in the limited circumstances
described below, the Trust shall be terminated with the result that the
Subordinated Debt Securities will be distributed to the holders of the Trust
Securities, on a pro rata basis, in lieu of any cash distribution. In the case
of the occurrence of a Special Event that is a Tax Event, the Company will
have the right in certain circumstances to redeem the Subordinated Debt
Securities, which would result in the redemption by the Trust of the Trust
Securities in the same amount on a pro rata basis. If the Subordinated Debt
Securities are distributed to the holders of the Preferred Securities, the
Company will use its best efforts to have the Subordinated Debt Securities
listed on the New York Stock Exchange or on such other exchange as the
Preferred Securities are then listed. See "Description of the Preferred
Securities--Special Event Redemption or Distribution" and "Description of the
Subordinated Debt Securities."
In the event of the voluntary or involuntary dissolution, winding-up or
termination of the Trust, the holders of the Preferred Securities will be
entitled to receive, for each Preferred Security, a liquidation amount of $25
plus accrued and unpaid distributions thereon (including interest, if any,
thereon) to the date of payment, unless in connection with such dissolution,
winding-up or termination the Subordinated Debt Securities are distributed to
the holders of the Trust Securities. See "Description of the Preferred
Securities--Liquidation Distribution Upon Termination."
----------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED
SECURITIES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF
PREFERRED SECURITIES TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
S-3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus. Reference is made to "Definitions" on page S-40
for the location in this Prospectus Supplement of the definitions of certain
capitalized terms used herein.
PREFERRED SECURITIES OFFERED
% Trust Preferred Securities evidencing preferred undivided
beneficial interests in the assets of the Trust are offered hereby. Holders of
the Preferred Securities are entitled to receive cumulative cash distributions
at an annual rate of % of the liquidation amount of $25 per Preferred
Security, accruing from , 1998 and payable quarterly in arrears on
, and of each year, commencing on , 1998.
The distribution payable on , 1998, which will be calculated at the above
rate and based on a period that is [shorter/longer] than a full quarter, will
be in the amount of $25 per Preferred Security. The distribution rate and the
distribution and other payment dates for the Preferred Securities will
correspond to the interest rate and interest and other payment dates on the
Subordinated Debt Securities, which will be the sole assets of the Trust. As a
result, if principal or interest is not paid on the Subordinated Debt
Securities, no amounts will be paid on the Preferred Securities. See
"Description of the Preferred Securities."
SUBORDINATED DEBT SECURITIES
The Trust will invest the proceeds from the issuance of the Preferred
Securities and Common Securities in an equivalent amount of % Subordinated
Deferrable Interest Notes due , of the Company. The Subordinated
Debt Securities will be subordinate and junior in right of payment to all
Senior Indebtedness of the Company. See "Description of the Subordinated Debt
Securities--Subordination."
PREFERRED SECURITIES GUARANTEE
Payment of distributions out of moneys held by the Trust, and payments on
liquidation of the Trust or the redemption of Preferred Securities, are
guaranteed by the Company if and to the extent the Trust has funds available
therefor. If the Company does not make principal or interest payments on the
Subordinated Debt Securities, the Trust will not have sufficient funds to
redeem or make distributions on the Preferred Securities, in which event the
Preferred Securities Guarantee will not apply to such redemptions or
distributions until the Trust has sufficient funds available therefor. The
Company's obligations under the Preferred Securities Guarantee, taken together
with its other obligations described herein, constitute a full and
unconditional guarantee by the Company of payments due on the Preferred
Securities. See "Effect of Obligations Under the Subordinated Debt Securities
and the Preferred Securities Guarantee" and "Description of the Preferred
Securities Guarantee." The obligations of the Company under the Preferred
Securities Guarantee are subordinate and junior in right of payment to all
other liabilities of the Company and will rank pari passu with the most senior
preferred stock issued by the Company from time to time and with any guarantee
that may be entered into by the Company in respect of any preferred stock of
any subsidiary or affiliate of the Company. See "Risk Factors--Ranking of
Obligations under Preferred Securities Guarantee and Subordinated Debt
Securities" and "--Rights under the Preferred Securities Guarantee" and
"Description of the Preferred Securities Guarantee."
INTEREST DEFERRAL
The Company has the right to defer payments of interest on the Subordinated
Debt Securities by extending the interest payment period on the Subordinated
Debt Securities, at any time and from time to time, for up to 20
S-4
<PAGE>
consecutive quarters, provided that no Extension Period may extend beyond the
maturity of the Subordinated Debt Securities. If interest payments on the
Subordinated Debt Securities are so deferred, distributions on the Preferred
Securities will also be deferred. During any deferral, distributions will
continue to accrue with interest thereon compounded quarterly (to the extent
permitted by law) as described herein. There could be multiple Extension
Periods of varying lengths throughout the term of the Subordinated Debt
Securities. During an Extension Period, holders of Preferred Securities will be
required to include deferred interest income in their gross income in advance
of receipt of the cash interest payments attributable thereto. See "Description
of the Preferred Securities--Voting Rights," "Description of the Subordinated
Debt Securities--Option to Extend Interest Payment Period" and "Certain Federal
Income Tax Consequences--Original Issue Discount, Premium and Market Discount."
MANDATORY REDEMPTION OF CAPITAL SECURITIES
Unless previously redeemed pursuant to the optional or special redemption
provisions described below, each of the outstanding Preferred Securities will
be redeemed by the Trust, in cash, on , , which is the maturity date
of the Subordinated Debt Securities, at the Mandatory Redemption Price, which
is equal to (a) $25 per Preferred Security plus (b) accrued and unpaid
distributions thereon to the date of redemption. See "Description of the
Preferred Securities--Mandatory and Optional Redemption."
OPTIONAL AND SPECIAL REDEMPTION
The Subordinated Debt Securities are redeemable by the Company, in whole or
in part, from time to time, on or after , , or at any time in certain
circumstances upon the occurrence of a Tax Event, in each case at a price equal
to (a) 100% of the principal amount of Subordinated Debt Securities to be
redeemed plus (b) accrued and unpaid interest thereon to the date of
redemption. If the Company redeems Subordinated Debt Securities, the Trust must
redeem Trust Securities on a pro rata basis having an aggregate liquidation
amount equal to the aggregate principal amount of the Subordinated Debt
Securities so redeemed at the Redemption Price. See "Description of the
Preferred Securities--Mandatory and Optional Redemption" and "--Special Event
Redemption or Distribution."
VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and will not
be entitled to vote to appoint, remove or replace, or to increase or decrease
the number of, Company Trustees (as defined herein), which voting rights are
vested exclusively in the holder of the Common Securities. See "Description of
the Preferred Securities--Voting Rights."
USE OF PROCEEDS
The Trust will invest the proceeds from the sale of the Preferred Securities
offered hereby in the Subordinated Debt Securities, the proceeds of which will
be used by the Company to . See "Use of Proceeds."
LISTING
The Preferred Securities are expected to be approved for listing, subject to
official notice of issuance, on the New York Stock Exchange under the symbol
" ." Trading of the Preferred Securities on the New York Stock Exchange is
expected to commence within a 30-day period after the initial delivery of the
Preferred Securities. See "Underwriting."
S-5
<PAGE>
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained in other sections of this Prospectus Supplement and in
the accompanying Prospectus and should particularly consider the following
matters.
RANKING OF OBLIGATIONS UNDER PREFERRED SECURITIES GUARANTEE AND SUBORDINATED
DEBT SECURITIES
The Company's obligations under the Preferred Securities Guarantee are
subordinate and junior in right of payment to all other liabilities of the
Company and will rank pari passu with the most senior preferred stock issued
by the Company from time to time and with any guarantee that may be entered
into by the Company in respect of any preferred stock of any subsidiary or
affiliate of the Company. The obligations of the Company under the
Subordinated Debt Securities are subordinate and junior in right of payment to
all present and future Senior Indebtedness (as defined herein) of the Company.
No payment of principal of (including redemption payments), or interest on the
Subordinated Debt Securities may be made if (a) any Senior Indebtedness of the
Company is not paid when due and any applicable grace period with respect to
such default has ended with such default not being cured or waived or ceasing
to exist, or (b) the maturity of any Senior Indebtedness has been accelerated
because of a default. At December 31, 1997, Senior Indebtedness of the Company
aggregated approximately $2.5 billion. In addition, because the Company is a
holding company, its obligations under the Preferred Securities Guarantee and
the Subordinated Debt Securities will be effectively subordinated to all
existing and future liabilities of its subsidiaries. At December 31, 1997, the
subsidiaries of the Company had total indebtedness outstanding of
approximately $1.6 billion and other liabilities of approximately $2.3 billion
(excluding, in each case, indebtedness and other liabilities owed to the
Company and other affiliates, guaranteed indebtedness of subsidiaries that is
included in Senior Indebtedness and deferred income taxes and other deferred
credits). There are no terms in the Preferred Securities, the Subordinated
Debt Securities or the Preferred Securities Guarantee that limit the Company's
ability to incur additional indebtedness, including indebtedness that ranks
senior to the Subordinated Debt Securities or the Preferred Securities
Guarantee, and there are no limitations on the ability of its subsidiaries to
issue additional indebtedness. See "Description of the Preferred Securities
Guarantee" and "Description of the Subordinated Debt Securities--
Subordination."
RIGHTS UNDER THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee guarantees to the holders of the
Preferred Securities the payment of (i) any accrued and unpaid distributions
which are required to be paid on the Preferred Securities, to the extent the
Trust shall have funds available therefor, (ii) the Redemption Price, which
includes all accrued and unpaid distributions to the date of the redemption,
to the extent the Trust has funds available therefor, with respect to any
Preferred Securities called for redemption by the Trust and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Trust
(other than in connection with the distribution of Subordinated Debt
Securities to the holders of Preferred Securities), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid distributions
on the Preferred Securities to the date of payment thereof, to the extent the
Trust has funds available therefor, and (b) the amount of assets of the Trust
remaining available for distribution to holders of Preferred Securities in
liquidation of the Trust. Holders of the Preferred Securities have the right
to proceed directly against the Company to enforce the Company's obligations
to make payments under the Preferred Securities Guarantee, without first
instituting a legal proceeding against the Trust, the Preferred Guarantee
Trustee (as defined herein) or any other person or entity. If the Company were
to default in its obligation to pay amounts payable on the Subordinated Debt
Securities, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and in such event holders of the Preferred Securities would not be
able to rely upon the Preferred Securities Guarantee for payment of such
amounts. Instead, holders of the Preferred Securities (i) would be able to
proceed directly against the Company to the extent described under
"Enforcement of Certain Rights by Holders of Preferred Securities" below or
(ii) would rely on the enforcement by the Property Trustee (as defined herein)
of its rights as registered holder of the Subordinated Debt Securities against
the Company, pursuant to the terms of the Subordinated Debt Securities. See
"Description of the Preferred Securities Guarantee--Status of the Preferred
S-6
<PAGE>
Securities Guarantee" and "Description of the Subordinated Debt Securities--
Subordination." The Declaration (as defined herein) provides that each holder
of Preferred Securities by acceptance thereof agrees to the provisions of the
Preferred Securities Guarantee and the Indenture (as defined herein).
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Property Trustee of its rights as the holder of the
Subordinated Debt Securities against the Company. In addition, the holders of
a majority in aggregate liquidation amount of the Preferred Securities will
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee or to direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee to exercise
the remedies available to it as a holder of the Subordinated Debt Securities.
If a Declaration Event of Default occurs that results from the failure of the
Company to pay principal of or interest on the Subordinated Debt Securities
when due, during the continuance of such an event of default a holder of
Preferred Securities may institute a legal proceeding directly against the
Company to obtain payment of such principal or interest on Subordinated Debt
Securities having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities owned of record by such holder. The holders of
Preferred Securities will not be able to exercise directly against the Company
any other remedy available to the Property Trustee unless the Property Trustee
first fails to do so. See "Description of the Preferred Securities--Voting
Rights."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company has the right under the Indenture to defer payments of interest
on the Subordinated Debt Securities by extending the interest payment period
at any time, and from time to time, on the Subordinated Debt Securities. As a
consequence of such an extension, quarterly distributions on the Preferred
Securities would be deferred (but despite such deferral would continue to
accrue with interest thereon compounded quarterly) by the Trust during any
such extended interest payment period. Such right to extend the interest
payment period for the Subordinated Debt Securities is limited to a period not
exceeding 20 consecutive quarters for any such extension. In the event that
the Company exercises this right to defer payments of interest, then during
the term of such deferral (a) the Company shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase or
make a liquidation payment with respect to, any of its capital stock, (b) the
Company shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities issued by the Company
which rank pari passu with or junior to the Subordinated Debt Securities and
(c) the Company shall not make any guarantee payments (other than pursuant to
the Preferred Securities Guarantee) with respect to the foregoing; provided,
however, that the foregoing restrictions do not apply to any dividend,
redemption, interest, principal or guarantee payments by the Company where the
payment is made by way of securities (including capital stock) that rank
junior to the securities on which such dividend, redemption, interest,
principal or guarantee payment is being made. Prior to the termination of any
such Extension Period, the Company may further defer payments of interest by
further extending the interest payment period; provided, however, that such
Extension Period, together with all such previous and further extensions
thereof, may not exceed 20 consecutive quarters or extend beyond the maturity
of the Subordinated Debt Securities. Upon the termination of any Extension
Period and the payment of all amounts then due, the Company may select a new
Extension Period, as if no Extension Period had previously been declared,
subject to the above requirements. See "Description of the Preferred
Securities--Distributions" and "--Voting Rights" and "Description of the
Subordinated Debt Securities--Option to Extend Interest Payment Period."
Should the Company exercise its right to defer payments of interest by
extending the interest payment period, each holder of Preferred Securities
will be required to accrue income (as original issue discount) for United
States federal income tax purposes in respect of the deferred interest
allocable to such holder's Preferred Securities, which will be allocated, but
not distributed, to holders of record of Preferred Securities. As a result,
holders of Preferred Securities will recognize income for United States
federal income tax purposes in advance of the receipt of cash and will not
receive cash from the Trust related to such income if such holder disposes of
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<PAGE>
such holder's Preferred Securities prior to the record date for the date on
which distributions of such amounts are made. The Company has no current
intention of exercising its right to defer payments of interest by extending
the interest payment period on the Subordinated Debt Securities. However,
should the Company determine to exercise such right in the future, the market
price of the Preferred Securities is likely to be affected. A holder that
disposes of its Preferred Securities during an Extension Period, therefore,
might not receive the same return on its investment as a holder that continues
to hold its Preferred Securities. In addition, as a result of the existence of
the Company's right to defer interest payments, the market price of the
Preferred Securities (which represent a preferred undivided beneficial
interest in the Subordinated Debt Securities) may be more volatile than other
securities on which original issue discount accrues that are not subject to
such right. See "Certain Federal Income Tax Consequences--Original Issue
Discount, Premium and Market Discount."
SPECIAL EVENT DISTRIBUTION
Upon the occurrence of a Special Event, the Trust will be terminated, except
in the limited circumstances described below, with the result that the
Subordinated Debt Securities would be distributed to the holders of the Trust
Securities in connection with the liquidation of the Trust. In the case of a
Special Event that is a Tax Event, the Company shall have the right to redeem
the Subordinated Debt Securities, in whole but not in part, in which event the
Trust will redeem the Trust Securities. See "Description of the Preferred
Securities--Special Event Redemption or Distribution" and "Certain Federal
Income Tax Consequences."
Under current United States federal income tax law, a distribution of the
Subordinated Debt Securities upon the termination of the Trust would not be a
taxable event to holders of the Preferred Securities. Upon occurrence of a Tax
Event, however, a termination of the Trust in which holders of the Preferred
Securities receive cash would be a taxable event to such holders. See "Certain
Federal Income Tax Consequences--Receipt of Subordinated Debt Securities or
Cash upon Liquidation of the Trust."
There can be no assurance as to the market prices for the Preferred
Securities, or the Subordinated Debt Securities that may be distributed in
exchange for Preferred Securities if a termination of the Trust were to occur.
Accordingly, the Preferred Securities that an investor may purchase, or the
Subordinated Debt Securities that the investor may receive on dissolution and
liquidation of the Trust, may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby. Because
holders of Preferred Securities may receive Subordinated Debt Securities upon
the occurrence of a Special Event, prospective purchasers of Preferred
Securities are also making an investment decision with regard to the
Subordinated Debt Securities and should carefully review all the information
regarding the Subordinated Debt Securities contained herein. See "Description
of the Preferred Securities--Special Event Redemption or Distribution" and
"Description of the Subordinated Debt Securities."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights, primarily
in connection with directing the activities of the Property Trustee as the
holder of the Subordinated Debt Securities. Such holders will not be entitled
to vote to appoint, remove or replace, or to increase or decrease the number
of, Company Trustees, which voting rights are vested exclusively in the
Company as the holder of the Common Securities. See "Description of the
Preferred Securities--Voting Rights."
TRADING PRICE OF PREFERRED SECURITIES
The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying
Subordinated Debt Securities. A holder who disposes of his Preferred
Securities between record dates for payments of distributions thereon will be
required to include (to the extent not previously included in income) accrued
but unpaid interest on the Subordinated Debt Securities through the date of
disposition in income as ordinary income, and the amount realized on
disposition excludes the portion of the sale price treated as interest. To the
extent the amount realized on disposition is less than the holder's adjusted
tax basis, a holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes. See "Certain Federal Income Tax
Consequences--Original Issue Discount, Premium and Market Discount" and "--
Sale of Preferred Securities."
S-8
<PAGE>
THE TRUST
The Trust is a statutory business trust formed under Delaware law pursuant
to the filing of a certificate of trust with the Delaware Secretary of State
on April 8, 1998. The Trust's business is defined in a Declaration of Trust,
dated as of April 8, 1998, executed by the Company, as sponsor (the
"Sponsor"), and the Company Trustees as of that date. The Declaration of Trust
will be amended and restated in its entirety (as so amended and restated, the
"Declaration") substantially in the form filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus form a part. The Declaration has been qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Upon issuance of the Preferred Securities, the purchasers
thereof will own all of the Preferred Securities. See "Description of the
Preferred Securities--Book-Entry Issuance Only--The Depository Trust Company."
The Company will directly or indirectly acquire all of the Common Securities
in an aggregate liquidation amount equal to at least 3% of the total capital
of the Trust. The Trust exists for the exclusive purposes of (i) issuing and
selling the Trust Securities, representing undivided beneficial interests in
the assets of the Trust, (ii) investing the gross proceeds of the Trust
Securities in the Subordinated Debt Securities and the Preferred Securities
Guarantee and (iii) engaging in only those other activities necessary or
incidental thereto. The Trust has a term of approximately 55 years, but may
terminate earlier as provided in the Declaration.
The Trust's business and affairs will be conducted by the trustees (the
"Company Trustees") appointed by the Company, as holder of the Common
Securities. The duties and obligations of the Company Trustees shall be
governed by the Declaration, the Trust Indenture Act and the Delaware Business
Trust Act, as amended (the "Trust Act"). Pursuant to the Declaration, the
number of Company Trustees will initially be five. Three of the Company
Trustees (the "Regular Trustees") will be persons who are employees or
officers of, or affiliated with, the Company. A fourth trustee will be a
financial institution unaffiliated with the Company that will serve as
property trustee (the "Property Trustee") under the Declaration and as
indenture trustee for purposes of the Trust Indenture Act. The Bank of New
York will act as the Property Trustee until removed or replaced by the holder
of the Common Securities. The Bank of New York will also act as indenture
trustee under the Preferred Securities Guarantee (the "Preferred Guarantee
Trustee"). See "Description of the Preferred Securities Guarantee." The fifth
trustee will be a financial institution or an affiliate thereof which
maintains a principal place of business in the State of Delaware (the
"Delaware Trustee") and meets any other requirements of applicable law. The
Bank of New York (Delaware) will initially act as the Delaware Trustee.
The Property Trustee will hold title to the Subordinated Debt Securities for
the benefit of the Trust and holders of the Trust Securities and will have the
power to exercise all rights, powers and privileges under the Indenture (as
defined herein) as the holder of the Subordinated Debt Securities. In
addition, the Property Trustee will maintain exclusive control of a segregated
non-interest bearing bank account (the "Property Account") to hold all
payments made in respect of the Subordinated Debt Securities for the benefit
of the Trust and holders of the Trust Securities. The Property Trustee will
make payments of distributions and payments on liquidation, redemption and
otherwise to the holders of the Trust Securities out of funds from the
Property Account. The Preferred Guarantee Trustee will hold the Preferred
Securities Guarantee for the benefit of the holders of the Preferred
Securities. The Company, as the holder of all the Common Securities, will have
the right to appoint, remove or replace any Company Trustee and to increase or
decrease the number of Company Trustees, provided that the number of Company
Trustees shall be at least three, a majority of which shall be Regular
Trustees. The Company will pay all fees, expenses, debts and obligations
(other than the Trust Securities) related to the Trust and the offering of the
Trust Securities. The Company has agreed that the Property Trustee and any
person to whom such fees, expenses, debts and obligations are owed will have
the right to enforce the Company's obligations in respect of such fees,
expenses, debts and obligations directly against the Company without first
proceeding against the Trust. See "Description of the Preferred Securities--
Expenses and Taxes."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are as set forth in the
Declaration, the Trust Act, and the Trust Indenture Act. See "Description of
the Preferred Securities."
The principal place of business of the Trust shall be c/o The Coastal
Corporation, Coastal Tower, Nine Greenway Plaza, Houston, Texas 77046-0995;
telephone (713) 877-1400.
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<PAGE>
ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated with the
Company's financial statements, with the Preferred Securities shown on the
Company's consolidated financial statements as Company-obligated mandatorily
redeemable preferred securities of subsidiary trust holding solely
subordinated debt securities of the Company. The sole asset of the Trust will
be the % Subordinated Deferrable Interest Notes due , in the
principal amount of $ , which will eliminate upon consolidation of the
Trust.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of the Company's earnings to
combined fixed charges and preferred stock dividends, on a consolidated basis,
for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio............................................... x x x x x
</TABLE>
For purposes of calculating the ratio of earnings to fixed charges,
"earnings" are computed by adding to net earnings (loss) from continuing
operations the provision for income taxes and fixed charges net of interest
capitalized. "Combined Fixed Charges and Preferred Stock Dividends" consist of
interest plus interest capitalized, amortization of debt expense, subsidiary
preferred stock dividends, that portion of the Company's earnings (losses)
that represent the amount of pretax earnings that would be required to cover
preferred stock dividend requirements of the Company and a portion of
operating lease rent expense deemed to be representative of interest.
USE OF PROCEEDS
The proceeds of the sale of the Preferred Securities will be invested by the
Trust in the Subordinated Debt Securities of the Company. The Company will use
the net proceeds from the sale of such Subordinated Debt Securities to
.
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration has been qualified as an indenture under the
Trust Indenture Act. The Property Trustee will act as the indenture trustee
for purposes of compliance with the provisions of the Trust Indenture Act. The
terms of the Preferred Securities will include those stated in the Declaration
and those made part of the Declaration by the Trust Act and the Trust
Indenture Act. The following summary of the principal terms and provisions of
the Preferred Securities does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the Declaration (the form of
which is filed as an exhibit to the Registration Statement of which this
Prospectus Supplement and the accompanying Prospectus are a part), the Trust
Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees, on behalf of the Trust, to
issue the Preferred Securities, which represent preferred undivided beneficial
interests in the assets of the Trust, and the Common Securities,
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which represent common undivided beneficial interests in the assets of the
Trust. All of the Common Securities will be owned directly or indirectly by
the Company. The Common Securities rank pari passu, and payments will be made
thereon on a pro rata basis, with the Preferred Securities, except that upon
the occurrence and during the continuation of a Declaration Event of Default,
the rights of the holders of the Common Securities to receive payment of
periodic distributions and payments upon liquidation, redemption and otherwise
will be subordinated to the rights to payment of the holders of the Preferred
Securities. The Declaration does not permit the issuance by the Trust of any
securities other than the Trust Securities or the incurrence of any
indebtedness by the Trust. Pursuant to the Declaration, the Property Trustee
will own and hold the Subordinated Debt Securities for the benefit of the
Trust and the holders of the Trust Securities. The payment of distributions
out of money held by the Trust, and payments upon redemption of the Preferred
Securities or liquidation of the Trust, are guaranteed by the Company as
described under "Description of the Preferred Securities Guarantee."
The Preferred Guarantee Trustee will hold the Preferred Securities Guarantee
for the benefit of the holders of the Preferred Securities. The Preferred
Securities Guarantee does not cover payment of distributions on the Preferred
Securities when the Trust does not have sufficient available funds in the
Property Account to make such distributions.
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the liquidation amount of $25 per Preferred Security (equivalent to
$ per Preferred Security). Distributions in arrears for more than one
quarter will bear interest at the rate of % per annum compounded quarterly
(to the extent permitted by applicable law). The term "distributions" as used
herein includes any such interest payable unless otherwise stated.
Distributions on the Preferred Securities will be cumulative, will accrue
from , 1998, and will be payable quarterly in arrears on , ,
and of each year to the holders of record on the applicable record date,
commencing , 1998, when, as and if available for payment by the Property
Trustee, except as otherwise described below. The amount of distributions
payable for any full quarterly period will be computed on the basis of a 360-
day year of twelve 30-day months, and for any period shorter than a full
quarter, on the basis of the actual number of days elapsed in such a 90-day
quarter. The initial distribution, payable on , 1998, will be based on a
period [shorter/longer] than a full quarter ( to , 1998) and will be in
the amount of $ per Preferred Security.
The Company has the right under the Indenture to defer payments of interest
on the Subordinated Debt Securities by extending the interest payment period
from time to time on the Subordinated Debt Securities which, if exercised,
would defer quarterly distributions on the Preferred Securities (though such
distributions would continue to accrue interest since interest would continue
to accrue on the Subordinated Debt Securities) during any such extended
interest payment period. In the event that the Company exercises this right,
then during the term of such deferral (a) the Company shall not declare or pay
any dividend on, make any distributions with respect to, or redeem, purchase
or make a liquidation payment with respect to, any of its capital stock, (b)
the Company shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by the
Company which rank pari passu with or junior to the Subordinated Debt
Securities, and (c) the Company shall not make any guarantee payments (other
than pursuant to the Preferred Securities Guarantee) with respect to the
foregoing; provided, however, that the foregoing restrictions do not apply to
any dividend, redemption, liquidation, interest, principal or guarantee
payments by the Company where the payment is made by way of securities
(including capital stock) that rank junior to the securities on which such
dividend, redemption, interest, principal or guarantee payment is being made.
Prior to the termination of any such Extension Period, the Company may further
extend the interest payment period; provided, however, that such Extension
Period, together with all such previous and further extensions thereof, may
not exceed 20 consecutive quarters or extend beyond the maturity of the
Subordinated Debt Securities. Upon the termination of any Extension Period and
the payment of all amounts then due, the Company may select a new Extension
Period as if no Extension Period had previously been declared, subject to the
above requirements. See "--Voting Rights" below and "Description of the
Subordinated Debt Securities--Interest" and "--Option to Extend Interest
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<PAGE>
Payment Period." If distributions are deferred, the deferred distributions and
accrued interest thereon shall be paid to holders of record of the Preferred
Securities, if funds are available therefor, as they appear on the books and
records of the Trust on the record date immediately following the termination
of such Extension Period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received under the Subordinated Debt Securities. See "Description of
the Subordinated Debt Securities." The payment of distributions out of moneys
held by the Trust is guaranteed by the Company as described under "Description
of the Preferred Securities Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Preferred Securities remain in book-entry
only form, will be one Business Day (as defined herein) prior to the relevant
payment dates, which payment dates correspond to the interest payment dates on
the Subordinated Debt Securities. Such distributions will be paid through the
Property Trustee, who will hold amounts received in respect of the
Subordinated Debt Securities in the Property Account for the benefit of the
Trust and the holders of the Trust Securities. Subject to any applicable laws
and regulations and the provisions of the Declaration, each such payment will
be made as described under "--Book-Entry Only Issuance--The Depository Trust
Company" below. In the event the Preferred Securities shall not continue to
remain in book-entry only form, the Regular Trustees shall have the right to
select relevant record dates which shall be at least one Business Day, but
less than 60 Business Days, prior to the relevant payment dates. In the event
that any date on which distributions are to be made on the Preferred
Securities is not a Business Day, then payment of the distributions payable on
such date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay) except
that if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. A "Business Day" shall
mean any day other than a Saturday, Sunday or other day on which banking
institutions in New York, New York are authorized or required by law to close.
MANDATORY AND OPTIONAL REDEMPTION
The Subordinated Debt Securities will mature on , and may be
redeemed, in whole or in part, at any time on or after , , or at
any time in certain circumstances upon the occurrence of a Tax Event, in each
case at a price equal to the sum of (i) 100% of the principal amount of the
Subordinated Debt Securities to be redeemed and (ii) accrued and unpaid
interest thereon to the date fixed for redemption. Upon the repayment of the
Subordinated Debt Securities, whether at maturity or upon acceleration,
redemption or otherwise, the proceeds from such repayment or payment shall
simultaneously be applied to redeem Trust Securities on a pro rata basis
having an aggregate liquidation amount equal to the aggregate principal amount
of the Subordinated Debt Securities so repaid or redeemed at the Redemption
Price; provided, however, that except in the case of payments upon maturity,
holders of Trust Securities shall be given not less than 30 nor more than 60
days notice of such redemption. See "--Redemption Procedures" and "Description
of the Subordinated Debt Securities." In the event that fewer than all of the
outstanding Preferred Securities are to be redeemed, the Preferred Securities
will be redeemed as described under "--Book-Entry Only Issuance--The
Depository Trust Company" below.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Distribution Upon the Occurrence of a Special Event. If, at any time, a Tax
Event or an Investment Company Event (each, as defined below, a "Special
Event") shall occur and be continuing, the Trust shall, except in the
circumstances described below under "Redemption Upon the Occurrence of a Tax
Event," be dissolved with the result that, after satisfaction of liabilities
to creditors, Subordinated Debt Securities, with an aggregate principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the distribution rate of, and accrued and unpaid interest equal
to accrued and unpaid distributions on, the Trust
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<PAGE>
Securities, would be distributed to the holders of the Trust Securities, in
liquidation of such holders' interests in the Trust on a pro rata basis,
within 90 days following the occurrence of such Special Event; provided,
however, that in the case of the occurrence of a Tax Event, as a condition of
such termination, dissolution and distribution, the Regular Trustees shall
have received an opinion from a nationally recognized independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may
rely on published revenue rulings of the Internal Revenue Service, to the
effect that neither the Trust nor the holders of the Trust Securities will
recognize any gain or loss for United States federal income tax purposes as a
result of such termination and dissolution of the Trust and the distribution
of the Subordinated Debt Securities; and, provided, further, that, if there is
available to the Trust the opportunity to eliminate, within such 90-day
period, the Special Event by taking some ministerial action, such as filing a
form or making an election, or pursuing some other similar reasonable measure,
which has no adverse effect on the Trust, the Company or the holders of the
Trust Securities, the Trust will pursue such measure in lieu of dissolution.
If Subordinated Debt Securities are distributed to the holders of the
Preferred Securities, the Company will use its best efforts to have the
Subordinated Debt Securities listed on the New York Stock Exchange or on such
other exchanges as the Preferred Securities are then listed.
After the date for any distribution of Subordinated Debt Securities upon
termination of the Trust, (i) the Preferred Securities and Preferred
Securities Guarantee will no longer be deemed to be outstanding, (ii) the
depositary or its nominee, as the record holder of the Preferred Securities,
will receive a registered global certificate or certificates representing the
Subordinated Debt Securities to be delivered upon such distribution and (iii)
any certificates representing Preferred Securities not held by the depositary
or its nominee will be deemed to represent Subordinated Debt Securities having
an aggregate principal amount equal to the aggregate stated liquidation amount
of, with an interest rate identical to the distribution rate of, and accrued
and unpaid interest equal to accrued and unpaid distributions on, such
Preferred Securities, until such certificates are presented to the Company or
its agent for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debt Securities that may be distributed in
exchange for the Preferred Securities if a termination and liquidation of the
Trust were to occur. Accordingly, the Preferred Securities that an investor
may purchase, whether pursuant to the offer hereby or in the secondary market,
or the Subordinated Debt Securities that the investor may receive on
termination and liquidation of the Trust, may trade at a discount to the price
that the investor paid to purchase the Preferred Securities.
Redemption Upon the Occurrence of a Tax Event If, in the case of the
occurrence and continuation of a Tax Event, (i) the Company has received an
opinion (a "Redemption Tax Opinion") from a nationally recognized independent
tax counsel experienced in such matters that, as a result of a Tax Event,
there is more than an insubstantial risk that the Company would be precluded
from deducting the interest on the Subordinated Debt Securities for United
States federal income tax purposes even after the Subordinated Debt Securities
were distributed to the holders of Trust Securities in liquidation of such
holders' interests in the Trust as described above under "Distribution Upon
the Occurrence of a Special Event" or (ii) the Regular Trustees shall have
been informed by such tax counsel that a No Recognition Opinion cannot be
delivered, the Company shall have the right, upon not less than 30 nor more
than 60 days' notice, to redeem the Subordinated Debt Securities in whole or
in part for cash within 90 days following the occurrence of such Tax Event at
a price equal to the sum of (x) 100% of the principal amount of the
Subordinated Debt Securities to be redeemed and (y) accrued and unpaid
interest thereon to the date fixed for redemption, and, following such
redemption, Trust Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Subordinated Debt Securities so redeemed
shall be redeemed by the Trust at the Redemption Price on a pro rata basis;
provided, however, that, if there is available to the Company or the Trust the
opportunity to eliminate, within such 90-day period, the Tax Event by taking
some ministerial action, such as filing a form or making an election, or
pursuing some other similar reasonable measure which has no adverse effect on
the Trust, the Company or the holders of the Trust Securities, the Company or
the Trust will pursue such measure in lieu of redemption.
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<PAGE>
Definitions. As used herein the following terms have the meanings specified
below:
"Investment Company Event" means that the Company has provided the Regular
Trustees with an opinion from a nationally recognized independent counsel
experienced in practice under the 1940 Act (as hereinafter defined) to the
effect that, as a result of the occurrence of a change in law or regulation or
a written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law"), there is more than an insubstantial risk that the
Trust is or will be considered an "investment company" which is required to be
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), which Change in 1940 Act Law becomes effective on or after the date of
this Prospectus Supplement.
"Tax Event" means that the Company has provided the Regular Trustees with an
opinion from a nationally recognized independent tax counsel experienced in
such matters (a "Dissolution Tax Opinion") to the effect that, on or after the
date of this Prospectus Supplement, as a result of (a) any amendment to, or
change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations by any legislative
body, court, governmental agency or regulatory authority, in each case which
amendment or change is enacted, promulgated, issued or announced or which
interpretation is issued or announced or which action is taken, on or after
the date of this Prospectus Supplement, there is more than an insubstantial
risk that (i) the Trust is, or will be within 90 days of the date thereof,
subject to United States federal income tax with respect to interest accrued
or received on the Subordinated Debt Securities, (ii) interest payable to the
Trust on the Subordinated Debt Securities is not, or will not be within 90
days of the date thereof, deductible in whole or in part by the Company for
United States federal income tax purposes or (iii) the Trust is, or will be
within 90 days of the date thereof, subject to more than a de minimis amount
of other taxes, duties or other governmental charges.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Trust Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Preferred Securities
(which notice will be irrevocable), then, by 12:00 noon, New York City time,
on the redemption date, provided that the Company has paid to the Property
Trustee a sufficient amount of cash in connection with the related redemption
or maturity of the Subordinated Debt Securities, the Trust will irrevocably
deposit with the depositary funds sufficient to pay the applicable Redemption
Price and will give the depositary irrevocable instructions and authority to
pay the Redemption Price to the holders of the Preferred Securities. See "--
Book-Entry Only Issuance--The Depository Trust Company." If notice of
redemption shall have been given and funds deposited as required, then
immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue and all rights of holders of such Preferred
Securities so called for redemption will cease, except the right of the
holders of such Preferred Securities to receive the Redemption Price, but
without interest on such Redemption Price. In the event that any date fixed
for redemption of Preferred Securities is not a Business Day, then payment of
the Redemption Price payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day falls in the
next calendar year, such payment will be made on the immediately preceding
Business Day. In the event that payment of the Redemption Price in respect of
Preferred Securities is improperly withheld or refused and not paid either by
the Trust or by the Company pursuant to the Preferred Securities Guarantee,
distributions on such Preferred Securities will continue to accrue, from the
original redemption date to the actual date of payment, in which case the
actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities are
to be redeemed, the Preferred Securities will be redeemed as described under
"--Book-Entry Only Issuance--The Depository Trust Company" below.
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Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), the Company or its
affiliates may, at any time and from time to time, purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON TERMINATION
In the event of any voluntary or involuntary termination, dissolution or
winding-up of the Trust, the holders of the Preferred Securities at that time
will be entitled to receive out of the assets of the Trust, after satisfaction
of liabilities to creditors, distributions in an amount equal to the aggregate
liquidation amount of $25 per Preferred Security plus accrued and unpaid
distributions thereon to the date of payment (the "Liquidation Distribution"),
unless in connection with such termination, dissolution or winding-up
Subordinated Debt Securities in an aggregate principal amount equal to the
aggregate liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distributions on, the Preferred Securities have been distributed on a
pro rata basis to the holders of Preferred Securities in exchange for such
Preferred Securities.
If, upon any such termination, dissolution or winding-up, the Liquidation
Distribution can be paid only in part because the Trust has insufficient
assets available to pay in full the aggregate Liquidation Distribution, then
the amounts payable directly by the Trust on the Preferred Securities shall be
paid on a pro rata basis. The holders of the Common Securities will be
entitled to receive distributions upon any such dissolution pro rata with the
holders of the Preferred Securities, except that if a Declaration Event of
Default has occurred and is continuing, the Preferred Securities shall have a
preference over the Common Securities with regard to such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on ,
2053, the expiration of the term of the Trust, (ii) upon the bankruptcy of the
Company or the holder of the Common Securities, (iii) upon the filing of a
certificate of dissolution or its equivalent with respect to the Company or
the holder of the Common Securities, the filing of a certificate of
cancellation with respect to the Trust, or the revocation of the charter of
the Company or the holder of the Common Securities and the expiration of 90
days after the date of revocation without a reinstatement thereof, (iv) upon
the distribution of the Subordinated Debt Securities following the occurrence
of a Special Event, (v) upon the entry of a decree of a judicial dissolution
of the Company or the holder of the Common Securities or the Trust or (vi)
upon the redemption of all of the Trust Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
(see "Description of the Subordinated Debt Securities--Indenture Events of
Default") constitutes an event of default under the Declaration with respect
to the Trust Securities (a "Declaration Event of Default"); provided, however,
that pursuant to the Declaration, the holder of the Common Securities will be
deemed to have waived any Declaration Event of Default with respect to the
Common Securities or its consequences until all Declaration Events of Default
with respect to the Preferred Securities have been cured, waived or otherwise
eliminated. Until such Declaration Events of Default with respect to the
Preferred Securities have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the holders
of the Preferred Securities and only the holders of the Preferred Securities
will have the right to direct the Property Trustee with respect to certain
matters under the Declaration, and therefore the Indenture. If a Declaration
Event of Default with respect to the Preferred Securities is waived by holders
of Preferred Securities, such waiver will also constitute the waiver of such
Declaration Event of Default with respect to the Common Securities for all
purposes under the Declaration, without any further act, vote or consent of
the holders of the Common Securities.
During the existence of a Declaration Event of Default, the Property
Trustee, as the sole holder of the Subordinated Debt Securities, will have the
right under the Indenture to declare the principal of, and interest on, the
Subordinated Debt Securities to be immediately due and payable.
If a Declaration Event of Default occurs that results from the failure of
the Company to pay principal of or interest on the Subordinated Debt
Securities when due, during the continuance of such an event of default a
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holder of Preferred Securities may institute a legal proceeding directly
against the Company to obtain payment of such principal or interest on
Subordinated Debt Securities having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities owned of record by such holder.
The holders of Preferred Securities will not be able to exercise directly
against the Company any other remedy available to the Property Trustee unless
the Property Trustee first fails to do so. See "--Voting Rights."
VOTING RIGHTS
Except as provided below and except as provided under the Trust Act, the
Trust Indenture Act and under "Description of the Preferred Securities
Guarantee--Amendments and Assignment" below, and except as otherwise required
by law and the Declaration, the holders of the Preferred Securities will have
no voting rights. In the event that the Company elects to defer payments of
interest on the Subordinated Debt Securities as described above under "--
Distributions," the holders of the Preferred Securities do not have the right
to appoint a special representative or trustee or otherwise act to protect
their interests.
Subject to the requirement of the Property Trustee obtaining a tax opinion
as set forth in the last sentence of this paragraph, the holders of a majority
in aggregate liquidation amount of the Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or to direct the exercise of any trust or
power conferred upon the Property Trustee under the Declaration, including the
right to direct the Property Trustee, as the holder of the Subordinated Debt
Securities, to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Subordinated Debt Trustee (as
hereinafter defined) under the Indenture with respect to the Subordinated Debt
Securities, (ii) waive any past Indenture Event of Default which is waivable
under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Subordinated Debt Securities shall
be due and payable, or (iv) consent to any amendment, modification or
termination of the Indenture or the Subordinated Debt Securities, where such
consent shall be required, provided that where a consent under the Indenture
would require the consent of the holders of greater than a majority in
principal amount of Subordinated Debt Securities affected thereby (a "Super-
Majority"), only the holders of at least the proportion in liquidation amount
of the Preferred Securities which the relevant Super-Majority represents of
the aggregate principal amount of the Subordinated Debt Securities may direct
the Property Trustee to give such consent. If the Property Trustee fails to
enforce its rights under the Declaration (including, without limitation, its
rights, powers and privileges as the holder of the Subordinated Debt
Securities under the Indenture), a holder of Preferred Securities may to the
extent permitted by applicable law institute a legal proceeding directly
against any person to enforce the Property Trustee's rights under the
Declaration without first instituting any legal proceeding against the
Property Trustee or any other person or entity. Following and during the
continuance of a Declaration Event of Default that results from the failure of
the Company to pay principal of or interest on the Subordinated Debt
Securities when due, a holder of Preferred Securities may also proceed
directly against the Company, without first waiting to determine if the
Property Trustee has enforced its rights under the Declaration, to obtain
payment of such principal or interest on Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities owned of record by such holder. The Property Trustee shall notify
all holders of the Preferred Securities of any notice of default received from
the Subordinated Debt Trustee with respect to the Subordinated Debt
Securities. Such notice shall state that such Indenture Event of Default also
constitutes a Declaration Event of Default. The Property Trustee shall not
take any action described in clauses (i), (ii), (iii) or (iv) above unless the
Property Trustee has obtained an opinion of independent tax counsel to the
effect that, as a result of such action, the Trust will not be classified as
other than a grantor trust for United States federal income tax purposes and
each holder of Trust Securities will be treated as owning an undivided
beneficial interest in the Subordinated Debt Securities.
In the event the consent of the Property Trustee, as the holder of the
Subordinated Debt Securities, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture, the Property
Trustee shall request the direction of the holders of the Trust Securities
with respect to such amendment, modification or termination. The Property
Trustee shall vote with respect to such amendment, modification or termination
as directed by a majority in liquidation amount of the Preferred Securities
and, if no Declaration Event of Default has occurred and is continuing, a
majority in liquidation amount of the Common Securities, voting together as a
single class, provided that where a consent under the Indenture would require
the consent of
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a Super-Majority, the Property Trustee may only give such consent at the
direction of the holders of at least the proportion in liquidation amount of
the Preferred Securities and Common Securities, respectively, which the
relevant Super-Majority represents of the aggregate principal amount of the
Subordinated Debt Securities outstanding. The Property Trustee shall not take
any such action in accordance with the directions of the holders of the Trust
Securities unless the Property Trustee has obtained an opinion of independent
tax counsel to the effect that, as a result of such action, the Trust will not
be classified as other than a grantor trust for United States federal income
tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be
taken, to be mailed to each holder of record of Preferred Securities. Each
such notice will include a statement setting forth (i) the date of such
meeting or the date by which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on which such holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for the Trust to
redeem and cancel Preferred Securities or distribute Subordinated Debt
Securities in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by the Company or any entity directly
or indirectly controlling or controlled by, or under direct or indirect common
control with, the Company, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if they were not
outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "--Book-Entry Only Issuance--The
Depository Trust Company."
Holders of the Preferred Securities will have no rights to appoint or remove
the Company Trustees, who may be appointed, removed or replaced solely by the
Company, as the direct or indirect holder of all the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be amended or modified if approved and executed by a
majority of the Regular Trustees (or if there are two or fewer Regular
Trustees, by all of the Regular Trustees), provided that if any proposed
amendment provides for (i) any action that would adversely affect the powers,
preferences or special rights of the Trust Securities, whether by way of
amendment to the Declaration or otherwise or (ii) the dissolution, winding-up
or termination of the Trust other than pursuant to the terms of the
Declaration, then the holders of the Trust Securities as a single class will
be entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of a majority in
liquidation amount of the Trust Securities affected thereby, provided that a
reduction of the principal amount or the distribution rate, or a change in the
payment dates or maturity of the Preferred Securities, shall not be permitted
without the consent of each holder of Preferred Securities. In the event any
amendment or proposal referred to in clause (i) above would adversely affect
only the Preferred Securities or the Common Securities, then only the affected
class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of a
majority in liquidation amount of such class of Trust Securities. In addition,
if any such proposed amendment or modification affects the rights, powers,
duties, obligations or immunities of the Property Trustee or the Delaware
Trustee such amendment or modification shall also require the written approval
of the Property Trustee or the Delaware Trustee, as the case may be.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal
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income taxation as other than a grantor trust, (ii) reduce or otherwise
adversely affect the powers of the Property Trustee in contravention of the
Trust Indenture Act or (iii) cause the Trust to be deemed to be an "investment
company" which is required to be registered under the 1940 Act.
EXPENSES AND TAXES
In the Declaration, the Company has agreed to pay for all debts and other
obligations (other than with respect to the Trust Securities) and all costs
and expenses of the Trust (including costs and expenses relating to the
organization of the Trust, the fees and expenses of the Company Trustees and
the costs and expenses relating to the operation of the Trust) and to pay any
and all taxes and all costs and expenses with respect thereto (other than
United States withholding taxes) to which the Trust might become subject. The
foregoing obligations of the Trust under the Declaration are for the benefit
of, and shall be enforceable by, the Property Trustee and any person to whom
any such debts, obligations, costs, expenses and taxes are owed (a "Creditor")
whether or not such Creditor has received notice thereof. The Property Trustee
and any such Creditor may enforce such obligations of the Trust directly
against the Company, and the Company has irrevocably waived any right or
remedy to require that the Property Trustee or any such Creditor take any
action against the Trust or any other person before proceeding against the
Company. The Company has also agreed in the Declaration to execute such
additional agreements as may be necessary or desirable to give full effect to
the foregoing agreement of the Company.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described below. The Trust may, with the consent of a majority of the Regular
Trustees and without the consent of the holders of the Trust Securities, the
Delaware Trustee or the Property Trustee, consolidate, amalgamate, merge with
or into, or be replaced by a trust organized as such under the laws of any
State; provided, that (i) such successor entity either (x) expressly assumes
all of the obligations of the Trust with respect to the Trust Securities or
(y) substitutes for the Trust Securities other securities having substantially
the same terms as the Trust Securities (the "Successor Securities") so long as
the Successor Securities rank the same as the Trust Securities rank in
priority with respect to distributions and payments upon termination,
liquidation, redemption, maturity and otherwise, (ii) the Company expressly
acknowledges a trustee of such successor entity which possesses the same
powers and duties as the Property Trustee as the holder of the Subordinated
Debt Securities, (iii) if the Preferred Securities are at such time listed on
any national securities exchange or with another organization, the Successor
Securities will be listed, upon notification of issuance, on any national
securities exchange or other organization on which the Preferred Securities
are then listed, (iv) such merger, consolidation, amalgamation or replacement
does not cause the Preferred Securities (including any Successor Securities)
to be downgraded by any nationally recognized statistical rating organization,
(v) such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect (other
than with respect to any dilution of the holders' interest in the successor
entity), (vi) such successor entity has a purpose identical to that of the
Trust, (vii) prior to such merger, consolidation, amalgamation or replacement,
the Company has received an opinion from independent counsel to the Trust
experienced in such matters to the effect that (A) such merger, consolidation,
amalgamation or replacement does not adversely affect the rights, preferences
and privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution
of the holders' interest in the successor entity), and (B) following such
merger, consolidation, amalgamation or replacement, neither the Trust nor such
successor entity will be required to register as an investment company under
the 1940 Act and (viii) the Company guarantees the obligations of such
successor entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee. Notwithstanding the foregoing,
the Trust shall not, except with the consent of holders of 100% in liquidation
amount of the Trust Securities, consolidate, amalgamate, merge with or into,
or be replaced by any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger or replacement would cause the Trust or the successor
entity to be classified for United States federal income tax purposes as other
than a grantor trust for United States federal income tax purposes and any
holder of Trust Securities not to be treated as owning an undivided beneficial
interest in the Subordinated Debt Securities.
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BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities. The Preferred Securities will be issued only as
fully registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully registered global Preferred Securities
certificates will be issued, representing in the aggregate the total number of
Preferred Securities, and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in a global Preferred Security.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). DTC holds securities
that its participants ("Participants") deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations ("Direct Participants"). DTC is owned by a
number of its Direct Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through
or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser
of Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Direct or Indirect Participants through which the Beneficial Owners purchased
Preferred Securities. Transfers of ownership interests in the Preferred
Securities are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Preferred Securities,
except in the event that use of the book-entry system for the Preferred
Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited
by Participants with DTC are registered in the name of DTC's nominee, Cede &
Co. The deposit of Preferred Securities with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Preferred Securities. DTC's
records reflect only the identity of the Direct Participants to whose accounts
such Preferred Securities are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce by lot the amount of
the interest of each Direct Participant in the Preferred Securities to be
redeemed.
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Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a listing attached
to the Omnibus Proxy).
Distribution payments on the Preferred Securities will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment
date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by participants to Beneficial Owners will be governed
by standing instructions and customary practices, as in 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 Participant and not of
DTC, the Trust or any trustee or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
distributions to DTC is the responsibility of the Trust, disbursement of such
payments to Direct Participants is the responsibility of DTC, and disbursement
of such payments to the Beneficial Owners is the responsibility of Direct and
Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred Security
will not be entitled to receive physical delivery of Preferred Securities.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
the Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Securities certificates are required to
be printed and delivered. Additionally, the Regular Trustees (after
consultation with the Company) may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor depositary) with respect to
the Preferred Securities. In that event, certificates for the Preferred
Securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and the Trust believe to be
reliable, but the Company and the Trust take no responsibility for the
accuracy thereof.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities and after the curing of all such defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after default, shall exercise the same degree of care
as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Property Trustee is under no
obligation to exercise any of the powers vested in it by the Declaration at
the request of any holder of Preferred Securities, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which
might be incurred thereby; but the foregoing shall not relieve the Property
Trustee, upon the occurrence of a Declaration Event of Default, from
exercising the rights and powers vested in it by the Declaration. The Property
Trustee also serves as the Subordinated Debt Trustee under the Indenture and
as the Preferred Guarantee Trustee under the Preferred Securities Guarantee.
REGISTRAR AND TRANSFER AGENT
In the event that the Preferred Securities do not remain in book-entry only
form, the Property Trustee will act as paying agent and may designate an
additional or substitute paying agent at any time. Registration of transfers
of Preferred Securities will be effected without charge by or on behalf of the
Trust, but upon payment (with the giving of such indemnity as the Regular
Trustees may require) in respect of any tax or other government charges which
may be imposed in relation to it. The Trust will not be required to register
or cause to be registered the transfer of Preferred Securities after such
Preferred Securities have been called for redemption.
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GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act or characterized for United
States federal income tax purposes as other than a grantor trust. The Company
is authorized and directed to conduct its affairs so that the Subordinated
Debt Securities will be treated as indebtedness of the Company for United
States federal income tax purposes. In this connection, the Regular Trustees
and the Company are authorized to take any action, not inconsistent with
applicable law, the Declaration or the Restated Certificate of Incorporation
of the Company, that each of the Regular Trustees and the Company determines
in their discretion to be necessary or desirable for such purposes, as long as
such action does not materially and adversely affect the interests of the
holders of the Preferred Securities.
Holders of the Preferred Securities will have no preemptive rights.
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DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
Set forth below is a summary of information concerning the Preferred
Securities Guarantee that will be executed and delivered by the Company for
the benefit of the holders from time to time of the Preferred Securities. The
Preferred Securities Guarantee has been qualified as an indenture under the
Trust Indenture Act. Harris Trust and Savings Bank will act as the Preferred
Guarantee Trustee. The terms of the Preferred Securities Guarantee will be
those set forth therein and those made part thereof by the Trust Indenture
Act. The following summary does not purport to be complete and is subject in
all respects to the provisions of, and is qualified in its entirety by
reference to, the Preferred Securities Guarantee (the form of which is filed
as an exhibit to the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus form a part) and the Trust
Indenture Act. The Preferred Securities will be held by the Preferred
Guarantee Trustee for the benefit of the holders of the Preferred Securities.
GENERAL
Pursuant to the Preferred Securities Guarantee, the Company will irrevocably
and unconditionally agree to pay in full to the holders of the Preferred
Securities the Guarantee Payments (as defined herein) (without duplication of
amounts theretofore paid by the Trust), to the extent not paid by the Trust,
regardless of any defense, right of set-off or counterclaim that the Trust may
have or assert. The following payments or distributions with respect to the
Preferred Securities to the extent not paid or made by the Trust (the
"Guarantee Payments") will be subject to the Preferred Securities Guarantee
(without duplication): (i) any accrued and unpaid distributions that are
required to be paid on the Preferred Securities, to the extent the Trust has
funds available therefor, (ii) the Redemption Price, which includes all
accrued and unpaid distributions to the date of the redemption, to the extent
the Trust has funds available therefor, with respect to any Preferred
Securities called for redemption by the Trust and (iii) upon a voluntary or
involuntary termination, dissolution or winding-up of the Trust (other than in
connection with the distribution of Subordinated Debt Securities to the
holders of Preferred Securities in exchange for Preferred Securities), the
lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on the Preferred Securities to the date of payment, to
the extent the Trust has funds available therefor, and (b) the amount of
assets of the Trust remaining available for distribution to holders of
Preferred Securities in liquidation of the Trust. The Company's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Company to the holders of Preferred Securities or by causing
the Trust to pay such amounts to such holders.
The Preferred Securities Guarantee will be a full and unconditional
guarantee of the Guarantee Payments with respect to the Preferred Securities
from the time of issuance of the Preferred Securities, but will not apply to
the payment of distributions and other payments on the Preferred Securities
when the Property Trustee does not have sufficient funds in the Property
Account to make such distributions or other payments. If the Company does not
make interest payments on the Subordinated Debt Securities held by the
Property Trustee, the Trust will not make distributions on the Preferred
Securities issued by the Trust and will not have funds available therefor. See
"Risk Factors--Rights under the Preferred Securities Guarantee" and
"Description of the Subordinated Debt Securities--Certain Covenants."
The Company has also agreed separately to guarantee the obligations of the
Trust with respect to the Common Securities (the "Common Securities
Guarantee") to the same extent as the Preferred Securities Guarantee, except
that upon the occurrence and during the continuation of an Indenture Event of
Default, holders of Preferred Securities shall have priority over holders of
Common Securities with respect to distributions and payments on liquidation,
redemption or otherwise.
CERTAIN COVENANTS OF THE COMPANY
In the Preferred Securities Guarantee, the Company will covenant that, so
long as the Preferred Securities remain outstanding, if there shall have
occurred and is continuing any event that constitutes an event of default
under the Preferred Securities Guarantee or the Declaration, then (a) the
Company shall not declare or pay any
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dividend on, or make any distribution with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital
stock, (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued
by the Company which rank pari passu with or junior to the Subordinated Debt
Securities and (c) the Company shall not make any guarantee payments (other
than pursuant to the Preferred Securities Guarantee) with respect to the
foregoing. However, the foregoing restriction will not apply to any dividend,
redemption, liquidation, interest, principal or guarantee payments by the
Company where the payment is made by way of securities (including capital
stock) that rank junior to the securities on which such dividend, redemption,
interest, principal or guarantee payment is being made.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of Preferred Securities (in which case no consent will
be required), the Preferred Securities Guarantee may be amended only with the
prior approval of the holders of not less than a majority in liquidation
amount of the outstanding Preferred Securities. The manner of obtaining any
such approval of holders of the Preferred Securities is set forth under
"Description of the Preferred Securities--Voting Rights." All guarantees and
agreements contained in the Preferred Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Company
and shall inure to the benefit of the Preferred Guarantee Trustee and the
holders of the Preferred Securities then outstanding.
TERMINATION OF THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee will terminate and be of no further force
and effect as to the Preferred Securities upon full payment of the Redemption
Price of all Preferred Securities, or upon distribution of the Subordinated
Debt Securities to the holders of the Preferred Securities, and will terminate
completely upon full payment of the amounts payable upon liquidation of the
Trust. The Preferred Securities Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any holder of Preferred
Securities must repay to the Trust or the Company, or their successors, any
sums paid to them under such Preferred Securities or the Preferred Securities
Guarantee.
EVENTS OF DEFAULT
An event of default under the Preferred Securities Guarantee will occur upon
the failure of the Company to perform any of its payment or other obligations
thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of the Preferred Securities Guarantee or to direct the exercise of any
trust or power conferred upon the Preferred Guarantee Trustee under the
Preferred Securities Guarantee. If the Preferred Guarantee Trustee fails to
enforce the Preferred Securities Guarantee, any holder of Preferred Securities
may institute a legal proceeding directly against the Company to enforce the
Preferred Guarantee Trustee's rights under the Preferred Securities Guarantee,
without first instituting a legal proceeding against the Trust, the Preferred
Guarantee Trustee or any other person or entity. In addition, any record
holder of Preferred Securities shall have the right, which is absolute and
unconditional, to proceed directly against the Company to obtain Guarantee
Payments, without first waiting to determine if the Preferred Guarantee
Trustee has enforced the Preferred Security Guarantee or instituting a legal
proceeding against the Trust, the Preferred Guarantee Trustee or any other
person or entity.
STATUS OF THE PREFERRED SECURITIES GUARANTEE
The Company's obligations under the Preferred Securities Guarantee to make
the Guarantee Payments will constitute an unsecured obligation of the Company
and will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, including the Subordinated Debt Securities, except
those liabilities of the
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Company made pari passu or subordinate by their terms, (ii) pari passu with
the most senior preferred stock issued from time to time by the Company and
with any guarantee now or hereafter entered into by the Company in respect of
any preferred stock of any subsidiary or affiliate of the Company and (iii)
senior to the Company's common stock. The terms of the Preferred Securities
provide that each holder of Preferred Securities by acceptance thereof agrees
to the subordination provisions and other terms of the Preferred Securities
Guarantee.
The Preferred Securities Guarantee will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without instituting a legal proceeding against any other person or
entity). The Preferred Securities Guarantee will be deposited with the
Preferred Guarantee Trustee to be held for the benefit of the holders of the
Preferred Securities. Except as otherwise noted herein, the Preferred
Guarantee Trustee has the right to enforce the Preferred Securities Guarantee
on behalf of the holders of the Preferred Securities. The Preferred Securities
Guarantee will not be discharged except by payment of the Guarantee Payments
in full (without duplication of amounts theretofore paid by the Trust).
The Company's obligations under the Preferred Securities Guarantee, taken
together with its obligations under the Declaration, the Subordinated Debt
Securities and the Indenture, in the aggregate provide a full and
unconditional guarantee by the Company of payments due on the Preferred
Securities.
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to the Preferred Securities Guarantee and after the curing of all such
defaults that may have occurred, undertakes to perform only such duties as are
specifically set forth in the Preferred Securities Guarantee and, after
default, shall exercise the same degree of care as a prudent individual would
exercise in the conduct of his or her own affairs. Subject to such provisions,
the Preferred Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by the Preferred Securities Guarantee at the request of
any holder of Preferred Securities, unless offered reasonable indemnity
against the costs, expenses and liabilities which might be incurred thereby;
but the foregoing shall not relieve the Preferred Guarantee Trustee, upon the
occurrence of an event of default under the Preferred Securities Guarantee,
from exercising the rights and powers vested in it by the Preferred Securities
Guarantee. The Preferred Guarantee Trustee also serves as Property Trustee
under the Declaration and as Subordinated Debt Trustee under the Indenture.
GOVERNING LAW
The Preferred Securities Guarantee will be governed by, and construed in
accordance with, the internal laws of the State of New York.
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DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
Set forth below is a description of the terms of the Subordinated Debt
Securities. The following description does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the Indenture,
dated as of , 1998, as supplemented by a First Supplemental Indenture
(as so supplemented, the "Indenture"), between the Company and The Bank of New
York, as Trustee (the "Subordinated Debt Trustee"), which (or the form of
which) are filed as exhibits to the Registration Statement of which this
Prospectus Supplement and the accompanying Prospectus form a part. The terms
of the Subordinated Debt Securities will include those stated in the Indenture
(which has been qualified under the Trust Indenture Act) and those made a part
of the Indenture by reference to the Trust Indenture Act. Certain capitalized
terms used herein are defined in the Indenture.
Under certain circumstances involving the termination of the Trust following
the occurrence of a Special Event, Subordinated Debt Securities may be
distributed to the holders of Trust Securities in liquidation of the Trust.
See "Description of the Preferred Securities--Special Event Redemption or
Distribution."
If the Subordinated Debt Securities are distributed to the holders of the
Trust Securities, the Company will use its best efforts to have the
Subordinated Debt Securities listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed.
GENERAL
The Subordinated Debt Securities will be issued as unsecured subordinated
debt securities under the Indenture. The Subordinated Debt Securities will be
limited in aggregate principal amount to $ , such amount being the sum
of the aggregate liquidation amount of the Preferred Securities and the
capital contributed by the Company in exchange for the Common Securities.
The Subordinated Debt Securities are not subject to any sinking fund
provision. The entire principal amount of the Subordinated Debt Securities
will mature and become due and payable, together with any accrued and unpaid
interest thereon, on , .
If Subordinated Debt Securities are distributed to holders of the Trust
Securities in liquidation of such holders' interests in the Trust, such
Subordinated Debt Securities will initially be issued as a Global Security (as
defined below). As described herein, under certain limited circumstances,
Subordinated Debt Securities may be issued in certificated form in exchange
for a Global Security. See "--Book Entry and Settlement" below. In the event
Subordinated Debt Securities are issued in certificated form, such
Subordinated Debt Securities will be in denominations of $1,000 and integral
multiples thereof and may be transferred or exchanged at the offices described
below. Payments on Subordinated Debt Securities issued as a Global Security
will be made to the depositary for the Subordinated Debt Securities. In the
event Subordinated Debt Securities are issued in certificated form, principal
and interest will be payable, the transfer of the Subordinated Debt Securities
will be registrable and Subordinated Debt Securities will be exchangeable for
Subordinated Debt Securities of other denominations of a like aggregate
principal amount at the corporate trust office of the Subordinated Debt
Trustee in New York, New York; provided, however, that payment of interest may
be made at the option of the Company by check mailed to the address of the
persons entitled thereto.
The Indenture does not contain provisions that afford holders of the
Subordinated Debt Securities protection in the event of a highly leveraged
transaction involving the Company or a decline in the credit quality of the
Company resulting from a change of control transaction.
SUBORDINATION
The Indenture provides that the Subordinated Debt Securities are
subordinated and junior in right of payment to all Senior Indebtedness of the
Company, whether now existing or hereafter incurred. No payment of
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principal of (including redemption payments, if any) or interest on, the
Subordinated Debt Securities may be made if (a) any Senior Indebtedness of the
Company is not paid when due and any applicable grace period with respect to
such default has ended with such default not being cured or waived or ceasing
to exist, or (b) the maturity of any Senior Indebtedness has been accelerated
because of a default. Upon any distribution of assets of the Company to
creditors upon any dissolution, winding-up, liquidation or reorganization,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership
or other proceedings, all principal of, premium, if any, and interest due or
to become due on, all Senior Indebtedness must be paid in full before the
holders of the Subordinated Debt Securities are entitled to receive or retain
any payment. The rights of the holders of the Subordinated Debt Securities
will be subrogated to the rights of the holders of Senior Indebtedness to
receive payments or distributions applicable to such Senior Indebtedness until
all amounts owing on the Subordinated Debt Securities are paid in full.
The term "Senior Indebtedness" means: (i) any payment in respect of (a)
indebtedness of the Company for money borrowed and (b) indebtedness evidenced
by securities, debentures, bonds, notes or other similar instruments issued by
the Company, including all indebtedness currently outstanding under indentures
with various trustees; (ii) all capital lease obligations of the Company;
(iii) all obligations of the Company issued or assumed as the deferred
purchase price of property, all conditional sale obligations of the Company
and all obligations of the Company under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business);
(iv) all obligations of the Company for the reimbursement on any letter of
credit, banker's acceptance, security purchase facility or similar credit
transaction; (v) all obligations of the type referred to in clauses (i)
through (iv) above of other persons for the payment of which the Company is
responsible or liable as obligor, guarantor or otherwise; and (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
persons secured by any lien on any property or asset of the Company (whether
or not such obligation is assumed by the Company), except for any such
indebtedness that is by its terms subordinated to or pari passu with the
Subordinated Debt Securities, as the case may be. Such Senior Indebtedness
shall continue to be Senior Indebtedness and be entitled to the benefits of
the subordination provisions irrespective of any amendment, modification or
waiver of any term of such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
which may be issued by the Company. As of December 31, 1997, Senior
Indebtedness of the Company aggregated approximately $2.5 billion.
CERTAIN COVENANTS
If (i) there shall have occurred and be continuing any event that
constitutes an Indenture Event of Default or (ii) the Company shall be in
default with respect to its payment of any obligations under the Preferred
Securities Guarantee or the Common Securities Guarantee, and such default
shall be continuing then (a) the Company shall not declare or pay any dividend
on, make any distributions with respect to, or redeem, purchase or make a
liquidation payment with respect to, any of its capital stock, (b) the Company
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by the Company which
rank pari passu with or junior to the Subordinated Debt Securities and (c) the
Company shall not make any guarantee payments (other than pursuant to the
Preferred Securities Guarantee) with respect to the foregoing.
If the Company shall have given notice of its election of an Extension
Period as provided in the Indenture and such period, or any extension thereof,
shall be continuing, then during the term of such Extension Period (a) the
Company shall not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase or make a liquidation payment with respect to,
any of its capital stock, (b) the Company shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Company which rank pari passu with or junior to
the Subordinated Debt Securities and (c) the Company shall not make any
guarantee payments (other than pursuant to the Preferred Securities Guarantee)
with respect to the foregoing.
Notwithstanding the foregoing restrictions, the Company will be permitted,
in any event, to make dividend, redemption, liquidation and guarantee payments
on capital stock, and interest, principal, redemption and
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guarantee payments on debt securities issued by the Company ranking pari passu
with or junior to Subordinated Debt Securities, where the payment is made by
way of securities (including capital stock) that rank junior to the securities
on which such payment is being made.
For so long as the Trust Securities remain outstanding, the Company will
covenant (i) to directly or indirectly maintain 100% direct or indirect
ownership of the Common Securities of the Trust; provided, however, that any
permitted successor of the Company under the Indenture may succeed to the
Company's ownership of such Common Securities, (ii) not to cause, as sponsor
of the Trust, or to permit, as holder of the Common Securities, the
termination, dissolution or winding-up of the Trust, except in connection with
a distribution of the Subordinated Debt Securities as provided in the
Declaration and in connection with certain mergers, consolidations or
amalgamations, (iii) to use its reasonable efforts to cause the Trust (a) to
remain a statutory business trust, except in connection with the distribution
of Subordinated Debt Securities to the holders of Trust Securities in
liquidation of the Trust, the redemption of all of the Trust Securities of the
Trust, or certain mergers, consolidations or amalgamations, each as permitted
by the Declaration, and (b) to otherwise continue to be classified as a
grantor trust for United States federal income purposes and (iv) to use
reasonable efforts to cause each holder of Trust Securities to be treated as
owning an undivided beneficial interest in the Subordinated Debt Securities.
OPTIONAL REDEMPTION
The Company shall have the right to redeem the Subordinated Debt Securities,
in whole or in part, from time to time, on or after , , or at any
time in certain circumstances upon the occurrence of a Tax Event as described
under "Description of the Preferred Securities--Special Event Redemption or
Distribution," upon not less than 30 nor more than 60 days' notice, at a
redemption price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest to the redemption date. If a partial redemption of
the Preferred Securities resulting from a partial redemption of the
Subordinated Debt Securities would result in the delisting of the Preferred
Securities, the Company may only redeem the Subordinated Debt Securities in
whole.
INTEREST
Each Subordinated Debt Security shall bear interest at the rate of % per
annum from , 1998, payable quarterly in arrears on , ,
and of each year (each, an "Interest Payment Date"),
commencing , 1998, to the person in whose name such Subordinated Debt
Security is registered, subject to certain exceptions, at the close of
business on the Business Day next preceding such Interest Payment Date. The
distribution payable on , 1998, which will be calculated at the above
rate and based on a period that is [shorter/longer] than a full quarter, will
be in the amount of $ per Preferred Security. In the event the
Subordinated Debt Securities are distributed to holders of the Trust
Securities in liquidation of such holders' interests in the Trust and such
Subordinated Debt Securities shall not thereafter continue to remain in book-
entry only form, the Company shall have the right to select record dates which
shall be not less than fifteen days prior to each Interest Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period will be computed on the basis
of the actual number of days elapsed in such 90-day quarter. In the event that
any date on which interest is payable on the Subordinated Debt Securities is
not a Business Day, then payment of the interest payable on such date will be
made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date.
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OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company shall have the right at any time, and from time to time, during
the term of the Subordinated Debt Securities to defer payments of interest by
extending the interest payment period for a period not exceeding 20
consecutive quarters, at the end of which Extension Period the Company shall
pay all interest then accrued and unpaid (including any Additional Interest),
together with interest thereon at the rate specified for the Subordinated Debt
Securities to the extent permitted by applicable law; provided, however, that,
during any such Extension Period, (a) the Company shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase or
make a liquidation payment with respect to, any of its capital stock, (b) the
Company shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities issued by the Company
which rank pari passu with or junior to the Subordinated Debt Securities and
(c) the Company shall not make any guarantee payments (other than pursuant to
the Preferred Securities Guarantee) with respect to the foregoing; provided,
however, the foregoing restriction will not apply to any dividend, redemption,
liquidation, interest, principal or guarantee payments by the Company where
the payment is made by way of securities (including capital stock) that rank
junior to the securities on which such dividend, redemption, interest,
principal or guarantee payment is being made. Prior to the termination of any
such Extension Period, the Company may further defer payments of interest by
extending the interest payment period, provided that such Extension Period
together with all such previous and further extensions thereof may not exceed
20 consecutive quarters or extend beyond the maturity of the Subordinated Debt
Securities. Upon the termination of any Extension Period and the payment of
all amounts then due, the Company may select a new Extension Period, as if no
Extension Period had previously been declared, subject to the above
requirements. No interest during an Extension Period, except at the end
thereof, shall be due and payable. The Company has no present intention of
exercising its rights to defer payments of interest by extending the interest
payment period on the Subordinated Debt Securities. If the Property Trustee
shall be the sole holder of the Subordinated Debt Securities, the Company
shall give the Regular Trustees and the Property Trustee notice of its
selection of an Extension Period one Business Day prior to the earlier of (i)
the next succeeding date on which distributions on the Preferred Securities
are payable or (ii) the date the Trust is required to give notice to any
national securities exchange or other applicable self-regulatory organization
or to holders of the Preferred Securities of the record date or the date such
distribution is payable, but in any event not less than one Business Day prior
to such record date. The Regular Trustees shall give notice of the Company's
selection of such Extension Period to the holders of the Preferred Securities.
If the Property Trustee shall not be the sole holder of the Subordinated Debt
Securities, the Company shall give the holders of the Subordinated Debt
Securities notice of its selection of such Extension Period ten Business Days
prior to the earlier of (i) the relevant Interest Payment Date or (ii) the
date the Company is required to give notice to any national securities
exchange or other applicable self-regulatory organization or to holders of the
Subordinated Debt Securities of the record or payment date of such related
interest payment, but in any event at least two Business Days before such
record date.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in
any such case, the Company will pay as additional interest ("Additional
Interest") such additional amounts as shall be required so that the net
amounts received and retained by the Trust after paying any such taxes,
duties, assessments or other governmental charges will be equal to the amounts
the Trust would have received had no such taxes, duties, assessments or other
governmental charges been imposed.
INDENTURE EVENTS OF DEFAULT
In case any Indenture Event of Default shall occur and be continuing, the
Property Trustee, as the holder of the Subordinated Debt Securities, will have
the right to declare the principal of and the interest on the Subordinated
Debt Securities (including Additional Interest, if any) and any other amounts
payable under the Indenture to be forthwith due and payable and to enforce its
other rights as a creditor with respect to the Subordinated Debt Securities.
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The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Event of
Default" with respect to the Subordinated Debt Securities:
(a) failure for 30 days to pay interest on the Subordinated Debt
Securities, including any Additional Interest in respect thereof, when due;
provided, however, that a valid extension of the interest payment period by
the Company shall not constitute a default in the payment of interest for
this purpose; or
(b) failure to pay principal or premium, if any, on the Subordinated Debt
Securities when due whether at maturity, upon earlier redemption or
otherwise; or
(c) failure to observe or perform any other covenant (other than those
specifically relating to another series of subordinated debt securities)
contained in the Indenture for 90 days after written notice to the Company
from the Subordinated Debt Trustee or the holders of at least 25% in
principal amount of the outstanding Subordinated Debt Securities; or
(d) certain events of bankruptcy, insolvency or reorganization of the
Company; or
(e) the voluntary or involuntary termination, dissolution or winding-up
of the Trust, except in connection with the distribution of Subordinated
Debt Securities to the holders of Preferred Securities in liquidation of
the Trust, the redemption of all outstanding Trust Securities of the Trust
and certain mergers, consolidations or amalgamations permitted by the
Declaration.
The holders of a majority in aggregate outstanding principal amount of the
Subordinated Debt Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the
Subordinated Debt Trustee. The Subordinated Debt Trustee or the holders of not
less than 25% in aggregate outstanding principal amount of the Subordinated
Debt Securities may declare the principal due and payable immediately on
default, but the holders of a majority in aggregate outstanding principal
amount may annul such declaration and waive the default if the default has
been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Subordinated Debt Trustee.
The holders of a majority in aggregate outstanding principal amount of the
Subordinated Debt Securities affected thereby may, on behalf of the holders of
all the Subordinated Debt Securities, waive any past default, except (i) a
default in the payment of principal or interest, including Additional Interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration and
any applicable premium has been deposited with the Subordinated Debt Trustee),
or (ii) a default in the covenant of the Company not to declare or pay
dividends on, or make distributions with respect to, or redeem, purchase or
acquire any of its capital stock during an Extension Period. An Indenture
Event of Default also constitutes a Declaration Event of Default. The holders
of Preferred Securities in certain circumstances have the right to direct the
Property Trustee to exercise its rights as the holder of the Subordinated Debt
Securities. See "Description of the Preferred Securities--Declaration Events
of Default" and "--Voting Rights."
In addition, if an Indenture Event of Default results from the failure of
the Company to pay principal of or interest on the Subordinated Debt
Securities when due, during the continuance of such an event of default a
holder of Preferred Securities may immediately institute a legal proceeding
directly against the Company to obtain payment of such principal or interest
on Subordinated Debt Securities having a principal amount equal to the
aggregate liquidation amount of the Preferred Securities owned of record by
such holder.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
voluntary or involuntary termination, dissolution or winding-up of the Trust
as a result of the occurrence of a Special Event, the Subordinated Debt
Securities will be issued in the form of one or more global certificates
(each, a "Global Security") registered in the name of the depositary or its
nominee. Except under the limited circumstances described below, Subordinated
Debt Securities represented by the Global Security will not be exchangeable
for, and will not otherwise be issuable as, Subordinated Debt Securities in
definitive form. The Global Securities described above may not be
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transferred except by the depositary to a nominee of the depositary or by a
nominee of the depositary to the depositary or another nominee of the
depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Subordinated
Debt Securities in definitive form and will not be considered the Holders (as
defined in the Indenture) thereof for any purpose under the Indenture, and no
Global Security representing Subordinated Debt Securities shall be
exchangeable, except for another Global Security of like denomination and
tenor to be registered in the name of the depositary or its nominee or to a
successor depositary or its nominee. Accordingly, each beneficial owner must
rely on the procedures of the depositary and, if such person is not a
Participant, on the procedures of the Participant through which such person
owns its interest, to exercise any rights of a Holder under the Indenture.
If Subordinated Debt Securities are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, DTC will
act as securities depositary for the Subordinated Debt Securities. For a
description of DTC and the specific terms of the depository arrangements, see
"Description of the Preferred Securities--Book-Entry Only Issuance--The
Depository Trust Company." The description therein of DTC's book-entry system
and DTC's practices as they relate to purchases, transfers, notices and
payments with respect to the Preferred Securities apply in all material
respects to any debt obligations represented by one or more Global Securities
held by DTC. The Company may appoint a successor to DTC or any successor
depositary in the event DTC or such successor depositary is unable or
unwilling to continue as depositary.
None of the Company, the Trust, the Subordinated Debt Trustee, any paying
agent and any other agent of the Company or the Subordinated Debt Trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in a Global
Security for such Subordinated Debt Securities or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.
A Global Security shall be exchangeable for Subordinated Debt Securities
registered in the names of persons other than the depositary or its nominee
only if (i) the depositary notifies the Company that it is unwilling or unable
to continue as a depositary for such Global Security and no successor
depositary shall have been appointed, or if at any time the depositary ceases
to be registered or in good standing under the Exchange Act (or other
applicable statute or regulation) at a time when the depositary is required to
be so registered to act as such depositary and no successor depositary shall
have been appointed by the Company within 90 days after the Company receives
such notice or becomes aware of such condition, (ii) the Company in its sole
discretion determines that such Global Security shall be so exchangeable or
(iii) there shall have occurred an Indenture Event of Default with respect to
such Subordinated Debt Securities. Any Global Security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for Subordinated Debt
Securities registered in such names as the depositary shall direct. It is
expected that such instructions will be based upon directions received by the
depositary from its Participants with respect to ownership of beneficial
interests in such Global Security.
In the event the Subordinated Debt Securities are not represented by one or
more Global Securities, certificates evidencing Subordinated Debt Securities
may be presented for registration of transfer (with the form of transfer
endorsed thereon duly executed) or exchange, at the office of the Debt
Registrar (as defined in the Indenture) or at the office of any transfer agent
designated by the Company for such purpose with respect to the Subordinated
Debt Securities, without service charge and upon payment of any taxes and
other governmental charges as described in the Indenture. Such transfer or
exchange will be effected upon the Debt Register (as defined in the Indenture)
or such transfer agent, as the case may be, being satisfied with the documents
of title and identity of the person making the request. The Company has
appointed the Subordinated Debt Trustee as Debt Registrar with respect to the
Subordinated Debt Securities. The Company may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent
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acts, except that the Company will be required to maintain a transfer agent at
the place of payment. The Company may at any time designate additional
transfer agents with respect to the Subordinated Debt Securities.
In the event of any redemption in part, the Company shall not be required to
(i) issue, exchange or register the transfer of Subordinated Debt Securities
during a period beginning at the opening of business 15 days before the day of
the mailing of a notice of redemption of less than all of the Subordinated
Debt Securities and ending at the close of business on the date of such
mailing or (ii) register the transfer of or exchange any Subordinated Debt
Securities so selected for redemption, in whole or in part, except the
unredeemed portion of any Subordinated Debt Securities being redeemed in part.
PAYMENT AND PAYING AGENTS
Payment of principal of and premium, if any, on the Subordinated Debt
Securities will be made only against surrender to the Paying Agent (as defined
in the Indenture) of the Subordinated Debt Securities. Principal of and
premium, if any, and interest on Subordinated Debt Securities will be payable,
subject to any applicable laws and regulations, at the office of such Paying
Agent or Paying Agents as the Company may designate from time to time, except
that at the option of the Company payment of any interest may be made by check
mailed to the address of the person entitled thereto as such address shall
appear in the Debt Register with respect to the Subordinated Debt Securities.
Payment of interest on the Subordinated Debt Securities on any Interest
Payment Date will be made to the person in whose name the Subordinated Debt
Security (or predecessor security) is registered at the close of business on
the Regular Record Date for such interest payment.
The Company will initially act as Paying Agent with respect to the
Subordinated Debt Securities except that, if the Subordinated Debt Securities
are distributed to the holders of the Preferred Securities in liquidation of
such holders' interests in the Trust, the Subordinated Debt Trustee will act
as the Paying Agent. The Company may at any time designate additional Paying
Agents or rescind the designation of any Paying Agents or approve a change in
the office through which any Paying Agent acts, except that the Company will
be required to maintain a Paying Agent at the place of payment.
All moneys paid by the Company to a Paying Agent for the payment of the
principal of, premium, if any, or interest, if any, on the Subordinated Debt
Securities which remain unclaimed at the end of two years after such
principal, premium or interest shall have become due and payable will be
repaid to the Company, and the holder of such Subordinated Debt Securities
will thereafter look only to the Company for payment thereof.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the
Subordinated Debt Trustee, with the consent of the holders of not less than a
majority in principal amount of the Subordinated Debt Securities, to modify
the Indenture or any supplemental indenture affecting that series or the
rights of the holders of the Subordinated Debt Securities; provided, however,
that no such modification may, without the consent of the holder of each
outstanding Subordinated Debt Security affected thereby, (i) extend the fixed
maturity of the Subordinated Debt Securities, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon,
or reduce any premium payable upon the redemption thereof, without the consent
of the holder of the Subordinated Debt Securities so affected or (ii) reduce
the percentage of Subordinated Debt Securities the holders of which are
required to consent to any such supplemental indenture, without the consent of
the holders of each Subordinated Debt Security then outstanding and affected
thereby.
In addition, the Company and the Subordinated Debt Trustee may execute,
without the consent of holders of the Subordinated Debt Securities, any
supplemental indenture for certain other usual purposes including the creation
of any new series of subordinated debt securities.
SUCCESSOR CORPORATION
The Company may not consolidate with or merge into, or transfer its
properties and assets substantially as an entirety to, another corporation
unless (i) the successor corporation, which shall be a corporation organized
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under the laws of the United States or a State thereof, assumes by
supplemental indenture all the obligations of the Company under the
Subordinated Debt Securities and the Indenture, and (ii) after giving effect
to such transaction, no Indenture Event of Default shall have occurred and be
continuing. The Indenture does not otherwise contain any covenant which
restricts the ability of the Company to merge or consolidate with or into any
other corporation, sell or convey all or substantially all of its assets to
any person, firm or corporation or otherwise engage in restructuring
transactions.
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, the Company will be discharged from any
and all obligations in respect of the Subordinated Debt Securities (except in
each case for certain obligations with respect to denominations and provisions
for payment of the Subordinated Debt Securities and obligations to register
the transfer or exchange of Subordinated Debt Securities, replace stolen, lost
or mutilated Subordinated Debt Securities, maintain paying agencies and hold
moneys for payment in trust) if the Company (i) deposits with the Subordinated
Debt Trustee, in trust, moneys or governmental obligations in an amount
sufficient to pay all the principal of, and interest on, the Subordinated Debt
Securities on the dates such payments are due in accordance with the terms of
such Subordinated Debt Securities and (ii) delivers to the Subordinated Debt
Trustee an opinion of counsel to the effect that, based upon the Company's
receipt from, or the publication by, the Internal Revenue Service of a ruling
or a change in law, the holders of the Subordinated Debt Securities will not
recognize income, gain or loss for United States federal income tax purposes
as a result of the deposit, defeasance and discharge and will be subject to
United States federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit, defeasance or
discharge had not occurred.
GOVERNING LAW
The Indenture and the Subordinated Debt Securities will be governed by, and
construed in accordance with, the internal laws of the State of New York.
INFORMATION CONCERNING THE SUBORDINATED DEBT TRUSTEE
The Subordinated Debt Trustee, prior to default, undertakes to perform only
such duties as are specifically set forth in the Indenture and, after default,
shall exercise the same degree of care as a prudent individual would exercise
in the conduct of his or her own affairs. Subject to such provision, the
Subordinated Debt Trustee is under no obligation to exercise any of the powers
vested in it by the Indenture at the request of any holder of Subordinated
Debt Securities, unless offered reasonable indemnity by such holder against
the costs, expenses and liabilities which might be incurred thereby; but the
foregoing shall not relieve the Subordinated Debt Trustee, upon the occurrence
of an Indenture Event of Default, from exercising the rights and powers vested
in it by the Indenture. The Subordinated Debt Trustee is not required to
expend or risk its own funds or otherwise incur personal financial liability
in the performance of its duties if the Subordinated Debt Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
The Subordinated Debt Trustee also serves as Property Trustee under the
Declaration and as the Preferred Guarantee Trustee under the Preferred
Securities Guarantee.
MISCELLANEOUS
The Company will have the right at all times to assign any of its rights or
obligations under the Indenture to a direct or indirect wholly owned
subsidiary of the Company; provided, however, that in the event of any such
assignment, the Company will remain liable for all of the obligations of such
subsidiary. Subject to the foregoing, the Indenture will be binding upon and
inure to the benefit of the parties thereto and their respective successors
and assigns. The Indenture provides that it may not otherwise be assigned by
the parties thereto.
The Indenture will provide that the Company will pay all costs, expenses,
debts and obligations of the Trust other than with respect to the Trust
Securities.
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<PAGE>
EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED DEBT SECURITIES AND THE PREFERRED
SECURITIES GUARANTEE
As set forth in the Declaration, the exclusive purposes of the Trust are to
(i) issue the Trust Securities, (ii) invest the proceeds thereof in the
Subordinated Debt Securities and (iii) engage in only those other activities
necessary or incidental thereto.
As long as payments of interest and other payments are made when due on the
Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities primarily because (i)
the aggregate principal amount of the Subordinated Debt Securities will be
equal to the sum of the aggregate liquidation amount of the Trust Securities;
(ii) the interest rate and interest and other payment dates on the
Subordinated Debt Securities will match the distribution rate and distribution
and other payment dates for the Preferred Securities; (iii) the Company shall
pay for all costs, expenses, debts and obligations of the Trust (other than
with respect to the Trust Securities); and (iv) the Declaration provides that
the Company Trustees shall not cause or permit the Trust to, among other
things, engage in any activity that is not consistent with the purposes of the
Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor
are available) are guaranteed by the Company as described under "Description
of the Preferred Securities Guarantee." If the Company does not make interest
payments on the Subordinated Debt Securities purchased by the Trust, it is
expected that the Trust will not have sufficient funds to pay distributions on
the Preferred Securities. The Preferred Securities Guarantee does not apply to
any payment of distributions unless and until the Trust has sufficient funds
for the payment of such distributions.
If the Company fails to make interest or other payments on the Subordinated
Debt Securities when due (taking into account any Extension Period), the
Declaration provides a mechanism whereby the holders of the Preferred
Securities, using the procedures described in "Description of the Preferred
Securities--Voting Rights," may direct the Property Trustee to enforce its
rights under the Subordinated Debt Securities, including proceeding directly
against the Company to enforce the Subordinated Debt Securities. If the
Property Trustee fails to enforce its rights under the Indenture or the
Subordinated Debt Securities, a holder of Preferred Securities may, to the
extent permitted by applicable law, institute a legal proceeding directly
against the Company to enforce the Property Trustee's rights under the
Indenture and the Subordinated Debt Securities without first instituting any
legal proceeding against the Property Trustee or any other person or entity,
including the Trust. In addition, during the continuance of a Declaration
Event of Default that results from the failure of the Company to pay principal
of or interest on the Subordinated Debt Securities when due, a holder may
proceed directly against the Company, without first waiting to determine if
the Property Trustee has enforced its rights under the Declaration, to obtain
payment of such principal or interest on Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities owned of record by such holder.
If the Company fails to make payments under the Preferred Securities
Guarantee, the Preferred Securities Guarantee provides a mechanism whereby the
holders of the Preferred Securities may direct the Preferred Guarantee Trustee
to enforce its rights thereunder. If the Preferred Guarantee Trustee fails to
enforce the Preferred Securities Guarantee, any holder of Preferred Securities
may institute a legal proceeding directly against the Company to enforce the
Preferred Guarantee Trustee's rights under the Preferred Securities Guarantee,
without first instituting a legal proceeding against the Trust, the Preferred
Guarantee Trustee or any other person or entity. In addition, any record
holder of Preferred Securities shall have the right, which is absolute and
unconditional, to proceed directly against the Company to obtain Guarantee
Payments, without first waiting to determine if the Preferred Guarantee
Trustee has enforced the Preferred Security Guarantee or instituting a legal
proceeding against the Trust, the Preferred Guarantee Trustee or any other
person or entity.
The Company's obligations under the Preferred Securities Guarantee, the
Declaration, the Subordinated Debt Securities and the Indenture, in the
aggregate, provide a full and unconditional guarantee by the Company of
payments due on the Preferred Securities.
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<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain of the principal United States federal
income tax consequences of the purchase, ownership and disposition of the
Preferred Securities. This summary is based on the Internal Revenue Code of
1986, as amended, Treasury regulations and administrative and judicial rulings
and decisions now in effect, all of which are subject to change, possibly on a
retroactive basis. This summary does not address the tax consequences
applicable to investors that may be subject to special tax rules such as
banks, thrifts, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, tax-exempt investors
or persons that will hold the Preferred Securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a U.S. Holder.
Further, it does not include any description of any alternative minimum tax
consequences or the tax laws of any state or local government or of any
foreign government that may be applicable to a U.S. Holder.
As used herein, a "U.S. Holder" means a beneficial owner of the Preferred
Securities who or that is (i) a citizen or resident of the United States, (ii)
a corporation or other entity created or organized in or under the laws of the
United States or a political subdivision thereof, (iii) an estate the income
of which is subject to U.S. federal income taxation regardless of its source,
(iv) a trust if a U.S. court is able to exercise primary supervision over the
administration of the trust and one or more U.S. persons have authority to
control all substantial decisions of the trust, or (v) otherwise subject to
U.S. federal income taxation on a net income basis in respect of the Preferred
Securities, as the case may be. As used herein, a "Non-U.S. Holder" means a
holder that is not a U.S. Holder.
CLASSIFICATION OF THE SUBORDINATED DEBT SECURITIES
The Company intends to take the position that the Subordinated Debt
Securities will be classified for United States federal income tax purposes as
indebtedness of the Company and, by acceptance of a Preferred Security, each
U.S. Holder covenants to treat the Subordinated Debt Securities as
indebtedness and the Preferred Securities as evidence of an indirect
beneficial ownership interest in the Subordinated Debt Securities. No
assurance can be given however, that such position will not be challenged by
the Internal Revenue Service, or if challenged, that such a challenge will not
be successful. The remainder of this discussion assumes that the Subordinated
Debt Securities will be classified as indebtedness of the Company for United
States federal income tax purposes.
CLASSIFICATION OF COASTAL FINANCE I
Cahill Gordon & Reindel, special tax counsel to the Company and the Trust,
is of the opinion that, under current law and assuming full compliance with
the terms of the Indenture and the Declaration (and certain other documents),
the Trust will be classified as a "grantor trust" for United States federal
income tax purposes and will not be classified as an association taxable as a
corporation or a partnership. Each U.S. Holder will be treated as owning an
undivided beneficial interest in the Subordinated Debt Securities.
Accordingly, each U.S. Holder will be required to include in its gross income
the interest and/or original issue discount ("OID") paid or accrued with
respect to its allocable share of Subordinated Debt Securities. Investors
should be aware that the opinion of Cahill Gordon & Reindel does not address
any other issue and is not binding on the Internal Revenue Service or the
courts.
INTEREST, ORIGINAL ISSUE DISCOUNT, PREMIUM AND MARKET DISCOUNT
Under applicable Treasury regulations (the "Regulations"), if the likelihood
that the stated interest on a debt instrument will not be timely paid is
"remote," such likelihood is ignored in determining whether the debt
instrument is issued with OID. The Company intends to treat the likelihood of
exercising its option to defer
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payments of interest on the Subordinated Debt Securities as being remote
within the meaning of the Regulations. Based on the foregoing, the Company
believes that the Subordinated Debt Securities will not be considered to be
issued with OID at the time of their original issuance and that a U.S. Holder
of Preferred Securities should include in gross income such holder's allocable
share of the interest paid on the Subordinated Debt Securities in accordance
with such holder's method of tax accounting.
If, under the Regulations, the Company's option to defer payments of
interest on the Subordinated Debt Securities by extending interest payment
periods for up to 20 consecutive quarters is determined not to be remote, or
if the Company exercises its option, the Subordinated Debt Securities would be
treated as issued with OID at the time of issuance or at the time of such
exercise, as the case may be, and all of the stated interest payments on the
Subordinated Debt Securities thereafter would be treated as OID. In such
event, U.S. Holders would include the OID attributable to the Subordinated
Debt Securities in income on an economic accrual basis before the receipt of
cash attributable to the interest, regardless of their method of tax
accounting. The amount of OID that accrues in any month will approximately
equal the amount of the interest that accrues in that month at the stated
interest rate. In the event that the interest payment period is extended,
Holders will continue to accrue OID approximately equal to the amount of the
interest payment due at the end of the extended interest payment period on an
economic accrual basis over the length of the extended interest period.
Corporate U.S. Holders will not be entitled to a dividends-received deduction
with respect to any income earned with respect to the Preferred Securities.
No rulings or interpretations have been issued by the Internal Revenue
Service which address the meaning of the term "remote" as used in the
Regulations, and it is possible that the Internal Revenue Service could take a
position contrary to that expressed herein.
To the extent a U.S. Holder acquires its Preferred Securities at a price
that is greater or less than the principal amount of such U.S. Holder's share
of the Subordinated Debt Securities, the U.S. Holder will be deemed to have
acquired its interest in the Preferred Securities with amortizable bond
premium or with market discount, as the case may be. If the Subordinated Debt
Securities were to be treated as having been issued with OID, a U.S. Holder
acquiring Preferred Securities at a premium will be permitted to reduce the
amount of OID required to be included in income to reflect such acquisition
premium. A U.S. Holder acquiring Preferred Securities at a market discount
will also include the amount of such discount in income in accordance with the
market discount rules described below.
A U.S. Holder acquiring Preferred Securities at a market discount generally
will be required to recognize ordinary income to the extent of accrued market
discount upon the retirement of the underlying Subordinated Debt Securities
or, to the extent of any gain, upon the disposition of the Preferred
Securities. Such market discount would accrue on a straight-line basis, or, at
the election of the U.S. Holder, under a constant yield method over the
remaining term of the Subordinated Debt Securities. A U.S. Holder may also be
required to defer the deduction of a portion of the interest paid or accrued
on indebtedness incurred to purchase or carry Preferred Securities acquired
with market discount. In lieu of the foregoing, a U.S. Holder may elect to
include market discount in income currently as it accrues on all market
discount instruments acquired by such holder in the taxable year of the
election or thereafter, in which case the interest deferral rule will not
apply. A U.S. Holder may elect, in lieu of applying the market discount or
premium rules described above, to account for all income under the Preferred
Securities as if it were OID.
RECEIPT OF SUBORDINATED DEBT SECURITIES OR CASH UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
the Preferred Securities--Special Event Redemption or Distribution,"
Subordinated Debt Securities may be distributed to Holders in
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exchange for the Preferred Securities and in liquidation of the Trust. Such a
distribution would be treated as a non-taxable event to each U.S. Holder and
each U.S. Holder would receive an aggregate tax basis in the Subordinated Debt
Securities equal to such Holder's aggregate tax basis in the Preferred
Securities. A U.S. Holder's holding period in the Subordinated Debt Securities
so received in liquidation of the Trust would include the period for which the
Preferred Securities were held by such holder. If, however, the Trust is
characterized for United States federal income tax purposes as an association
taxable as a corporation at the time of its dissolution, the distribution of
the Subordinated Debt Securities would constitute a taxable event to U.S.
Holders of Preferred Securities and a U.S. Holder's holding period in
Subordinated Debt Securities would not include the period during which the
Subordinated Debt Securities were held by the Trust.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Subordinated Debt Securities may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption
of their Preferred Securities. Such a redemption would, for United States
federal income tax purposes, constitute a taxable disposition of the redeemed
Preferred Securities, and a U.S. Holder would recognize gain or loss as if it
sold such redeemed Preferred Securities for cash. See "--Sale of Preferred
Securities."
SALE OF PREFERRED SECURITIES
A U.S. Holder that sells Preferred Securities will recognize gain or loss
equal to the difference between its adjusted tax basis in the Preferred
Securities and the amount realized on the sale. A U.S. Holder's adjusted tax
basis in the Preferred Securities generally will be its initial purchase
price. If the Subordinated Debt Securities are treated as having been issued
with OID, a U.S. Holder's adjusted tax basis would be such holder's initial
purchase price increased by OID previously included in such holder's gross
income to the date of disposition and decreased by payments received on the
Preferred Securities. Subject to the market discount rules described above,
any such gain or loss generally will be capital gain or loss and generally
will be long-term capital gain or loss if the Preferred Securities have been
held for more than one year.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the
underlying Subordinated Debt Securities. A U.S. Holder disposing of its
Preferred Securities between record dates for payments of distributions
thereon will be required to include accrued but unpaid interest through the
date of disposition in income (to the extent not previously included in
income) as ordinary income, and the amount realized on disposition excludes
the portion of the sale price treated as interest. To the extent the amount
realized on disposition is less than the U.S. Holder's adjusted tax basis, a
U.S. Holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
NON-U.S. HOLDERS
Subject to the discussion of backup withholding below, interest (including
OID, if any) with respect to the Preferred Securities paid to a Non-U.S.
Holder will be exempt from U.S. withholding tax, provided that the Holder
complies with applicable certification requirements (and does not actually or
constructively own ten percent or more of the voting stock of the Company and
is not a controlled foreign corporation related to the Company or its
affiliates).
INFORMATION REPORTING TO HOLDERS
Subject to the qualifications discussed below, income on the Preferred
Securities generally will be reported to Holders on Form 1099, which forms
should be mailed to holders of Preferred Securities by January 31 following
each calendar year.
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BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will be allowed
as a credit against the holder's United States federal income tax, provided
that required information is provided to the Internal Revenue Service.
Recently promulgated Treasury regulations, effective for certain payments made
to Non-U.S. Holders after December 31, 1999, may change certain certification
procedures relating to the receipt by intermediaries of payments on behalf of
a beneficial owner of Preferred Securities. Prospective investors should
consult their tax advisors regarding the possible effect of such new Treasury
regulations on an investment in the Preferred Securities.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF
THE PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.
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UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement"), the Trust has agreed to sell to each of the
underwriters named below (the "Underwriters"), and each of the Underwriters,
for whom is acting as representative (the "Representative"),
has severally agreed to purchase, the number of Preferred Securities set forth
opposite its name below. In the Purchase Agreement, the several Underwriters
have agreed, subject to the terms and conditions set forth therein, to
purchase all of the Preferred Securities offered hereby if any of the
Preferred Securities are purchased. In the event of default by an Underwriter,
the Purchase Agreement provides that, in certain circumstances, the purchase
commitments of the nondefaulting Underwriters may be increased or the Purchase
Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER PREFERRED SECURITIES
----------- --------------------
<S> <C>
-------
Total.............................................
=======
</TABLE>
The Underwriters propose initially to offer the Preferred Securities to the
public at the initial public offering price set forth on the cover page of
this Prospectus, and to certain dealers at such price less a concession not in
excess of $ per Preferred Security; provided, however, that such concession
for sales of 10,000 or more Preferred Securities to a single purchaser will
not be in excess of $ per Preferred Security. The Underwriters may allow,
and such dealers may reallow, a discount not in excess of $ per Preferred
Security to certain other dealers. After the initial public offering, the
public offering price, concession and discount may be changed.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Subordinated Debt Securities of the
Company, the Purchase Agreement provides that the Company will pay as
compensation ("Underwriters' Compensation") to the Underwriters for the
Underwriters arranging the investment therein of such proceeds, an amount in
same-day funds of $ per Preferred Security (or $ in the
aggregate); provided, however, that such compensation for sales of 10,000 or
more Preferred Securities to any single purchaser will be $ per Preferred
Security. Therefore, to the extent of such sales, the actual amount of
Underwriters' Compensation will be less than the aggregate amount specified in
the preceding sentence.
During a period of 30 days from the date of this Prospectus Supplement,
neither the Trust nor the Company will, without the prior written consent of
the Representative, directly or indirectly, sell, offer to sell, contract to
sell, grant any option for the sale of, or otherwise dispose of, any Preferred
Securities, any security convertible into, or exchangeable or exercisable for,
Preferred Securities or the Subordinated Debt Securities or any debt
securities substantially similar to the Subordinated Debt Securities or any
equity securities substantially similar to the Preferred Securities (except
for the Subordinated Debt Securities and the Preferred Securities offered
hereby and subject to certain exceptions specified in the Purchase Agreement).
Prior to this Offering there has been no public market for the Preferred
Securities. The Representative has advised the Trust that the Underwriters
intend to make a market in the Preferred Securities but will have no
obligation to make a market in the Preferred Securities and may cease market
making activities, if commenced, at any time. In order to meet one of the
requirements for listing the Preferred Securities on the New York Stock
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Exchange, the Underwriters will undertake to sell lots of 100 or more
Preferred Securities to a minimum of 400 beneficial holders.
The Company and the Trust have agreed to indemnify the Underwriters against,
or to contribute to payments that the Underwriters may be required to make in
respect of, certain liabilities, including liabilities under the Securities
Act of 1933, as amended (the "Act").
Certain of the Underwriters engage in transactions with, and from time to
time have performed services for, the Company in the ordinary course of
business.
Until the distribution of the Preferred Securities is completed, rules of
the Securities and Exchange Commission may limit the ability of the
Underwriters and certain selling group members to bid for and purchase the
Preferred Securities. As an exception to these rules, the Representatives are
permitted to engage in certain transactions that stabilize the price of the
Preferred Securities. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the Preferred
Securities.
If the Underwriters create a short position in the Preferred Securities in
connection with this offering, i.e. if they sell more Preferred Securities
than are contemplated on the cover page of this Prospectus Supplement, the
Representatives may reduce that short position by purchasing Preferred
Securities in the open market.
The Representatives may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
Preferred Securities in the open market to reduce the Underwriters' short
position or to stabilize the price of the Preferred Securities they may
reclaim the amount of the selling concession from the Underwriters and selling
group members who sold those securities as part of the offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases. The imposition of a penalty
bid might also have an effect on the price of a security to the extent that it
were to discourage resales of the security.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above might have on the price of the Preferred
Securities. In addition, neither the Company nor any of the Underwriters makes
any representation that the Representatives will engage in such transactions
or that such transactions, once commenced, will not be discontinued without
notice.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the Trust by Richards, Layton &
Finger, P.A., Wilmington, Delaware, special Delaware counsel to the Trust. The
validity of the Subordinated Debt Securities, the Preferred Securities
Guarantee and certain matters relating thereto will be passed upon on behalf
of the Company by Austin M. O'Toole, Esq., Senior Vice President and Secretary
of the Company. Certain United States federal income taxation matters will be
passed upon for the Company and the Trust, and certain legal matters will be
passed upon on behalf of the Underwriters, by Cahill Gordon & Reindel (a
partnership including a professional corporation), New York, New York.
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DEFINITIONS
<TABLE>
<CAPTION>
TERM PAGE
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<S> <C>
Act........................... S-41
Additional Interest........... S-28
Beneficial Owner.............. S-19
Business Day.................. S-12
Change in 1940 Act Law........ S-14
Common Securities............. S-1
Common Securities Guarantee... S-22
Company....................... S-1
Company Trustees.............. S-9
Creditor...................... S-18
DTC........................... S-19
Declaration................... S-9
Declaration Event of Default.. S-15
Delaware Trustee.............. S-9
Direct Participants........... S-19
Dissolution Tax Opinion....... S-14
distributions................. S-2
Event of Default.............. S-29
Exchange Act.................. S-19
Extension Period.............. S-2
Global Security............... S-29
Guarantee Payments............ S-22
Holder........................ S-36
Indenture..................... S-25
Indenture Event of Default.... S-15
Indirect Participants......... S-19
Interest Payment Date......... S-27
Investment Company Event...... S-14
Liquidation Distribution...... S-15
Mandatory Redemption Price.... S-3
1940 Act...................... S-14
</TABLE>
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
No Recognition Opinion................................................ S-12
Non-U.S. Holder....................................................... S-34
OID................................................................... S-34
Optional Redemption Price............................................. S-3
Participants.......................................................... S-19
Preferred Guarantee Trustee........................................... S-9
Preferred Securities.................................................. S-1
Preferred Securities Guarantee........................................ S-2
Property Account...................................................... S-9
Property Trustee...................................................... S-9
Purchase Agreement.................................................... S-38
Redemption Price...................................................... S-3
Redemption Tax Opinion................................................ S-13
Regular Trustees...................................................... S-9
Regulations........................................................... S-34
Representative........................................................ S-38
Senior Indebtedness................................................... S-26
Special Event......................................................... S-12
Sponsor............................................................... S-9
Successor Securities.................................................. S-18
Subordinated Debt Securities.......................................... S-2
Subordinated Debt Trustee............................................. S-25
Super-Majority........................................................ S-16
Tax Event............................................................. S-14
Trust................................................................. S-1
Trust Act............................................................. S-9
Trust Indenture Act................................................... S-9
Trust Securities...................................................... S-1
Underwriters.......................................................... S-38
Underwriters' Compensation............................................ S-38
U.S. Holder........................................................... S-34
</TABLE>
S-40
<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 APRIL , 1998
PROSPECTUS
[LOGO] THE COASTAL CORPORATION
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
COMMON STOCK WARRANTS
SUBORDINATED DEFERRABLE INTEREST DEBENTURES
----------
COASTAL FINANCE I
COASTAL FINANCE II
TRUST PREFERRED SECURITIES
GUARANTEED BY
THE COASTAL CORPORATION
----------
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, (v) warrants to purchase shares of its Common
Stock (the "Common Stock Warrants"); (vi) its unsecured subordinated deferrable
interest debentures (the "Subordinated Deferrable Interest Debentures") and
(vii) the Trust Preferred Securities Guarantees (as defined below).
Coastal Finance I and Coastal Finance II (each, a "Trust"), each a statutory
business trust formed under the laws of Delaware, may from time to time offer
preferred securities evidencing preferred undivided beneficial interests in the
assets of the respective Trust ("Trust Preferred Securities"). The payment of
periodic cash distributions ("distributions") with respect to Trust Preferred
Securities of each of the Trusts, out of moneys held by each of the Trusts, and
payments on liquidation, redemption or otherwise with respect to such Trust
Preferred Securities will be guaranteed by the Company as described herein
(each, a "Trust Preferred Securities Guarantee"). The Company's obligations
under the Trust Preferred Securities Guarantees will be subordinate and junior
in right of payment to all other liabilities of the Company and pari passu
(equally and ratably) with the most senior preferred stock issued by the
Company and with any guarantee that may be entered into by the Company in
respect of any preferred stock of any subsidiary or affiliate of the Company.
Subordinated Deferrable Interest Debentures may be issued and sold from time to
time in one or more series by the Company to a Trust in connection with the
investment of the proceeds from the offering of Trust Preferred Securities and
Trust Common Securities (as defined herein) of such Trust. The Subordinated
Deferrable Interest Debentures subsequently may be distributed pro rata to
holders of Trust Preferred Securities and Trust Common Securities in connection
with the termination of such Trust upon the occurrence of certain events as may
be described in the Prospectus Supplement. The Preferred Stock and the Common
Stock are collectively referred to as the "Equity Securities," and the Debt
Securities, the Equity Securities, the Trust Preferred Securities, the Trust
Preferred Securities Guarantee, the Subordinated Deferrable Interest Debentures
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
$700,000,000 (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 or Subordinated Deferrable Interest Debentures, 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 or Trust Preferred Securities, 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 or the applicable Trust,
through agents designated by the Company or the applicable Trust from time to
time or through underwriters or dealers designated by the Company or the
applicable Trust from time to time. If any agents of the Company or the
applicable Trust 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 or the applicable Trust, as the case may be, 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 , 1998
<PAGE>
AVAILABLE INFORMATION
The Trusts and the Company have filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended
(the "Securities Act"), a combined registration statement on Form S-3 (herein,
together with all amendments and exhibits, referred to as the "Registration
Statement") relating to the Debt Securities, the Subordinated Deferrable
Interest Debentures, the Equity Securities, the Trust Preferred Securities and
the Trust Preferred Securities Guarantees.
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, information statements and other
information with the Commission. Such reports, proxy statements, information
statements and other information concerning the Company 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 Commission's
Regional Offices at Seven World Trade Center, 13th Floor, New York, New York
10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Room of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, upon the payment of fees prescribed by the Commission.
The Commission maintains a site on the World Wide Web that contains reports,
proxy and information statements and other information regarding registrants
(including the Company) that file electronically with the Commission. The
address of the Commission's Web site is http://www.sec.gov. Reports, proxy
statements, information statements and other 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.
No separate financial statements of the Trusts have been included herein.
The Company does not believe that such financial statements would be material
to holders of the Trust Preferred Securities because (i) all of the voting
securities of the Trusts will be owned, directly or indirectly, by the
Company, a reporting company under the Exchange Act, (ii) the Trusts have no
independent operations and exist for the sole purpose of issuing securities
representing undivided beneficial interests in the assets of the applicable
Trust and investing the proceeds thereof in the Subordinated Deferrable
Interest Debentures issued by the Company and (iii) the obligations of the
Trusts under the Trust Securities are fully and unconditionally guaranteed by
the Company to the extent that the Trust has funds available to meet such
obligations. See "The Trusts," "Description of the Trust Preferred
Securities," "Description of the Trust Preferred Securities Guarantees" and
"Description of the Subordinated Deferrable Interest Debentures." The Trusts
intend to not file separate reports under the Exchange Act but must apply for
and be granted relief by the Commission to avoid the requirement to file such
reports.
INCORPORATION OF DOCUMENTS BY REFERENCE
Coastal hereby incorporates in this Prospectus by reference its Annual
Report on Form 10-K for the year ended December 31, 1997 (the "1997 Annual
Report"), which has been filed with the Commission pursuant to the Exchange
Act (File No. 1-7176).
2
<PAGE>
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.
3
<PAGE>
THE COMPANY
Coastal, acting through its subsidiaries, is a diversified energy holding
company with subsidiary operations in natural gas gathering, 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).
THE TRUSTS
Each of Coastal Finance I and Coastal Finance II is a statutory business
trust formed under Delaware law pursuant to (i) a separate declaration of
trust, executed by the Company, as sponsor for such trust (the "Sponsor"), and
the Trustees (as defined herein) as of that date of such trust and (ii) the
filing of a separate certificate of trust with the Delaware Secretary of
State. The declaration of trust of each Trust will be amended and restated in
its entirety (as so amended and restated, the "Declaration") substantially in
the form filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. Each Trust exists for the exclusive purposes of (i)
issuing and selling the Trust Preferred Securities representing preferred
undivided beneficial interests in the assets of such Trust and Trust Common
Securities representing common undivided beneficial interests in the assets of
such Trust (the "Trust Common Securities" and, together with the Trust
Preferred Securities, the "Trust Securities"), (ii) investing the gross
proceeds of the Trust Securities in a series of Subordinated Debt Securities
and (iii) engaging in only those other activities necessary or incidental
thereto. All of the Trust Common Securities will be directly or indirectly
owned by the Company. The Trust Common Securities will rank pari passu, and
payments will be made thereon pro rata, with the Trust Preferred Securities
except that upon an event of default under the Declaration, the rights of the
holders of the Trust Common Securities to payment in respect of distributions
and payments upon liquidation, redemption and otherwise will be subordinated
to the rights of the holders of the Trust Preferred Securities. The Company
will, directly or indirectly, acquire Trust Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of each Trust. Each Trust
has a term of approximately 55 years, but may earlier terminate as provided in
the applicable Declaration. Each Trust's business and affairs will be
conducted by the trustees (the "Trustees") appointed by the Company, as the
direct or indirect holder of all the Trust Common Securities. The holder of
the Trust Common Securities will be entitled to appoint, remove or replace any
of, or increase or reduce the number of, the Trustees of a Trust. The duties
and obligations of such Trustees shall be governed by the Declaration of such
Trust, the Trust Indenture Act and the Trust Act. A majority of the Trustees
(the "Regular Trustees") of each Trust will be persons who are employees or
officers of or affiliated with the Company. One Trustee of each Trust will be
a financial institution which will be unaffiliated with the Company and which
shall act as property trustee and as indenture trustee for purposes of the
Trust Indenture Act of 1939 (the "Trust Indenture Act"), pursuant to the terms
set forth in a Prospectus Supplement (the "Property Trustee"). In addition,
unless the Property Trustee maintains a principal place of business in the
State of Delaware, and otherwise meets the requirements of applicable law,
another Trustee of each Trust will have its principal place of business or
reside in the State of Delaware (the "Delaware Trustee"). The Company will pay
all fees, expenses, debts and obligations (other than the Trust Securities)
related to the Trusts and the offering of Trust Securities. The office of the
Delaware Trustee for each Trust in the State of Delaware is The Bank of New
York (Delaware) 400 White Clay Center, Route 273, Newark, Delaware 19711. The
principal place of business of each Trust shall be c/o The Coastal
Corporation, Coastal Tower, Nine Greenway Plaza, Houston, Texas 77046-0995
(telephone number (713) 877-1400).
4
<PAGE>
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 various credit
agreements, including short-term borrowings and 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.
ACCOUNTING TREATMENT RELATING TO TRUST SECURITIES
The financial statements of each Trust that has issued Trust Securities will
be consolidated with the Company's financial statements, with the Trust
Preferred Securities of each Trust shown on the Company's consolidated
financial statements as Company-obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely subordinated debt securities of
the Company. The Company's financial statements will include a footnote that
discloses, among other things, that the sole asset of each Trust included
therein consists of Subordinated Deferrable Interest Debentures of the
Company, and will specify the designation, principal amount, interest rate and
maturity date of such Subordinated Deferrable Interest Debentures.
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.
5
<PAGE>
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 Harris Trust and Savings Bank, as Trustee (the "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, 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;
6
<PAGE>
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;
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;
7
<PAGE>
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 Trustee, the address of which
will be stated in the applicable Prospectus Supplement; provided, however,
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 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 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).
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"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.
"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
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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, however, 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 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.
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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. 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, however, 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.
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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 Trustee (a "Default Notice"), then,
unless and until all events of default have been cured or waived or have
ceased to exist or the 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).
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 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, however, 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
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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, however, 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 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, however, 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, however, 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
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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 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 The Bank of New York.
Each Indenture will contain certain limitations on a right of the 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. The 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 actually known to a
responsible officer of 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, the Trustee will not 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 the 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.
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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.
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.
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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 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.
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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 March 31, 1998, 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....................................................... 105,815,843
Class A Common Stock............................................... 362,988
Preferred Stock:
$1.19 Cumulative Convertible Preferred Stock, Series A ("Series A
Preferred Stock")............................................... 57,537
$1.83 Cumulative Convertible Preferred Stock, Series B ("Series B
Preferred Stock")............................................... 66,636
$5.00 Cumulative Convertible Preferred Stock, Series C ("Series C
Preferred Stock")............................................... 29,204
$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;
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<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 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.
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<PAGE>
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, however, 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 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
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<PAGE>
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.
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.
20
<PAGE>
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 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
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<PAGE>
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 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
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<PAGE>
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;
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;
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<PAGE>
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 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).
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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, however, 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.
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DESCRIPTION OF THE TRUST PREFERRED SECURITIES
Each Trust may issue only one series of Trust Preferred Securities having
terms described in the Prospectus Supplement relating thereto. The Declaration
of each Trust authorizes the Regular Trustees of such Trust to issue on behalf
of such Trust one series of Trust Preferred Securities. Each Declaration will
be qualified as an indenture under the Trust Indenture Act. The Trust
Preferred Securities will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferred or
other special rights or such restrictions as shall be set forth in each
Declaration or made part of each Declaration by the Trust Indenture Act and
the Trust Act. Reference is made to the Prospectus Supplement relating to the
Trust Preferred Securities of a Trust for specific terms, including (i) the
distinctive designation of such Trust Preferred Securities; (ii) the number of
Trust Preferred Securities issued by such Trust; (iii) the annual distribution
rate (or method of determining such rate) for Trust Preferred Securities
issued by such Trust and the date or dates upon which such distributions shall
be payable; provided, however, that distributions on such Trust Preferred
Securities shall be payable on a quarterly basis to holders of such Preferred
Securities as of a record date in each quarter during which such Trust
Preferred Securities are outstanding; (iv) whether distributions on Trust
Preferred Securities issued by such Trust shall be cumulative, and, in the
case of Trust Preferred Securities having such cumulative distribution rights,
the date or dates or method of determining the date or dates from which
distributions on Trust Preferred Securities issued by such Trust shall be
cumulative; (v) the amount or amounts which shall be paid out of the assets of
such Trust to purchase or redeem Trust Preferred Securities issued by such
Trust and the price or prices at which, the period or periods within which,
and the terms and conditions upon which, Trust Preferred Securities issued by
such Trust shall be purchased or redeemed, in whole or in part, pursuant to
such obligation; (vi) the voting rights, if any, of Trust Preferred Securities
issued by such Trust in addition to those required by law, including any
requirement for the approval by the holders of Trust Preferred Securities, or
of Trust Preferred Securities issued by one or more Trusts, or of both, as a
condition to specified action or amendments to the Declaration of such Trust;
and (vii) any other relevant rights, preferences, privileges, limitations or
restrictions of Trust Preferred Securities issued by such Trust not
inconsistent with the Declaration of such Trust or with applicable law. All
Trust Preferred Securities offered hereby will be guaranteed by the Company as
described under "Description of the Trust Preferred Securities Guarantees"
below. Any applicable United States federal income tax considerations
applicable to any offering of Trust Preferred Securities will be described in
the Prospectus Supplement relating thereto.
In connection with the issuance of Trust Preferred Securities, each Trust
will issue one series of Trust Common Securities. The Declaration of each
Trust authorizes the Regular Trustees of such Trust to issue on behalf of such
Trust one series of Trust Common Securities having such terms including
distributions, redemption, voting, liquidation rights or such restrictions as
shall be set forth therein. The terms of the Trust Common Securities issued by
a Trust will be substantially identical to the terms of the Trust Preferred
Securities issued by such Trust and the Trust Common Securities will rank pari
passu, and payments will be made thereon pro rata, with the Trust Preferred
Securities except that, upon an event of default under the Declaration, the
rights of the holders of the Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Trust Preferred Securities.
All of the Trust Common Securities of a Trust will be directly or indirectly
owned by the Company.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Trust Preferred
Securities Guarantees which will be executed and delivered by the Company for
the benefit of the holders from time to time of Trust Preferred Securities.
Each Trust Preferred Securities Guarantee will be qualified as an indenture
under the Trust Indenture Act. The Bank of New York will act as indenture
trustee under each Trust Preferred Securities Guarantee (the "Preferred
Guarantee Trustee"). The terms of each Preferred Securities Guarantee will be
those set forth in such Trust Preferred Securities Guarantee and those made
part of such Preferred Securities Guarantee by the Trust Indenture Act. The
following summary does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by reference
to, the form of Trust Preferred Securities Guarantee,
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which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, and the Trust Indenture Act. Each Trust Preferred
Securities Guarantee will be held by the Preferred Guarantee Trustee for the
benefit of the holders of the Trust Preferred Securities of the applicable
Trust.
GENERAL
Pursuant to each Trust Preferred Securities Guarantee, the Company will
irrevocably and unconditionally agree to pay in full, to the holders of the
Trust Preferred Securities issued by a Trust, the Guarantee Payments (as
defined herein) (except to the extent paid by such Trust), as and when due,
regardless of any defense, right to set-off or counterclaim which such Trust
may have or assert. The following payments with respect to Preferred
Securities issued by a Trust, to the extent not paid by such Trust (the
"Guarantee Payments"), will be subject to the Trust Preferred Securities
Guarantee thereon (without duplication): (i) any accrued and unpaid
distributions which are required to be paid on such Trust Preferred
Securities, to the extent such Trust shall have funds available therefor, (ii)
the redemption price, including all accrued and unpaid distributions to the
redemption date (the "Redemption Price"), to the extent such Trust has funds
available therefor, with respect to any Preferred Securities called for
redemption by such Trust and (iii) upon a voluntary or involuntary
termination, dissolution or winding-up of such Trust (other than in connection
with the distribution of Subordinated Deferrable Interest Debentures to the
holders of Trust Preferred Securities in exchange for their Trust Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on such Trust Preferred Securities to the
date of payment and (b) the amount of assets of such Trust remaining available
for distribution to holders of such Trust Preferred Securities in liquidation
of such Trust. The Company's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of Trust Preferred Securities or by causing the applicable Trust to
pay such amounts to such holders.
Each Trust Preferred Securities Guarantee will be a full and unconditional
guarantee with respect to the Trust Preferred Securities issued by the
applicable Trust from the time of issuance of such Trust Preferred Securities,
but will not apply to any payment of distributions when the Trust does not
have sufficient funds available to make such payment or distributions. If the
Company does not make interest payments on the Subordinated Deferrable
Interest Debentures purchased by a Trust, such Trust will not pay
distributions on the Trust Preferred Securities issued by such Trust and will
not have funds available therefor. See "Description of the Subordinated
Deferrable Interest Debentures--Certain Covenants."
The Company has also agreed separately to guarantee the obligations of the
Trusts with respect to the Trust Common Securities (the "Trust Common
Securities Guarantees") to the same extent as the Trust Preferred Securities
Guarantee, except that upon the occurrence and during the continuation of an
event of default under the Indenture (as hereinafter defined), holders of
Trust Preferred Securities shall have priority over holders of Trust Common
Securities with respect to distributions and payments on liquidation,
redemption or otherwise.
CERTAIN COVENANTS OF THE COMPANY
In each Trust Preferred Securities Guarantee, the Company will covenant
that, so long as any Trust Preferred Securities issued by the applicable Trust
remain outstanding, if any event that would constitute an event of default
shall exist under such Trust Preferred Securities Guarantee or the Declaration
of such Trust, then (a) the Company shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase or make a
liquidation payment with respect to, any of its capital stock, (b) the Company
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by the Company which
rank pari passu with or junior to such Subordinated Deferrable Interest
Debentures and (c) the Company shall not make any guarantee payments (other
than pursuant to the Trust Preferred Security Guarantees) with respect to the
foregoing. However, each Trust Preferred Security Guarantee will except from
the foregoing covenant any dividend, redemption, liquidation, interest,
principal or guarantee payment by the Company where the payment is made by way
of securities (including capital stock) that rank junior to the securities on
which such dividend, redemption, liquidation, interest, principal or guarantee
payment is being made.
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MODIFICATION OF THE TRUST PREFERRED SECURITIES GUARANTEES; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Trust Preferred Securities (in which case no vote will be
required), each Trust Preferred Securities Guarantee may be amended only with
the prior approval of the holders of not less than a majority in aggregate
liquidation amount of the outstanding Trust Preferred Securities issued by the
applicable Trust. The manner of obtaining any such approval of holders of such
Trust Preferred Securities will be as set forth in an accompanying Prospectus
Supplement. All guarantees and agreements contained in a Trust Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Company and shall inure to the benefit of the
holders of the Trust Preferred Securities then outstanding of the applicable
Trust.
TERMINATION
Each Trust Preferred Securities Guarantee will terminate as to the Trust
Preferred Securities issued by the applicable Trust upon full payment of the
Redemption Price of all Trust Preferred Securities of such Trust, upon
distribution of the Subordinated Deferrable Interest Debentures held by such
Trust to the holders of the Trust Preferred Securities of such Trust in
liquidation of such holders' interest in such Trust Preferred Securities or
upon full payment of the amounts payable in accordance with the Declaration of
such Trust upon liquidation of such Trust. Each Trust Preferred Securities
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Trust Preferred Securities issued by the
applicable Trust must restore payment of any sums paid under such Trust
Preferred Securities or such Trust Preferred Securities Guarantee.
EVENTS OF DEFAULT
An event of default under a Trust Preferred Securities Guarantee will occur
upon the failure of the Company to perform any of its payment or other
obligations thereunder.
The holders of a majority in liquidation amount of the Trust Preferred
Securities relating to such Trust Preferred Securities Guarantee have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the Preferred Guarantee Trustee in respect of such
Trust Preferred Securities Guarantee or to direct the exercise of any trust or
power conferred upon the Trust Preferred Guarantee Trustee under such Trust
Preferred Securities Guarantee. If the Preferred Guarantee Trustee fails to
enforce such Trust Preferred Securities Guarantee, any holder of Trust
Preferred Securities relating to such Trust Preferred Securities Guarantee may
institute a legal proceeding directly against the Company to enforce the
Preferred Guarantee Trustee's rights under such Trust Preferred Securities
Guarantee, without first instituting a legal proceeding against the relevant
Trust, the Preferred Guarantee Trustee or any other person or entity. In
addition, any record holder of Trust Preferred Securities relating to such
Trust Preferred Securities Guarantee shall have the right, which is absolute
and unconditional, to proceed directly against the Company to obtain Guarantee
Payments thereunder, without first waiting to determine if the Preferred
Guarantee Trustee has enforced such Trust Preferred Security Guarantee or
instituting a legal proceeding against the Trust which issued such Trust
Preferred Securities, the Preferred Guarantee Trustee or any other person or
entity.
STATUS OF THE TRUST PREFERRED SECURITIES GUARANTEES
The Trust Preferred Securities Guarantees will constitute unsecured
obligations of the Company and will rank (i) subordinate and junior in right
of payment to all other liabilities of the Company, (ii) pari passu with the
most senior preferred or preference stock now or hereafter issued by the
Company and with any guarantee now or hereafter entered into by the Company in
respect of any preferred or preference stock of any subsidiary or affiliate of
the Company and (iii) senior to the Company's common stock. The terms of the
Trust Preferred Securities provide that each holder of Trust Preferred
Securities issued by such Trust by acceptance thereof agrees to the
subordination provisions and other terms of the Trust Preferred Securities
Guarantee relating thereto.
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The Trust Preferred Securities Guarantees will constitute a guarantee of
payment and not of collection (that is, the guaranteed party may institute a
legal proceeding directly against the guarantor to enforce its rights under
the guarantee without instituting a legal proceeding against any other person
or entity).
The Company's obligations under the Declaration for each Trust, the Trust
Preferred Securities Guarantee with respect to the Trust Preferred Securities
issued by such Trust, the Subordinated Deferrable Interest Debentures
purchased by such Trust and the Indenture, in the aggregate, will provide a
full and unconditional guarantee by the Company of payments due on the Trust
Preferred Securities issued by such Trust.
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to a Trust Preferred Securities Guarantee, undertakes to perform only
such duties as are specifically set forth in such Trust Preferred Securities
Guarantee and, after default, shall exercise the same degree of care as a
prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provisions, the Preferred Guaranteed Trustee is under no
obligation to exercise any of the powers vested in it by the Trust Preferred
Securities Guarantee at the request of any holder of Trust Preferred
Securities, unless offered reasonable indemnity against the costs, expenses
and liabilities which might be incurred thereby.
The Company and certain of its affiliates maintain deposit accounts and
banking relationships with the Preferred Guarantee Trustee. The Preferred
Guarantee Trustee serves as trustee under other indentures pursuant to which
unsecured debt securities of the Company are outstanding.
GOVERNING LAW
The Trust Preferred Securities Guarantees will be governed by and construed
in accordance with the internal laws of the State of New York.
DESCRIPTION OF THE SUBORDINATED DEFERRABLE INTEREST DEBENTURES
Subordinated Deferrable Interest Debentures may be issued from time to time
in one or more series under an Indenture (the "Indenture") to be entered into
among the Company and The Bank of New York, as Trustee (the "Subordinated Debt
Trustee"). The terms of the Subordinated Deferrable Interest Debentures will
include those stated in the Indenture and in a Supplemental Indenture (as
defined below) and those made part of the Indenture by reference to the Trust
Indenture Act. The following summary does not purport to be complete and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the Indenture, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and the Trust
Indenture Act. Whenever particular provisions or defined terms in the
Indenture are referred to herein, such provisions or defined terms are
incorporated by reference herein.
GENERAL
The Subordinated Deferrable Interest Debentures will be unsecured,
subordinated obligations of the Company. The Indenture does not limit the
aggregate principal amount of Subordinated Deferrable Interest Debentures
which may be issued thereunder and provides that the Subordinated Deferrable
Interest Debentures may be issued from time to time in one or more series. The
Subordinated Deferrable Interest Debentures are issuable in one or more series
pursuant to an indenture supplemental to the Indenture or a resolution of the
Company's Board of Directors or a special committee thereof (each, a
"Supplemental Indenture").
In the event Subordinated Deferrable Interest Debentures are issued to a
Trust or a trustee of such Trust in connection with the issuance of Trust
Securities by such Trust, such Subordinated Deferrable Interest Debentures
subsequently may be distributed pro rata to the holders of such Trust
Securities in connection with the
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termination of such Trust upon the occurrence of certain events described in
the Prospectus Supplement relating to such Trust Securities. Only one series
of Subordinated Deferrable Interest Debentures will be issued to a Trust or a
trustee of such Trust in connection with the issuance of Trust Securities by
such Trust.
Reference is made to the accompanying Prospectus Supplement for the
following terms of the series of Subordinated Deferrable Interest Debentures
being offered thereby: (i) the specific title of such Subordinated Deferrable
Interest Debentures; (ii) any limit on the aggregate principal amount of such
Subordinated Deferrable Interest Debentures; (iii) the date or dates on which
the principal of such Subordinated Deferrable Interest Debentures is payable
and the right, if any, to extend such date or dates; (iv) the rate or rates at
which such Subordinated Deferrable Interest Debentures will bear interest or
the method of determination of such rate or rates; (v) the date or dates from
which such interest shall accrue, the interest payment dates on which such
interest will be payable or the manner of determination of such interest
payment dates and the record dates for the determination of holders to whom
interest is payable on any such interest payment dates; (vi) the right, if
any, to extend the interest payment periods and the duration of such
extension; (vii) the period or periods within which, the price or prices at
which, and the terms and conditions upon which, such Subordinated Deferrable
Interest Debentures may be redeemed, in whole or in part, at the option of the
Company; (viii) the right and/or obligation, if any, of the Company to redeem
or purchase such Subordinated Deferrable Interest Debentures pursuant to any
sinking fund or analogous provisions or at the option of the holder thereof
and the period or periods during which, the price or prices at which, and the
terms and conditions upon which, such Subordinated Deferrable Interest
Debentures shall be redeemed or purchased, in whole or part, pursuant to such
right and/or obligation; (ix) the terms of subordination; (x) if other than
denominations of $25 or any integral multiple thereof, the denominations in
which such Subordinated Deferrable Interest Debentures shall be issuable; (xi)
any and all other terms with respect to such series; and (xii) whether such
Subordinated Deferrable Interest Debentures are issuable as a global security,
and in such case, the identity of the depositary.
The Indenture does not contain any provisions that afford holders of
Subordinated Deferrable Interest Debentures protection in the event of a
highly leveraged transaction involving the Company.
SUBORDINATION
The Subordinated Deferrable Interest Debentures will be subordinated and
junior in right of payment to certain other indebtedness of the Company to the
extent set forth in the accompanying Prospectus Supplement.
CERTAIN COVENANTS
If Subordinated Deferrable Interest Debentures are issued to a Trust or a
trustee of such Trust in connection with the issuance of Trust Securities by
such Trust and (i) there shall have occurred and be continuing any event that
would constitute an Event of Default under the Indenture or (ii) the Company
shall be in default with respect to its payment of any obligations under the
related Trust Preferred Securities Guarantee or Trust Common Securities
Guarantee, and such default shall be continuing, then (a) the Company shall
not declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase or make a liquidation payment with respect to, any of its
capital stock, (b) the Company shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Company which rank pari passu with or junior to such
Subordinated Deferrable Interest Debentures and (c) the Company shall not make
any guarantee payments (other than pursuant to the Trust Preferred Security
Guarantees) with respect to the foregoing.
If Subordinated Deferrable Interest Debentures are issued to a Trust or a
trustee of such Trust in connection with the issuance of Trust Securities by
such Trust and the Company shall have given notice of its election to defer
payments of interest on such Subordinated Deferrable Interest Debentures by
extending the interest payment period as provided in the Indenture and such
period, or any extension thereof, shall be continuing, then (a) the Company
shall not declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase or make a liquidation payment with respect to, any of
its capital stock, (b) the Company shall not make
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any payment of interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities issued by the Company which rank pari passu with
or junior to such Subordinated Deferrable Interest Debentures and (c) the
Company shall not make any guarantee payments (other than pursuant to the
Trust Preferred Security Guarantees) with respect to the foregoing.
Notwithstanding the foregoing restrictions, the Company will be permitted,
in any event, to make dividend, redemption, liquidation and guarantee payments
on capital stock, and interest, principal, redemption and guarantee payments
on debt securities issued by the Company ranking pari passu with or junior to
Subordinated Deferrable Interest Debentures, where the payment is made by way
of securities (including capital stock) that rank junior to the securities on
which such payment is being made.
In the event Subordinated Deferrable Interest Debentures are issued to a
Trust or a trustee of such Trust in connection with the issuance of Trust
Securities of such Trust, for so long as such Trust Securities remain
outstanding, the Company will covenant (i) to directly or indirectly maintain
100% ownership of the Trust Common Securities of such Trust; provided,
however, that any permitted successor of the Company under the Indenture may
succeed to the Company's ownership of such Trust Common Securities, (ii) not
to cause, as sponsor of such Trust, or to permit, as holder of the Trust
Common Securities of such Trust, the termination, dissolution or winding-up of
such Trust, except in connection with a distribution of the Subordinated
Deferrable Interest Debentures as provided in the Declaration and in
connection with certain mergers, consolidations or amalgamations, (iii) to use
its reasonable efforts to cause such Trust (a) to remain a statutory business
trust, except in connection with the distribution of Subordinated Deferrable
Interest Debentures to the holders of Trust Securities in liquidation of such
Trust, the redemption of all of the Trust Securities of such Trust, or certain
mergers, consolidations or amalgamations, each as permitted by the Declaration
of such Trust, and (b) to otherwise continue not to be classified as an
association taxable as a corporation or partnership for United States federal
income tax purposes and (iv) to use reasonable efforts to cause each holder of
Trust Securities of such Trust to be treated as owning an undivided beneficial
interest in the Subordinated Deferrable Interest Debentures issued to such
Trust.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Subordinated Deferrable Interest Debentures of each series will be issued in
registered form and in either certificated form or represented by one or more
global securities. If not represented by one or more global securities,
Subordinated Deferrable Interest Debentures may be presented for registration
of transfer (with the form of transfer endorsed thereon duly executed) or
exchange at the office of the Debt Registrar or at the office of any transfer
agent designated by the Company for such purpose with respect to any series of
Subordinated Deferrable Interest Debentures and referred to in an applicable
Prospectus Supplement, without service charge and upon payment of any taxes
and other governmental charges as described in the Indenture. Such transfer or
exchange will be effected upon the Debt Registrar or such transfer agent, as
the case may be, being satisfied with the documents of title and identity of
the person making the request. The Company has appointed the Subordinated Debt
Trustee as Debt Registrar with respect to each series of Subordinated
Deferrable Interest Debentures. If a Prospectus Supplement refers to any
transfer agents (in addition to the Debt Registrar) initially designated by
the Company with respect to any series of Subordinated Deferrable Interest
Debentures, the Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, except that the Company will be required to maintain a
transfer agent in each Place of Payment for such series. The Company may at
any time designate additional transfer agents with respect to any series of
Subordinated Deferrable Interest Debentures.
In the event of any redemption in part, the Company shall not be required to
(i) issue, register the transfer of or exchange any Subordinated Deferrable
Interest Debentures during a period beginning at the opening of business 15
days before any selection for redemption of Subordinated Deferrable Interest
Debentures of like tenor and of the series of which such Subordinated
Deferrable Interest Debentures are a part, and ending at the close of business
on the earliest date on which the relevant notice of redemption is deemed to
have been given to all holders of Subordinated Deferrable Interest Debentures
of like tenor and of such series to be redeemed and
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(ii) register the transfer of or exchange any Subordinated Deferrable Interest
Debentures so selected for redemption, in whole or in part, except the
unredeemed portion of any Subordinated Deferrable Interest Debentures being
redeemed in part.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and premium, if any, on any Subordinated Deferrable Interest
Debentures will be made only against surrender to the Paying Agent of such
Subordinated Deferrable Interest Debentures. Unless otherwise indicated in an
applicable Prospectus Supplement, principal of, any premium, if any, and
interest, if any, on Subordinated Deferrable Interest Debentures will be
payable, subject to any applicable laws and regulations, at the office of such
Paying Agent or Paying Agents as the Company may designate from time to time,
except that at the option of the Company, payment of any interest may be made
by check mailed to the address of the person entitled thereto as such address
as shall appear in the Debt Register with respect to such Subordinated
Deferrable Interest Debentures. Unless otherwise indicated in an applicable
Prospectus Supplement, payment of interest on a Subordinated Deferrable
Interest Debenture on any Interest Payment Date will be made to the person in
whose name such Subordinated Deferrable Interest Debenture (or predecessor
security) is registered at the close of business on the Regular Record Date
for such interest payment.
The Subordinated Debt Trustee will act as Paying Agent with respect to each
series of Subordinated Deferrable Interest Debentures. The Company may at any
time designate additional Paying Agents or rescind the designation of any
Paying Agents or approve a change in the office through which any Paying Agent
acts, except that the Company will be required to maintain a Paying Agent in
each Place of Payment for each series of Subordinated Deferrable Interest
Debentures.
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or premium or interest, if any, on any Subordinated Deferrable
Interest Debentures of any series which remain unclaimed at the end of two
years after such principal or premium or interest, if any, shall have become
due and payable will be repaid to the Company and the holder of such
Subordinated Deferrable Interest Debentures will thereafter look only to the
Company for payment thereof.
GLOBAL SECURITIES
If any Subordinated Deferrable Interest Debentures of a series are
represented by one or more global securities (each, a "Global Security"), the
applicable Prospectus Supplement will describe the circumstances, if any,
under which beneficial owners of interests in any such Global Security may
exchange such interests for Subordinated Deferrable Interest Debentures of
such series and of like tenor and principal amount in any authorized form and
denomination. Principal of and any premium, if any, and interest on a Global
Security will be payable in the manner described in the applicable Prospectus
Supplement.
The specific terms of the depositary arrangement with respect to any portion
of a series of Subordinated Deferrable Interest Debentures to be represented
by a Global Security will be described in the applicable Prospectus
Supplement.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the
Subordinated Debt Trustee, with the consent of the holders of not less than a
majority in principal amount of the Subordinated Deferrable Interest
Debentures of each series which are affected by the modification, to modify
the Indenture or any supplemental indenture affecting that series or the
rights of the holders of that series of Subordinated Deferrable Interest
Debentures; provided, however, that no such modification may, without the
consent of the holder of each outstanding Subordinated Deferrable Interest
Debenture affected thereby, (i) extend the fixed maturity of any Subordinated
Deferrable Interest Debentures of any series, or reduce the principal amount
thereof, or reduce the
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rate or extend the time of payment of interest thereon, or reduce any premium
payable upon the redemption thereof, without the consent of the holder of each
Subordinated Deferrable Interest Debenture so affected or (ii) reduce the
percentage of Subordinated Deferrable Interest Debentures the holders of which
are required to consent to any such supplemental indenture, without the
consent of the holders of each then outstanding Subordinated Deferrable
Interest Debenture affected thereby.
In addition, the Company and the Subordinated Debt Trustee may execute,
without the consent of any holder of Subordinated Deferrable Interest
Debentures, any supplemental indenture for certain other usual purposes
including the creation of any new series of Subordinated Deferrable Interest
Debentures.
EVENTS OF DEFAULT
With respect to a particular series of Subordinated Deferrable Interest
Debentures, the Indenture provides (or the Supplemental Indenture for such
series will provide) that any one or more of the following described events
which has occurred and is continuing constitutes an "Event of Default" with
respect to such series of Subordinated Deferrable Interest Debentures:
(a) failure for 30 days to pay interest on the Subordinated Deferrable
Interest Debentures of that series, including any Additional Interest in
respect thereof, when due; provided, however, that a valid extension of the
interest payment period by the Company shall not constitute a default in
the payment of interest for this purpose; or
(b) failure to pay principal or premium, if any, on the Subordinated
Deferrable Interest Debentures of that series when due whether at maturity,
upon redemption, by declaration or otherwise, or to make any sinking fund
payment with respect to that series; or
(c) failure to observe or perform any other covenant (other than those
specifically relating to another series) contained in the Indenture for 90
days after written notice to the Company from the Subordinated Debt Trustee
or the holders of at least 25% in principal amount of the outstanding
Subordinated Deferrable Interest Debentures of that series; or
(d) certain events of bankruptcy, insolvency or reorganization of the
Company; or
(e) in the event Subordinated Deferrable Interest Debentures are issued
to a Trust or a trustee of such Trust in connection with the issuance of
Trust Securities by such Trust, the voluntary or involuntary dissolution,
winding-up or termination of such Trust, except in connection with the
distribution of Subordinated Deferrable Interest Debentures to the holders
of Trust Securities in liquidation of such Trust, the redemption of all of
the Trust Securities of such Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration of such Trust.
The holders of a majority in aggregate outstanding amount of any series of
Subordinated Deferrable Interest Debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Subordinated Debt Trustee for the series. The Subordinated Debt Trustee or the
holders of not less than 25% in aggregate outstanding principal amount of any
particular series of the Subordinated Deferrable Interest Debentures may
declare the principal immediately due and payable upon an Event of Default
with respect to such series, but the holders of a majority in aggregate
outstanding principal amount of such series may annul such declaration and
waive the default with respect to such series if the Event of Default has been
cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration and any applicable premium has
been deposited with the Subordinated Debt Trustee. If an Event of Default
results from the failure of the Company to pay when due principal of or
interest on the Subordinated Deferrable Interest Debentures issued to a Trust,
during the continuance of such an Event of Default a holder of Trust Preferred
Securities issued by such Trust may immediately institute a legal proceeding
directly against the Company to obtain payment of such principal or interest
on Subordinated Deferrable Interest Debentures having a principal amount equal
to the aggregate liquidation amount of the Trust Preferred Securities owned of
record by such holder.
33
<PAGE>
The holders of a majority in aggregate outstanding principal amount of any
series of Subordinated Deferrable Interest Debentures affected thereby may, on
behalf of the holders of all the Subordinated Deferrable Interest Debentures
of such series, waive any past default, except (i) a default in the payment of
principal, premium, if any, or interest (unless such default has been cured
and a sum sufficient to pay all matured installments of interest and principal
due otherwise than by acceleration and any applicable premium has been
deposited with the Subordinated Debt Trustee) or (ii) a default in the
covenants described in the first or second paragraph under "--Certain
Covenants" above.
CONSOLIDATION, MERGER AND SALE
The Indenture does not contain any covenant which restricts the ability of
the Company to merge or consolidate with or into any other corporation, sell
or convey all or substantially all of its assets to any person, firm or
corporation or otherwise engage in restructuring transactions.
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, the Company will be discharged from any
and all obligations in respect of the Subordinated Deferrable Interest
Debentures of any series (except in each case for certain obligations to
register the transfer or exchange of Subordinated Deferrable Interest
Debentures, replace, stolen, lost or mutilated Subordinated Deferrable
Interest Debentures, maintain paying agencies and hold moneys for payment in
trust) if the Company deposits with the Subordinated Debt Trustee, in trust,
moneys or U.S. Government Obligations in an amount sufficient to pay all the
principal of, and interest on, the Subordinated Deferrable Interest Debentures
of such series on the dates such payments are due in accordance with the terms
of such Subordinated Deferrable Interest Debentures.
GOVERNING LAW
The Indenture and the Subordinated Deferrable Interest Debentures will be
governed by, and construed in accordance with, the internal laws of the State
of New York.
INFORMATION CONCERNING THE SUBORDINATED DEBT TRUSTEE
The Subordinated Debt Trustee, prior to default, undertakes to perform only
such duties as are specifically set forth in the Indenture and, after default,
shall exercise the same degree of care as a prudent individual would exercise
in the conduct of his or her own affairs. Subject to such provision, the
Subordinated Debt Trustee is under no obligation to exercise any of the powers
vested in it by the Indenture at the request of any holder of Subordinated
Deferrable Interest Debentures, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby. The Subordinated Debt Trustee is not required to expend or risk its
own funds or otherwise incur personal financial liability in the performance
of its duties if the Subordinated Debt Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
The Company and certain of its affiliates maintain a deposit account and
banking relationship with the Subordinated Debt Trustee. The Subordinated Debt
Trustee serves as trustee under other indentures pursuant to which unsecured
debt securities of the Company are outstanding.
MISCELLANEOUS
The Company will have the right at all times to assign any of its rights or
obligations under the Indenture to a direct or indirect wholly-owned
subsidiary of the Company; provided, however, that in the event of any such
assignment, the Company will remain liable for all of its obligations
thereunder. Subject to the foregoing, the Indenture will be binding upon and
inure to the benefit of the parties thereto and their respective successors
and assigns. The Indenture provides that it may not otherwise be assigned by
the parties thereto.
34
<PAGE>
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 the applicable Trust
or through agents designated by the Company or the applicable Trust 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 or the applicable Trust to such agents, will be set forth in the
applicable 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 or the
applicable Trust 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 or the
applicable Trust 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 or the applicable Trust 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. No
assurance can be given regarding the activity of trading in, or liquidity of,
any Securities..
Agents, dealers and underwriters may be entitled, under agreements entered
into with the Company or the applicable Trust (or both), to indemnification by
the Company or the applicable Trust (or both) against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution 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 and/or the applicable Trust in the
ordinary course of business.
35
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the Equity Securities, the Debt
Securities, the Common Stock Warrants and the Preferred Securities Guarantees
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. Certain matters of Delaware law
relating to the validity of the Trust Preferred Securities will be passed upon
on behalf of the Trusts by Richards, Layton & Finger, P.A., Wilmington,
Delaware, special Delaware counsel to the Trusts. As of March 11, 1998, Mr.
O'Toole beneficially owned approximately 23,144 shares of Common Stock and 553
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 1997 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.
36
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY COASTAL FINANCE I, THE COASTAL
CORPORATION OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF COASTAL FINANCE I OR THE COASTAL CORPORATION SINCE THE DATE HEREOF.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Prospectus Summary........................................................ S-4
Risk Factors.............................................................. S-6
The Trust................................................................. S-9
Accounting Treatment...................................................... S-10
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. S-10
Use of Proceeds........................................................... S-10
Description of the Preferred Securities................................... S-10
Description of the Preferred Securities Guarantee......................... S-22
Description of the Subordinated Debt Securities........................... S-25
Effect of Obligations Under the Subordinated Debt Securities and the
Preferred Securities Guarantee........................................... S-33
Certain Federal Income Tax Consequences................................... S-34
Underwriting.............................................................. S-38
Legal Matters............................................................. S-39
Definitions............................................................... S-40
PROSPECTUS
Available Information..................................................... 2
Incorporation of Documents by Reference................................... 2
The Company............................................................... 4
The Trusts................................................................ 4
Use of Proceeds........................................................... 5
Accounting Treatment Relating to Trust Securities......................... 5
Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends................................................................ 5
Description of Debt Securities............................................ 6
Description of Equity Securities.......................................... 17
Description of Common Stock Warrants...................................... 23
Description of the Trust Preferred Securities............................. 26
Description of the Trust Preferred Securities Guarantees.................. 26
Description of the Subordinated Deferrable Interest Debentures............ 29
Plan of Distribution...................................................... 35
Legal Matters............................................................. 36
Experts................................................................... 36
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$
COASTAL FINANCE I
% TRUST PREFERRED SECURITIES
GUARANTEED BY
THE COASTAL CORPORATION
----------------
PROSPECTUS SUPPLEMENT
----------------
[UNDERWRITERS]
, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The aggregate estimated expenses, other than underwriting discounts and
commissions, in connection with the offering pursuant to this Registration
Statement are currently anticipated to be as follows (all amounts except for
the Securities and Exchange Commission filing fee are estimated):
<TABLE>
<S> <C>
Registration Fee.................................................. $ 29,500
Printing and Engraving Expenses................................... 75,000
Legal Fees and Expenses........................................... 25,000
Accounting Fees and Expenses...................................... 50,000
Miscellaneous..................................................... 25,500
--------
Total........................................................... $205,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporate 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>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<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).
1.3 Form of Underwriting Agreement with respect to Trust Preferred
Securities (including form of Terms Agreement).
3.1 Restated Certificate of Incorporation of the Company (filed as Module
TCC-Art1-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 4.3).
4.5 Form of Indenture for the Subordinated Deferrable Interest Debentures.
4.6 Form of First Supplemental Indenture to Indenture to be used in
connection with the issuance of the Subordinated Deferrable Interest
Debentures.
4.7 Form of Second Supplemental Indenture to Indenture to be used in
connection with the issuance of the Subordinated Deferrable Interest
Debentures.
4.8 Form of Subordinated Deferrable Interest Debenture (included in
Exhibits 4.6 and 4.7).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
4.9 Certificate of Trust of Coastal Finance I.
4.10 Certification of Trust of Coastal Finance II.
4.11 Declaration of Trust of Coastal Finance I.
4.12 Declaration of Trust of Coastal Finance II.
4.13 Form of Amended and Restated Declaration of Trust of Coastal Finance
I.
4.14 Form of Amended and Restated Declaration of Trust of Coastal Finance
II.
4.15 Form of Common Stock Warrant Agreement.
4.16 Form of Common Stock Warrant (included in Exhibit No.4.15).
4.17 Form of Guarantee Agreement with respect to Preferred Securities of
Coastal Finance I.
4.18 Form of Guarantee Agreement with respect to Preferred Securities of
Coastal Finance II.
4.19 Form of Guarantee Agreement with respect to Common Securities of
Coastal Finance I.
4.20 Form of Guarantee Agreement with respect to Common Securities of
Coastal Finance II.
5.1 Opinion of Austin M. O'Toole, Esq., Senior Vice President and
Secretary of the Registrant, as to the legality of the securities
being registered.
5.2 Opinion of Richards, Layton & Finger, P.A. regarding the validity
under Delaware law of the Coastal Finance I Trust Preferred
Securities being registered.
5.3 Opinion of Richards, Layton & Finger, P.A. regarding the validity
under Delaware law of the Coastal Finance II Trust Preferred
Securities being registered.
8 Opinion of Cahill Gordon & Reindel (a partnership including a
professional corporation) regarding certain tax matters.
12 Calculation of Ratios of Earnings to Combined Fixed Charges and
Preferred Stock Dividends of the Company.*
23.1 Independent Auditors' Consent.
23.2 Consent of Austin M. O'Toole, Esq. (included in Exhibit No. 5.1).
23.3 Consent of Richards, Layton & Finger, P.A. (included in Exhibits 5.2
and 5.3).
23.4 Consent of Cahill Gordon & Reindel (a partnership including a
professional corporation) (included in Exhibit 8).
24 Powers of Attorney (included on the signature pages hereof).
25.1 Statement of Eligibility of Harris Trust and Savings Bank, as Trustee
for the Debt Securities, on Form T-1 (incorporated herein by
reference to Exhibit 25 to the Registration Statement on Form
S-3 No. 333-44527 of The Coastal Corporation).
25.2 Statement of Eligibility of The Bank of New York, as Trustee for the
Subordinated Deferrable Interest Debentures Indenture, on Form T-1.
25.3 Statement of Eligibility of The Bank of New York, as Trustee for
Preferred Securities of Coastal Finance I, on Form T-1.
25.4 Statement of Eligibility of The Bank of New York, as Trustee for
Guarantee of Preferred Securities of Coastal Finance I, on Form T-1.
25.5 Statement of Eligibility of the Bank of New York, as Trustee for
Preferred Securities of Coastal Finance II, on Form T-1.
25.6 Statement of Eligibility of The Bank of New York, as Trustee for
Guarantee of Preferred Securities of Coastal Finance II, on Form T-1.
27.1 Restated Financial Data Schedule for the year December 31, 1995.
27.2 Restated Financial Data Schedule for the period ended September 30,
1996.
27.3 Restated Financial Data Schedule for the year December 31, 1996.
27.4 Restated Financial Data Schedule for the period ended June 30, 1997.
27.5 Restated Financial Data Schedule for the period ended September 30,
1997.
</TABLE>
- --------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
THE UNDERSIGNED REGISTRANTS HEREBY UNDERTAKE:
(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 facts 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.
II-2
<PAGE>
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 the 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; and
(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 Securities Exchange Act of
1934 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.
(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.
(4) 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 the 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.
(5) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
a registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497 (h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(6) For the purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus 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.
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 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 Registrants 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.
II-3
<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 APRIL 14, 1998.
THE COASTAL CORPORATION
(Registrant)
/s/ David A. Arledge
By __________________________________
David A. Arledge
Chairman of the Board, President
and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, 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 APRIL
14, 1998.
Coastal Finance I
By: _________________________________
/s/ Coby C. Hesse
Name: Coby C. Hesse
Title: Trustee
By: _________________________________
/s/ Donald H. Gullquist
Name: Donald H. Gullquist
Title: Trustee
By: _________________________________
/s/ Austin M. O'Toole
Name: Austin M. O'Toole
Title: Trustee
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, 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 APRIL
14, 1998.
Coastal Finance II
By: _________________________________
/s/ Coby C. Hesse
Name: Coby C. Hesse
Title: Trustee
By: _________________________________
/s/ Donald H. Gullquist
Name: Donald H. Gullquist
Title: Trustee
By: _________________________________
/s/ Austin M. O'Toole
Name: Austin M. O'Toole
Title: Trustee
II-4
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS (WHICH PERSONS
CONSTITUTE A MAJORITY OF THE BOARD OF DIRECTORS) IN THE CAPACITIES AND ON THE
DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ David A. Arledge Chairman of the Board, April 14, 1998
- ------------------------------------ President, Chief Executive
DAVID A. ARLEDGE Officer, Chief Financial
Officer and Director
(Principal Executive Officer
and Principal Financial
Officer)
/s/ Coby C. Hesse Executive Vice President April 14, 1998
- ------------------------------------ (Principal Accounting
COBY C. HESSE Officer)
/s/ John M. Bissell Director April 14, 1998
- ------------------------------------
JOHN M. BISSELL
/s/ George L. Brundrett, Jr. Director April 14, 1998
- ------------------------------------
GEORGE L. BRUNDRETT, JR.
/s/ Harold Burrow Director April 14, 1998
- ------------------------------------
HAROLD BURROW
/s/ Roy D. Chapin, Jr. Director April 14, 1998
- ------------------------------------
ROY D. CHAPIN, JR.
/s/ James F. Cordes Director April 14, 1998
- ------------------------------------
JAMES F. CORDES
/s/ Roy L. Gates Director April 14, 1998
- ------------------------------------
ROY L. GATES
/s/ Kenneth O. Johnson Director April 14, 1998
- ------------------------------------
KENNETH O. JOHNSON
/s/ Jerome S. Katzin Director April 14, 1998
- ------------------------------------
JEROME S. KATZIN
/s/ Thomas R. McDade Director April 14, 1998
- ------------------------------------
THOMAS R. MCDADE
/s/ J. Carleton MacNeil, Jr. Director April 14, 1998
- ------------------------------------
J. CARLETON MACNEIL, JR.
/s/ O. S. Wyatt, Jr. Director April 14, 1998
- ------------------------------------
O. S. WYATT, JR.
/s/ L. D. Wooddy, Jr. Director April 14, 1998
- ------------------------------------
L. D. WOODDY, JR.
</TABLE>
II-5
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ Coby H. Hesse Trustee of Coastal April 14, 1998
______________________________________ Finance I
COBY H. HESSE
/s/ Donald H. Gullquist Trustee of Coastal April 14, 1998
______________________________________ Finance I
DONALD H. GULLQUIST
/s/ Austin M. O'Toole Trustee of Coastal April 14, 1998
______________________________________ Finance I
AUSTIN M. O'TOOLE
</TABLE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ Coby H. Hesse Trustee of Coastal April 14, 1998
______________________________________ Finance II
COBY H. HESSE
/s/ Donald H. Gullquist Trustee of Coastal April 14, 1998
______________________________________ Finance II
DONALD H. GULLQUIST
/s/ Austin M. O'Toole Trustee of Coastal April 14, 1998
______________________________________ Finance II
AUSTIN M. O'TOOLE
</TABLE>
II-6
<PAGE>
EXHIBIT 1.1
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THE COASTAL CORPORATION
LOGO
and
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UNDERWRITING AGREEMENT
DATED
AND
TERMS AGREEMENT
DATED
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$
% DUE
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<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 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 [ ], 1998 between the Company and Harris Trust and Savings
Bank, 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 [ ], 1998, between the Company
and Harris Trust and Savings Bank, 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
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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
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<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) hereof) and any
4
<PAGE>
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 and the
Company shall
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<PAGE>
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 disbursements of
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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 and Secretary 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 requested to be covered by its letter
delivered to you concurrently with the execution of the Terms
10
<PAGE>
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 later be held
11
<PAGE>
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 [ ], 1998, as amended from time to
time, between the Company and Harris Trust and Savings Bank, 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:
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EXHIBIT 1.2
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THE COASTAL CORPORATION
LOGO
and
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UNDERWRITING AGREEMENT
DATED
AND
TERMS AGREEMENT
DATED
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[TITLE OF EQUITY SECURITIES]
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<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 [ ], 199 (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
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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
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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
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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.
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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.
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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
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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
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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 and Secretary 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 governing documents:
<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>
EXHIBIT 1.3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COASTAL FINANCE
[LOGO OF
COASTAL APPEARS and
HERE]
---------------------
UNDERWRITING AGREEMENT
DATED
AND
TERMS AGREEMENT
DATED
---------------------
% TRUST PREFERRED SECURITIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
COASTAL FINANCE
UNDERWRITING AGREEMENT
, 199
[Name and Address of Lead Underwriters]
Dear Sirs:
Coastal Finance (the "Trust"), a statutory business trust formed under
the Business Trust Act (the "Delaware Act") of the State of Delaware proposes
to issue and sell from time to time certain of its % Trust Preferred
Securities (liquidation amount $25 per preferred security) of the Trust (the
"Preferred Securities"). The Preferred Securities will be guaranteed (the
"Guarantees") by the Coastal Corporation, a Delaware corporation (the
"Company" and, together with the Trust, the "Issuers") on a limited basis to
the extent the Trust has funds available therefor pursuant to a Preferred
Securities Guarantee Agreement (the "Guarantee Agreement"). The aforementioned
Preferred Securities, together with the Guarantees, are collectively
hereinafter referred to as the "Securities". 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 Issuers and the respective
Underwriters in regard to each offering of Purchased Securities.
This Agreement shall not limit or affect the rights of the Issuers 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 Issuers by the Underwriters.
1. REPRESENTATIONS AND WARRANTIES. Each of the Trust and the Company,
jointly and severally, represents and warrants to, and agrees with each
Underwriter that:
(a) A registration statement on Form S-3 (File No. 333- ), prepared
by the Issuers 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
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
1
<PAGE>
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 Issuers 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) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Act; all filings required
under the laws of the State of Delaware with respect to the creation and
valid existence of the Trust as a business trust have been made under the
Delaware Act and the Amended and Restated Declaration of Trust (the
"Declaration"), the Trust has the business trust power and authority to (x)
own property or lease its properties and conduct its business as described
in the Prospectus, (y) enter into and perform its obligations under this
Agreement, and (z) issue and perform its obligations under the Securities
and is not required to be authorized to do business in any other
jurisdiction; the Trust is not a party to or otherwise bound by any
agreement other than those described in the Prospectus, the Trust does not
have any consolidated or unconsolidated subsidiaries; and the Trust is and
will be treated as a consolidated subsidiary of the Company pursuant to
generally accepted accounting principles.
(g) The Declaration has been duly and validly authorized by the Company
and, when executed and delivered by the Company and the Trustees (as such
term is defined in the Declaration) at the Closing Date, and assuming due
authorization, execution and delivery thereof by the Trustees, will be the
valid and binding obligation of the Company and the Trustees, enforceable
against the Company and the Trustees in accordance with its terms, subject
as to enforcement to bankruptcy, insolvency, reorganization, moratorium
2
<PAGE>
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles (regardless of whether the issue of
enforceability is considered in a proceeding at law or in equity), and, at
the Closing Date, the Declaration will have been duly qualified under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
(h) 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.
(i) 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 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 either of the Issuers and their
respective Subsidiaries taken as a whole, from the date as of which
information is given in the Prospectus.
(j) Neither of the Issuers nor any of their respective 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, its certificate of
incorporation, certificate of trust, by-laws, Declaration or other
governing documents, as the case may be, or any agreement, indenture or
other instrument to which either Issuer or any of their respective
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 Issuers and their
Subsidiaries taken as a whole.
(k) The execution and delivery of this Agreement, the applicable Terms
Agreement, the authorization, issuance and sale of the Purchased
Securities, the fulfillment of this Agreement, the applicable Terms
Agreement, the Purchased Securities, the Guarantees, the Guarantee
Agreement, the Indenture between the Company and The Bank of New York, as
trustee (the "Indenture"), the Supplemental Indenture between the Company
and Harris Trust and Savings Bank, as trustee (the "Supplemental
Indenture"), the Subordinated Debt 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 Issuers or their respective Subsidiaries
or an acceleration of indebtedness pursuant to, the certificate of
incorporation, certificate of trust, by-laws, Declaration or other
governing documents, as the case may be, of the Issuers or any of their
respective 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 either of the Issuers or any of
their respective Subsidiaries is a party or by which any of them is bound
or to which any of the property or assets of the Issuers or any of their
respective Subsidiaries is subject, or any law, administrative regulation
or order of any court or governmental agency or authority applicable to the
Issuers or any of their respective Subsidiaries.
(l) 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 issuance and sale of the Securities or the purchase
3
<PAGE>
by the Trust of the Subordinated Debt Securities or the consummation of the
transactions contemplated by this Agreement, the applicable Terms
Agreement, the Indenture, the Supplemental Indenture, the Guarantee
Agreement or the Guarantee.
(m) Under the Delaware Act and the Declaration, the execution and
delivery by the Trust of this Agreement and the Terms Agreement, and the
performance by the Trust of its obligations thereunder, have been duly
authorized by all necessary business trust action on the part of the Trust,
and this Agreement and the Terms Agreement will have been, duly executed
and delivered by the Trust under the law of Delaware and each constitutes
the legal, valid and binding obligations of the Trust.
(n) The Common Securities have been duly authorized by the Original
Declaration (as defined in the Declaration) and, when issued and delivered
by the Trust to the Company against payment therefor in accordance with the
undivided beneficial interests in the assets of the Trust; and under the
Delaware Act and the Declaration, the issuance of the Common Securities
will not be subject to preemptive rights.
(o) 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.
(p) 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.
(q) The Preferred Securities have been duly authorized by the Original
Declaration and the Company for issuance and sale to the Underwriters
pursuant to this Agreement and Terms Agreement and, when issued and
delivered by the Trust in accordance with the Declaration to the
Underwriters and paid for in accordance with this Agreement, will be
validly issued, and fully paid and nonassessable undivided beneficial
interests in the assets of the Trust; the holders of the Securities, as
beneficial owners of the Trust, will be entitled to the same limitation of
personal liability as that extended to stockholders of private corporations
for profit organized under the General Corporation Law of the State of
Delaware; under the Delaware Act and the Declaration, the issuance of the
Securities will not be subject to preemptive rights; and the Securities
conform to the description thereof in the Prospectus.
(r) The Delayed Delivery Contracts, if any, have been duly authorized and
when executed and delivered by the Issuers will be the legal, valid and
binding agreements of the Issuers 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.
(s) Subsequent to the respective dates as of which information is given
in the Registration Statement and Prospectus and prior to the Closing Date,
neither of the Issuers nor any of their respective 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 Issuers and
their respective 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 either of the Issuers or any of their respective
Subsidiaries, or any material adverse change in the business, prospects,
financial position, net worth or assets or results of operations of the
Issuers and their respective Subsidiaries taken as a whole.
(t) The Issuers and each of their respective 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 Issuers and each of their respective Subsidiaries.
4
<PAGE>
(u) Except as described in the Prospectus, there is no litigation or
governmental proceeding to which either of the Issuers or any of their
respective Subsidiaries is a party or to which any property of either of
the Issuers or any of their respective Subsidiaries is subject or which is
pending or, to the knowledge of the Issuers, contemplated against either of
the Issuers or any of their respective 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 either of the
Issuers and their respective Subsidiaries taken as a whole.
(v) Neither of the Issuers nor any of their respective Subsidiaries 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 either of the
Issuers and their respective Subsidiaries taken as a whole.
(w) The conditions for use of Form S-3, set forth in the General
Instructions thereto, have been satisfied.
(x) At the Closing Date, the Property Trustee will be the record holder
of Subordinated Debt Securities and no security interest, mortgage, pledge,
lien, encumbrance, claim or equity will be noted thereon or on the
register.
(y) The Guarantees and the Guarantee Agreement have each been duly and
validly authorized by the Company and, when executed and delivered by the
Company at the Closing Date, will constitute valid and legally binding
agreements of the Company enforceable in accordance with their terms,
subject as to enforcement to bankruptcy, insolvency, reorganization,
moratorium and other similar laws now or hereafter in effect relating to
creditors' rights generally and 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; at the Closing Date, the Guarantees and the
Guarantee Agreement will have been duly qualified under the Trust Indenture
Act; and the Guarantees conform to the descriptions thereof contained in
the Prospectus.
(z) The Indenture has been duly and validly authorized by the Company
and, when executed and delivered by the Company at the Closing Date and,
assuming due authorization, execution and delivery by the Debt Trustee, at
such Closing Date will constitute a valid and legally binding agreement of
the Company enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization, moratorium and other
similar laws now or hereafter in effect relating to creditors' rights
generally and 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 at the Closing Date, the Indenture will have been duly
qualified under the Trust Indenture Act.
(aa) The Supplemental Indenture has been duly and validly authorized by
the Company and, when executed and delivered by the Company at the Closing
Date and, assuming due authorization, execution and delivery by the Debt
Trustee, at such Closing Date will constitute a valid and legally binding
agreement of the Company enforceable in accordance with its terms, subject
as to enforcement to bankruptcy, insolvency, reorganization, moratorium and
other similar laws now or hereafter in effect relating to creditors' rights
generally and 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 at the Closing Date, the Supplemental Indenture will have been
duly qualified under the Trust Supplemental Indenture Act.
(bb) The Subordinated Debt Securities have been duly and validly
authorized by the Company and, when executed and authenticated in
accordance with the terms of the Indenture and delivered to and paid for by
the Trust in accordance with the Declaration, will constitute valid and
legally binding obligations of the Company enforceable in accordance with
their terms, subject as to enforcement to bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and 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 the Subordinated
Debt Securities conform to the description thereof contained in the
Prospectus.
5
<PAGE>
(cc) The statements set forth in the Prospectus under the caption
"Certain Federal Income Tax Consequences," insofar as they purport to
describe the provisions of the law referred to therein, are accurate and
complete in all material respects.
(dd) The Trust will be classified as a "grantor trust" for United States
federal income tax purposes and is not an will not be classified as an
association taxable as a partnership or a corporation for United States
federal income tax purposes under federal income tax laws as currently in
effect.
(ee) Neither the Trust nor the Company is an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, and neither
the Trust nor the Company is subject to regulation under such Act.
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 Issuers determine to sell Purchased
Securities, with such other provisions which the Representatives and the
Issuers 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, 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 Issuers 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 Trust or its order in immediately available funds (same
day), against delivery of the Underwriters' Securities to you for the
respective accounts of the Underwriters. 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
Trust 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
Trust. For the purpose of expediting the checking and packaging of the
Underwriters' Securities by you, the Trust 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 Trust 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
Trust 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 Trust 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 Trust
6
<PAGE>
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 Trust.
3. COVENANTS. Each of the Issuers covenants and agrees with each Underwriter
that it 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 Issuers 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 Issuers 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 Issuers, may be necessary or
advisable in connection with the distribution of the Securities and the
Issuers 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 Issuers shall notify you promptly of
the filing with the Commission of the Prospectus supplemented by the
Prospectus Supplement relating to the Purchased Securities. The Issuers
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 Issuers shall use their 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 Issuers 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 Issuers
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 Issuers 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
Issuers be obligated in connection therewith to qualify as a foreign
corporation, or to execute a general consent for service of process.
(e) The Issuers 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.
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(f) The Trust 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 Issuers' 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 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 certificates representing the Purchased
Securities, (G) any fees payable to rating agencies in connection with the
rating of the Purchased Securities and (H) 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 either of the Issuers 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 Issuers
to perform any agreement on its part to be performed or because any other
condition of the Underwriters' obligations hereunder is not fulfilled, the
Issuers 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 Issuers, at your request, shall
furnish to you as soon as they have been prepared by the Issuers a copy of
any unaudited interim consolidated financial statements of the Issuers and
their respective 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 on the New York Stock Exchange on the date of the Terms
Agreement.
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 Issuers contained
herein, to the performance by the Issuers of their respective obligations
hereunder and to the following additional conditions:
(a) The Issuers 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 Issuers 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 and Secretary of the Company, dated the Closing Date and
satisfactory to Cahill Gordon & Reindel, your counsel, to the effect that:
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(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;
(ii) this Agreement, the Terms Agreement, the Indenture, the
Supplemental Indenture, the Guarantee Agreement, the Guarantees and the
Declaration have been duly authorized, executed and delivered by each
of the Issuers, and this Agreement, the Terms Agreement, the Indenture,
the Supplemental Indenture, the Guarantee Agreement, the Guarantees and
the Declaration are each legal, valid and binding agreements of each of
the Issuers 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) each of the Guarantee Agreement, Guarantees, the Indenture, the
Supplemental Indenture and the Declaration has been duly qualified
under, and complies in all material respects with the requirements of,
the Trust Indenture Act.
(iv) the Subordinated Debt Securities, when executed and
authenticated in accordance with the terms of the Indenture and
delivered to and paid for by the Trust at the Closing Date, will be
legal, valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable in accordance with their
terms, except (A) as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and other
similar laws affecting creditors' rights generally, (B) the remedy of
specific performance and injunctive and other forms of equitable relief
are subject to certain equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought and (C)
rights to indemnity and contribution hereunder may be limited by
Federal and state security laws or policy underlying such laws.
(v) the Delayed Delivery Contracts, if any, have been duly
authorized, executed and delivered by each of the Issuers and (assuming
that they have been duly authorized, executed and delivered by the
purchasers thereunder) are valid and binding agreements of each of the
Issuers;
(vi) to the best knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened to which either of the
Issuers or any of their respective Subsidiaries is a party, or of which
the business or properties of either of the Issuers or any of their
respective 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 either of
the Issuers or any of their respective 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;
(vii) the execution and delivery of this Agreement, the Terms
Agreement, the Indenture, the Supplemental Indenture, the Guarantee
Agreement, the Guarantees and any Delayed Delivery Contract, the
authorization, issuance and sale of the Purchased Securities, the
subordinated Debt Securities, the fulfillment of the terms of this
Agreement, the Terms Agreement, the Indenture, the Supplemental
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Indenture, the Guarantee Agreement, the Guarantees and any Delayed
Delivery Contract, and the consummation of the transactions
contemplated by this Agreement, the Terms Agreement, the Indenture, the
Supplemental Indenture, the Guarantee Agreement, the Guarantees 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 Issuers or
their respective Subsidiaries or an acceleration of indebtedness
pursuant to, the certificate of incorporation, certificate of trust and
by-laws, Declaration or other equivalent instruments, as the case may
be, of the Issuers or any of their respective 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 either of
the Issuers or any of their respective Subsidiaries is subject where
such breach or default would have a material adverse effect on the
Issuers and their respective 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 either of
the Issuers or any of their respective Subsidiaries or any of their
respective 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, the Indenture and the Guarantees 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;
(viii) the Purchased Securities have been duly authorized and, when
executed and authenticated in accordance with the terms of the Terms
Agreement and delivered to, and paid for by, you will be validly issued
and fully paid and non-assessable; the Contract Securities have been
duly authorized and, when executed and authenticated in accordance with
the terms of the Terms 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 terms;
(ix) the Trust and the Company jointly meet the requirements for use
of Form S-3 under the 1933 Act. 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;
(x) the number of authorized shares of capital stock of the Issuers
is as set forth in the Prospectus under "Capitalization" and the
authorized capital stock of the Issuers conforms as to legal matters to
the description thereof contained in the Prospectus;
(xi) the Purchased Securities, the Delayed Delivery Contracts (if
any), the Indenture, the Supplemental Indenture, the Guarantee
Agreement, the Guarantees, the Declaration and the Subordinated Debt
Securities each conform in all material respects to the descriptions
thereof in the Prospectus;
(xii) neither the Company nor the Trust is an "investment company"
within the meaning of Section 3(a) of the Investment Company Act of
1940, as amended, and is not subject to regulation under such Act;
(xiii) 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; and
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(xiv) 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 or under the Declaration of the Trust; and no
holder of the Securities will be subject to personal liability solely
by reason of being such a holder.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Issuers,
representatives of the independent public accountants for the Issuers,
special Delaware counsel to the Issuers 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 paragraphs (x) and (xi) 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 Issuers), 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), (iv), (v), (viii), (ix), (xiii)(a) (except with respect to the
Incorporated Documents) and (x)(b) of Section 4(c) hereof. Such opinion
shall additionally state that the statements set forth in the Prospectus
under the caption "Certain Federal Income Tax Consequences," insofar as
they relate to matters of law or legal conclusions, are accurate and
complete in all material respects. In addition, such counsel shall state
that such counsel has participated in conferences with officers and other
representatives of the Issuers, counsel for the Issuers, 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 (xi) 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
Issuers), 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).
(4) You shall have received from Richards, Layton & Finger, P.A., special
Delaware counsel to the Issuers, to the following effect and covering such
additional matters as the Underwriters may reasonably request:
(i) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Act, all filings
required under the laws of the State of Delaware with respect to the
creation and valid existence of the Trust as a business trust have been
made; under the Delaware Act and the Declaration, the Trust has the
business trust power and authority to (x) own property and
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conduct its business, all as described in the Prospectus, (y) enter
into and perform its obligations under this Agreement and the Terms
Agreement, and (z) issue and perform its obligations under the
Securities and the Common Securities.
(ii) Assuming the Declaration has been duly authorized, executed and
delivered by the Trustees and the Company, the Declaration is the valid
and binding obligation of the Company and the Trustees, enforceable
against the Company and the Trustees in accordance with its terms,
subject as to enforcement to (a) bankruptcy, insolvency, receivership,
reorganization, moratorium, liquidation, fraudulent conveyance and
other similar laws relating to or affecting the rights remedies of
creditors generally, (b) to principles of equity including applicable
law relating to fiduciary duties (regardless of whether the issue of
enforceability is considered in a proceeding at law or in equity) and
(c) the effect of applicable public policy on the enforceability of
provisions relating to indemnification or contribution.
(iii) Under the Delaware Act and the Declaration, the execution and
delivery by the Trust of this Agreement and the Terms Agreement, and
the performance by the Trust of its obligations thereunder, have been
duly authorized by all necessary business trust action on the part of
the Trust.
(iv) The Common Securities have been duly authorized by the
Declaration and are validly issued and represent undivided beneficial
interests in the assets of the Trust; and under the Delaware Act and
the Declaration, the issuance of the Common Securities is not subject
to preemptive rights.
(v) The Preferred Securities have been duly authorized by the
Declaration and, when delivered to and paid for pursuant to this
Agreement, will be validly issued and fully paid and nonassessable
undivided beneficial interests in the assets of the Trust; the holders
of the Preferred Securities, as beneficial owners of the Trust, will be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware; and under the
Delaware Act and the Declaration, the issuance of the Preferred
Securities is not subject to preemptive rights. Such counsel may note
that the Preferred Security holders may be obligated, pursuant to the
Declaration, to (i) provide indemnity and/or security in connection
with and pay taxes or governmental charges arising from transfers of
Preferred Security Certificates and the issuance of replacement
Preferred Security Certificates, and (ii) provide security and
indemnity in connection with requests of or directions to the Property
Trustee to exercise its rights and powers under the Declaration.
(vi) The issuance and sale by the Trust of the Preferred Securities
and Common Securities; the execution, delivery and performance by the
Trust of this Agreement and the Terms Agreement; the consummation of
the transactions contemplated herein and therein; and compliance by the
Trust with its obligations hereunder and thereunder will not violate
any of the provisions of the Certificate of Trust or the Declaration,
or any applicable Delaware law or administrative regulation.
(vii) Assuming that the Trust derives no income from or in connection
with sources within the State of Delaware and has no assets, activities
(other than having a Delaware Trustee as required by the Delaware Act
and the filing of documents with the Delaware Secretary of State) or
employees in the State of Delaware, no authorization, approval, consent
or order of any Delaware court or Delaware governmental authority or
Delaware agency is required to be obtained by the Trust solely in
connection with the issuance and sale of the Common Securities and the
Preferred Securities or the purchase by the Trust of the Subordinated
Debt Securities and the Guarantees.
(c) The opinion of Emmet, Marvin & Martin, LLP, counsel to The Bank of
New York, as Property Trustee under the Declaration, in form and substance
satisfactory to counsel to the Underwriters to the effect that:
(i) The Bank of New York is a national banking association with trust
powers, duly organized, validly existing and in good standing under the
laws of the United States, with all necessary power and authority to
execute and deliver, and to carry out and perform its obligations under
the terms of, the Declaration.
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(ii) The execution, delivery and performance by the Property Trustee
of the Declaration have been duly authorized by all necessary corporate
action on the part of the Property Trustee; the Declaration has been
duly executed and delivered by the Property Trustee, and constitutes
the valid and binding obligation of the Property Trustee, enforceable
against the Property Trustee in accordance with its terms, subject as
to enforcement to bankruptcy, insolvency, reorganization, moratorium
and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles (regardless of
whether the issue of enforceability is considered in a proceeding at
law or in equity).
(iii) The execution, delivery and performance of the Declaration by
the Property Trustee does not conflict with or constitute a breach of
the Articles of Organization or Bylaws of the Property Trustee.
(iv) No consent, approval or authorization of, or registration with
or notice to, any New York or federal banking authority is required for
the execution, delivery or performance by the Property Trustee of the
Declaration.
(v) To the best of such counsel's knowledge, based on a review of the
certificates representing the Subordinated Debt Securities, no security
interest, mortgage, pledge, lien, encumbrance, claim or equity is noted
thereon.
In giving such opinion, such counsel may rely as to matters governed by
the laws of the State of Delaware on an opinion of Richards Layton &
Finger, P.A.; provided, however, that such opinion shall be addressed to
the Underwriters, shall be dated as of such date and shall expressly permit
such counsel to rely thereon.
(d) There shall have been furnished to you two certificates, each dated
the Closing Date and addressed to you, (i) one signed by the President, or
any Vice President and the Chief Financial Officer, any financial Vice
President or the Treasurer of the Company and (ii) the other signed by any
Regular Trustee of the Trust, each certificate to the effect that: (i) the
representations and warranties of the Company and Trust, as the case may
be, contained in this Agreement are true and correct, as if made at and as
of the Closing Date, and the Company and Trust, as the case may be, 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.
(e) Since the execution of the Terms Agreement, neither of the Issuers
nor any of their respective 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 Issuers and their
respective 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 Issuers and their
respective 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.
(f) 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
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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.
(g) That the Issuers shall have accepted Delayed Delivery Contracts in
any case where sales of Contract Securities arranged by the Underwriters
have been approved by the Issuers.
(h) At the Closing Date, the Securities shall have been approved for
quotation on the New York Stock Exchange and the Trust and the Company
shall have filed all notices and documents required by the New York Stock
Exchange of companies that have securities quoted on such exchange.
(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 Issuers 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 Issuers. Notice of such cancellation
shall be given to the Issuers in writing, or by telegraph or telephone and
confirmed in writing.
5. INDEMNIFICATION AND CONTRIBUTION. (a) Each of the Issuers, jointly and
severally, 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 Issuers
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 either of the Issuers specifically
for the purpose or based upon any written information furnished by either of
the Issuers 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 Issuers 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 Issuers 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 each of the Issuers against any loss, claim, damage or liability
to which the Issuers 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
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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 Issuers 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 Issuers 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 Issuers 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 Issuers 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 Issuers.
(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
Issuers on the one hand and the Underwriters on the other hand from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Issuers 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 Issuers 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 Issuers 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 either of the Issuers or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The Issuers 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
15
<PAGE>
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 Issuers under this Section 5 shall be in addition
to any liability which the Issuers 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 or Trustee,
as the case may be, of the Issuers (including any person who, with his or her
consent, is named in the Registration Statement as about to become a director
or Trustee, as the case may be, of the Issuers), to each officer of either of
the Issuers who has signed the Registration Statement and to each person, if
any, who controls either of the Issuers 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 Issuers
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 Issuers by giving notice as hereinafter provided to you or by you by
giving notice as hereinafter provided to the Issuers, 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 Issuers, if (i) the Issuers 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 Issuers 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
16
<PAGE>
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,
each of the Issuers 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 Issuers or selected by the Issuers with your approval).
If a new underwriter or underwriters are substituted by the Underwriters or
by the Issuers for a defaulting Underwriter or Underwriters in accordance with
the foregoing provision, the Issuers 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 Issuers 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.; (b) to the Trust c/o The Coastal Corporation at the address
listed above and (c) 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 Issuers 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, each of the Issuers, 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.
17
<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 Issuers.
Very truly yours,
COASTAL FINANCE ______
By: _________________________________
THE COASTAL CORPORATION,
as Guarantor
By: _________________________________
Confirmed and accepted as of
the date first above mentioned:
[Lead Underwriters]
By:
By: _________________________________
18
<PAGE>
SCHEDULE A
TO
TERMS AGREEMENT
<TABLE>
<CAPTION>
NUMBER
OF
PURCHASED
NAME SECURITIES
---- -----------
<S> <C>
-----------
Total.....................................................
===========
</TABLE>
<PAGE>
EXHIBIT A
TERMS AGREEMENT
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED BY THE COASTAL CORPORATION
[Date]
Coastal Finance
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Dear Sirs:
Coastal Finance (the "Trust") and The Coastal Corporation, as Guarantor
(the "Company" and, together with the Trust, the "Issuers") 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 Issuers of % Trust Preferred Securities liquidation amount
$25 per preferred security of the Trust (the "Preferred Securities", and
together with the Guarantee, the "Securities"). This Terms Agreement, relating
to the Securities, 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 Issuers propose to issue and sell
of Securities (the "Purchased Securities"). Subject to the terms, conditions,
representations and warranties set forth or incorporated by reference herein,
the Issuers agree to sell to the Underwriters and the Underwriters agree,
severally but not jointly, to purchase from the Issuers 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 immediately available funds (same day), 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 governing documents:
<TABLE>
<S> <C>
(a) Distributions: % per annum of the liquidation amount of $ per
Security
(b) Conversion:
(c) Initial Public Offering Price:
(d) Distribution Payment Dates: , , , and of each year,
commencing .
(e) Redemption: (i) upon repayment, whether at maturity or upon acceleration,
redemption or otherwise of the Subordinated Debt Securities (ii) Upon a Tax
Event (iii) Upon an Investment Company Event
</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
Coastal Finance _______
By: _________________________________
Name:
Title:
The Coastal Corporation
By: _________________________________
Name:
Title:
2
<PAGE>
EXHIBIT 4.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
THE COASTAL CORPORATION
LOGO AND
HARRIS TRUST AND SAVINGS BANK, 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>
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>
i
<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 Harris Trust and Savings Bank, 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 re-
lating 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
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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.
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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
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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.
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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.
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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
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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
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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: Harris Trust and Savings Bank
c/o Bank of Montreal Trust Company
Wall Street Plaza
88 Pine Street
New York, New York 10005
Attention:
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
By: ________________________________________
[Title of Officer]
Attest: ________________________
[Assistant] Secretary
<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 Harris
Trust and Savings Bank, 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 Security] include those stated in the Indenture and
[reference to Authorizing Resolution 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 in-
dentures thereto for a statement 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>
EXHIBIT 4.3
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
THE COASTAL CORPORATION
LOGO AND
HARRIS TRUST AND SAVINGS BANK, AS TRUSTEE
-------------------
SUBORDINATED INDENTURE
DATED AS OF , 199
-------------------
SUBORDINATED 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)............................................. 4.05; 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>
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........ 7
Section 1.03. Rules of Construction.................................... 8
ARTICLE 2
The Securities
Section 2.01. Form of Securities....................................... 8
Section 2.02. Title and Terms.......................................... 9
Section 2.03. Execution and Authentication............................. 12
Section 2.04. Registrar, Paying Agent and Conversion Agent............. 14
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.............................. 24
</TABLE>
i
<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.... 25
Section 3B.03. Redemption of Securities for Sinking Fund................ 25
ARTICLE 4
Covenants
Section 4.01. Payment of Securities.................................... 26
Section 4.02. Maintenance of Office or Agency.......................... 26
Section 4.03. Corporate Existence...................................... 27
Section 4.04. Compliance Certificate................................... 27
Section 4.05. SEC Reports.............................................. 28
Section 4.06. Waiver of Stay, Extension or Usury Laws.................. 28
ARTICLE 5
Successor Corporation
Section 5.01. When Company May Merge, etc. ............................ 28
Section 5.02. Successor Corporation Substituted........................ 29
ARTICLE 6
Default and Remedies
Section 6.01. Events of Default........................................ 29
Section 6.02. Acceleration............................................. 31
Section 6.03. Other Remedies........................................... 32
Section 6.04. Waiver of Past Defaults.................................. 32
Section 6.05. Control by Majority...................................... 32
Section 6.06. Limitation on Suits...................................... 33
Section 6.07. Rights of Holders to Receive Payment..................... 33
Section 6.08. Collection Suit by Trustee............................... 34
Section 6.09. Trustee May File Proofs of Claim......................... 34
Section 6.10. Priorities............................................... 35
Section 6.11. Undertaking for Costs.................................... 35
</TABLE>
<PAGE>
iii
ARTICLE 7
Trustee
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Section 7.01. Duties of Trustee........................................ 35
Section 7.02. Rights of Trustee........................................ 37
Section 7.03. Individual Rights of Trustee............................. 37
Section 7.04. Trustee's Disclaimer..................................... 37
Section 7.05. Notice of Defaults....................................... 38
Section 7.06. Reports by Trustee to Holders............................ 38
Section 7.07. Compensation and Indemnity............................... 38
Section 7.08. Replacement of Trustee................................... 39
Section 7.09. Successor Trustee by Merger, etc......................... 40
Section 7.10. Eligibility; Disqualification............................ 40
Section 7.11. Preferential Collection of Claims Against Company........ 41
ARTICLE 8
Discharge of Indenture
Section 8.01. Termination of Company's Obligations..................... 41
Section 8.02. Application of Trust Money............................... 42
Section 8.03. Repayment to Company..................................... 43
Section 8.04. Reinstatement............................................ 43
Section 8.05. Indemnity for U.S. Government Obligations................ 43
ARTICLE 9
Amendments, Supplements and Waivers
Section 9.01. Without Consent of Holders............................... 44
Section 9.02. With Consent of Holders.................................. 44
Section 9.03. Compliance With Trust Indenture Act...................... 46
Section 9.04. Revocation and Effect of Consents........................ 46
Section 9.05. Notation on or Exchange of Securities.................... 47
Section 9.06. Trustee to Sign Amendments, etc.......................... 47
Section 9.07. Subordination Unimpared.................................. 47
</TABLE>
<PAGE>
iv
ARTICLE 10
Miscellaneous
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Section 10.01. Trust Indenture Act Controls........................... 47
Section 10.02. Notices................................................ 47
Section 10.03. Communications by Holders With Other Holders........... 48
Section 10.04. Certificate and Opinion as to Conditions Precedent..... 48
Section 10.05. Statements Required in Certificate or Opinion.......... 48
Section 10.06. Rules by Trustee, Paying Agent, Registrar.............. 49
Section 10.07. Legal Holidays......................................... 49
Section 10.08. Governing Law.......................................... 49
Section 10.09. No Adverse Interpretation of Other Agreements.......... 49
Section 10.10. No Recourse Against Others............................. 49
Section 10.11. Successors............................................. 50
Section 10.12. Duplicate Originals.................................... 50
Section 10.13. Separability........................................... 50
Section 10.14. Action of Holders When Securities are Denominated in
Different Currencies................................. 50
Section 10.15. Monies of Different Currencies to be Segregated........ 50
Section 10.16. Payment to be in Proper Currency....................... 51
ARTICLE 11
Conversion of Securities
Section 11.01. Applicability of Article............................... 51
Section 11.02. Exercise of Conversion Privilege....................... 51
Section 11.03 Fractional Interests................................... 53
Section 11.04. Adjustment of Conversion Price......................... 54
Section 11.05. Continuation of Conversion Privilege in Case of Merger,
Consolidation or Sale of Assets...................... 57
Section 11.06. Notice of Certain Events............................... 58
Section 11.07. Taxes on Conversion.................................... 59
Section 11.08. Company to Provide Stock............................... 59
Section 11.09. Disclaimer of Responsibility for Certain Matters....... 60
Section 11.10. Return of Funds Deposited for Redemption of Converted
Securities........................................... 61
</TABLE>
<PAGE>
v
ARTICLE 12
Subordination
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Section 12.01. Securities Subordinated to Senior Indebtedness......... 61
Section 12.02. Reliance on Certificate of Liquidating Agent; Further
Evidence as to Ownership of Senior Indebtedness....... 64
Section 12.03. Payment Permitted If No Default........................ 65
Section 12.04. Disputes with Holders of Certain Senior Indebtedness... 65
Section 12.05. Trustee Not Charged with Knowledge of Prohibition...... 65
Section 12.06. Trustee to Effectuate Subordination.................... 66
Section 12.07. Rights of Trustee as Holder of Senior Indebtedness..... 66
Section 12.08. Article Applicable to Paying Agents.................... 66
Section 12.09. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Indebtedness...... 67
Trustee Not Fiduciary for Holders of Senior
Section 12.10. Indebtedness........................................... 67
Testimonium.............................................................
Signatures.............................................................. 68
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>
SUBORDINATED INDENTURE, dated as of , 199 , between The
Coastal Corporation, a Delaware corporation (the "Company"), and Harris Trust
and Savings Bank, 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 subordinated
notes, debentures or other evidences of indebtedness (collectively, the "Secu-
rities"), 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 pursuant to the Authorizing Resolution hereinafter referred to and/or in
the indenture 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, co-Registrar or Conversion Agent.
"Authorizing Resolution" means a Board Resolution providing for the issuance
of a Series of Securities.
"Bankruptcy Law" shall have the meaning provided in Section 6.01.
"Blockage Period" shall have the meaning provided in Section 12.01.
"Board of Directors" means the Board of Directors of the Company or any duly
authorized committee of the Board.
<PAGE>
2
"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.
"Common Stock" means the common stock, par value $.33 1/3 per share, of the
Company, as the same exists at the date of execution and delivery of this In-
denture, or other Capital Stock of the Company into which such common stock is
reclassified or changed from time to time.
"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 Subsidiary" means a Subsidiary which for financial reporting
purposes is accounted for by the Company as a consolidated subsidiary.
"Conversion Agent" shall have the meaning provided in Section 2.04.
"Conversion Price" shall have the meaning provided in Section 11.04.
"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.
<PAGE>
3
"Custodian" shall have the meaning provided in Section 6.01.
"Date of Conversion" shall have the meaning provided in Section 11.02.
"Default" means any event which is, or after notice or passage of time or
both would become, an Event of Default.
"Default Notice" shall have the meaning provided in Section 12.01.
"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.
"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.
"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 re-
lating to a Capitalized Lease Obligation; (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 re-
ferred to in clauses (i) and (ii) above.
<PAGE>
4
"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.
"Last Sale Price" shall have the meaning provided in Section 11.03.
"Legal Holiday" shall have the meaning provided in Section 10.07.
"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.
"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 the Paying Agent shall not be the Company or any
Subsidiary.
<PAGE>
5
"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.
"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 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.
"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.
"Representative" shall have the meaning provided in Section 12.01.
"Required Currency" shall have the meaning provided in Section 10.16.
"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.
<PAGE>
6
"Senior Indebtedness" means Indebtedness of the Company, whether outstanding
on the date of issue of any Securities or thereafter created, incurred, as-
sumed or guaranteed by the Company, other than the following: (i) any Indebt-
edness 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 subordi-
nated to such Indebtedness, (ii) any Indebtedness which, by its terms, ex-
pressly refers to the Securities and states that such Indebtedness shall not
be senior, shall be pari passu or shall be subordinated in right of payment to
the Securities, (iii) Securities of the same or another Series and (iv) In-
debtedness of or amounts owed by the Company for compensation to employees, or
for goods, materials and services purchased in the ordinary course of busi-
ness.
"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.
"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
<PAGE>
7
Subsidiary (or Subsidiaries) of the Company, directly or indirectly, at the
date of determination thereof has at least majority ownership interest; pro-
vided, 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.
"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-
tions 9.03 and 11.05.
"Trading Day" shall have the meaning provided in Section 11.03.
"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
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
<PAGE>
8
"obligor" on the indenture securities means the Company or any other obligor
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 "gener-
ally accepted accounting principles" refers to generally accepted account-
ing principles in effect in the United States;
(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 re-
fer to this Indenture as a whole and not to any particular Article, Sec-
tion or other subdivision; and
(7) "include," "included" and "including" as used herein shall be deemed
in each case to be followed 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
<PAGE>
9
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.
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. All Securities issued
hereunder shall be subordinate and junior in right of payment, to the extent
and in the manner set forth in Article 12, to all Senior Indebtedness of the
Company. The terms of each Series shall be as provided in an Authorizing Reso-
lution and/or supplemental indenture (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) Whether the Securities will be convertible into Common Stock and, if
so, the terms and conditions upon which such conversion will be effected
including the initial Conversion Price and any adjustments thereto in ad-
dition to or different from those set forth in Section 11, the conversion
period and other provisions in addition to or in lieu of those set forth
herein;
(3) 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 Se-
curities pursuant to Section 2.07, 2.08, 2.11, 3A.08, 9.05 or 11.02);
(4) the date or dates on which the principal of the Securities of such
Series is payable, and, if the Series shall be Extendible Securities, the
terms
<PAGE>
10
on which the Company or any other person shall have the option to extend
the Maturity of such Securities and the rights, if any, of the Holders to
require payment of the Securities;
(5) the rate or rates at which the Securities of such Series shall bear
interest, if any (whether floating or fixed), the provisions, if any, for
determining such interest rate or rates and adjustments thereto, the date
or dates from which such interest shall accrue, the provisions, if any,
for determining such date or dates, the Interest Payment Dates therefor,
the Regular Record Dates (if different from those provided in the form of
Security herein set forth) for the determination of Holders of the Securi-
ties 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;
(6) 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 Com-
pany in respect of Securities of such Series and this Indenture may be
served;
(7) 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
redeemed, in whole or in part, at the option of the Company, pursuant to a
Sinking Fund or otherwise;
(8) the obligation, if any, of the Company to redeem, purchase or repay
Securities 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;
(9) any deletions from, modifications of or additions to the Events of
Default provided for herein with respect to the Securities of such Series,
and any additions to the covenants or obligations provided for herein of
the Company to the Holders of the Securities of such Series;
(10) if less than 100% of the principal amount of the Securities of such
Series is payable on acceleration under Section 6.02 or in bankruptcy un-
der Section 6.09 at any time, a schedule of or the manner of computing the
amounts which are so payable from time to time;
(11) 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
hereto), 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 Securi-
ties and the
<PAGE>
11
circumstances under which any Global Security may be registered for trans-
fer or exchange, or authenticated and delivered, in the name of a Person
other than such Depository or its nominee, if other than as set forth in
Section 2.07;
(12) 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
Series shall be payable;
(13) if the principal of or interest, if any, on the Securities of such
Series is to be payable, at the election of the Company or a Holder there-
of, 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;
(14) if the amount of payments of principal of or interest, if any, on
such Securities of the 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 deter-
mined;
(15) 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;
(16) any provisions relating to the issuance of the Securities of any Se-
ries as Original Issue Discount Securities (including, without limitation,
the issue price thereof, the rate or rates at which such original issue
discount shall 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);
(17) if other than denominations of $1,000 and integral multiples there-
of, the denominations in which Securities of any such Series shall be is-
sued; and
(18) any other terms of the Securities of such Series; provided, that
such other terms shall not be inconsistent with any express terms of this
Indenture or in conflict with any express terms of any other Series of Se-
curities 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.
<PAGE>
12
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 Resolution and/or supplemental 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
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 Se-
curity approved thereby attached thereto, or a supplemental indenture in
respect of the issuance of the Series, executed on behalf of the Company;
<PAGE>
13
(2) an Officers' Certificate to the effect that the Securities of such
Series 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 accordance with their terms, subject to (A) bankruptcy and other laws
affecting creditors' rights generally as in effect from time to time, (B)
limitations of generally applicable equitable principles and (C) other ex-
ceptions 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 Securi-
ties, an Officers' Certificate setting forth the Yield to Maturity for the
Securities or other information sufficient to compute amounts due on ac-
celeration, or specifying the manner in which such amounts are to be de-
termined, provided 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 expose the Trustee to liability to Holders of previously issued and
outstanding 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.
<PAGE>
14
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.
Section 2.04. Registrar, Paying Agent and Conversion 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"), an office or agency where Securities may be
presented for payment ("Paying Agent"), and, if applicable, an office or
agency where Securities may be presented for conversion ("Conversion Agent").
The Company may have one or more co-Registrars and one or more additional pay-
ing 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 provi-
<PAGE>
15
sions of this Indenture that relate to such Agent. The Company shall give
prompt written 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
reasonable 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
Registrar 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 Regis-
trar, Paying Agent or Conversion Agent, the Trustee shall act as such and
shall be entitled to appropriate compensation therefor pursuant to Section
7.07.
The Company initially appoints the Trustee as Registrar, Paying Agent and
Conversion 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
Securityholders. If the Trustee is not the Registrar, the Company shall fur-
nish 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
<PAGE>
16
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 in definitive registered form,
a Global Security representing 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 of such Depository to such Deposi-
tory or another nominee of such Depository or by such Depository or any such
nominee to a successor Depository for such Series or a nominee of such succes-
sor 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
<PAGE>
17
Series shall no longer be eligible under Section 2.03, the Company shall ap-
point a successor Depository with respect to such Series. If a successor De-
pository for such Series is not appointed by the Company within 90 days after
the Company receives such notice or becomes aware of such ineligibility, 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 Com-
pany 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 Securities, and the Trustee shall, in accordance with Section 2.03 and
such Company Order, authenticate and deliver Securities of such Series, in any
authorized denominations, in an aggregate principal amount equal to the prin-
cipal 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 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
<PAGE>
18
(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 authenti-
cated 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 obligations 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 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.
<PAGE>
19
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 provisions therefor satisfactory to the Trustee
have been made.
If a Security is converted into Common Stock pursuant to Article 11 hereof,
then such Security shall cease to be outstanding.
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 the Authorizing Resolution
and/or supplemental indenture (if any) relating thereto, without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive
Securities for such
<PAGE>
20
Series in exchange for temporary Securities of such Series in an exchange pur-
suant 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 persons in whose name
any Security is registered as the owners of such Security for the purpose of
receiving payment of principal of and (subject to Section 2.13) interest on
such Security and for all other purposes whatsoever, whether or not such Secu-
rity 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
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22
prior to the Redemption Date by the Trustee, from the outstanding Securities
of such Series not previously called for redemption, in compliance with the
requirements 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.
If any Security selected for partial redemption is surrendered for conversion
after such selection, the converted portion of such Security shall be deemed
(so far as may be) to be the portion selected for redemption. Upon any redemp-
tion of less than all the Securities of a Series, for purposes of selection
for redemption the Company and the Trustee may treat outstanding Securities
surrendered for conversion during the period of 15 days next preceding the
mailing of a notice of redemption, and need not treat as outstanding any Secu-
rity authenticated and delivered during such period in exchange for the uncon-
verted portion of any Security converted in part during such period.
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;
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23
(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;
(6) the place or places where such Securities are to be surrendered for
payment of the Redemption Price; and
(7) if applicable, the Conversion Price then in effect and the date on
which the right to convert such Securities or the portions thereof to be
redeemed will expire.
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 (other than
Securities or portions thereof surrendered for conversion into Common Stock).
If any Security called for redemption is converted into Common Stock pursuant
hereto, any monies deposited with the Trustee or a Paying Agent or so segre-
gated and held in trust for the redemption of such Security shall be paid to
the Company upon the Company's request, or, if then held by the Company, shall
be discharged from such trust.
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 and from and after such date (unless an
earlier date shall be specified in the Authorizing Resolution or supplemental
indenture
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24
(if any) pursuant to which the terms of the Securities of such Series were es-
tablished) such Securities shall cease to be convertible into Common Stock.
Upon surrender of any such Security for redemption in accordance with said no-
tice such Security shall be paid by the Company at the Redemption Price, to-
gether with accrued interest to the Redemption Date; provided, however, that
installments of interest whose Stated Maturity is on or prior to the Redemp-
tion 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, and such Security shall remain convertible into
Common Stock until the Redemption Price of such Security (together with such
interest thereon) shall have been paid or duly provided for.
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 writing), and the Company shall execute and the Trustee shall au-
thenticate and deliver to the Holder of such Security, without service charge,
a new Security or Securities of the same Series, of any authorized denomina-
tion 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 sur-
rendered.
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
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25
Securities and the Authorizing Resolution and/or supplemental indenture (if
any) relating thereto, such amounts in cash or such other Required Currency as
shall be required or permitted under such provisions in order to redeem Secu-
rities 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),
(2) may apply as a credit Securities of the same Series redeemed at the elec-
tion 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, or (3) may apply as credit Securities of the same Series
(not previously so credited) converted into Common Stock and so delivered to
the Trustee for cancellation, 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.
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 (including Securities of such Series previously con-
verted into Common Stock), and, at least 45 days prior to the Sinking Fund
payment date (or such
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26
shorter period as shall be approved by the Trustee), will also deliver to the
Trustee the Securities of such Series to be so delivered. Such Officers' Cer-
tificate shall also state that the Securities forming the basis of any such
credit do not include any Securities which have been redeemed through the op-
eration of the Sinking Fund in the minimum amount required 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 re-
ceived 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.
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, for presentation for payment or, if
applicable, for conversion, and where notices and demands to or upon the Com-
pany in respect to the Securities and this Indenture may be served. The Com-
pany will
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27
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 thereof, 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, the Company will do or cause to be done all things nec-
essary to preserve and keep in full force and effect its corporate existence
and the rights (charter and statutory) and material franchises of the Company;
provided, however, that the Company shall not be required 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 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 material re-
spect to the Holders.
Section 4.04. 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 this 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 4.04 shall be for the fiscal quarter ending im-
mediately after the Original Issue Date.
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Section 4.05. 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 the their addresses appearing in the Security Regis-
ter.
Section 4.06. 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, whenever 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 law
had been enacted.
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
Company is merged or to which all or substantially all of the properties
and
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29
assets of the Company as an entirety are transferred shall be a corpora-
tion 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 indenture 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 and shall expressly
provide for the conversion rights, if any, in accordance with this Inden-
ture;
(2) immediately before and immediately after giving effect to such trans-
action, no Event of Default and no Default shall have occurred and be con-
tinuing; 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 Arti-
cle and that all conditions precedent herein provided for relating to such
transactions 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.
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
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30
Events of Default in the Authorizing Resolution and/or supplemental 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 contin-
ues for a period of 30 days;
(2) the Company defaults in the payment of the principal of any Securi-
ties of such Series when the same becomes due and payable at its Maturity
or otherwise 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 con-
tained in the Securities of such Series or this Indenture (other than an
agreement relating exclusively to another Series of Securities) and the
default continues 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 in-
voluntary case or proceeding,
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(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 pro-
ceeding,
(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.
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31
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 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 outstanding (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) oc-
curs, all unpaid principal (or, if any Securities are Original Issue Discount
Securities, such portion of the principal amount as may then be payable on ac-
celeration as provided in the terms thereof) and accrued interest on all Secu-
rities of every Series then outstanding shall ipso facto become and be immedi-
ately 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 in-
terest, 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 ex-
isting Events of Default, other than the non-payment of the principal of the
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32
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 lawful, 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
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
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33
single class) may direct the time, method and place of conducting any proceed-
ing 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
Securities of the Series in respect of which the Event of Default has oc-
curred 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 direction which, in the opinion of the Trustee, is inconsistent
with the request.
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, but subject to Article
12, 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 re-
spective dates, shall not be impaired or affected without the consent of such
Holder.
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34
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 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 authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Securityholder any plan of reorganization, arrange-
ment, adjustment or composition 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.
<PAGE>
35
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
Series in respect of which monies have been collected for principal and
interest, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal and inter-
est, respectively; 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).
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
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36
and use the same degree of care and skill in their exercise as a prudent per-
son would exercise or use under the circumstances in the conduct 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 opin-
ions 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.
(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.
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37
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
Officers' 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
hereunder in good faith and in accordance with the advice or opinion of
such counsel; 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 direc-
tion of the Holders, including, without limitation, the duties, rights and
powers specified in Section 6.02 hereof, unless such Holders have offered
to the Trustee reasonable security or indemnity against the costs, ex-
penses and liabilities which might be incurred by the Trustee in compli-
ance 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.
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
<PAGE>
38
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 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 Securities
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 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 commit-
tee 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 all
reasonable disbursements, expenses and advances incurred or made by it. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel.
<PAGE>
39
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 in principal amount of the Securities of all Series (voting as a sin-
gle class) may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
<PAGE>
40
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 held by it as Trustee to the successor
Trustee, subject to the lien provided in Section 7.07, the resignation or re-
moval 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 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>
41
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA (S) 311(a), excluding from the operation of
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 in-
dicated.
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 to pay principal of
<PAGE>
42
and interest on such outstanding Securities at their respective Stated maturi-
ties; provided that the Trustee or such Paying Agent shall have been irrevoca-
bly instructed to apply such cash, the proceeds of such U.S. Government Obli-
gations 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 pro-
vided, 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 quali-
fications 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 deposit (and the defeasance
contemplated in connection therewith) and (ii) will be subject to Federal in-
come 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 defeasance had not occurred, or
an applicable favorable ruling to that effect received 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, 8.04 and Ar-
ticle 11 and except as otherwise provided in the Authorizing Resolution and/or
the supplemental indenture (if any) in respect of any Series, shall survive
until the Securities are no longer outstanding. Thereafter, the Company's ob-
ligations 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>
43
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>
44
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 make any change that does not adversely affect the rights of any
Securityholder of such Series;
(5) 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
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 consider appropriate, including, without limita-
tion, provisions 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 pe-
riod of grace and/or notice 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 respect of such Series or (e) limitations upon the
remedies available in respect 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 Default; provided, that this paragraph (5) shall
not be deemed to require the execution of a supplemental indenture to pro-
vide for the issuance of any Series of Securities unless the same shall be
provided for in the Authorizing Resolution relating thereto; or
(6) 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>
45
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
amendment, 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;
(6) make any Security payable in money other than that stated in the Se-
curity; or
(7) adversely affect the right to convert the Securities into Common
Stock in accordance herewith.
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.
<PAGE>
46
After an amendment, supplement or waiver under this Section becomes effec-
tive, the Company shall mail to the Holders affected thereby a notice briefly
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 (7) 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>
47
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.
Section 9.07. Subordination Unimpaired.
This Indenture may not be amended to alter the subordination of any Security
without the written consent of each holder of Senior Indebtedness then out-
standing that would be adversely affected thereby.
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>
48
if to the Trustee: Harris Trust and Savings Bank
c/o Bank of Montreal Trust Company
Wall Street Plaza
88 Pine Street
New York, New York 10005
Attention:
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 shall include:
(1) a statement that the person making such certificate or opinion has
read such covenant or condition;
<PAGE>
49
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such cer-
tificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made such ex-
amination 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
complied 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 the place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
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 Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability.
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50
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 the 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.
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.
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51
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.
ARTICLE 11
Conversion of Securities
Section 11.01. Applicability of Article.
The provisions of this Article shall be applicable to the Securities of any
Series which are convertible into Common Stock pursuant to the Authorizing
Resolution and/or Supple- mental Indenture (if any) by which the form and
terms of the Securities of such Series were established, as and to the extent
provided by the terms of the Securities of such Series.
Section 11.02. Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of any Security to
be converted shall surrender such Security to the Conversion Agent at any time
during usual business hours at its office or agency maintained for the purpose
as provided in this Indenture, accompanied by a fully executed written notice,
in substantially the form set forth on the reverse of the Security, that the
Holder elects to convert such Security or a stated portion thereof constitut-
ing a multiple
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52
of $1,000 in principal amount, and, if such Security is surrendered for con-
version during the period between the close of business on any Regular Record
Date for such Security and the opening of business on the related Interest
Payment Date and has not been called for redemption on a Redemption Date
within such period (or on such Interest Payment Date), accompanied also by
payment of an amount equal to the interest payable on such Interest Payment
Date on the portion of the principal amount of the Security being surrendered
for conversion. Such notice shall also state the name or names (and address)
in which the certificate or certificates of shares of Common Stock shall be
issued. Securities surrendered for conversion shall (if so required by the
Company or the Conversion Agent) be duly endorsed by, or be accompanied by a
written instrument or instruments of transfer in form satisfactory to the Com-
pany and the Conversion Agent duly executed by, the Holder or his attorney
duly authorized in writing. As promptly as practicable after the receipt of
such notice and the surrender of such Security as aforesaid, the Company
shall, subject to the provisions of Section 11.07, issue and deliver at such
office or agency to such Holder, or on his written order, a certificate or
certificates for the number of full shares of Common Stock issuable on conver-
sion of such Security in accordance with the provisions of such Security and
cash, as provided in Section 11.03, in respect of any fraction of a share of
Common Stock otherwise issuable upon such conversion. Such conversion shall be
at the Conversion Price in effect, and shall be deemed to have been effected,
immediately prior to the close of business on the date (herein called the
"Date of Conversion") on which such notice in proper form shall have been re-
ceived by the Conversion Agent and such Security shall have been surrendered
as aforesaid, and the person or persons in whose name or names any certificate
or certificates for shares of Common Stock shall be issuable upon such conver-
sion shall be deemed to have become on the Date of Conversion the holder or
holders of record of the shares represented thereby; provided, however, that
any such surrender on any date when the stock transfer books of the Company
shall be closed shall constitute the person or persons in whose name or names
the certificate or certificates for such shares are to be issued as the record
holder or holders thereof for all purposes at the opening of business on the
next succeeding day on which such stock transfer books are open but such con-
version shall nevertheless be at the Conversion Price in effect at the close
of business on the date when such Security shall have been so surrendered with
the conversion notice in proper form. In the case of conversion of a portion,
but less than all, of a Security, the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder thereof, at the expense of the
Company, a Security or
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53
Securities in the aggregate principal amount of the unconverted portion of the
Security surrendered. Except as otherwise expressly provided in this Inden-
ture, no payment or adjustment shall be made for interest accrued on any Secu-
rity (or portion thereof) converted or for dividends or distributions on any
Common Stock issued upon conversion of any Security. The right, if any, of a
Holder of any Security to cause the Company to redeem, purchase or repay such
Security shall terminate upon receipt by the Company of any notice of conver-
sion of such Security.
Section 11.03. Fractional Interests.
No fractions of shares or scrip representing fractions of shares shall be is-
sued upon conversion of Securities. If more than one Security shall be surren-
dered for conversion at one time by the same Holder, the number of full shares
which shall be issuable upon conversion thereof shall be computed on the basis
of the aggregate principal amount of the Securities so surrendered. If any
fraction of a share of Common Stock would, except for the provisions of this
Section 11.03, be issuable on the conversion of any Security or Securities,
the Company shall make payment in lieu thereof in cash equal to the value of
such fraction computed on the basis of the Last Sale Price of one share of
Common Stock on the most recent Trading Day prior to the Date of Conversion.
"Last Sale Price" on any Trading Day shall mean (i) the closing price regular
way (or, if no closing price is reported, the average of the bid and asked
prices) as reported on the New York Stock Exchange Composite Tape, or (ii) if
on such Trading Day the Common Stock is not listed or admitted to trading on
such exchange, the closing price regular way (or, if no closing price is re-
ported, the average of the bid and asked prices) on the principal national se-
curities exchange on which the Common stock is listed or admitted to trading,
or (iii) if not listed or admitted to trading on any national securities ex-
change on such Trading Day, then the average of the closing bid and asked
prices as reported through the National Association of Securities Dealers,
Inc. on its Nasdaq National Market System or Nasdaq System or a similar organ-
ization if Nasdaq is no longer reporting information, or (iv) if the Common
Stock is not listed or admitted to trading on any national securities exchange
or quoted on the Nasdaq National Market System or Nasdaq System on such Trad-
ing Day, then the average of the closing bid and asked prices in the over-the-
counter market as furnished by any New York Stock Exchange member firm se-
lected from time to time by the Company for that purpose or (v) if not quoted
by any such organization on such Trading Day, the fair value of such Common
Stock on such Trading Day, as determined by the Board of Directors.
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54
The term "Trading Day" shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday, other than any day on which securities are not traded on any of
the above mentioned exchanges or in such markets.
Section 11.04. Adjustment of Conversion Price.
The conversion price or rate (herein called the "Conversion Price") for the
Securities of any Series shall be as set forth in the Authorizing Resolution
and/or supplemental indenture (if any) pursuant to which the form and terms of
the Securities of such Series were established, and, except as otherwise pro-
vided therein, shall be subject to adjustment from time to time as follows:
(a) In case the Company shall (1) pay a dividend or make a distribution
in shares of Common Stock on the Common Stock, (2) subdivide its outstand-
ing shares of Common Stock into a greater number of shares, (3) combine
its outstanding shares of Common Stock into a smaller number of shares or
(4) issue by reclassification of its Common Stock any shares of Capital
Stock of the Company, the Conversion Price in effect immediately prior to
such action shall be adjusted so that the Holder of any Security thereaf-
ter surrendered for conversion shall be entitled to receive the number of
shares of Common Stock or other Capital Stock of the Company which such
Holder would have owned immediately following such action had such Secu-
rity been converted immediately prior thereto. An adjustment made pursuant
to this subsection (a) shall become effective immediately, except as pro-
vided in subsection (e) below, after the record date in the case of a div-
idend or distribution and shall become effective immediately after the ef-
fective date in the case of a subdivision, combination or reclassifica-
tion. If, as a result of an adjustment made pursuant to this subsection
(a), the Holder of any Security thereafter surrendered for conversion
shall become entitled to receive shares of two or more classes of Capital
Stock (including shares of Common Stock and other Capital Stock) of the
Company, the Board of Directors (whose determination shall be conclusive
and shall be described in a statement filed with the Trustee) shall deter-
mine the allocation of the adjusted Conversion Price between or among
shares of such classes of Capital Stock or shares of Common Stock and
other Capital Stock.
(b) In case the Company shall issue rights or warrants to all holders of
Common Stock entitling them (for a period not exceeding 45 days from the
date of such issuance) to subscribe for or purchase shares of Common Stock
at a price per share less than the current market price per share (as de-
termined pursuant to subsection (d) below) of the Common Stock on the rec-
ord date mentioned below, the Conversion Price shall be adjusted to a
price,
<PAGE>
55
computed to the nearest cent, so that the same shall equal the price de-
termined by multiplying:
(1) the Conversion Price in effect immediately prior to the date of
issuance of such rights or warrants by a fraction, of which
(2) the numerator shall be (A) the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants, imme-
diately prior to such issuance, plus (B) the number of shares which
the aggregate offering price of the total number of shares so offered
for subscription or purchase would purchase at such current market
price (determined by multiplying such total number of shares by the
exercise price of such rights or warrants and dividing the product so
obtained by such current market price), and of which
(3) the denominator shall be (A) the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants, imme-
diately prior to such issuance, plus (B) the number of additional
shares of Common Stock which are so offered for subscription or pur-
chase.
Such adjustment shall become effective immediately, except as provided in
subsection (e) below, after the record date for the determination of hold-
ers entitled to receive such rights or warrants.
(c) In case the Company shall distribute to substantially all holders of
Common Stock, evidences of indebtedness, equity securities (including eq-
uity interests in the Company's Subsidiaries) other than Common Stock, or
other assets (other than cash dividends paid out of surplus of the Compa-
ny), or shall distribute to substantially all holders of Common Stock
rights or warrants to subscribe for securities (other than those referred
to in subsection (b) above) then in each such case the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the date
of such distribution by a fraction of which the numerator shall be the
current market price per share (determined as provided in subsection (d)
below) of the Common Stock on the record date mentioned below less the
then fair market value as determined by the Board of Directors (whose de-
termination shall, if made in good faith, be conclusive evidence of such
fair market value) of the portion of the assets so distributed or of such
subscription rights or warrants applicable to one share of Common Stock,
and of which the denominator shall be such current market price per share
of the Common Stock. Such adjustment shall become effective immediately,
except as provided in subsection (e) below, after the record date for the
determination of stockholders entitled to receive such distribution.
<PAGE>
56
(d) For the purpose of any computation under subsections (b) and (c)
above, the current market price per share of Common Stock on any date
shall be deemed to be the average of the Last Sale Prices for the 30 con-
secutive Trading Days commencing 45 Trading Days before the date in ques-
tion.
(e) In any case in which this Section 11.4 shall require that an adjust-
ment be made immediately following a record date, the Company may elect to
defer the effectiveness of such adjustment (but in no event until a date
later than the effective time of the event giving rise to such adjust-
ment), in which case the Company shall, with respect to any Security con-
verted after such record date and before such adjustment shall have become
effective, (i) defer paying any cash payment pursuant to Section 11.03 or
issuing to the Holder of such Security the number of shares of Common
Stock and other Capital Stock of the Company issuable upon such conversion
in excess of the number of shares of Common Stock and other Capital Stock
of the Company issuable thereupon only on the basis of the Conversion
Price prior to adjustment, and (ii) not later than five Business Days af-
ter such adjustment shall have become effective, pay to such Holder the
appropriate cash payment pursuant to Section 11.03 and issue to such
Holder the additional shares of Common Stock and other Capital Stock of
the Company issuable on such conversion.
(f) No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% of the
Conversion Price; provided that any adjustments which by reason of this
subsection (f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment; provided, further, that
adjustment shall be required and made in accordance with the provisions of
this Article 11 (other than this subsection (f)) not later than such time
as may be required in order to preserve the tax-free nature of a distribu-
tion to the holders of Securities or Common Stock. All calculations under
this Article 11 shall be made to the nearest cent or to the nearest one-
hundredth of a share, as the case may be.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly (i) file with the Trustee and each Conversion Agent
an Officer's Certificate setting forth the Conversion Price after such ad-
justment and setting forth a brief statement of the facts requiring such
adjustment, which certificate shall be conclusive evidence of the correct-
ness of such adjustment, and (ii) mail or cause to be mailed a notice of
such adjustment to each Holder of Securities in the manner provided in
Section 10.02.
Anything in this Section 11.04 to the contrary notwithstanding, the Company
shall be entitled to make such reductions in the Conversion Price, in addition
to
<PAGE>
57
those required by this Section 11.04, as it in its discretion shall determine
to be advisable in order that any stock dividend, subdivision of shares, dis-
tribution of rights or warrants to purchase stock or securities, or distribu-
tion of other assets (other than cash dividends) hereafter made by the Company
to its stockholders shall not be taxable.
Section 11.05. Continuation of Conversion Privilege in Case of Merger, Con-
solidation or Sale of Assets.
If any of the following shall occur, namely: (a) any consolidation or merger
of the Company as a result of which the holders of Common Stock shall be enti-
tled to receive stock, other securities or other assets (including cash) with
respect to or in exchange for Common Stock; or (b) any sale, lease, exchange
or other disposition of all or substantially all of the property and assets of
the Company as an entirety, then the Company, or such successor or purchasing
corporation, as the case may be, shall, as a condition precedent to such con-
solidation, merger, sale, lease, exchange or other disposition, execute and
deliver to the Trustee a supplemental indenture (which shall conform to the
TIA as in force at the date of the execution thereof) providing that the
Holder of each convertible Security then outstanding shall have the right to
convert such Security into the kind and amount of shares of stock and other
securities and property (including cash) receivable upon or in connection with
such consolidation, merger, sale, lease, exchange or other disposition by a
holder of the number of shares of Common Stock issuable upon conversion of
such Security immediately prior to such consolidation, merger, sale, lease,
exchange or other disposition. Such supplemental indenture shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 11. If, in the case of any such con-
solidation, merger, sale, lease, exchange or other disposition, the stock or
other securities and property (including cash) receivable thereupon or in con-
nection therewith by a holder of shares of Common Stock includes shares of
stock or other securities and property (including cash) of a corporation other
than the successor or purchasing corporation, as the case may be, in such con-
solidation, merger, sale, lease, exchange or other disposition, then such sup-
plemental indenture shall also be executed by such other corporation and shall
contain such additional provisions to protect the interests of the Holders of
the Securities as the Board of Directors shall reasonably consider necessary
by reason of the foregoing. The provisions of this Section 11.05 shall simi-
larly apply to successive consolidations, mergers, sales, leases, exchanges or
other dispositions.
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58
Notice of the execution of each such supplemental indenture shall be mailed
to each Holder of Securities in the manner provided in Section 10.02.
Neither the Trustee nor any Conversion Agent shall be under any responsibil-
ity to determine the correctness of any provisions contained in any such sup-
plemental indenture relating either to the kind or amount of shares of stock
or securities or property (including cash) receivable by Holders of Securities
upon the conversion of their Securities after any such consolidation, merger,
sale, lease, exchange or other disposition or to any adjustment to be made
with respect thereto, but, subject to the provisions of Sections 7.01 and
7.02, may accept as conclusive evidence of the correctness of any such provi-
sions, and shall be protected in relying upon, the Officer's Certificate
(which the Company shall be obligated to file with the Trustee prior to the
execution of any such supplemental indenture) with respect thereto.
Section 11.06. Notice of Certain Events.
If:
(a) the Company shall declare a dividend (or any other distribution) pay-
able to the holders of Common Stock otherwise than in cash; or
(b) the Company shall authorize the granting to all holders of Common
Stock of rights to subscribe for or purchase any shares of stock of any
class or of any other rights; or
(c) the Company shall authorize any reclassification or change of the
Common Stock (other than a subdivision or combination of its outstanding
shares of Common Stock), or any consolidation or merger to which the Com-
pany is a party and for which approval of any stockholders of the Company
is required, or the sale, lease, exchange or other disposition of all or
substantially all the property and assets of the Company; or
(d) there shall be authorized or ordered any voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, the Company shall cause to be filed at the office or agency maintained
for the purpose of conversion of the Securities as provided in Section 4.02,
and shall cause to be mailed to each Holder of Securities, in the manner pro-
vided in Section 10.02, at least 20 days before the date hereinafter specified
(or the earlier of the dates hereinafter specified, in the event that more
than one date is specified), a notice stating the date on which (1) a record
is expected to be taken for the purpose of such dividend, distribution or
rights, or if a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled
<PAGE>
59
to such dividend, distribution or rights are to be determined, or (2) such re-
classification, change, consolidation, merger, sale, lease, exchange or other
disposition, dissolution, liquidation or winding-up is expected to become ef-
fective and the date, if any is to be fixed, as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares
of Common Stock for securities or other property deliverable upon such reclas-
sification, change, consolidation, merger, sale, lease, exchange or other dis-
position, dissolution, liquidation or winding-up.
Section 11.07. Taxes on Conversion.
The Company will pay any and all documentary, stamp or similar taxes payable
to the United States of America or any political subdivision or taxing author-
ity thereof or therein in respect of the issue or delivery of shares of Common
Stock on conversion of Securities pursuant thereto; provided, however, that
the Company shall not be required to pay any tax which may be payable in re-
spect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the Holder of the Securities to be con-
verted (or payment of cash in lieu thereof to a person other than such Holder)
and no such issue or delivery (or payment) shall be made unless and until the
person requesting such issue or delivery (or payment) has paid to the Company
the amount of any such tax or has established, to the satisfaction of the Com-
pany, that such tax has been paid. The Company extends no protection with re-
spect to any other taxes imposed in connection with conversion of Securities.
Section 11.08. Company to Provide Stock.
The Company shall reserve, free from preemptive rights, out of its authorized
but unissued shares, sufficient shares to provide for the conversion of con-
vertible Securities from time to time as such Securities are presented for
conversion; provided, however, that nothing contained herein shall be con-
strued to preclude the Company from satisfying its obligations in respect of
the conversion of Securities by delivery of repurchased shares of Common Stock
which are held in the treasury of the Company.
If any shares of Common Stock to be reserved for the purpose of conversion of
Securities hereunder require registration with or approval of any governmental
authority under any Federal or state law before such shares may be validly is-
sued or delivered upon conversion, then the Company covenants that it will in
good faith and as expeditiously as possible endeavor to secure such registra-
tion or
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60
approval, as the case may be; provided, however, that nothing in this Section
11.08 shall be deemed to affect in any way the obligations of the Company to
convert Securities into Common Stock as provided in this Article 11.
Before taking any action which would cause an adjustment reducing the Conver-
sion Price below the then par value, if any, of the Common Stock, the Company
will take all corporate action which may, in the opinion of counsel, be neces-
sary in order that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be issued
upon conversion of Securities will upon issue be fully paid and non- assessa-
ble by the Company and free of preemptive rights.
Section 11.09. Disclaimer of Responsibility for Certain Matters.
Neither the Trustee, any Conversion Agent nor any agent of either shall at
any time be under any duty or responsibility to any Holder of Securities to
determine whether any facts exist which may require any adjustment of the Con-
version Price or with respect to the Officer's Certificate referred to in Sec-
tion 11.04(g), or with respect to the nature or extent of any such adjustment
when made, or with respect to the method employed, or herein or in any supple-
mental indenture provided to be employed, in making the same. Neither the
Trustee, any Conversion Agent nor any agent of either shall be accountable
with respect to the validity or value (or the kind or amount) of any shares of
Common Stock, or of any securities or property (including cash), which may at
any time be issued or delivered upon the conversion of any Security; and nei-
ther the Trustee, any Conversion Agent nor any agent of either makes any rep-
resentation with respect thereto. Neither the Trustee, any Conversion Agent
nor any agent of either shall be responsible for any failure of the Company to
issue, register the transfer of or deliver any shares of Common Stock or stock
certificates or other securities or property (including cash) upon the surren-
der of any Security for the purpose of conversion or, subject to Section 7.01
and 7.02, to comply with any of the covenants of the Company contained in this
Article 11.
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61
Section 11.10. Return of Funds Deposited for Redemption of Converted Securi-
ties.
Any funds which at any time shall have been deposited by the Company or on
its behalf with the Trustee or any Paying Agent for the purpose of paying the
principal of and interest, if any, on any of the Securities and which shall
not be required for such purposes because of the conversion of such Securi-
ties, as provided in this Indenture, shall forthwith after such conversion be
repaid to the Company by the Trustee or such Paying Agent.
ARTICLE 12
Subordination
Section 12.01. Securities Subordinated to Senior Indebtedness.
The Company covenants and agrees that anything in this Indenture or the Secu-
rities of any Series to the contrary notwithstanding, the indebtedness evi-
denced by the Securities of each Series is subordinate and junior in right of
payment to all Senior Indebtedness to the extent provided herein, and each
Holder of Securities of each Series, by such Holder's acceptance thereof,
likewise covenants and agrees to the subordination herein provided and shall
be bound by the provisions hereof.
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 pay-
ment 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, in-
terest on or other amounts owing in respect of the Securities or to acquire
any of the Securities for cash, property or otherwise. In addition, if any
other event of default occurs and is continuing with respect to any Senior In-
debtedness, as such event of default is defined in the instrument creating or
evidencing such Senior Indebtedness, permitting the holders of such Senior In-
debtedness then outstanding to accelerate the maturity thereof and if the
holder or holders of such Senior Indebtedness or the trustee or agent acting
on behalf of such Senior Indebtedness (each such person a "Representative")
gives written notice of the event of default to the Trustee (a "Default No-
tice"), then, unless and until all events of default have been cured or waived
or have ceased to exist or the Trustee receives notice from
<PAGE>
62
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 re-
spect of the Securities or (y) acquire any of the Securities for cash, prop-
erty 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 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 con-
tinuing 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 con-
secutive days (it being acknowledged that any subsequent action, or any breach
of any financial covenants for a period commencing after the date of commence-
ment 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 previ-
ously existed or was continuing shall constitute a new event of default for
this purpose).
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 to-
tal or partial liquidation, dissolution, winding up, reorganization, assign-
ment for the benefit of creditors or marshaling of assets of the Company or in
a bankruptcy, reorganization, insolvency, receivership or other similar pro-
ceeding relating to the Company or its property, whether voluntary or involun-
tary, 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 pay-
ment duly provided for to the satisfaction of the holders of Senior Indebted-
ness, 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 Securities, or for the acquisition of any of the Securities for cash,
property or otherwise. In the event of any such proceeding, after payment in
full of all sums owing with respect to Senior Indebtedness, the Holders of the
Securities, together with the holders of any obligations of the Company rank-
ing on a parity with the Securities, shall be entitled to be paid from the re-
maining assets of the Company the amounts at the time due and owing on account
of unpaid principal of and interest, if any, on the Securities and such other
obligations before any payment or other distribution,
<PAGE>
63
whether in cash, property or otherwise, shall be made on account of any Capi-
tal Stock or any obligations of the Company ranking junior to the Securities
and such other obligations.
If, notwithstanding the foregoing, any payment or distribution of any charac-
ter, whether in cash, securities or other property, shall be received by the
Trustee or any Holder in contravention of any of the terms hereof, such pay-
ment or distribution shall be received in trust for the benefit of, and shall
be paid over or delivered and transferred to, the holders of the Senior In-
debtedness then outstanding in accordance with the priorities then existing
among such holders for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all such Senior Indebtedness
in full. In the event of the failure of the Trustee or any Holder to endorse
or assign any such payment, distribution or security, each holder of Senior
Indebtedness is hereby irrevocably authorized to endorse or assign the same.
No present or future holder of any Senior Indebtedness shall be prejudiced in
the right to enforce subordination of the indebtedness evidenced by the Secu-
rities by any act or failure to act on the part of the Company. Nothing con-
tained herein shall impair, as between the Company and the Holders of Securi-
ties of each Series, the obligation of the Company to pay to such Holders the
principal of and interest, if any, on such Securities or prevent the Trustee
or the Holder from exercising all rights, powers and remedies otherwise per-
mitted by applicable law or hereunder upon a Default or Event of Default here-
under, all subject to the rights of the holders of the Senior Indebtedness to
receive cash, securities or other property otherwise payable or deliverable to
the Holders.
Senior Indebtedness shall not be deemed to have been paid in full unless the
holders thereof shall have received cash equal to the amount of such Senior
Indebtedness then outstanding. Upon the payment in full of all Senior Indebt-
edness, the Holders of Securities of each Series shall be subrogated to all
rights of any holders of Senior Indebtedness to receive any further payments
or distributions applicable to the Senior Indebtedness until the indebtedness
evidenced by the Securities of such Series shall have been paid in full, and
such payments or distributions received by such Holders, by reason of such
subrogation, of cash, securities or other property which otherwise would be
paid or distributed to the holders of Senior Indebtedness, shall, as between
the Company and its creditors other than the holders of Senior Indebtedness,
on the one hand, and such Holders, on the other hand, be deemed to be a pay-
ment by the Company on account of Senior Indebtedness, and not on account of
the Securities of such Series.
<PAGE>
64
The provisions of this Section 12.01 shall not impair any rights, interests,
remedies or powers of any secured creditor of the Company in respect of any
security the creation of which is not prohibited by the provisions of this In-
denture.
The securing of any obligations of the Company, otherwise ranking on a parity
with the Securities or ranking junior to the Securities, shall not be deemed
to prevent such obligations from constituting, respectively, obligations rank-
ing on a parity with the Securities or ranking junior to the Securities.
Section 12.02. Reliance on Certificate of Liquidating Agent; Further Evi-
dence as to Ownership of Senior Indebtedness.
Upon any payment or distribution of assets of the Company, the Trustee and
the Holders shall be entitled to rely upon an order or decree issued by any
court of competent jurisdiction in which such dissolution or winding up or
liquidation or reorganization or arrangement proceedings are pending or upon a
certificate of the trustee in bankruptcy, receiver, assignee for the benefit
of creditors or other person making such payment or distribution, delivered to
the Trustee or to the Holders, for the purpose of ascertaining the persons en-
titled to participate in such distribution, the holders of the Senior Indebt-
edness and other indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 12. In the absence of any such bankruptcy
trustee, receiver, assignee or other person, the Trustee shall be entitled to
rely upon a written notice by a person representing himself to be a holder of
Senior Indebtedness (or a trustee or representative on behalf of such holder)
as evidence that such person is a holder of Senior Indebtedness (or is such a
trustee or representative). If the Trustee determines, in good faith, that
further evidence is required with respect to the right of any person as a
holder of Senior Indebtedness to participate in any payment or distributions
pursuant to this Article 12, the Trustee may request such person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of Se-
nior Indebtedness held by such person, as to the extent to which such person
is entitled to participate in such payment or distribution, and as to other
facts pertinent to the rights of such persons under this Article 12, and if
such evidence is not furnished, the Trustee may defer any payment to such per-
son pending judicial determination as to the right of such person to receive
such payment.
<PAGE>
65
Section 12.03. Payment Permitted If No Default.
Nothing contained in this Article 12 or elsewhere in this Indenture, or in
any of the Securities, shall prevent (a) the Company at any time, except dur-
ing the pendency of any of the events described in the second and third para-
graphs of Section 12.01, from making payments of the principal of or interest,
if any, on the Securities, or (b) the application by the Trustee or any Paying
Agent of any moneys deposited with it hereunder to payments of the principal
of or interest, if any, on the Securities, unless and until the Trustee or
such Paying Agent, as the case may be, shall have timely received the Offi-
cer's Certificate or written notice provided for in Section 12.05.
Section 12.04. Disputes with Holders of Certain Senior Indebtedness.
Any failure by the Company to make any payment on or under any Senior Indebt-
edness, other than any Senior Indebtedness as to which the provisions of this
Section 12.04 shall have been waived by the Company in the instrument or in-
struments by which the Company incurred, assumed, guaranteed or otherwise cre-
ated such Senior Indebtedness, shall not be deemed a default under Section
12.01 if (i) the Company shall be disputing its obligation to make such pay-
ment or perform such obligation, and (ii) either (A) no final judgment relat-
ing to such dispute shall have been issued against the Company which is in
full force and effect and is not subject to further review, including a judg-
ment that has become final by reason of the expiration of the time within
which a party may seek further appeal or review, or (B) in the event of a
judgment that is subject to further review or appeal has been issued, the Com-
pany shall in good faith be prosecuting an appeal or other proceeding for re-
view, and a stay of execution shall have been obtained pending such appeal or
review.
Section 12.05. Trustee Not Charged with Knowledge of Prohibition.
Anything in this Article 12 or elsewhere in this Indenture contained to the
contrary notwithstanding, the Trustee shall not at any time be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment of moneys to or by the Trustee and shall be entitled to assume conclu-
sively that no such facts exist and that no event specified in the third para-
graph of Section 12.01 has happened, unless and until the Trustee shall have
received an Officer's Certificate to that effect or notice in writing to that
effect signed by or on behalf of the holder or holders, or their representa-
tives, of Senior Indebtedness who shall have been certified by the Company or
otherwise established to
<PAGE>
66
the reasonable satisfaction of the Trustee to be such holder or holders or
representatives or from any trustee under any indenture pursuant to which such
Senior Indebtedness shall be outstanding; provided, however, that, if the
Trustee shall not have received the Officer's Certificate or notice provided
for in this Section 12.05 at least three Business Days preceding the date upon
which by the terms hereof any such moneys may become payable for any purpose
(including, without limitation, the payment of either the principal of or in-
terest, if any, on any Security), then, anything herein contained to the con-
trary notwithstanding, the Trustee shall have full power and authority to re-
ceive such moneys and apply the same to the purpose for which they were re-
ceived and shall not be affected by any notice to the contrary which may be
received by it within three Business Days preceding such date. The Company
shall give prompt written notice to the Trustee and to each Paying Agent of
any facts which would prohibit any payment of moneys to or by the Trustee or
any Paying Agent, and the Trustee shall not be charged with knowledge of the
curing of any default or the elimination of any other fact or condition pre-
venting such payment or distribution unless and until the Trustee shall have
received an Officer's Certificate to such effect.
Section 12.06. Trustee to Effectuate Subordination.
Each Holder of Securities by such Holder's acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination as between such Holder and holders
of Senior Indebtedness as provided in this Article 12 and appoints the Trustee
its attorney-in-fact for any and all such purposes.
Section 12.07. Rights of Trustee as Holder of Senior Indebtedness.
The Trustee shall be entitled to all the rights set forth in this Article 12
with respect to any Senior Indebtedness which may at the time be held by it,
to the same extent as any other holder of Senior Indebtedness and nothing in
this Indenture shall deprive the Trustee of any of its rights as such holder.
Nothing in this Article 12 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07.
Section 12.08. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article 12 shall in such case (unless the context shall otherwise
<PAGE>
67
require) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if the Paying Agent were
named in this Article 12 in addition to or in place of the Trustee; provided,
however, that Sections 12.05 and 12.07 shall not apply to the Company if it
acts as Paying Agent.
Section 12.09. Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness to en-
force subordination as herein provided shall at any time in any way be preju-
diced or impaired by any act or failure to act on the part of the Company or
by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such holder may have
or be otherwise charged with. The holders of Senior Indebtedness may, at any
time or from time to time and in their absolute discretion, change the manner,
place or terms of payment, change or extend the time of payment of, or renew
or alter, any such Senior Indebtedness, or amend or supplement any instrument
pursuant to which any such Senior Indebtedness is issued or by which it may be
secured, or release any security therefor, or exercise or refrain from exer-
cising any other of their rights under the Senior Indebtedness, including,
without limitation, the waiver of default thereunder, all without notice to or
assent from the Holders of the Securities or the Trustee and without affecting
the obligations of the Company, the Trustee or the Holders of Securities under
this Article 12.
Section 12.10. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holder of
the Senior Indebtedness, and shall not be liable to any such holders if it
shall mistakenly pay over or distribute money or assets to Securityholders or
the Company.
<PAGE>
68
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]
Attest: By:
------------------------ ----------------------------------------
----------------------------------------
[SEAL]
Attest:By:
------------------------ ----------------------------------------
<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 inter-
est 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 Interest Payment Date fol-
lowing 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
By: ________________________________________
[Title of Officer]
Attest: ________________________
[Assistant] Secretary
<PAGE>
A-4
DATED:
Trustee's Certificate of Authentication
This is one of the [name of Series] referred to in the within-
mentionedIndenture.
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 Inden-
ture, dated as of , 199 (the "Indenture"), between the Company
and Harris Trust and Savings Bank, as Trustee (the "Trustee," which term in-
cludes any successor trustee under the Indenture); and under [reference to Au-
thorizing Resolution and/or supplemental indenture (if any) relating to the
Series]. The terms of this [name of Security] include those stated in the In-
denture and [reference to Authorizing Resolution and/or supplemental indenture
(if any) relating to the Series] and those made part of the Indenture by ref-
erence to the Trust Indenture Act of 1939, as in effect on the date of the In-
denture. Reference is hereby made to the Indenture and all [further] supple-
mental indentures thereto for a statement 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 [name of Series] are subordinated in right of payment, in the manner and
to the extent set forth in the Indenture, to the prior payment in full of all
Senior Indebtedness (as defined in the Indenture). Each Holder by accepting a
Security agrees to such subordination and authorizes the Trustee to give it
effect.
[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 not 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
<PAGE>
A-7
percentages in aggregate principal amount of the Securities at the time out-
standing to waive compliance by the Company with certain provisions of the In-
denture 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
conclusive 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 nota-
tion 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 requestn 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 any
<PAGE>
A-8
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 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 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>
EXHIBIT 4.5
---------------------
THE COASTAL CORPORATION
AND
---------------------
THE BANK OF NEW YORK,
Trustee
INDENTURE
Dated as of , 1998
Subordinated Securities
<PAGE>
CROSS-REFERENCE TABLE
TIA INDENTURE
SECTION SECTION
310 (a)(1)................................................. 7.10
(a)(2)................................................. 7.10
(a)(3)................................................. N.A.
(a)(4)................................................. N.A.
(b).................................................... 7.08;
7.10
(c).................................................... N.A.
311 (a).................................................... 7.11
(b).................................................... 7.11
(c).................................................... N.A.
312 (a).................................................... 2.07
(b).................................................... N.A.
(c).................................................... N.A.
313 (a).................................................... 7.06
(b)(1)................................................. N.A.
(b)(2)................................................. 7.06
(c).................................................... N.A.
(d).................................................... 7.06
314 (a).................................................... 4.02
(b).................................................... N.A.
(c)(1)................................................. N.A.
(c)(2)................................................. N.A.
(c)(3)................................................. N.A.
(d).................................................... N.A.
(e).................................................... 11.05
(f).................................................... N.A.
315 (a).................................................... 7.01(b)
(b).................................................... 7.05
(c).................................................... 7.01(a)
(d).................................................... 7.01(c)
(e).................................................... 6.11
316 (a)(last sentence)..................................... N.A.
(a)(1)(A).............................................. 6.05
(a)(1)(B).............................................. 6.04
(a)(2)................................................. N.A.
(b).................................................... 6.07
317 (a)(1)................................................. 6.08
(a)(2)................................................. 6.09
(b).................................................... 2.06
318 (a)................................................... N.A.
___________________
N.A. means Not Applicable.
This Cross-Reference Table does not constitute part of the Indenture
<PAGE>
TABLE OF CONTENTS
-----------------
Page
ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE....................... 1
SECTION 1.01. Definitions.................................................... 1
SECTION 1.02. Other Definitions.............................................. 4
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.............. 4
SECTION 1.04. Rules of Construction.......................................... 5
ARTICLE TWO THE SECURITIES................................................... 5
SECTION 2.01. Forms Generally and Dating..................................... 5
SECTION 2.02. Amount Unlimited; Issuable in Series........................... 6
SECTION 2.03. Denominations.................................................. 9
SECTION 2.04. Execution and Authentication...................................10
SECTION 2.05. Registrar and Paying Agent.....................................13
SECTION 2.06. Paying Agent to Hold Money and Securities in Trust.............13
SECTION 2.07. Securityholder Lists...........................................14
SECTION 2.08. Transfer and Exchange..........................................14
SECTION 2.09. Replacement Securities.........................................17
SECTION 2.10. Outstanding Securities.........................................18
SECTION 2.11. Temporary Securities...........................................19
SECTION 2.12. Cancellation...................................................20
SECTION 2.13. Payment of Interest; Defaulted Interest........................20
SECTION 2.14. Persons Deemed Owners..........................................21
SECTION 2.15. Securities in Global Form......................................21
SECTION 2.16. CUSIP Numbers..................................................23
ARTICLE THREE REDEMPTION.....................................................23
SECTION 3.01. Applicability of Article.......................................23
SECTION 3.02. Notices to Trustee.............................................23
SECTION 3.03. Selection of Securities to be Redeemed.........................24
SECTION 3.04. Notice of Redemption...........................................25
SECTION 3.05. Effect of Notice of Redemption.................................26
SECTION 3.06. Deposit of Redemption Price....................................26
SECTION 3.07. Securities Redeemed in Part....................................26
ARTICLE FOUR COVENANTS.......................................................27
SECTION 4.01. Payment of Securities..........................................27
SECTION 4.02. SEC Reports....................................................27
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SECTION 4.03. Compliance Certificate.........................................27
SECTION 4.04. Corporate Existence............................................28
SECTION 4.05. Calculation of Original Issue Discount.........................28
ARTICLE FIVE SUCCESSOR CORPORATION..........................................28
SECTION 5.01. When Company May Merge, etc....................................28
ARTICLE SIX DEFAULTS AND REMEDIES............................................29
SECTION 6.01. Events of Default..............................................29
SECTION 6.02. Acceleration...................................................30
SECTION 6.03. Other Remedies.................................................31
SECTION 6.04. Waiver of Existing Defaults....................................32
SECTION 6.05. Control by Majority............................................32
SECTION 6.06. Limitation of Suits............................................32
SECTION 6.07. Rights of Holders to Receive Payment and to Convert............33
SECTION 6.08. Collection Suit by Trustee.....................................33
SECTION 6.09. Trustee May File Proofs of Claim...............................33
SECTION 6.10. Priorities.....................................................34
SECTION 6.11. Undertaking for Costs..........................................34
ARTICLE SEVEN TRUSTEE........................................................35
SECTION 7.01. Duties of Trustee..............................................35
SECTION 7.02. Rights of Trustee..............................................36
SECTION 7.03. Individual Rights of Trustee...................................37
SECTION 7.04. Trustee's Disclaimer...........................................37
SECTION 7.05. Notice of Defaults.............................................37
SECTION 7.06. Reports by Trustee to Holders..................................38
SECTION 7.07. Compensation and Indemnity.....................................38
SECTION 7.08. Replacement of Trustee.........................................39
SECTION 7.09. Successor Trustee by Merger, etc...............................40
SECTION 7.10. Eligibility; Disqualification..................................40
SECTION 7.11. Preferential Collection of Claims Against Company..............41
ARTICLE EIGHT DISCHARGE OF INDENTURE.........................................41
SECTION 8.01. Termination of Company's Obligations...........................41
SECTION 8.02. Application of Trust Fund......................................43
SECTION 8.03. Repayment to Company...........................................43
ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS.............................43
SECTION 9.01. Without Consent of Holders.....................................43
SECTION 9.02. With Consent of Holders........................................45
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<PAGE>
SECTION 9.03. Compliance with the Trust Indenture Act........................46
SECTION 9.04. Revocation and Effect of Consents..............................46
SECTION 9.05. Notation on or Exchange of Securities..........................46
SECTION 9.06. Trustee to Sign Amendments, etc................................47
ARTICLE TEN SUBORDINATION....................................................47
SECTION 10.01. Subordination Terms............................................47
ARTICLE ELEVEN MISCELLANEOUS.................................................47
SECTION 11.01. Trust Indenture Act Controls...................................47
SECTION 11.02. Notices........................................................48
SECTION 11.03. Communication by Holders with Other Holders....................49
SECTION 11.04. Certificate and Opinion as to Conditions Precedent.............49
SECTION 11.05. Statements Required in Certificate or Opinion..................49
SECTION 11.06. When Treasury Securities Disregarded...........................50
SECTION 11.07. Rules by Trustee and Agents....................................50
SECTION 11.08. Legal Holidays.................................................50
SECTION 11.09. Governing Law..................................................50
SECTION 11.10. No Adverse Interpretation of Other Agreements..................50
SECTION 11.11. No Recourse Against Others.....................................51
SECTION 11.12. Successors.....................................................51
SECTION 11.13. Duplicate Originals............................................51
SECTION 11.14. Table of Contents, Headings, Etc...............................51
SECTION 11.15. Acts of Holders................................................51
SECTION 11.16. Assignment.....................................................53
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<PAGE>
INDENTURE dated as of , 1998, between THE COASTAL
CORPORATION, a Delaware corporation ("Company"), and THE BANK OF NEW YORK, a New
York banking corporation ("Trustee").
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
subordinated debentures, notes, bonds or other evidences of subordinated
indebtedness ("Securities"), to be issued in one or more series as provided in
this Indenture.
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the respective Holders from time to time of
Securities or of a series thereof:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
Affiliate of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person.
Agent means any Registrar, Paying Agent or co-Registrar. See Section
2.05.
Board of Directors means the Board of Directors of the Company or any
authorized committee thereof.
Business Day means any day which is not a Legal Holiday.
Company means the party named as such in this Indenture until a
successor replaces it pursuant to the applicable provisions of this Indenture
and thereafter means the successor.
Holder or Securityholder means the person in whose name a Security is
registered on the Registrar's books.
Indenture means this Indenture as amended or supplemented from time to
time and, unless the context indicates otherwise, shall include the form and
terms of a particular series of Securities established as contemplated
hereunder.
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interest, when used with respect to an Original Issue Discount
Security which by its terms bears interest only after maturity or upon default
in any other payment due on such Security, means interest payable after maturity
or upon such default, as the case may be.
Interest Payment Date means the date, if any, specified in the
Securities of any series as the fixed date on which any installment of interest
on the Securities of that series is due and payable.
Officer means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company.
Officers' Certificate means a certificate signed by two Officers or by
an Officer and an Assistant Treasurer or an Assistant Secretary of the Company
and delivered to the Trustee. See Sections 11.04 and 11.05.
Opinion of Counsel means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee. See Sections 11.04 and 11.05.
original issue discount of any debt security, including any Original
Issue Discount Security, means the difference between the principal amount of
such debt security and the initial issue price of such debt security (as set
forth, in the case of an Original Issue Discount Security, on the face of such
Security).
Original Issue Discount Security means any Security which provides for
an amount less than the principal amount thereof to be due and payable upon
acceleration of the maturity thereof pursuant to Section 6.02.
Person means any individual, corporation, partnership, limited
liability company, joint venture, joint-stock company, unincorporated
association or government or any agency or political subdivision thereof.
Predecessor Securities means, with respect to any Security, every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security,
<PAGE>
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and, for the purpose of this definition, any Security authenticated and
delivered under Section 2.09 in exchange for or in lieu of a mutilated, lost,
destroyed or wrongfully-taken Security shall be deemed to evidence the same debt
as the mutilated, lost, destroyed or wrongfully-taken Security.
principal of a debt security, including any Security, means the amount
(including, without limitation, if and to the extent applicable, any premium
and, in the case of an Original Issue Discount Security, any accrued original
issue discount, but excluding interest) that is payable with respect to such
debt security as of any date and for any purpose (including, without limitation,
in connection with any sinking fund, upon any redemption at the option of the
Company, upon any purchase or exchange at the option of the Company or the
holder of such debt security and upon any acceleration of the maturity of such
debt security).
principal amount of a debt security, including any Security, means the
principal amount as set forth on the face of such debt security.
Regular Record Date means the date, if any, specified in the
Securities of any series as the record date for the determination of
Securityholders to whom interest is payable on the next succeeding Interest
Payment Date.
SEC means the Securities and Exchange Commission.
Securities means the Securities that are issued from time to time in
one or more series under this Indenture as such Securities are amended or
supplemented from time to time.
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
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 acquires more than 50% of the outstanding voting
stock thereof and has elected a majority of its board of directors.
<PAGE>
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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
Section 9.03.
Trustee means the party named as such in this Indenture until a
successor replaces it and thereafter means the successor and if at any time
there is more than one such party, "Trustee" as used with respect to the
Securities of any series shall mean the Trustee with respect to Securities of
that series.
Trust Officer shall mean, when used with respect to the Trustee, (a)
any officer within the corporate trust department of the Trustee, including any
vice president, assistant vice president, assistant secretary, assistant
treasurer, trust officer or any other officer of the Trustee who customarily
performs functions similar to those performed by the Persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of such person's knowledge of and familiarity with the
particular subject and (b) who shall have direct responsibility for the
administration of this Indenture.
United States means the United States of America.
U.S. Government Obligations means direct obligations of, or
obligations entitled to the full faith and credit of, the United States.
SECTION 1.02. Other Definitions.
TERM DEFINED IN SECTION
Bankruptcy Law 6.01
Code 9.01
Custodian 6.01
Event of Default 6.01
Legal Holiday 11.08
Paying Agent 2.05
Registrar 2.05
SECTION 1.03. 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:
<PAGE>
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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.
obligor on the indenture securities means the Company and any other
obligor thereon.
SECTION 1.04. 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;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and in the plural
include the singular.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Forms Generally and Dating.
The Securities of each series may be issued in whole or in part in the
form of one or more global Securities as shall be specified as contemplated by
Section 2.02.
The Securities of each series (including any temporary global
Securities) shall be in one of the forms established from time to time by or
pursuant to a resolution of the Board of Directors or in or pursuant to one or
more indentures supplemental hereto, which shall set forth the information
required by Section 2.02. The Securities shall have such appropriate
<PAGE>
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insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture or by a resolution of the Board of Directors or
indenture supplemental hereto and may have such notations, legends or
endorsements as the Company may deem appropriate and as are not inconsistent
with the provisions of this Indenture, or as may be required by law, stock
exchange rule or usage. The Company shall approve the forms of the Securities
and any notation, legend or endorsement on them. If the form or forms of
Securities of any series is established by action taken pursuant to a resolution
of the Board of Directors or indenture supplemental hereto, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the written order of the Company contemplated by Section 2.04
for the authentication and delivery of such Securities.
Each Security shall be dated the date of its authentication. The form
of the Trustee's certificate of authentication to be borne by the Securities
shall be substantially as follows:
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
THE BANK OF NEW YORK
as Trustee
By:
--------------------------------
Authorized Signatory
SECTION 2.02. Amount Unlimited; Issuable in Series.
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. There shall be
established in or pursuant to a resolution of the Board of Directors or
established in or pursuant to one or more indentures supplemental hereto, prior
to the issuance of Securities of any series:
<PAGE>
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(1) the title of the Securities of the Series (which shall
distinguish Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of Securities
of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Sections 2.08, 2.09, 2.11, 3.07 or 9.05 and except for
any Securities which pursuant to Section 2.04 are deemed not to have been
authenticated and delivered hereunder);
(3) (A) whether any of the Securities of the series are to be
issuable in global form and, if so, (i) the identity of the depositary with
respect to any such global Security and (ii) whether beneficial owners of
interests in any such global Security may exchange such interests for
Securities of the same series and of like tenor and of any authorized form
and denomination, and, if so, the circumstances under which and the manner
in which any such exchanges may occur, if other than as specified in
Section 2.08; (B) if any of the Securities of the series are to be issuable
in global form, the date as of which any global Security shall be dated (if
other than the date of original issuance of the first of such Securities to
be issued); and (C) if Securities of the series are to be issuable in
definitive form (whether upon original issue, upon exchange of a temporary
Security of such series, or in exchange for a beneficial ownership interest
in a permanent global Security) only upon receipt of certain certificates
or other documents or satisfaction of other conditions, or if Securities of
the series are initially issuable in temporary global form and if owners of
beneficial interests therein may exchange such interest for an interest in
a permanent global Security only upon receipt of certain certificates or
other documents or satisfaction of other conditions, then the form and/or
terms of such certificates, documents or conditions;
(4) the date or dates (and whether fixed or extendible) on which
the principal of Securities of the series is payable;
(5) the rate or rates at which Securities of the series shall
bear interest, or the method of determining the same, if any, the date or
dates from which such interest
<PAGE>
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shall accrue, or the method of determining the same, if any, the Interest
Payment Dates (and whether fixed or extendible) and the Regular Record
Dates;
(6) the place or places where the principal of and any interest
on Securities of the series shall be payable;
(7) any provisions relating to the issuance of Securities of
such series at an original issue discount (including, without limitation,
the issue price thereof, the rate or rates at which such original issue
discount shall 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);
(8) the price or prices at which, the period or periods within
which and the terms and conditions upon which Securities of the series may
be redeemed or otherwise purchased, in whole or in part, at the option of
the Company, pursuant to any sinking fund or otherwise (including, without
limitation, the form or method of payment thereof if other than in cash);
(9) the obligation, if any, of the Company to redeem, purchase
or repay Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Securityholder thereof and the price or
prices at which and the period or periods within which and the terms and
conditions upon which Securities of the series shall be redeemed, purchased
or repaid, in whole or in part, pursuant to such obligation (including,
without limitation, the form or method of payment thereof, if other than in
cash);
(10) if other than denominations of $25 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(11) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be payable
upon acceleration of the maturity thereof pursuant to Section 6.02 or
provable in bankruptcy pursuant to Section 6.09;
(12) any Events of Default with respect to the Securities of a
particular series in lieu of or in addition to those set forth herein and
the remedies therefor;
<PAGE>
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(13) the terms of the subordination of Securities of the series;
and
(14) any other terms of a particular series and any other
provisions expressing or referring to the terms and conditions upon which
the Securities of that series are to be issued under this Indenture, which
terms and provisions are not in conflict with the provisions of this
Indenture; provided, however, that the addition to or subtraction from or
variation of Articles Four, Five, Six and Eight (and Sections 1.01 and
1.02, insofar as they relate to the definition of certain terms as used in
such Articles) with regard to the Securities of a particular series shall
not be deemed to constitute a conflict with the provisions of those
Articles.
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to such resolution of the Board of Directors or in any such indenture
supplemental hereto. Not all Securities of any one series need be issued at the
same time, and, unless otherwise so provided, a series may be reopened for
issuances of additional Securities of such series.
If any of the terms of the Securities of a series are established by
action taken pursuant to a resolution of the Board of Directors or indenture
supplemental hereto, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee with an Officers' Certificate setting forth the terms
or the manner of determining the terms of the Securities of such series. With
respect to Securities of a series which are not to be issued at one time, such
resolution of the Board of Directors or action may provide general terms or
parameters for Securities of such series and provide either that the specific
terms of particular Securities of such series shall be specified in a written
order of the Company or that such terms shall be determined by the Company or
its agents in accordance with a written order of the Company as contemplated by
the proviso clause of the fourth paragraph of Section 2.04.
SECTION 2.03. Denominations.
The Securities of each series shall be issuable in registered form
without coupons in such denominations as shall be specified as contemplated by
Section 2.02. In the absence of any such provisions with respect to the
Securities of any series, the securities of such series shall be issuable in
denominations of $25 and any integral multiple thereof.
<PAGE>
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SECTION 2.04. Execution and Authentication.
Two Officers shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Securities.
If an Officer 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 entitled to any benefit under this Indenture
or be valid for any purpose until the Trustee manually signs the certificate of
authentication on the Security. The signature shall be conclusive evidence that
the Security has been authenticated under this Indenture. Notwithstanding the
foregoing, if any Security shall have been duly authenticated and delivered
hereunder but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in Section
2.12 together with a written statement (which need not comply with Sections
11.04 and 11.05 and need not be accompanied by an Opinion of Counsel) stating
that such Security has not been issued and sold by the Company, for all purposes
of this Indenture such Security shall be deemed not to have been authenticated
and delivered hereunder and shall not be entitled to the benefits of 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 for authentication, and the Trustee shall authenticate
and deliver said Securities to or upon the written order of the Company, signed
by two Officers or by an Officer and an Assistant Treasurer of the Company,
without any further action by the Company. Such written order shall specify the
date on which said Securities shall be authenticated; provided, however, that if
not all the Securities of a series are to be issued at one time and if the
resolution of the Board of Directors or indenture supplemental hereto
establishing such series as contemplated by Sections 2.01 and 2.02 shall so
permit, such written order may set forth procedures acceptable to the Trustee
for the issuance of such Securities and for determining the form or terms of
particular Securities of such series including, but not limited to, interest
rate, maturity date, date of issuance and date from which interest shall accrue.
<PAGE>
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If the form or forms or terms of the Securities of the series have
been established in or pursuant to one or more resolutions of the Board of
Directors or indentures supplemental hereto as permitted by Sections 2.01 and
2.02, in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 7.01) shall be
fully protected in relying upon, an Opinion of Counsel stating:
(1) if the form or forms of such Securities has been established
by or pursuant to a resolution of the Board of Directors or indenture
supplemental hereto, that such form or forms has been established in
conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or
pursuant to a resolution of the Board of Directors or indenture
supplemental hereto, that such terms have been established in conformity
with the provisions of this Indenture; and
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will have been duly issued
and will constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization and other laws of general
applicability relating to or affecting the enforcement of creditors' rights
and to general equitable principles;
provided, however, that, with respect to Securities of a series which are not to
be issued at one time, the Trustee shall be entitled to receive such Opinion of
Counsel only once at or prior to the time of the first authentication of
Securities of such series and that the opinions described in clauses (2) and (3)
above may state, respectively,
(a) that, when the terms of such Securities shall have been
established pursuant to a written order of the Company or pursuant to such
procedures as may be specified from time to time by a written order of the
Company, all as contemplated by and in accordance with a resolution of the
Board of Directors or an Officers' Certificate pursuant to a resolution of
the Board of Directors or indenture supplemental hereto, as the case may
be, such terms will have been established in conformity with the provisions
of this Indenture; and
<PAGE>
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(b) that such Securities, when (i) executed by the Company, (ii)
completed, authenticated and delivered by the Trustee in accordance with
this Indenture, (iii) issued and delivered by the Company and (iv) paid
for, all as contemplated by and in accordance with the aforesaid written
order of the Company or specified procedures, as the case may be, will have
been duly issued and will constitute valid and legally binding obligations
of the Company, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization and other
laws of general applicability relating to or affecting the enforcement of
creditors' rights and to general equitable principles.
Notwithstanding the provisions of Sections 2.01, 2.02, 11.04 and this
Section, if all the Securities of a series are not to be originally issued at
one time, the resolution of the Board of Directors or indenture supplemental
hereto, and certified copy of the record of action taken pursuant to such
resolution or supplemental indenture, the Officers' Certificate, the written
order of the Company and any other documents otherwise required pursuant to such
Sections need not be delivered at or prior to the time of authentication of each
Security of such series if such documents are delivered at or prior to the
authentication upon original issuance of the first Security of such series to be
issued; provided, however, that any subsequent request by the Company to the
Trustee to authenticate Securities of such series shall constitute a
representation and warranty by the Company that as of the date of such request,
the statements made in the Officers' Certificate delivered pursuant to Section
11.04 at or prior to authentication of the first such Security shall be true and
correct on the date thereof as if made on and as of the date thereof.
The Trustee shall have the right to decline to authenticate and make
available for delivery any Securities under this Section if the issuance of such
Securities pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee.
With respect to Securities of a series which are not all issued at one
time, the Trustee may conclusively rely, as to the authorization by the Company
of any of such Securities, the form and terms thereof and the legality,
validity, binding
<PAGE>
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effect and enforceability thereof, upon the Opinion of Counsel, Officers'
Certificate and other documents delivered pursuant to Sections 2.01, 2.02, 11.04
and this Section, as applicable, at or prior to the time of the first
authentication of Securities of such series unless and until such opinion,
certificate or other documents have been superseded or revoked. In connection
with the authentication and delivery of Securities of a series which are not all
issued at one time, the Trustee shall be entitled to assume that the Company's
instructions to authenticate and deliver such Securities do not violate any
rules, regulations or orders of any governmental agency or commission having
jurisdiction over the Company.
SECTION 2.05. Registrar and Paying Agent.
The Company shall maintain an office or agency where Securities of
each series may be presented for registration of transfer or for exchange
("Registrar"), and an office or agency where Securities of each series may be
presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Securities of each series issued hereunder and of their transfer and
exchange. The Company may have one or more co-Registrars (provided that there
shall be only one register, which shall be maintained by the principal
Registrar) and one or more additional paying agents with respect to any series.
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
promptly notify the Trustee of the name and address of any such Agent. If the
Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as
such.
The Company initially appoints the Trustee Registrar and Paying Agent
for each series.
SECTION 2.06. Paying Agent to Hold Money and Securities in Trust.
Subject to any applicable terms of the Securities of the relevant
series relating to subordination (as contemplated by Article Ten and Section
2.02), each Paying Agent shall hold in trust for the benefit of Securityholders
of such series or the Trustee all money and securities held by the Paying Agent
for the payment of any amount in respect of the Securities of such series, and
shall notify the Trustee of any default by the
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Company in making any such payment. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate such money and securities and hold it as a
separate trust fund. The Company at any time may require a Paying Agent to pay
all money and securities held by it to the Trustee and account for any funds or
securities disbursed. Upon doing so the Paying Agent shall have no further
liability for the money or securities.
SECTION 2.07. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee on or before either (1) April 1 and October 1 in each year in the
case of Original Issue Discount Securities of any series which by their terms do
not bear interest prior to maturity (other than upon a default in any payment
upon such a Security) or (2) each Interest Payment Date for the Securities of
any other series, but in no event less frequently than semi-annually, 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 Securityholders.
SECTION 2.08. Transfer and Exchange.
Where a Security is presented to the Registrar or a co-Registrar with
a request to register a transfer, the Registrar shall register the transfer as
requested if its requirements for such transfer are met. Notwithstanding any
other provision of this Section, unless and until it is exchanged in whole or in
part for Securities in definitive form, a global Security representing all or a
portion of the Securities of or within a series may not be transferred except as
a whole by the depositary for such series to a nominee of such depositary or by
a nominee of such depositary to such depositary or another nominee of such
depositary or by such depositary or any such nominee to a successor depositary
for such series or a nominee of such successor depositary. Where Securities are
presented to the Registrar or a co-Registrar with a request to exchange them for
an equal aggregate principal amount of Securities of the same series of other
authorized denominations, the Registrar shall make the exchange as requested
(other than with respect to a global Security, except as provided below or as
otherwise specified as contemplated by Section 2.02) if its requirements for
such exchange are met. The Registrar shall require, among other things, that
any Security presented or surrendered for transfer or exchange be duly endorsed,
or be accompanied by appropriate transfer documents duly endorsed, or be
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accompanied by appropriate transfer documents duly executed, by the Holder
thereof or his attorney duly authorized in writing. To permit transfers and
exchanges, the Trustee shall authenticate Securities at the Registrar's request.
Any exchange or transfer shall be without charge, except that the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto.
The Registrar need not transfer or exchange any Security selected for
redemption or purchase (except, in the case of Securities to be redeemed or
purchased in part, the portion thereof not to be redeemed or purchased) any
Security in respect of which a notice requiring the purchase or redemption
thereof by the Company at the option of the Holder has been given and not
withdrawn by the Holder thereof in accordance with the terms of such Securities
(except in the case of Securities to be so purchased or redeemed in part, the
portion thereof not to be so purchased or redeemed) or transfer or exchange
Securities of any particular series during a period of 15 days before a
selection of Securities of such series to be redeemed.
Except as otherwise provided with respect to the Securities of any
series as contemplated by Section 2.02, a global Security may be exchanged only
as provided below in this Section.
If at any time the depositary with respect to a global Security
representing all or a portion of the Securities of or within a series notifies
the Company that it is unwilling, unable or ineligible to continue as such
depositary, the Company shall appoint a successor depositary with respect to
such Securities. Unless otherwise provided with respect to a series of
Securities as contemplated by Section 2.02, if a successor depositary is not so
appointed by the Company within 90 days after the Company receives such notice,
the Company will execute and the Trustee, upon receipt of a written order of the
Company as contemplated by Section 2.04 for the authentication and delivery of
definitive Securities of such series (or, if such written order has previously
been delivered, then upon receipt of written instructions from the person or
persons specified in such written order), will authenticate and deliver
Securities of such series in definitive form equal in aggregate principal amount
to the principal amount of the global Security or Securities representing such
series in exchange for such global Security or Securities.
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The Company may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more global Securities
shall no longer be represented by such global Security or Securities. In such
event the Company will execute and the Trustee, upon receipt of a written order
of the Company as contemplated by Section 2.04 for the authentication and
delivery of definitive Securities of such series (or, if such written order has
previously been delivered, then upon receipt of written instructions from the
person or persons specified in such written order), will authenticate and
deliver Securities of such series in definitive form equal in aggregate
principal amount to the principal amount of the global Security or Securities
representing such series in exchange for such global Security or Securities.
If a global Security is otherwise exchangeable as specified by the
Company pursuant to Section 2.02(3) with respect to a series of Securities, the
depositary with respect to a global Security representing all or a portion of
the Securities of or within such series may surrender such global Security to
the Trustee, as the Company's agent for such purpose, to be exchanged in whole
or in part for Securities of such series in definitive form in the manner and
under the circumstances so specified and on such terms as are acceptable to the
Company and such depositary. In such event, the Company shall execute and the
Trustee shall authenticate and deliver or make available for delivery:
(i) to each Person specified by such depositary a new Security
or Securities of the same series and of like tenor, of any authorized form
and denomination as requested by such Person in aggregate principal amount
equal to and in exchange for such Person's beneficial interest in the
global Security; and
(ii) unless endorsement of the surrendered global Security as
contemplated by Section 2.15 or another procedure is specified for the
Securities of such series as contemplated by Section 2.02, to such
depositary 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 delivered pursuant to clause
(i) above in exchange for beneficial interests in such surrendered global
Security.
In any exchange provided for in any of the preceding three paragraphs,
the Company will execute and the Trustee will authenticate and deliver
Securities in definitive registered form in authorized denominations.
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Upon the exchange of a global Security for Securities in definitive
form, such global Security shall be cancelled by the Trustee, unless endorsement
of the surrendered global Security as contemplated by Section 2.15 or another
procedure is specified for the Securities of such series as contemplated by
Section 2.02. Securities issued in exchange for a global Security pursuant to
this Section shall be registered in such names and in such authorized
denominations as the depositary for such global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such Securities to the persons
in whose names such Securities are so registered.
If a Security is issued in exchange for any portion of a global
Security after the close of business at the office or agency where such exchange
occurs (i) on any Regular Record Date and before the opening of business at such
office or agency on the relevant Interest Payment Date, or (ii) on any special
record date and before the opening of business at such office or agency on the
related date for payment of defaulted interest, interest or defaulted interest,
as the case may be, will not be payable on such Interest Payment Date or
proposed date for payment, as the case may be, in respect of such Security, but
will be payable on such Interest Payment Date or proposed date for payment, as
the case may be, only to the Person to whom interest in respect of such portion
of such global Security is payable in accordance with the provisions of this
Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
SECTION 2.09. Replacement Securities.
If a mutilated Security is surrendered to the Registrar or if the
Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, then in the absence of notice to the Company or the Trustee
that such Security has been acquired by a bona fide purchaser, the Company shall
issue and the Trustee shall authenticate a replacement Security if the Trustee's
requirements are met. If required, such Holder shall furnish an indemnity bond
sufficient in the
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judgment of the Company and the Trustee to protect the Company, the Trustee or
any Agent from any loss which any of them may suffer if a Security is replaced.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
In case any such lost, destroyed or wrongfully-taken Security has
become or is about to become due and payable, or is about to be purchased by the
Company pursuant to any provision of the Securities of such series providing for
the purchase thereof at the option of the Holder or the Company, the Company in
its discretion may, instead of issuing a new Security, pay or purchase such
Security.
Every new Security issued pursuant to this Section in lieu of any
lost, destroyed or wrongfully-taken Security shall constitute a separate
obligation of the Company, whether or not the lost, destroyed or wrongfully-
taken Security shall be at any time enforceable by anyone, and shall be entitled
to all the benefits of this Indenture equally and proportionately with any and
all other Securities of such series duly issued hereunder.
The provisions of this Section, as amended or supplemented pursuant to
this Indenture with respect to particular Securities or generally, shall be
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, lost,
destroyed or wrongfully-taken Securities.
SECTION 2.10. Outstanding Securities.
Securities outstanding at any time are all Securities authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation and those described in this Section as not being 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 2.09, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
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If the Paying Agent holds on a redemption date or maturity date or on
the Business Day following a date on which Securities of such series are to be
purchased by the Company pursuant to any provision thereof providing for such
purchase at the option of the Holder or the Company, money (or securities if
permitted by the terms of such Securities) in trust or, if the Company, acting
as its own Paying Agent, sets aside and segregates money (or securities if
permitted by the terms of such Securities) in trust, sufficient to pay
Securities payable on that date, then, on and after that date such Securities
cease to be outstanding and interest, if any (and original issue discount, if
Original Issue Discount Securities), on them ceases to accrue, unless the Paying
Agent is restricted under the terms of the Securities of such series (specified
as contemplated by Section 2.02) in applying such money.
SECTION 2.11. Temporary Securities.
Pending the preparation of a permanent global Security or definitive
Securities of any series, the Company may execute and the Trustee, upon the
written order of the Company pursuant to Section 2.04, shall authenticate and
deliver temporary Securities. Temporary Securities of any series shall be in
authorized denominations and substantially of the tenor of the definitive
Securities of that series in lieu of which they are issued, but may have
variations that the Company considers appropriate for temporary Securities. In
the case of Securities of any series, such temporary Securities may be in global
form. If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, and upon
surrender for cancellation of any one or more temporary Securities of such
series, the Company shall execute and the Trustee shall authenticate and deliver
in exchange therefor a like aggregate principal amount of definitive Securities
of authorized denominations of the same series and containing identical terms
and provisions. Until so exchanged, the temporary Securities of any series
shall, except as otherwise specified as contemplated by Section 2.02 (including
with respect to the payment of interest on temporary Securities), in all
respects be entitled to the same benefits under this Indenture as definitive
Securities of the same series and of like tenor authenticated and delivered
hereunder.
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SECTION 2.12. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation, including Securities authenticated which the Company has not
issued and sold. The Company and each Agent shall forward to the Trustee any
Securities surrendered to them for transfer, exchange, payment, redemption, or
purchase by the Company pursuant to any provision thereof providing for such
purchase at the option of the Holder. The Trustee and no one else shall cancel
all Securities surrendered for transfer, exchange, payment, redemption,
purchase, or cancellation, and may dispose of cancelled Securities as the
Company directs; provided, however, that the Trustee shall not be required to
destroy such cancelled Securities. Except as otherwise provided in the
resolution of the Board of Directors or indenture supplemental hereto
establishing such series as contemplated by Section 2.02, the Company may not
issue new Securities of a series to replace Securities of the same series that
it has paid or that have been delivered to the Trustee for cancellation.
SECTION 2.13. Payment of Interest; Defaulted Interest.
Unless otherwise provided with respect to the Securities of any series
as contemplated by Section 2.02, interest (except defaulted interest) on any
Security of any series which is payable on any Interest Payment Date shall be
paid to the Holder in whose name that Security (or one or more Predecessor
Securities) is registered on the security register at the close of business on
the Regular Record Date for such interest payment. At the option of the
Company, payment of interest on any Security may be made (i) by check mailed to
the address of the Person entitled thereto as such address appears in the
security register, or (ii) if so specified with respect to the Securities of
such series as contemplated by Section 2.02, by wire transfer to any account
designated by such Person so long as the Paying Agent is notified in writing at
least five days prior to such Interest Payment Date.
If the Company defaults in a payment of interest on the Securities of
any series on any Interest Payment Date, it shall pay the defaulted interest to
the Persons who are Securityholders of such series at the close of business on a
subsequent special record date. The Company shall fix the special record date
and payment date. At least 15 days before the record date, the Company shall
mail to each Securityholder of such series a notice that states the special
record date, the payment date and the amount of defaulted interest proposed to
be paid. The Company shall notify the Trustee in writing of the amount of the
defaulted interest proposed to be paid on each Security of such series and the
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date of the proposed payment, and at the same time the Company shall deposit
with the Paying Agent an amount of money equal to the aggregate amount proposed
to be paid in respect of such defaulted interest or shall make arrangements
satisfactory to the Paying Agent for such deposit prior to the date of the
proposed payment. The Company may pay defaulted interest in any other lawful
manner.
SECTION 2.14. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any Agent may treat the person in whose name such
Security is registered as the owner of such Security for the purpose of
receiving payment of principal of and (subject to Section 2.13) interest on such
Security and for all other purposes whatsoever, and neither the Company, the
Trustee nor any Agent shall be affected by notice to the contrary.
No holder of any beneficial interest in any global Security held on
its behalf by a depositary shall have any rights under this Indenture with
respect to such global Security, and such depositary (or its nominee, if such
global Security is registered in the name of a nominee) may be treated by the
Company, the Trustee, and any Agent as the owner of such global Security for all
purposes whatsoever. None of the Company, the Trustee, or any Agent will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global Security,
nothing herein shall prevent the Company, the Trustee, or any Agent from giving
effect to any written certification, proxy or other authorization furnished by
any depositary, as a Holder, with respect to such global Security or impair, as
between such depositary and owners of beneficial interests in such global
Security, the operation of customary practices governing the exercise of the
rights of such depositary (or its nominee) as Holder of such global Security.
SECTION 2.15. Securities in Global Form.
If the Company shall establish pursuant to Section 2.02 that the
Securities of or within a series are to be issued in whole or in part in global
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form, then the Company shall execute, and the Trustee shall, in accordance with
Section 2.04 and the written order of the Company contemplated thereby,
authenticate and deliver one or more global Securities in temporary or permanent
form that (i) shall be registered in the name of the depositary for such global
Security or Securities or the nominee of such depositary, (ii) shall be
delivered by the Trustee to such depositary or pursuant to such depositary's
instructions, and (iii) shall bear a legend substantially to the following
effect: "UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY." Each depositary designated pursuant to Section
2.02 for a global Security in registered form must be, to the extent required by
applicable law or regulation, a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and any other applicable statute or
regulation, at the time of its designation and at all times that it serves as
depositary. Notwithstanding clause (14) of Section 2.02 and the provisions of
Section 2.03, any such global Security shall represent such of the outstanding
Securities of such series as shall be specified therein and may provide that it
shall represent the aggregate amount of outstanding Securities of such series
from time to time endorsed thereon and that the aggregate amount of outstanding
Securities represented thereby may from time to time be increased or decreased
to reflect exchanges. Any endorsement of a Security in a global form to reflect
the amount, or any increase or decrease in the amount, or changes in the rights
of Holders, of outstanding Securities represented thereby shall be made in such
manner and upon instructions given by such Person or Persons as shall be
specified therein or in the written order of the Company to be delivered to the
Trustee pursuant to Section 2.04. Subject to the provisions of Section 2.04
and, if applicable, Section 2.11, the Trustee shall deliver and redeliver any
Security in permanent global form in the manner and upon instructions given by
the Person or Persons specified therein or in the applicable written order of
the Company. If a written order of the Company pursuant to Section 2.04 has
been, or simultaneously is, delivered, any instructions with respect to a
Security in global form shall be in writing but need not comply with Sections
11.04 and 11.05 and need not be accompanied by an Opinion of Counsel.
The provisions of the last sentence of the third paragraph of Section
2.04 shall apply to any Security represented by a Security in global form if
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such Security was never issued and sold by the Company and the Company delivers
to the Trustee the Security in global form together with written instructions
(which need not comply with Sections 11.04 and 11.05 and need not be accompanied
by an Opinion of Counsel) with regard to the reduction in the principal amount
of Securities represented thereby, together with the written statement
contemplated by the last sentence of the third paragraph of Section 2.04.
SECTION 2.16. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided, however, that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the "CUSIP" numbers.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Applicability of Article.
Securities of any series which are redeemable before their stated
maturity at the election of the Company or through the operation of any sinking
fund for the retirement of Securities of such series shall be redeemable in
accordance with their terms and (except as otherwise specified as contemplated
by Section 2.02 for Securities of any series) in accordance with this Article.
SECTION 3.02. Notices to Trustee.
If the Company elects to redeem all or less than all the Securities of
any series, it shall notify the Trustee of the redemption date, the principal
amount of Securities to be redeemed, the specific provision of the Securities
pursuant to which the Securities being called for redemption are being redeemed
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and the redemption price. In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, the Company shall furnish the
Trustee with an Officers' Certificate evidencing compliance with such
restriction. If the Company wants to make any permitted optional sinking fund
payment, it shall notify the Trustee of the principal amount of the Securities
to be redeemed.
The Company (1) may deliver outstanding Securities of a series (other
than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed or otherwise purchased either at
the election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Securities in satisfaction of all or any part of any sinking fund
payment required to be made pursuant to the terms of the Securities of such
series as provided for by the terms of such series: provided, however, that such
Securities have not been previously so credited. Such Securities shall be
received and credited for such purpose by the Trustee at the redemption price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.
The Company shall notify the Trustee of its intention to so reduce the amount of
such sinking fund payment, the amount of the reduction and the basis for it.
The Company shall deliver to the Trustee with such notice any Securities to be
credited for such purpose that it has not previously delivered to the Trustee
for cancellation.
The Company shall give each notice and Officers' Certificate provided
for in this Section at least 60 days before the redemption date (unless a
shorter notice shall be satisfactory to the Trustee or is otherwise specified as
contemplated by Section 2.02 for Securities of any series).
SECTION 3.03. Selection of Securities to be Redeemed.
Except as otherwise specified as contemplated by Section 2.02 for
Securities of any series, if less than all the Securities of any series are to
be redeemed, the particular Securities to be redeemed shall be selected from
Securities of the same series outstanding not previously called for redemption
by such method as the Trustee considers fair and appropriate (and in such manner
as complies with applicable requirements of any stock exchange on which
Securities of such series are listed) and which may provide for the selection
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for redemption of portions (equal to the minimum authorized denomination for
Securities of that series or any integral multiple thereof) of the principal
amount of Securities of such series that have denominations larger than the
minimum authorized denomination for Securities of that series. Provisions of
this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption.
SECTION 3.04. Notice of Redemption.
At least 30 days but no more than 60 days before a redemption date
(unless a shorter notice is specified as contemplated by Section 2.02 for
Securities of any series), the Company shall mail a notice of redemption by
first-class mail to each Holder of Securities of the series to be redeemed.
The notice shall identify the Securities, including CUSIP number, if
any (and, in the case of partial redemption, the principal amount of the
Securities), to be redeemed and shall state:
(1) The redemption date;
(2) the redemption price and method of payment, if other than in
cash;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(5) that interest, if any (or original issue discount, if
Original Issue Discount Securities), on Securities called for redemption
ceases to accrue on and after the redemption date, unless the Company
defaults in making such redemption payment; and
(6) that the redemption is for a sinking fund or at the election
of the Company, whichever is the case.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense, provided that the
Company shall have furnished to the Trustee the Officers' Certificate and
Opinion of Counsel required pursuant to Section 11.04 at least 15 days prior to
the date that the Trustee is required to take any action in connection with a
redemption.
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SECTION 3.05. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities of the series called
for redemption become due and payable on the redemption date and at the
redemption price therein specified and on and after such date (unless the
Company shall default in the payment of the redemption price and accrued
interest, if any) such Securities shall cease to bear interest, if any (and
original issue discount, if such Securities are Original Issue Discount
Securities, shall cease to accrue). Upon surrender to the Paying Agent, such
Securities shall be paid at the redemption price, plus, if applicable, accrued
interest, if any, to the redemption date: provided, however, that installments
of interest the Interest Payment Date for which is on or prior to the redemption
date shall be payable to the persons who are Holders of such Securities (or one
or more Predecessor Securities) on the relevant record dates for such interest
according to their terms 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, bear interest
from the redemption date at the rate prescribed therefor in the Security.
SECTION 3.06. Deposit of Redemption Price.
On or before 10:00 a.m., New York time, on the redemption date, the
Company shall deposit with the Paying Agent money (or securities if permitted by
the terms of such Securities) sufficient to pay the redemption price of, and
(except if the redemption date is an Interest Payment Date) accrued interest, if
any, on, all Securities to be redeemed on that date other than Securities or
portions thereof called for redemption on that date which are delivered by the
Company to the Trustee for cancellation.
SECTION 3.07. Securities Redeemed in Part.
Any Security that is to be redeemed only in part shall be surrendered
at a place of payment therefor (with, if the Company, the Registrar or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company, the Registrar and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in 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, containing identical terms and provisions, of any authorized
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denomination as requested by such Holder in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal amount of the
Security so surrendered, and, unless otherwise specified as contemplated by
Section 2.02, if a global Security is so surrendered, the Company shall execute,
and the Trustee shall authenticate and deliver to the depositary for such global
Security, without service charge, a new global Security in a denomination equal
to and in exchange for the unredeemed portion of the principal amount of the
global Security so surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
The Company shall pay the principal of and any interest on the
Securities of each series in accordance with the terms of the Securities of such
series and this Indenture.
To the extent enforceable under applicable law, the Company shall pay
interest on overdue principal at the rate borne by the Securities of such series
(unless a different rate is specified as contemplated by Section 2.02 for
Securities of such series).
SECTION 4.02. SEC Reports.
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, documents
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 Exchange Act of
1934. The Company also shall comply with the other provisions of TIA (S)314(a).
SECTION 4.03. Compliance Certificate.
The Company shall deliver to the Trustee within 120 days after the end
of each fiscal year 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 being
complied with regardless of any period of grace or requirement of notice
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provided under this 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 delivered
pursuant to this Section 4.03 shall be for the fiscal year ending immediately
after the date that the Securities are issued.
SECTION 4.04. Corporate Existence.
Subject to the provisions of Section 5.01, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence.
SECTION 4.05. Calculation of Original Issue Discount.
The Company shall file with the Trustee promptly at the end of each
calendar year a written notice specifying the amount of original issue discount
(including daily rates and accrual periods), if any, accrued on outstanding
Securities as of the end of such year.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, etc.
The Company shall not consolidate with or merge into, or transfer its
properties and assets substantially as an entirety to, another corporation
unless (1) the successor corporation, which shall be a corporation organized and
existing under the laws of the United States, a State thereof or the District of
Columbia, assumes by supplemental indenture all the obligations of the Company
under the Securities and this Indenture; and (2) immediately after giving effect
to such transaction, no Event of Default shall have occurred and be continuing.
Thereafter, unless otherwise specified as contemplated by Section 2.02 for the
Securities of any series, all such obligations of the predecessor corporation
shall terminate.
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ARTICLE SIX
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.
An "Event of Default" with respect to Securities of any series means
each of the events specified below in this Section 6.01, unless it is either
inapplicable to a particular series or is specifically deleted or modified as
contemplated by Section 2.02 for the Securities of such series, and any other
events as may be specified as contemplated by Section 2.02 for the Securities of
such series:
(1) the Company defaults in the payment of any interest on any
Security of that 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
Security of that series when the same becomes due and payable at maturity,
upon redemption (including default in the making of any mandatory sinking
fund payment), upon purchase by the Company at the option of the Holder
pursuant to the terms of such Security or otherwise;
(3) the Company fails to comply with any of its other agreements
in Securities of that series or this Indenture (other than an agreement
which has expressly been included in this Indenture solely for the benefit
of Securities of any series other than that series or is expressly made
inapplicable to the Securities of such series as contemplated by Section
2.02) and the default continues 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 consents to the
commencement of a case against it,
(B) consents to the entry of an order for relief against it
in an involuntary case,
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(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors;
(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 adjudicates the Company insolvent or bankrupt,
(B) appoints a Custodian of the Company or for all or
substantially all of its property, or
(C) orders the winding up or liquidation of the Company, and
the order or decree remains unstayed and in effect for 90 days; or
(6) any other Event of Default provided with respect to
Securities of that series occurs.
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 or similar official under any Bankruptcy
Law.
A default under clause (3) is not an Event of Default until the
Trustee notifies the Company or the Holders of at least 25% in aggregate
principal amount of the outstanding Securities of that series notify the Company
and the Trustee of the default and the Company does not cure the default within
90 days after receipt of the notice. The notice must specify the default,
demand that it be remedied and state that the notice is a "Notice of Default."
SECTION 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
Section 6.01(4) or (5)) occurs and is continuing with respect to Securities of
any series at the time outstanding, the Trustee by notice to the Company, or the
Holders of at least 25% in aggregate principal amount of the outstanding
Securities of that series by notice to the Company and the Trustee, may declare
to be due and payable immediately (1) the principal amount (or, if the
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Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of the Securities of
that series) of all of the Securities of that series then outstanding and (2)
interest, if any, accrued to the date of acceleration. Upon such declaration,
such principal amount (or specified amount) and interest, if any, shall be due
and payable immediately. If an Event of Default specified in Section 6.01 (4)
or (5) occurs and is continuing, (1) the principal amount (or, if the Securities
of that series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of the Securities of that
series) of all of the Securities of that series then outstanding and (2)
interest, if any, accrued to the date of such acceleration shall become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or Securityholders. The Holders of a majority in aggregate
principal amount of the outstanding Securities of the series with respect to
which an acceleration applies by notice to the Trustee may rescind an
acceleration and its consequences with respect to such series if all existing
Events of Default (other than the non-payment of the principal of and accrued
interest, if any, on Securities that have become due solely by such
acceleration) with respect to Securities of that series have been cured or
waived and if the rescission would not conflict with any judgment or decree. No
such rescission shall affect any subsequent default or impair any right
consequence thereon.
SECTION 6.03. Other Remedies.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may pursue any available remedy by proceeding at
law or in equity to collect the payment of the whole amount which then shall
have become due and remain unpaid for principal or interest, if any, on the
Securities of that series or to enforce the performance of any provision of the
Securities of that series or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities of that series 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 an Event of Default shall not
impair the right or remedy or constitute a waiver or acquiescence in the Event
of Default. No remedy is exclusive of any other remedy. All available remedies
are cumulative.
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SECTION 6.04. Waiver of Existing Defaults.
Subject to Section 9.02, the Holders of a majority in aggregate
principal amount of the outstanding Securities of any series by notice to the
Trustee may waive on behalf of the Holders of all the Securities of such series
an existing Default or Event of Default and its consequences. When a Default or
Event of Default is waived, it is cured and stops continuing.
SECTION 6.05. Control by Majority.
The Holders of a majority in aggregate principal amount of the
outstanding Securities of any series 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, with respect to the Securities of such
series. The Trustee, however, may refuse to follow any direction that conflicts
with law or this Indenture, that is unduly prejudicial to the rights of another
Securityholder or that would involve the Trustee in personal liability.
SECTION 6.06. Limitation of Suits.
No Holder of any Security of any series shall have the right to pursue
any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of at least 25% in aggregate principal amount of
the outstanding Securities of that series in respect of which the Event of
Default has occurred make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer and provide 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 receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in aggregate principal amount of the outstanding Securities of such series.
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A Securityholder of any series may not use this Indenture to prejudice
the rights of another Securityholder of such series or to obtain a preference or
priority over another Securityholder of such series, except in the manner herein
provided and for the equal and ratable benefit of all Securityholders of such
series.
SECTION 6.07. Rights of Holders to Receive Payment and to Convert.
Subject to the terms of the Securities of any series relating to
subordination (as contemplated by Article Ten and Section 2.02) and
notwithstanding any other provision of this Indenture, the right of any Holder
of a Security to receive payment of principal of and (subject to Section 2.13)
interest, if any, on the Security, on or after the respective due dates with
respect to such payments expressed in such Security, and, if applicable, to
convert such Security on the terms and subject to the conditions applicable to
Securities of such series, or to bring suit for the enforcement of any such
payment on or after such respective dates or of such right to convert, if any,
shall not be impaired or affected without the consent of the Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(1) or (2) occurs and
is continuing with respect to the Securities of any series, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount which then shall have become due and remain unpaid
for principal and interest, if any, on the Securities of such series.
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 and the Securityholders allowed in any judicial proceedings relative to
the Company, its creditors or its property and to collect and receive money,
property or securities payable or deliverable on any such claims and to
distribute the same.
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SECTION 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to the payment of items to which the Securities have been
subordinated as contemplated by Article Ten and Section 2.02;
Third: to the payment of amounts due and unpaid for principal and
interest, if any, on the Securities in respect of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts which then shall have become due and payable on such
Securities for principal and interest, respectively; and
Fourth: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section, notice of which shall be mailed to
each Securityholder by the Company at least 15 days before such record date.
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
litigant 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 and expenses, 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 Section does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in
aggregate principal amount of the outstanding Securities of any series.
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ARTICLE SEVEN
TRUSTEE
All the provisions of this Article Seven apply to the Trustee acting
in all its appointed capacities pursuant to this Indenture unless any provision
specifically applies to the Trustee only in its capacity as Trustee.
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default with respect to Securities of any series
has occurred and is continuing, the Trustee shall with respect to such series
exercise such of the rights and powers vested in it by this Indenture with
respect to such series and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) With respect to Securities of any series, except during the
continuance of an Event of Default with respect to Securities of such series:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture or the TIA and no others.
(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. The
Trustee, however, shall, with respect to certificates or opinions which by
any provision hereof are required to be provided to the Trustee, examine
the certificates and opinions to determine whether or not they conform to
the requirements of this Indenture (but need not confirm or investigate the
accuracy of mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its willful misconduct,
except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section.
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(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) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee may refuse to perform any duty or exercise any right
or power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance 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 reasonably assured to it.
SECTION 7.02. Rights of Trustee.
(a) The Trustee may conclusively 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 consult
with counsel of its selection or require an Officers' Certificate, an Opinion of
Counsel, and/or an accountant's certificate. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the advice
of such counsel the Officers' Certificate, Opinion of Counsel or accountant's
certificate.
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(c) The Trustee may act through agents and counsel and shall not be
responsible for the misconduct or negligence of any agent or counsel 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 believes to be authorized or within its rights or
powers.
(e) Any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution.
(f) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Securities and this Indenture.
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
Affiliates with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. The Trustee, however, must comply with
Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities; it shall not be accountable for the Company's
use of the proceeds from the Securities; and it shall not be responsible for any
statement in the Indenture or the Securities other than its certificate of
authentication.
SECTION 7.05. Notice of Defaults.
If a Default occurs and is continuing with respect to Securities of
any series and if it is actually known to a Trust Officer of the Trustee, the
Trustee shall transmit by mail to each Securityholder or such series in the
manner and to the extent provided in TIA (S) 313(c) notice of the Default within
90 days after its occurs or as soon as reasonably practicable thereafter.
Except in the case of a default in payment of principal of or interest on any
Security of such series (including default in the making of any mandatory
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sinking fund or mandatory repurchase payment), the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Securityholders of
such series.
SECTION 7.06. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15 following
the date on which Securities are originally issued under this Indenture, the
Trustee shall transmit by mail to each Securityholder in the manner and to the
extent provided in TIA (S) 313(c) a brief report dated as of such May 15 that
complies with TIA (S) 313(a) if such report is required by TIA (S) 313(a). The
Trustee also shall comply with TIA (S) 313(b).
A copy of each report at the time of its mailing to Securityholders
shall be filed by the Company with the SEC and each stock exchange on which the
Securities are listed.
The Company will promptly notify the Trustee if and when the
Securities of any series are listed on any stock exchange.
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee such compensation for its
services as shall be agreed upon in a writing between 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 all reasonable out-of-pocket expenses incurred by it.
Such expenses shall include the reasonable compensation and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee or any predecessor Trustee and
their agents for and to hold them harmless against any loss, damages, claims,
expenses or liability incurred by it arising out of or in connection with the
acceptance or administration of this trust and its duties hereunder. The
Trustee shall notify the Company promptly of any claims asserted against the
Trustee for which it may seek indemnity. Failure of the Trustee to so notify
the Company shall not relieve the Company of its obligations hereunder. The
Company shall have the right to elect to defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need
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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, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal of or
interest on particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign at any time with respect to Securities of one
or more series by so notifying the Company. The Holders of a majority in
aggregate principal amount of the outstanding Securities of any series may
remove the Trustee with respect to the Securities of such series by so notifying
the removed Trustee and may appoint a successor Trustee with the Company's
consent. The Company shall 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 the Trustee for any reason, with respect to the Securities of one or
more series, the Company shall promptly appoint a successor Trustee or Trustees
(it being understood that any such successor Trustee may be appointed with
respect to the Securities of one or more or all of such series and that at any
time there shall be only one Trustee with respect to the Securities of any
particular series).
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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 all property held by it as Trustee to the
successor Trustee (subject to its lien, if any, provided for 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 with respect to Securities of any series does
not take office within 30 days after the retiring Trustee resigns or is removed,
the retiring Trustee (at the expense of the Company), the Company or the Holders
of a majority in aggregate principal amount of the outstanding Securities of
such series may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
with respect to all Securities and the appointment of a successor Trustee.
SECTION 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates with, mergers or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation or national banking association, the successor corporation or
national banking association 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). The Trustee shall always have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. With respect to the Securities of each
series, the Trustee shall comply with TIA (S) 310(b). In determining whether
the Trustee has a conflicting interest as defined in TIA (S) 310(b) with respect
to the Securities of any series, there shall be excluded this Indenture with
respect to the Securities of any series other than that series. Nothing herein
shall prevent the Trustee from filing with the SEC the application referred to
in the second to last paragraph of TIA (S) 310(b).
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SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA (S) 311(a), excluding 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.
Any application by the Trustee for written instructions from the
Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations.
The Company may terminate all of its obligations under the Securities
of any series and this Indenture with respect to the Securities of such series
if either (1) all Securities of such series previously authenticated and
delivered (other than destroyed, lost or stolen Securities which have been
replaced or paid or Securities for whose payment money (or, if permitted by the
terms of such Securities, securities) has theretofore been held in trust and
thereafter repaid to the Company, as provided in Section 8.03) have been
delivered to the Trustee for cancellation; or (2) (i) the Company irrevocably
deposits in trust with the Trustee money or U.S. Government Obligations
sufficient to pay the principal of and interest, if any, on all Securities of
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such series not theretofore cancelled or delivered to the Trustee for
cancellation (other than destroyed, lost or stolen Securities which have been
replaced or paid or Securities for whose payment money (or, if permitted by the
terms of such Securities, securities) has theretofore been held in trust and
thereafter repaid to the Company, as provided in Section 8.03) to maturity or
redemption, as the case may be and (ii) the Company delivers to the Trustee an
opinion of counsel to the effect that, based upon the Company's receipt from, or
the publication by, the Internal Revenue Service of a ruling or a change in law,
the holders of the Securities will not recognize income, gain or loss for United
States federal income tax purposes as a result of the deposit, defeasance and
discharge and will be subject to United States federal income tax on the same
amount in the same manner and at the same times as would have been the case if
such deposit, defeasance or discharge had not occurred.
The Company's obligations in Sections 2.05, 2.06, 2.07, 2.08, 2.09,
4.01, 7.07, 7.08 and 8.03 of this Indenture, however, shall survive until the
Securities of such series are no longer outstanding. Thereafter, the Company's
obligations in Sections 7.07 and 8.03 shall survive. Notwithstanding the
satisfaction and discharge of this Indenture with respect to the Securities of
any series, if money or U.S. Government Obligations shall have been deposited
with the Trustee pursuant to clause (2) of the first paragraph of this Section,
the obligations of the Trustee under Section 8.02 and the second sentence of
Section 8.03 shall survive.
After a deposit and if all other conditions thereto are met, the
Trustee for the Securities of such series shall be required to execute an
instrument acknowledging satisfaction and discharge of this Indenture with
respect to such Securities, except for those surviving obligations specified
above; provided, however, that the Trustee shall not be required to execute such
instrument until the expiration of 90 days after the date of a deposit and that
such instrument may be made subject to the condition that such deposit had been
in compliance with any applicable terms of the Securities of such series
relating to subordination (as contemplated by Article Ten and Section 2.02).
In order to have money available on a payment date to pay the
principal of or interest, if any, on the Securities, the U.S. Government
Obligations shall be payable as to principal or interest on or before such
payment date in such amounts as will provide the necessary money. U.S.
Government Obligations shall not be callable at the issuer's option.
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SECTION 8.02. Application of Trust Fund.
The Trustee shall hold in trust money and U.S. Government Obligations
deposited with it pursuant to Section 8.01. Subject to any applicable terms of
the Securities of any series relating to subordination (as contemplated by
Article Ten and Section 2.02), the Trustee shall apply the deposited money and
the money from the U.S. Government Obligations through the Paying Agent and in
accordance with the provisions of the Securities of such series and this
Indenture to the payment of principal of and interest, if any, on the Securities
of such series for the payment of which such money or U.S. Government
Obligations has been deposited with the Trustee.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 8.01 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of outstanding Securities.
SECTION 8.03. Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the Company
upon written request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon written request
any money or securities held by them for the payment of principal or interest,
if any, that remains unclaimed for two years. After that, Holders entitled to
the money or securities must look to the Company for payment unless an
applicable abandoned property law designates another Person.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or
the Securities of any series without notice to or consent of any Securityholder:
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(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Section 5.01;
(3) to establish the form or terms of Securities of any series as
permitted by Sections 2.01 and 2.02;
(4) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company;
(5) to add any additional Events of Default (and if such Events
of Default are to be applicable to less than all series of Securities,
stating that such Events of Default are expressly being included solely to
be applicable to such series);
(6) to change or eliminate any of the provisions of this
Indenture, provided that, except as otherwise contemplated by Section
2.02(14), any such change or elimination shall become effective only when
there is no Security outstanding of any series created prior thereto which
is entitled to the benefit of such provision;
(7) to add or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal,
and with or without interest coupons, or to provide for uncertificated
Securities in addition to certificated Securities (so long as any
"registration-required obligation" within the meaning of Section 163(f)(2)
of the Internal Revenue Code of 1986, as amended (the "Code") is in
registered form for purposes of the Code);
(8) to make any change that does not materially adversely affect
the rights of any Securityholder; or
(9) to comply with any requirement of the SEC in connection with
the qualification of this Indenture under the TIA.
<PAGE>
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SECTION 9.02. With Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or
the Securities of any series without notice to any Securityholder but with the
written consent of the Holders of a majority in aggregate principal amount of
the outstanding Securities of each series affected by such amendment or
supplement. The Holders of a majority in aggregate principal amount of the
outstanding Securities of any series may on behalf of the Holders of all
Securities of such series waive compliance by the Company with any provision of
this Indenture or of Securities of such series without notice to any
Securityholder. Without the consent of each Securityholder affected, however,
the amendment, supplement or waiver, including a waiver pursuant to Section
6.04, may not:
(1) reduce the amount of Securities of any series whose Holders
must consent to an amendment, supplement or waiver;
(2) reduce the rate of or extend the time for payment of interest
on any Security (or, in the case of an Original Issue Discount Security,
reduce the rate of accrual of original issue discount);
(3) reduce the principal of (or any premium payable upon the
redemption of) or change the fixed maturity of any Security (or, in the
case of an Original Issue Discount Security, reduce the portion of the
principal amount that would be due and payable upon acceleration of the
maturity thereof pursuant to Section 6.02);
(4) change the amount or time of any payment required by any
sinking fund provisions of the Securities of any series;
(5) make any change that materially adversely affects the rights
of a Holder to require the Company to purchase a Security in accordance
with the terms thereof and this Indenture;
(6) waive a default in the payment of the principal of or
interest, if any, on any Security; or
(7) make any Security payable in money or securities other than
that stated in the Security.
<PAGE>
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It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplement, but it shall
be sufficient if such consent approves the substance thereof.
An amendment to or supplement of this 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 covenant or other provision, shall be deemed not to
affect the rights under this Indenture of the Holders of Securities of any other
series.
SECTION 9.03. Compliance with the 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.
A consent to an amendment, supplement, waiver or other action by a
Holder of a Security shall bind the Holder and every subsequent Holder of a
Security or portion of a Security that evidences the same debt as the consenting
Holder's Security, even if notation of the consent is not made on any Security.
Any such Holder or subsequent Holder, however, may revoke the consent as to his
Security or portion of a Security. Such revocation shall be effective only if
the Trustee receives the notice of revocation before the date the amendment,
supplement, waiver or other action becomes effective. An amendment, supplement,
waiver or other action shall become effective on receipt by the Trustee of
written consents from the Holders of the requisite percentage in aggregate
principal amount of the outstanding Securities of the relevant series. After an
amendment, supplement or waiver becomes effective, it shall bind every
Securityholder of each series of Securities so affected.
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 issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
<PAGE>
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SECTION 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article if the amendment, supplement or waiver does not
adversely affect the rights, duties, immunities or liabilities of the Trustee.
If it does, the Trustee may but need not sign it. The Company may not sign an
amendment or supplement until the Board of Directors approves it.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modification thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture.
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Subordination Terms.
The payment by the Company of the principal of, premium, if any, and
interest on the Securities of any series shall be subordinated in the manner and
to the extent provided in the Securities of such series, as contemplated by
Sections 2.01 and 2.02.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by any of TIA (S)(S) 310 to 317, inclusive, through operation
of TIA (S) 318(c), such imposed duties shall control.
<PAGE>
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SECTION 11.02. Notices.
Any notice or communication shall be sufficiently given if in writing
and delivered 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
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 W
New York, New York 10286
Attention: Remo Reale, Assistant Vice President
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 by first-class mail, postage prepaid, at his address as it appears on the
registration books of the Registrar and shall be sufficiently 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.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be equivalent of such notice.
Waivers of notice by Holders of Securities shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
<PAGE>
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SECTION 11.03. Communication 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
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA (S)312(c).
SECTION 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action 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 (including any covenants compliance with
which constitutes a condition 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 (including any covenants compliance
with which constitutes a condition precedent) have been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion.
Each Officers' Certificate or Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture (other
than certificates provided pursuant to Section 4.03) shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
<PAGE>
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(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 11.06. When Treasury Securities Disregarded.
In determining whether the Holders of the required aggregate principal
amount of Securities of any series have concurred in any direction, waiver or
consent, Securities of such series owned by the Company or by any Affiliate of
the Company shall be disregarded and treated as not outstanding, except that for
the purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Securities of such series which the
Trustee actually knows are so owned shall be so disregarded.
SECTION 11.07. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or a meeting of
the Securityholders of all series or any series. The Registrar and Paying Agent
may make reasonable rules for its functions.
SECTION 11.08. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday, or a day on which banking
institutions in the City of New York, New York, are not required to be open. If
a specified date (including a date for giving notice) is a Legal Holiday, any
action to be taken on such date pursuant to this Indenture or the Securities
(including such conversion) may be taken on the next succeeding day that is not
a Legal Holiday, and, to the extent applicable, no interest, or original issue
discount, as the case may be, shall accrue for the intervening period.
SECTION 11.09. Governing Law.
The internal laws of the State of New York shall govern this Indenture
and the Securities.
SECTION 11.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
<PAGE>
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SECTION 11.11. No Recourse Against Others.
No past, present or future director, officer, employee or stockholder,
as such, of the Company or the Trustee or any successor of either thereof shall
have any liability for any obligations of the Company or the Trustee under the
Securities or this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation and all such liability is hereby
waived and released. Such waiver and release are part of the consideration for
the issue of the Securities.
SECTION 11.12. 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 11.13. 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 11.14. Table of Contents, Headings, Etc.
The table of contents and the titles and headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference only,
are not to be considered a part hereof, and shall in no way modify or restrict
any of the terms or provisions hereof.
SECTION 11.15. Acts of Holders.
(a) Any direction, consent, waiver or other action provided by this
Indenture to be given or taken by Holders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such Holders in
person or by an agent duly appointed in writing. Except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Proof of execution of any such instrument or of a
writing appointing any such agent, or of the holding by any person of a
Security, shall be sufficient for any purpose of this Indenture and (subject to
Section 7.01) conclusive in favor of the Trustee, the Company and any Agent, if
made in the manner provided in this Section.
<PAGE>
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(b) The fact and date of the execution by any Person of any such
instrument may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership, principal amount and serial numbers of outstanding
Securities held by any person, and the date of holding the same, shall be
provided by the security register.
(d) If the Company shall solicit from the Holders of any Securities
any direction, consent, waiver or other authorization, the Company may at its
option (but is not obligated to), by or pursuant to a resolution of the Board of
Directors, fix in advance a record date for the determination of Holders of
Securities entitled to give such direction, consent, waiver or other
authorization. Notwithstanding TIA (S) 316(c), such record date shall be the
record date specified in or pursuant to such resolution of the Board of
Directors, which shall be a date not earlier than 30 days prior to the first
solicitation of Holders generally in connection therewith and not later than the
date such solicitation is completed. If such a record date is fixed, such
direction, consent, waiver or other authorization may be given before or after
such record date, but only the Holders of Securities of record at the close of
business on such record date shall be deemed to be Holders for the purpose of
determining whether Holders of the requisite proportion of outstanding
Securities have authorized or agreed or consented to such direction, consent,
waiver or other authorization, and for that purpose the outstanding Securities
shall be computed as of such record date; provided that no such consent or other
authorization by the Holders shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than eleven
months after the record date.
<PAGE>
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(e) Any consent, waiver or other authorization by the Holder of any
Security shall bind such Holder and every future Holder of the same Security and
the Holder of every Security issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee, any Agent or the Company in reliance
thereon, whether or not notation of such action is made upon such Security.
SECTION 11.16. Assignment.
The Company shall have the right at all times to assign any to its
rights or obligations under this Indenture to a direct or indirect wholly owned
Subsidiary of the Company; provided, however, that, in the event of any such
assignment, the Company shall remain liable for all such obligations.
<PAGE>
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SIGNATURES
----------
Dated: THE COASTAL CORPORATION
By:
----------------------------------
Title:
(SEAL)
ATTEST:
Assistant Secretary
Dated: THE BANK OF NEW YORK
By:
----------------------------------
Title:
<PAGE>
Exhibit 4.6
================================================================================
THE COASTAL CORPORATION
AND
THE BANK OF NEW YORK
Trustee
____________________
FIRST SUPPLEMENTAL
INDENTURE
TO
INDENTURE
Dated as of , 1998
____________________
% Subordinated Deferrable Interest Notes
due ,
===============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS 2
Section 1.1. Definition of Terms 2
Section 1.2. Interpretation 3
ARTICLE II GENERAL TERMS AND CONDITIONS OF THE NOTES 4
Section 2.1. Designation and Principal Amount 4
Section 2.2. Maturity 4
Section 2.3. Form and Payment 4
Section 2.4. Global Note 5
Section 2.5. Interest 6
Section 2.6. Denominations 7
ARTICLE III REDEMPTION OF THE NOTES 7
Section 3.1. Tax Event Redemption 7
Section 3.2. Optional Redemption by Company 8
Section 3.3. No Sinking Fund 9
ARTICLE IV EXTENSION OF INTEREST PAYMENT PERIOD 9
Section 4.1. Extension of Interest Payment Period 9
Section 4.2. Notice of Extension 9
ARTICLE V EXPENSES 10
Section 5.1. Payment of Expenses 10
ARTICLE VI SUBORDINATION 11
Section 6.1. Agreement to Subordinate 11
Section 6.2. Default on Senior Indebtedness 12
Section 6.3. Liquidation; Dissolution; Bankruptcy 13
Section 6.4. Subrogation 14
Section 6.5. Trustee to Effectuate Subordination 16
Section 6.6. Notice by the Company 16
Section 6.7. Rights of the Trustee; Holders of
Senior Indebtedness 17
Section 6.8. Subordination May Not Be Impaired 18
ARTICLE VII COVENANT TO LIST ON EXCHANGE 18
Section 7.1. Listing on Exchange 18
ARTICLE VIII FORM OF NOTE 19
Section 8.1. Form of Note 19
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE IX ORIGINAL ISSUE OF NOTES 28
Section 9.1. Original Issue of Notes 28
ARTICLE X CERTAIN COVENANTS 28
Section 10.1. Limitation on Dividends and Other
Payments 28
Section 10.2. Covenants as to the Trust 29
ARTICLE XI CERTAIN EVENTS OF DEFAULT 30
Section 11.1. Additional Events of Default 30
Section 11.2. Waiver of Existing Defaults 30
ARTICLE XII MISCELLANEOUS 30
Section 12.1. Supplemental Indenture Incorporated
Into Indenture 30
Section 12.2. Trustee Not Responsible for Recitals;
Disclaimer 31
Section 12.3. Governing Law 31
Section 12.4. Separability 31
Section 12.5. Counterparts 31
Section 12.6. Acknowledgment of Rights of Holders of
Preferred Securities 31
</TABLE>
-ii-
<PAGE>
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of , 1998 (this
"First Supplemental Indenture"), between The Coastal Corporation, a Delaware
corporation (the "Company"), and The Bank of New York, a New York banking
corporation, not in its individual capacity but solely as trustee (the
"Trustee"), under the Indenture dated as of , 1998 between the Company
and the Trustee (the "Indenture").
W I T N E S S E T H:
WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the future issuance of the Company's unsecured
subordinated Securities, to be issued from time to time in one or more series as
might be determined by the Company in accordance with the Indenture, in an
unlimited aggregate principal amount which may be authenticated and delivered as
provided in the Indenture; and
WHEREAS, pursuant to the terms of the Indenture, the Company desires
to provide for the establishment of a new series of its Securities to be known
as its % Subordinated Deferrable Interest Notes due (the
"Notes"), the form and substance of such Notes and the terms, provisions and
conditions thereof to be as set forth in the Indenture and this First
Supplemental Indenture; and
WHEREAS, Coastal Finance I, a Delaware statutory business trust (the
"Trust"), has offered to the public $ aggregate liquidation amount of its
25% Trust Preferred Securities (the "Preferred Securities") and has offered to
the Company $ aggregate liquidation amount of its common securities
(the "Common Securities" and, together with the Preferred Securities, the "Trust
Securities"), such Trust Securities representing undivided beneficial interests
in the assets of the Trust, and proposes to invest the proceeds from such
offering in $ aggregate principal amount of
<PAGE>
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the Notes; and
WHEREAS, the Company has requested the Trustee to execute and deliver
this First Supplemental Indenture, and all requirements necessary to make this
First Supplemental Indenture a valid instrument, in accordance with its terms,
and to make the Notes, when executed by the Company and authenticated and
delivered by the Trustee, the valid obligations of the Company, have been
performed, and the execution and delivery of this First Supplemental Indenture
has been duly authorized in all respects.
NOW, THEREFORE, in consideration of the purchase and acceptance of the
Notes by the holders thereof, and for the purpose of setting forth, as provided
in the Indenture, the form and substance of the Notes and the terms, provisions
and conditions thereof, the Company covenants and agrees with the Trustee as
follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definition of Terms. Unless the context otherwise
requires, (a) a term defined in the Indenture has the same meaning when used in
this First Supplemental Indenture, (b) a term defined anywhere in this First
Supplemental Indenture has the same meaning throughout and (c) the following
terms have the meanings given to them in the Declaration (including, without
limitation, Annex I thereto):
Clearing Agency
Delaware Trustee
Distribution
No Recognition Opinion
Preferred Securities Guarantee
Preferred Security Certificate
<PAGE>
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Pro Rata
Property Trustee
Purchase Agreement
Regular Trustee
Special Event
Tax Event
Tax Event Opinion
In addition, the following terms have the following respective
meanings:
"Declaration" means the Amended and Restated Declaration of Trust of
Coastal Finance I, a Delaware statutory business trust, dated as of ,
1998.
"Dissolution Event" means that, as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Declaration and the Notes held by the Property Trustee are to be distributed
to the holders of the Trust Securities Pro Rata in accordance with the
Declaration.
"Maturity Date" means the date on which the Notes mature and on which
the principal shall be due and payable together with all accrued and unpaid
interest thereon including Additional Interest, if any.
"Senior Indebtedness" means: (i) any payment in respect of (A)
indebtedness of the Company for money borrowed and (B) indebtedness evidenced by
securities, debentures, bonds, notes or other similar instruments issued by the
Company; (ii) all capital lease obligations of the Company; (iii) all
obligations of the Company issued or assumed as the deferred purchase price of
property, all conditional sale obligations of the Company and all obligations of
such obligor under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business); (iv) all obligations of the
Company for reimbursement on any letter of credit, banker's acceptance, security
purchase
<PAGE>
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facility or similar credit transaction; (v) all obligations of the type
referred to in clauses (i) through (iv) of other Persons for the payment of
which the Company is responsible or liable as obligor, guarantor or otherwise;
and (vi) all obligations of the type referred to in clauses (i) through (v) of
other Persons secured by any lien on any property or asset of the Company
(whether or not such obligation is assumed by the Company), except for any such
indebtedness that is by its terms subordinated to or pari passu with the Notes,
as the case may be. For greater certainty, "Senior Indebtedness" includes all
indebtedness for money borrowed between or among the Company and its Affiliates,
except for such indebtedness that is by its terms subordinated to or pari passu
with the Notes, as the case may be. Such Senior Indebtedness shall continue to
be Senior Indebtedness and be entitled to the benefits of Article VI hereof
irrespective of any amendment, modification or waiver of any term of such Senior
Indebtedness.
Section 1.2. Interpretation. Each definition in this First
Supplemental Indenture includes the singular and the plural, and references to
the neuter gender include the masculine and feminine where appropriate. Terms
which relate to accounting matters shall be interpreted in accordance with
generally accepted accounting principles in effect from time to time.
References to any statute mean such statute as amended at the time and include
any successor legislation. The word "or" is not exclusive, and the words
"herein," "hereof" and "hereunder" refer to this First Supplemental Indenture as
a whole. References to Articles and Sections are to the Articles and Sections
of this First Supplemental Indenture. The headings to the Articles and Sections
are for convenience of reference and shall not affect the meaning or
interpretation of this First Supplemental Indenture.
<PAGE>
-5-
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE NOTES
Section 2.1. Designation and Principal Amount. There is hereby
authorized a series of Securities designated the " % Subordinated Deferrable
Interest Notes due ." The aggregate principal amount of Notes which
may be authenticated and delivered under the Indenture is limited to $
(except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes pursuant to Sections 2.08, 2.09,
2.11, 3.07 or 9.05 of the Indenture and except for any Notes which pursuant to
Section 2.04 of the Indenture are deemed not to have been authenticated and
delivered pursuant to the Indenture).
Section 2.2. Maturity. The Maturity Date will be .
Section 2.3. Form and Payment. Except as provided in Section 2.4,
the Notes shall be issued in fully registered certificated form without interest
coupons. Principal of and interest (including Additional Interest, if any) on
the Notes issued in certificated form will be payable, the transfer of such
Notes will be registrable and such Notes will be exchangeable for Notes bearing
identical terms and provisions at the office or agency of the Trustee in New
York, New York, provided, however, that payment of interest may be made at the
option of the Company by check mailed to the registered Holder at such address
as shall appear in the security register maintained by the Registrar.
Notwithstanding the foregoing, so long as the registered Holder of any Notes is
the Property Trustee, the payment of the principal of and interest (including
Additional Interest, if any) on such Notes held by the Property Trustee will be
made at such place and to such account as may be designated by the Property
Trustee.
Section 2.4. Global Note. In connection with a Dissolution Event:
<PAGE>
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(a) Notes in certificated form may be presented to the Trustee by the
Property Trustee in exchange for a global Note in an aggregate principal
amount equal to the aggregate principal amount of the Notes so presented,
to be registered in the name of The Depository Trust Company ("DTC"), as
the initial Clearing Agency for the Notes, or the nominee of DTC, and
delivered by the Trustee to DTC for crediting to the accounts of its
participants pursuant to the instructions of the Regular Trustees. The
Company, upon any such presentation, shall execute a global Note in such
aggregate principal amount and deliver the same to the Trustee for
authentication and delivery in accordance with the Indenture and this First
Supplemental Indenture. Payments on the Notes issued as a global Note will
be made in immediately available funds to DTC (or a successor Clearing
Agency); and
(b) If any Preferred Securities are held in certificated form (i.e.,
not in book entry form), Notes in certificated form may be presented to the
Trustee by the Property Trustee and any Preferred Security Certificate
which represents Preferred Securities (other than Preferred Securities held
by DTC (or a successor Clearing Agency) or its nominee) ("Non Book-Entry
Preferred Securities") will be deemed to represent beneficial interests in
Notes in certificated form presented to the Trustee by the Property Trustee
having an aggregate principal amount equal to the aggregate stated
liquidation amount of the Non Book-Entry Preferred Securities until such
Preferred Security Certificates are presented to the Registrar for transfer
or reissuance, at which time such Preferred Security Certificates will be
canceled and a Note in certificated form, registered in the name of the
holder of such Preferred Security Certificate or the transferee of the
holder of such Preferred Security Certificate, as the case may be, with an
aggregate principal amount equal to the aggregate stated liquidation amount
of the Preferred Security Certificate canceled, will be executed by the
Company and delivered to the
<PAGE>
-7-
Trustee for authentication and delivery in accordance with the Indenture
and this First Supplemental Indenture. Upon issuance of such Notes, Notes
in certificated form with an equivalent aggregate principal amount that
were presented by the Property Trustee to the Trustee will be deemed to
have been canceled.
Section 2.5. Interest. (a) Each Note will bear interest at the
rate of % per annum (the "Coupon Rate") from the original date of issuance
until the principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the Coupon Rate,
compounded quarterly, payable (subject to the provisions of Article IV)
quarterly in arrears on , , and of each year
(each, an "Interest Payment Date"), commencing on , 1998, to the Person
in whose name such Note or any predecessor Note is registered, at the close of
business on the Regular Record Date for such interest installment, which shall
be the close of business on the Business Day next preceding that Interest
Payment Date. If pursuant to the provisions of Section 2.08 of the Indenture
the Notes are no longer represented by a global Security, the Company may select
a regular record date for such interest installment which shall be any date at
least fifteen days before an Interest Payment Date.
(b) The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any date
on which interest is payable on the Notes is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. The amount of
interest payable for any period shorter than a full quarterly period for which
interest is computed will be computed on the basis of the actual number
<PAGE>
-8-
of days elapsed in such a 90-day quarter.
(c) If at any time while the Property Trustee is the Holder of any
Notes, the Trust or the Property Trustee is required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
case, the Company will pay as additional interest ("Additional Interest") on the
Notes held by the Property Trustee, such additional amounts as shall be required
so that the net amounts received and retained by the Trust and the Property
Trustee after paying such taxes, duties, assessments or other governmental
charges will be equal to the amounts the Trust and the Property Trustee would
have received had no such taxes, duties, assessments or other governmental
charges been imposed.
Section 2.6. Denominations. In the event Notes are issued in
certificated form, such Notes will be in denominations of $1,000 and integral
multiples thereof.
ARTICLE III
REDEMPTION OF THE NOTES
Section 3.1. Tax Event Redemption. If a Tax Event has occurred and
is continuing and:
(a) the Company has received a Redemption Tax Opinion; or
(b) after receiving a Tax Event Opinion, the Regular Trustees shall
have been informed by tax counsel rendering the Tax Event Opinion that a No
Recognition Opinion cannot be delivered to the Trust,
then, notwithstanding Section 3.2(a) but subject to Section
<PAGE>
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3.2(b), the Company shall have the right, upon not less than 30 nor more than 60
days notice to the registered Holders of the Notes, to redeem the Notes, in
whole or in part, for cash within 90 days following the occurrence of such Tax
Event (the "90 Day Period") at a redemption price equal to 100% of the principal
amount to be redeemed plus any accrued and unpaid interest thereon to the date
of such redemption (the "Special Redemption Price"), provided, however, that if
at the time there is available to the Company the opportunity to eliminate,
within the 90 Day Period, the Tax Event by taking some ministerial action
("Ministerial Action"), such as filing a form or making an election, or pursuing
some other similar reasonable measure that has no adverse effect on the Company,
the Trust or the holders of the Trust Securities, the Company shall pursue such
Ministerial Action in lieu of redemption; and provided further, that the Company
shall have no right to redeem the Notes while the Trust is pursuing any
Ministerial Action pursuant to its obligations under the Declaration. The
Special Redemption Price shall be paid prior to 12:00 noon, New York City time,
on the date of such redemption or at such earlier time as the Company determines
and specifies in the notice of redemption; provided, however, the Company shall
deposit with the Trustee an amount sufficient to pay the Special Redemption
Price by 10:00 a.m., New York City time, on the date such Special Redemption
Price is to be paid.
Section 3.2. Optional Redemption by Company. (a) Subject to the
provisions of Article Three of the Indenture and to Section 3.2(b), the Company
shall have the right to redeem the Notes, in whole or in part, from time to
time, on or after , , at a redemption price equal to 100% of the
principal amount to be redeemed plus any accrued and unpaid interest thereon to
the date of such redemption (the "Optional Redemption Price"). Any redemption
pursuant to this paragraph will be made upon not less than 30 nor more than 60
days notice to the registered Holder of the Notes, at the Optional Redemption
Price. If the Notes are only partially redeemed pursuant to this Section 3.2,
the Notes will be redeemed by lot or by any other method utilized by the
Trustee; provided, however, that if at the time of redemption the Notes are
<PAGE>
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registered as a global security, the Depositary shall determine by lot the
interest of each of its participants in such global Note to be redeemed. The
Optional Redemption Price shall be paid prior to 12:00 noon, New York City time,
on the date of such redemption or at such earlier time as the Company determines
and specifies in the notice of redemption, provided the Company shall deposit
with the Trustee an amount sufficient to pay the Optional Redemption Price by
10:00 a.m., New York City time, on the date such Optional Redemption Price is to
be paid.
(b) If a partial redemption of the Notes would result in the
delisting of the Preferred Securities issued by the Trust from any national
securities exchange or other organization on or with which the Preferred
Securities are then listed, the Company shall not be permitted to effect such
partial redemption and may only redeem the Notes in whole.
Section 3.3. No Sinking Fund. The Notes are not entitled to the
benefit of any sinking fund.
<PAGE>
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ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
Section 4.1. Extension of Interest Payment Period. The Company
shall have the right, at any time and from time to time prior to the Maturity
Date, to extend the interest payment period of such Notes for up to twenty (20)
consecutive quarters (the "Extended Interest Payment Period"). To the extent
permitted by applicable law, interest, the payment of which has been deferred
because of the extension of the interest payment period pursuant to this Section
4.1, will bear interest compounded quarterly at the Coupon Rate for each quarter
of the Extended Interest Payment Period ("Compounded Interest"). At the end of
the Extended Interest Payment Period, the Company shall pay all interest accrued
and unpaid on the Notes, including any Additional Interest ("Deferred
Interest"), which shall be payable to the Holders of the Notes in whose names
the Notes are registered in the security register maintained by the Registrar on
the first Regular Record Date after the end of the Extended Interest Payment
Period. Before the termination of any Extended Interest Payment Period, the
Company may further extend such period, provided, however, that such period
together with all previous and such further extensions thereof shall not exceed
twenty (20) consecutive quarters or extend beyond the Maturity Date. Upon the
termination of any Extended Interest Payment Period and upon the payment of all
Deferred Interest then due, the Company may select a new Extended Interest
Payment Period, subject to the foregoing requirements. No interest shall be due
and payable during an Extended Interest Payment Period, except at the end
thereof.
Section 4.2. Notice of Extension. (a) If the Property Trustee is
the only registered Holder of the Notes at the time the Company selects an
Extended Interest Payment Period, the Company shall give written notice to both
the Regular Trustees and the Property Trustee of its selection of such Extended
Interest Payment Period one Business Day before the earlier of (i) the next
succeeding date on which Distributions on the Trust Securities are payable, or
(ii) the date the Trust is required to give notice of
<PAGE>
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the record or payment date for such Distributions to the New York Stock Exchange
or other applicable self-regulatory organization or to holders of the Preferred
Securities, but in any event at least one Business Day before such record date.
The Regular Trustees shall give notice of the Company's selection of such
Extended Interest Payment Period to the holders of the Preferred Securities.
(b) If the Property Trustee is not the only Holder of the Notes at
the time the Company selects an Extended Interest Payment Period, the Company
shall give the Holders of the Notes and the Trustee written notice of its
selection of such Extended Interest Payment Period ten (10) Business Days before
the earlier of (i) the next succeeding Interest Payment Date, or (ii) the date
the Company is required to give notice of the record or payment date of such
interest payment to the New York Stock Exchange or other applicable self-
regulatory organization or to Holders of the Notes.
(c) The quarter in which any notice is given pursuant to paragraphs
(a) or (b) of this Section 4.2 shall be counted as one of the twenty quarters
permitted in the maximum Extended Interest Payment Period permitted under
Section 4.1.
ARTICLE V
EXPENSES
Section 5.1. Payment of Expenses. In connection with the offering,
sale and issuance of the Notes to the Property Trustee in connection with the
sale of the Trust Securities by the Trust, and in connection with the
maintenance of the Trust for so long as the Trust Securities are outstanding,
the Company shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Notes, including compensation of the Trustee under the Indenture
in accordance with the provisions of Section 7.07 of the Indenture;
<PAGE>
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(b) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the Trust, the
offering, sale and issuance of the Trust Securities, the fees and expenses of
the Property Trustee and the Delaware Trustee, the costs and expenses relating
to the operation of the Trust, including without limitation, costs and expenses
of accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), any Clearing Agency for the Notes, duplicating,
travel and telephone and other telecommunications expenses and costs and
expenses incurred in connection with the acquisition, financing, and disposition
of Trust assets), other than obligations of the Trust in respect of the Common
Securities and the Preferred Securities;
(c) be primarily liable for any indemnification obligations arising
with respect to the Declaration;
(d) pay any and all taxes, duties, assessments or governmental
charges of whatever nature (other than United States withholding taxes
attributable to the Trust or its assets) imposed on the Trust or its assets and
all liabilities, costs and expenses of the Trust with respect to such taxes,
duties, assessments or governmental charges; and
(e) pay any and all fees and expenses related to the enforcement by
the Property Trustee of the rights of the holders of the Preferred Securities.
<PAGE>
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ARTICLE VI
SUBORDINATION
Section 6.1. Agreement to Subordinate. The Company covenants and
agrees, and each holder of Notes issued hereunder by such holder's acceptance
thereof likewise covenants and agrees, that all Notes shall be issued subject to
the provisions of this Article VI; and each holder of a Note, whether upon
original issue or upon transfer or assignment thereof, accepts and agrees to be
bound by such provisions.
The payment by the Company of the principal of, premium, if any, and
interest on all Notes issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and subject in right of payment to the
prior payment in full of all Senior Indebtedness, whether outstanding at the
date of this First Supplemental Indenture or thereafter incurred.
This Article shall constitute a continuing offer to all Persons who,
in reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness and such holders are made obligees hereunder and they and/or
each of them may enforce such provisions.
No provision of this Article VI shall prevent the occurrence of any
default or Event of Default with respect to the Notes.
Section 6.2. Default on Senior Indebtedness. In the event and
during the continuation of any default by the Company in the payment of
principal, premium, interest or any other amount due on any Senior Indebtedness,
or in the event that the maturity of any Senior Indebtedness has been
accelerated because of a default, then, in either case, no payment shall be made
by the Company to the Holders of the Notes with respect to the principal
(including
<PAGE>
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redemption and sinking fund payments) of, premium, if any, interest on, or any
other amount owing in respect of, the Notes.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder of the Notes when such payment is
prohibited by the preceding paragraph of this Section 6.2, such payment shall be
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, but
only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee within 90
days of such payment of the amounts then due and owing on the Senior
Indebtedness and only the amounts specified in such notice to the Trustee shall
be paid to the holders of Senior Indebtedness.
Section 6.3. Liquidation; Dissolution; Bankruptcy. Upon any payment
by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors upon any
dissolution or winding-up or liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due upon all Senior Indebtedness shall first be
paid in full, or payment thereof provided for in money in accordance with its
terms, before any payment or distribution is made by the Company to the Holders
of the Notes on account of the principal of, premium, if any, interest on, or
any other amount owing in respect of, the Notes; and upon any such dissolution
or winding-up or liquidation or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Notes or the Trustee would
be entitled to receive from the Company, except for the provisions of this
Article VI, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders of the Notes or by the Trustee under this
Indenture if
<PAGE>
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received by them or it, directly to the holders of Senior Indebtedness (pro rata
to such holders on the basis of the respective amounts of Senior Indebtedness
held by such holders, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay such
Senior Indebtedness in full, in money or money's worth, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Holders of Notes
or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee or the Holders of the Notes before all Senior Indebtedness is paid in
full, or provision is made for such payment in money in accordance with its
terms, such payment or distribution shall be held in trust for the benefit of
and shall be paid over or delivered to the holders of such Senior Indebtedness
or their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing such Senior
Indebtedness may have been issued, as their respective interests may appear, as
calculated by the Company, for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay such Senior
Indebtedness in full in money in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the benefit of the holders
of such Senior Indebtedness.
For purposes of this Article VI, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this
<PAGE>
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Article VI with respect to the Notes to the payment of all Senior Indebtedness
that may at the time be outstanding, provided, however, that (i) such Senior
Indebtedness is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of such
Senior Indebtedness are not, without the consent of such holders, altered by
such reorganization or readjustment. The consolidation of the Company with, or
the merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided for in Article Five of the Indenture shall not be
deemed a dissolution, winding-up, liquidation or reorganization for the purposes
of this Section 6.3 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions stated
in Article Five of the Indenture. Nothing in Section 6.2 or in this Section 6.3
shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 7.07 of the Indenture.
Section 6.4. Subrogation. Subject to the payment in full of all
Senior Indebtedness, the rights of the Holders of the Notes shall be subrogated
to the rights of the holders of such Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company applicable to such
Senior Indebtedness until the principal of, premium, if any, and interest on,
and all other amounts owing in respect of, the Notes shall be paid in full; and,
for the purposes of such subrogation, no payments or distributions to the
holders of such Senior Indebtedness of any cash, property or securities to which
the Holders of the Notes or the Trustee would be entitled except for the
provisions of this Article VI, and no payment over pursuant to the provisions of
this Article VI, to or for the benefit of the holders of such Senior
Indebtedness by Holders of the Notes or the Trustee, shall, as between the
Company, its creditors other than holders of Senior Indebtedness, and the
Holders of the Notes be deemed to be a payment by the Company to or on account
of such Senior Indebtedness. It is
<PAGE>
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understood that the provisions of this Article VI are and are intended solely
for the purposes of defining the relative rights of the Holders of the Notes, on
the one hand, and the holders of Senior Indebtedness on the other hand.
Nothing contained in this Article VI or elsewhere in this First
Supplemental Indenture or the Indenture or in the Notes is intended to or shall
impair, as between the Company, its creditors other than the holders of Senior
Indebtedness, and the Holders of the Notes, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the Notes the principal
of (and premium, if any) and interest on and all other amounts owing in respect
of the Notes as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of the
Holders of the Notes and creditors of the Company, other than the holders of
Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or
the Holder of any Note from exercising all remedies otherwise permitted by
applicable law upon default under the Indenture, as amended and supplemented by
this First Supplemental Indenture, subject to the rights, if any, under this
Article VI of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article VI, the Trustee, subject to the provisions of Section 7.01 of
the Indenture, and the Holders of the Notes, shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the Notes, for the purposes of ascertaining the
Persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable
<PAGE>
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thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article VI.
Section 6.5. Trustee to Effectuate Subordination. Each Holder of a
Note by such holder's acceptance thereof authorizes and directs the Trustee on
such holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article VI and appoints the
Trustee as such holder's attorney-in-fact for any and all such purposes.
Section 6.6. Notice by the Company. The Company shall give prompt
written notice to a Trust Officer of any fact known to the Company that would
prohibit the making of any payment of monies to or by the Trustee in respect of
the Notes pursuant to the provisions of this Article VI. Notwithstanding the
provisions of this Article VI or any other provision of the Indenture and this
First Supplemental Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment of
monies to or by the Trustee in respect of the Notes pursuant to the provisions
of this Article VI unless and until a Trust Officer shall have received written
notice thereof from the Company or a holder or holders of Senior Indebtedness or
from any representative or trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 7.01 of the
Indenture, shall be entitled in all respects to assume that no such facts exist;
provided, however, that if the Trustee shall not have received the notice
provided for in this Section 6.6 at least two Business Days prior to the date
upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any) or interest on any Note) then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
money and to apply the same to the purposes for which they were received, and
shall not be affected by any notice to the contrary that may be received by it
within two Business Days prior to such date.
The Trustee, subject to the provisions of Section 7.01 of the
Indenture, shall be entitled to rely on the
<PAGE>
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delivery to it of a written notice by a Person representing himself to be a
holder of Senior Indebtedness (or a representative or trustee on behalf of such
holder) to establish that such notice has been given by a holder of such Senior
Indebtedness or a representative or trustee on behalf of any such holder or
holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of such
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article VI, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article VI, and if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
Section 6.7. Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the rights set
forth in this Article VI in respect of any Senior Indebtedness at any time held
by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article VI, and no implied covenants or
obligations with respect to the holders of such Senior Indebtedness shall be
read into the Indenture or this First Supplemental Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and, subject to the provisions of Section 7.01 of
the Indenture, the Trustee shall not be liable to any holder of Senior
Indebtedness if it shall pay over or deliver to Holders of Notes, the Company or
any other Person money or assets to which
<PAGE>
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any holder of Senior Indebtedness shall be entitled by virtue of this Article VI
or otherwise.
Section 6.8. Subordination May Not Be Impaired. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of the Indenture or this First
Supplemental Indenture, regardless of any knowledge thereof that any such holder
may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the Notes,
without incurring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article VI or the
obligations hereunder of the Holders of the Notes to the holders of such Senior
Indebtedness, do any one or more the following: (i) change the manner, place or
terms of payment or extend the time of payment of, or renew or alter, such
Senior Indebtedness, or otherwise amend or supplement in any manner such Senior
Indebtedness or any instrument evidencing the same or any agreement under which
such Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing such
senior Indebtedness; (iii) release any Person liable in any manner for the
collection of such Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
<PAGE>
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ARTICLE VII
COVENANT TO LIST ON EXCHANGE
Section 7.1. Listing on Exchange. If the Notes are distributed to
the holders of the Preferred Securities upon a Dissolution Event, the Company
will use its best efforts to list such Notes on the New York Stock Exchange,
Inc. or on such other national securities exchange or with the Nasdaq Stock
Market or such other organization as the Preferred Securities are then listed.
ARTICLE VIII
FORM OF NOTE
Section 8.1. Form of Note. The Notes and the Trustee's Certificate
of Authentication to be endorsed thereon are to be substantially in the
following forms:
(FORM OF FACE OF NOTE)
[IF THE NOTE IS TO BE A GLOBAL SECURITY, INSERT: THIS NOTE IS A
GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF
DTC. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO
A NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
<PAGE>
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No. $
CUSIP No.
THE COASTAL CORPORATION
% SUBORDINATED DEFERRABLE INTEREST NOTE DUE
The COASTAL CORPORATION, a Delaware corporation (the "Company", which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to ________________ or
registered assigns, the principal sum of ________________ Dollars on
and to pay interest on said principal sum from , 1998 or from the
most recent interest payment date (each such date, an "Interest Payment Date")
to which interest has been paid or duly provided for, quarterly (subject to
deferral as set forth herein) in arrears on , , and
of each year, commencing , 1998, at the rate of % per annum until
the principal hereof shall have become due and payable, and on any overdue
principal and premium, if any, and (without duplication and to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest, compounded quarterly, at the same rate per annum. The
amount of interest payable on any Interest Payment Date shall be computed on the
basis of a 360-day year of twelve 30-day months. The amount of interest payable
for any period shorter than a full quarterly period for which interest is
computed will be computed on the basis of the actual number of days elapsed in
such 90-day quarter. In the event that any date on which interest is payable on
this Note is not a Business Day, then payment of interest payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date. The interest installment so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this Note (or one
or more Predecessor Securities, as defined in said Indenture) is registered at
the close of business on the Regular Record Date for such interest installment
[which shall be the close of business on the Business Day next preceding such
Interest Payment Date.] [IF PURSUANT TO THE PROVISIONS OF SECTION 2.08 OF THE
INDENTURE THE
<PAGE>
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NOTES ARE NO LONGER REPRESENTED BY A GLOBAL SECURITY -- which shall be [insert
date (to be selected by the Company) which is not less than 15 days prior to
each Interest Payment Date.]] Any such interest installment not punctually paid
or duly provided for shall forthwith cease to be payable to the registered
Holders on such Regular Record Date, and may be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a special record date to be fixed by the Company for the payment of
such defaulted interest, notice whereof shall be given to the registered Holders
of the Notes not less than fifteen (15) days prior to such special record date,
or may be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in the Indenture. The principal of (and premium, if any) and the interest on
this Note shall be payable at the office or agency of the Trustee maintained for
that purpose in New York, New York, in any coin or currency of the United States
of America which at the time of payment is legal tender for payment of public
and private debts; provided, however, that payment of interest may be made at
the option of the Company by check mailed to the registered Holder at such
address as shall appear in the security register maintained by the Registrar.
Notwithstanding the foregoing, so long as the Holder of this Note is the
Property Trustee of Coastal Finance I, the payment of the principal of (and
premium, if any) and interest on this Note will be made in immediately available
funds at such place and to such account as may by designated by the Property
Trustee of Coastal Finance I.
The indebtedness evidenced by this Note is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness, and this Note is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on
<PAGE>
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his behalf to take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination so provided and (c) appoints the Trustee his
attorney-in-fact for any and all such purposes. Each Holder hereof, by his
acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
This Note shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Note are continued on the reverse side hereof
and such continued provisions shall for all purposes have the same effect as
though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated:
THE COASTAL CORPORATION
By:
Name:
Title:
Attest:
By:__________________________
Name:
Title:
<PAGE>
-26-
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By:
Authorized Signatory
<PAGE>
-27-
(FORM OF REVERSE OF NOTE)
This Note is one of a duly authorized series of Securities of the
Company designated its " % Subordinated Deferrable Interest Notes due
" (herein sometimes referred to as the "Notes"), issued under and pursuant to an
Indenture dated as of , 1998, duly executed and delivered between the
Company and The Bank of New York, not in its individual capacity but solely as
trustee (the "Trustee"), as supplemented by a First Supplemental Indenture dated
as of , 1998, between the Company and the Trustee (such Indenture as so
supplemented, the "Indenture"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders of the Notes. The terms of the Notes
include those stated in the Indenture 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 (the "TIA"). This Note is subject to all such terms and the Holder of
this Note is referred to the Indenture and the TIA for a statement of those
terms.
The Notes are general unsecured obligations of the Company and are
limited (except as otherwise provided in the Indenture) to $ in
aggregate principal amount.
Upon the occurrence and continuation of a Tax Event, in certain
circumstances this Note may be redeemed by the Company at a redemption price
equal to 100% of the principal amount hereof, plus any accrued but unpaid
interest thereon to the date of such redemption (the "Special Redemption
Price"). The Special Redemption Price shall be paid prior to 12:00 noon, New
York City time, on the date of such redemption or at such earlier time as the
Company determines. The Company shall also have the right to redeem this Note
at the option of the Company, without premium or penalty, in whole or in part at
any time on or after , (an "Optional Redemption"), at
<PAGE>
-28-
a redemption price equal to 100% of the principal amount hereof, plus any
accrued but unpaid interest thereon to the date of such redemption (the
"Optional Redemption Price"). Any optional redemption pursuant to this paragraph
will be made upon not less than 30 nor more than 60 days notice, at the Optional
Redemption Price. If the Notes are only partially redeemed by the Company
pursuant to an Optional Redemption, the Notes will be redeemed by lot or by any
other method utilized by the Trustee; provided, however, that if at the time of
redemption the Notes are registered as a global Note, the depositary shall
determine by lot the interest of each of its participants in such global Note to
be redeemed.
In the event of redemption of this Note in part only, a new Note or
Notes of this series for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Notes may be declared,
and upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of a majority in aggregate principal
amount of the Securities of each series affected at the time outstanding, as
defined in the Indenture, to amend or supplement the Indenture or the Securities
of any series (including the Notes) for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of modifying in any manner the rights of the Holders of the Securities
(including the Notes); provided, however, that no such amendment or supplement
shall (i) extend the fixed maturity of any Securities of any series, or reduce
the principal amount thereof, or reduce the rate or extend the time for payment
of interest thereon, without the consent of the Holder of each Security of such
series so affected or (ii)
<PAGE>
-29-
reduce the aforesaid percentage in aggregate principal amount of Securities, the
Holders of which are required to consent to any such amendment or supplement,
without the consent of the Holders of each Security then outstanding and
affected thereby. The Indenture also contains provisions permitting the Holders
of a majority in aggregate principal amount of the Securities of any series at
the time outstanding affected thereby, on behalf of all of the Holders of the
Securities of such series, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to such series, and its consequences, except a default in
the payment of the principal of or interest, if any, on any of the Securities of
such series. Any such consent or waiver by the registered Holder of this Note
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Note and of any
Note issued in exchange herefor or in place hereof (whether by registration of
transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note at the time and place and at the rate and in the money
herein prescribed.
The Company shall have the right at any time during the term of the
Notes, and from time to time, to extend the interest payment period of the Notes
for up to twenty (20) consecutive quarters (an "Extended Interest Payment
Period"), at the end of which period the Company shall pay all interest then
accrued and unpaid (together with interest thereon at the rate specified for the
Notes to the extent that payment of such interest is enforceable under
applicable law). Before the termination of any such Extended Interest Payment
Period, the Company may further extend such Extended Interest Payment Period,
provided, however, that such Extended Interest Payment
<PAGE>
-30-
Period together with all previous and such further extensions thereof shall not
exceed twenty (20) consecutive quarters or extend beyond the maturity of the
Notes. At the termination of any such Extended Interest Payment Period and upon
the payment of all accrued and unpaid interest and any additional amounts then
due, the Company may select a new Extended Interest Payment Period, subject to
the foregoing requirements.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is transferable by the registered Holder hereof on
the security register of the Company maintained by the Registrar, upon surrender
of this Note for registration of transfer at the office or agency of the Trustee
in New York, New York accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company or the Trustee duly executed by the
registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes of authorized denominations and for the same
aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be made for any such transfer, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Note,
the Company, the Trustee, any Paying Agent and the Registrar may deem and treat
the registered Holder hereof as the absolute owner hereof (whether or not this
Note shall be overdue and notwithstanding any notice of ownership or writing
hereon made by anyone other than the Registrar) for the purpose of receiving
payment of principal of and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any Paying Agent nor the Registrar shall
be affected by any notice to the contrary.
No past, present or future director, officer, employee or stockholder,
as such, of the Company or the Trustee or any successor of either thereof shall
have any liability for any obligations of the Company or the Trustee under the
Notes
<PAGE>
-31-
or this Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof,
expressly waived and released.
[The Notes of this series are issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof.] [This global
Note is exchangeable for Notes in definitive certificated form only under
certain limited circumstances set forth in the Indenture. Notes so issued are
issuable only in registered form without coupons in denominations of $1000 and
any integral multiple thereof.] As provided in the Indenture and subject to
certain limitations therein set forth, Notes so issued are exchangeable for a
like aggregate principal amount of Notes of a different authorized denomination,
as requested by the Holder surrendering the same.
This Note shall be governed by the internal laws of the State of New
York, and for all purposes shall be construed in accordance with the laws of
said State.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
<PAGE>
-32-
ARTICLE IX
ORIGINAL ISSUE OF NOTES
Section 9.1. Original Issue of Notes. Notes in the aggregate
principal amount of $ may, upon execution of this First Supplemental
Indenture, be executed by the Company and delivered to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver said
Notes to or upon the written order of the Company, signed by its Chairman, its
President, or any Vice President and its Treasurer, an Assistant Treasurer, or
Secretary without any further action by the Company.
ARTICLE X
CERTAIN COVENANTS
The following covenants shall apply to the Notes (but not with respect
to any other series of Securities), and are in addition to the covenants set
forth in Article Four of the Indenture.
Section 10.1. Limitation on Dividends and Other Payments. If (i)
there shall have occurred any event that constitutes an Event of Default or (ii)
the Company shall be in default with respect to its payment of any obligations
under the Preferred Securities Guarantee, then (a) the Company shall not declare
or pay any dividend on, make any distributions with respect to, or redeem,
purchase or make a liquidation payment with respect to, any of its capital
stock, (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
the Company which rank pari passu with or junior to the Notes, and (c) the
Company shall not make any guarantee payments (other than pursuant to the
Preferred Securities Guarantee) with respect to the foregoing.
<PAGE>
-33-
If the Company shall have given notice of its election to defer
payments of interest on the Notes by extending the interest payment period as
provided in Article IV and such period, or any extension thereof, shall be
continuing, then (i) the Company shall not declare or pay any dividend, or make
any distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock, (ii) the Company shall not
make any payment of interest, principal, premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Company which rank pari
passu with or junior to the Notes, and (iii) the Company shall not make any
guarantee payments (other than pursuant to the Preferred Securities Guarantee)
with respect to the foregoing.
Notwithstanding the foregoing restrictions, nothing in this Section
10.1 shall prevent the Company, in any event, from making dividend, redemption,
liquidation or guarantee payments on capital stock, or interest, principal,
redemption or guarantee payments on debt securities issued by the Company
ranking pari passu with or junior to the Notes, where the payment is made by way
of securities (including capital stock) that rank junior to the securities on
which such payment is being made.
Section 10.2. Covenants as to the Trust. For so long as the Trust
Securities remain outstanding, the Company will (i) maintain 100% direct or
indirect ownership of the Common Securities; provided, however, that any
permitted successor of the Company under the Indenture may succeed to the
Company's ownership of the Common Securities, (ii) not cause, as sponsor of the
Trust, or permit, as the holder of the Common Securities of the Trust, the
termination, dissolution or winding-up of the Trust, except in connection with a
distribution of the Notes as provided in the Declaration and in connection with
certain mergers, consolidations or amalgamations as permitted by the
Declaration, (iii) use its reasonable efforts to cause the Trust (a) to remain a
statutory business trust, except in connection with a distribution of Notes to
the holders of the Preferred Securities in liquidation of the Trust, the
redemption of all of the Trust Securities of the Trust or certain mergers,
<PAGE>
-34-
consolidations or amalgamations, each as permitted by the Declaration, and (b)
to otherwise continue to be treated as a grantor trust for United States federal
income tax purposes and (iv) use its reasonable efforts to cause each holder of
Trust Securities to be treated as owning an individual beneficial interest in
the Notes.
ARTICLE XI
CERTAIN EVENTS OF DEFAULT
Section 11.1. Additional Events of Default. An Event of Default with
respect to the Notes shall include those events described in Section 6.01 of the
Indenture and, with respect to the Notes only, the occurrence of any of the
following events: the voluntary or involuntary dissolution, winding up or
termination of the Trust, except in connection with (i) the distribution of
Notes to holders of Preferred Securities in liquidation of their interests in
the Trust, (ii) the redemption of all of the outstanding Preferred Securities,
or (iii) certain mergers, consolidations or amalgamations, each as permitted by
the provisions of the Declaration.
Section 11.2. Waiver of Existing Defaults. Notwithstanding Section
6.04 of the Indenture, the Holders of a majority in aggregate principal amount
of the Notes may not waive a Default or an existing Event of Default (i) in the
payment of the principal of or accrued interest on the Notes, unless the Company
has paid or deposited with the Trustee a sum sufficient to pay all matured
installments of interest (with interest on overdue interest at the rate
specified in Section 2.5(a)) upon all of the Notes and the principal of the
Notes that shall have become due otherwise than by acceleration or (ii) that
arise out of a breach by the Company of Section 10.1. Section 6.04 of the
Indenture shall, in all other respects and as modified by this Section 11.2,
apply to the Notes.
<PAGE>
-35-
ARTICLE XII
MISCELLANEOUS
Section 12.1. Supplemental Indenture Incorporated Into Indenture.
This First Supplemental Indenture is executed by the Company and the Trustee
pursuant to the provisions of Sections 2.01 and 2.02 of the Indenture, and the
terms and conditions hereof shall be deemed to be part of the Indenture for all
purposes relating to the Notes. The provisions of the Indenture, as modified by
this First Supplemental Indenture, are effective with respect to the Notes, and
are not effective with respect to any series of Securities to be issued pursuant
to any previous or subsequent supplemental indenture or resolution of the Board
of Directors. The Indenture, as supplemented by this First Supplemental
Indenture, is in all respects adopted, ratified and confirmed.
Section 12.2. Trustee Not Responsible for Recitals; Disclaimer. The
recitals herein contained are made by the Company and not by the Trustee, and
the Trustee assumes no responsibility for the correctness thereof. The Trustee
makes no representation as to the validity or sufficiency of this First
Supplemental Indenture.
Section 12.3. Governing Law. This First Supplemental Indenture and
each Note shall be deemed to be a contract made under the internal laws of the
State of New York, and for all purposes shall be construed in accordance with
the laws of said State.
Section 12.4. Separability. In case any one or more of the
provisions contained in this First Supplemental Indenture or in the Notes shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provisions of this First Supplemental Indenture or of the Notes, but this First
Supplemental Indenture and the Notes shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.
<PAGE>
-36-
Section 12.5. Counterparts. This First Supplemental Indenture may be
executed in any number of counterparts each of which shall be an original; but
such counterparts shall together constitute but one and the same instrument.
Section 12.6. Acknowledgment of Rights of Holders of Preferred
Securities. The Company hereby acknowledges the right of each holder of
Preferred Securities, upon and during the continuance of an Event of Default
under the Declaration that results from the failure of the Company to pay
principal of or interest on the Notes when due, to directly institute
proceedings against the Company to obtain payment to such holder of an amount
equal to the principal or interest so defaulted on with respect to Notes in a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities owned by such holder.
<PAGE>
-37-
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, as of the day and year first above written.
THE COSTAL CORPORATION
By
Name:
Title:
[Seal]
Attest: _____________________
Title:
THE BANK OF NEW YORK,
as Trustee
By:
Name:
Title:
<PAGE>
-38-
STATE OF )
COUNTY OF ) ss:
On the day of , 1998 before me personally came
, to me known, who, being by me duly sworn, did depose and say that he is the
of THE COASTAL CORPORATION, one of the corporations described in and which
executed the above instrument; that he knows the corporate seal of said
corporation; that the seal affixed to the said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
NOTARY PUBLIC
[seal] Commission expires
STATE OF )
COUNTY OF ) ss:
On the day of , 1998 before me personally came
, to me known, who, being by me duly sworn, did depose and say that he is the
of THE BANK OF NEW YORK, one of the corporations described in and which executed
the above instrument; that he knows the corporate seal of said corporation; that
the seal affixed to the said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation; and that he
signed his name thereto by like authority.
NOTARY PUBLIC
[seal] Commission expires
<PAGE>
Exhibit 4.7
================================================================================
THE COASTAL CORPORATION
AND
THE BANK OF NEW YORK
Trustee
____________________
SECOND SUPPLEMENTAL
INDENTURE
TO
INDENTURE
Dated as of ,
____________________
% Subordinated Deferrable Interest Notes
due ,
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS 2
Section 1.1. Definition of Terms 2
Section 1.2. Interpretation 3
ARTICLE II GENERAL TERMS AND CONDITIONS OF THE NOTES 4
Section 2.1. Designation and Principal Amount 4
Section 2.2. Maturity 4
Section 2.3. Form and Payment 4
Section 2.4. Global Note 5
Section 2.5. Interest 6
Section 2.6. Denominations 7
ARTICLE III REDEMPTION OF THE NOTES 7
Section 3.1. Tax Event Redemption 7
Section 3.2. Optional Redemption by Company 8
Section 3.3. No Sinking Fund 9
ARTICLE IV EXTENSION OF INTEREST PAYMENT PERIOD 9
Section 4.1. Extension of Interest Payment Period 9
Section 4.2. Notice of Extension 9
ARTICLE V EXPENSES 10
Section 5.1. Payment of Expenses 10
ARTICLE VI SUBORDINATION 11
Section 6.1. Agreement to Subordinate 11
Section 6.2. Default on Senior Indebtedness 12
Section 6.3. Liquidation; Dissolution; Bankruptcy 13
Section 6.4. Subrogation 14
Section 6.5. Trustee to Effectuate Subordination 16
Section 6.6. Notice by the Company 16
Section 6.7. Rights of the Trustee; Holders of
Senior Indebtedness 17
Section 6.8. Subordination May Not Be Impaired 18
Section 6.9. Pari Passu Debt 18
ARTICLE VII COVENANT TO LIST ON EXCHANGE 19
Section 7.1. Listing on Exchange 19
ARTICLE VIII FORM OF NOTE 19
Section 8.1. Form of Note 19
ARTICLE IX ORIGINAL ISSUE OF NOTES 28
Section 9.1. Original Issue of Notes 28
ARTICLE X CERTAIN COVENANTS 28
Section 10.1. Limitation on Dividends and Other
Payments 28
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
Section 10.2. Covenants as to the Trust 29
ARTICLE XI CERTAIN EVENTS OF DEFAULT 30
Section 11.1. Additional Events of Default 30
Section 11.2. Waiver of Existing Defaults 30
ARTICLE XII MISCELLANEOUS 30
Section 12.1. Supplemental Indenture Incorporated
Into Indenture 30
Section 12.2. Trustee Not Responsible for Recitals;
Disclaimer 31
Section 12.3. Governing Law 31
Section 12.4. Separability 31
Section 12.5. Counterparts 31
Section 12.6. Acknowledgment of Rights of Holders of
Preferred Securities 31
</TABLE>
-ii-
<PAGE>
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of , (this
"Second Supplemental Indenture"), between The Coastal Corporation, a Delaware
corporation (the "Company"), and The Bank of New York, a New York banking
corporation, not in its individual capacity but solely as trustee (the
"Trustee"), under the Indenture dated as of , 1998 between the Company
and the Trustee (the "Indenture").
W I T N E S S E T H:
WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the future issuance of the Company's unsecured
subordinated Securities, to be issued from time to time in one or more series as
might be determined by the Company in accordance with the Indenture, in an
unlimited aggregate principal amount which may be authenticated and delivered as
provided in the Indenture; and
WHEREAS, pursuant to the terms of the Indenture, the Company desires
to provide for the establishment of a new series of its Securities to be known
as its % Subordinated Deferrable Interest Notes due (the
"Notes"), the form and substance of such Notes and the terms, provisions and
conditions thereof to be as set forth in the Indenture and this Second
Supplemental Indenture; and
WHEREAS, Coastal Finance II, a Delaware statutory business trust (the
"Trust"), has offered to the public $ aggregate liquidation amount of its
25% Trust Preferred Securities (the "Preferred Securities") and has offered to
the Company $ aggregate liquidation amount of its common securities
(the "Common Securities" and, together with the Preferred Securities, the "Trust
Securities"), such Trust Securities representing undivided beneficial interests
in the assets of the Trust, and proposes to invest the proceeds from such
offering in $ aggregate principal amount of
<PAGE>
-2-
the Notes; and
WHEREAS, the Company has requested the Trustee to execute and deliver
this Second Supplemental Indenture, and all requirements necessary to make this
Second Supplemental Indenture a valid instrument, in accordance with its terms,
and to make the Notes, when executed by the Company and authenticated and
delivered by the Trustee, the valid obligations of the Company, have been
performed, and the execution and delivery of this Second Supplemental Indenture
has been duly authorized in all respects.
NOW, THEREFORE, in consideration of the purchase and acceptance of the
Notes by the holders thereof, and for the purpose of setting forth, as provided
in the Indenture, the form and substance of the Notes and the terms, provisions
and conditions thereof, the Company covenants and agrees with the Trustee as
follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definition of Terms. Unless the context otherwise
requires, (a) a term defined in the Indenture has the same meaning when used in
this Second Supplemental Indenture, (b) a term defined anywhere in this Second
Supplemental Indenture has the same meaning throughout and (c) the following
terms have the meanings given to them in the Declaration (including, without
limitation, Annex I thereto):
Clearing Agency
Delaware Trustee
Distribution
No Recognition Opinion
Preferred Securities Guarantee
Preferred Security Certificate
<PAGE>
-3-
Pro Rata
Property Trustee
Purchase Agreement
Regular Trustee
Special Event
Tax Event
Tax Event Opinion
In addition, the following terms have the following respective
meanings:
"Declaration" means the Amended and Restated Declaration of Trust of
Coastal Finance II, a Delaware statutory business trust, dated as of ,
.
"Dissolution Event" means that, as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Declaration and the Notes held by the Property Trustee are to be distributed
to the holders of the Trust Securities Pro Rata in accordance with the
Declaration.
"Maturity Date" means the date on which the Notes mature and on which
the principal shall be due and payable together with all accrued and unpaid
interest thereon including Additional Interest, if any.
"Senior Indebtedness" means: (i) any payment in respect of (A)
indebtedness of the Company for money borrowed and (B) indebtedness evidenced by
securities, debentures, bonds, notes or other similar instruments issued by the
Company; (ii) all capital lease obligations of the Company; (iii) all
obligations of the Company issued or assumed as the deferred purchase price of
property, all conditional sale obligations of the Company and all obligations of
such obligor under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business); (iv) all obligations of the
Company for reimbursement on any letter of credit, banker's acceptance, security
purchase
<PAGE>
-4-
facility or similar credit transaction; (v) all obligations of the type
referred to in clauses (i) through (iv) of other Persons for the payment of
which the Company is responsible or liable as obligor, guarantor or otherwise;
and (vi) all obligations of the type referred to in clauses (i) through (v) of
other Persons secured by any lien on any property or asset of the Company
(whether or not such obligation is assumed by the Company), except for any such
indebtedness that is by its terms subordinated to or pari passu with the Notes,
as the case may be. For greater certainty, "Senior Indebtedness" includes all
indebtedness for money borrowed between or among the Company and its Affiliates,
except for such indebtedness that is by its terms subordinated to or pari passu
with the Notes, as the case may be. Such Senior Indebtedness shall continue to
be Senior Indebtedness and be entitled to the benefits of Article VI hereof
irrespective of any amendment, modification or waiver of any term of such Senior
Indebtedness.
Section 1.2. Interpretation. Each definition in this Second
Supplemental Indenture includes the singular and the plural, and references to
the neuter gender include the masculine and feminine where appropriate. Terms
which relate to accounting matters shall be interpreted in accordance with
generally accepted accounting principles in effect from time to time.
References to any statute mean such statute as amended at the time and include
any successor legislation. The word "or" is not exclusive, and the words
"herein," "hereof" and "hereunder" refer to this Second Supplemental Indenture
as a whole. References to Articles and Sections are to the Articles and
Sections of this Second Supplemental Indenture. The headings to the Articles
and Sections are for convenience of reference and shall not affect the meaning
or interpretation of this Second Supplemental Indenture.
<PAGE>
-5-
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE NOTES
Section 2.1. Designation and Principal Amount. There is hereby
authorized a series of Securities designated the " % Subordinated Deferrable
Interest Notes due ." The aggregate principal amount of Notes which
may be authenticated and delivered under the Indenture is limited to $
(except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes pursuant to Sections 2.08, 2.09,
2.11, 3.07 or 9.05 of the Indenture and except for any Notes which pursuant to
Section 2.04 of the Indenture are deemed not to have been authenticated and
delivered pursuant to the Indenture).
Section 2.2. Maturity. The Maturity Date will be .
Section 2.3. Form and Payment. Except as provided in Section 2.4,
the Notes shall be issued in fully registered certificated form without interest
coupons. Principal of and interest (including Additional Interest, if any) on
the Notes issued in certificated form will be payable, the transfer of such
Notes will be registrable and such Notes will be exchangeable for Notes bearing
identical terms and provisions at the office or agency of the Trustee in New
York, New York, provided, however, that payment of interest may be made at the
option of the Company by check mailed to the registered Holder at such address
as shall appear in the security register maintained by the Registrar.
Notwithstanding the foregoing, so long as the registered Holder of any Notes is
the Property Trustee, the payment of the principal of and interest (including
Additional Interest, if any) on such Notes held by the Property Trustee will be
made at such place and to such account as may be designated by the Property
Trustee.
Section 2.4. Global Note. In connection with a Dissolution Event:
<PAGE>
-6-
(a) Notes in certificated form may be presented to the Trustee by the
Property Trustee in exchange for a global Note in an aggregate principal
amount equal to the aggregate principal amount of the Notes so presented,
to be registered in the name of The Depository Trust Company ("DTC"), as
the initial Clearing Agency for the Notes, or the nominee of DTC, and
delivered by the Trustee to DTC for crediting to the accounts of its
participants pursuant to the instructions of the Regular Trustees. The
Company, upon any such presentation, shall execute a global Note in such
aggregate principal amount and deliver the same to the Trustee for
authentication and delivery in accordance with the Indenture and this
Second Supplemental Indenture. Payments on the Notes issued as a global
Note will be made in immediately available funds to DTC (or a successor
Clearing Agency); and
(b) If any Preferred Securities are held in certificated form (i.e.,
not in book entry form), Notes in certificated form may be presented to the
Trustee by the Property Trustee and any Preferred Security Certificate
which represents Preferred Securities (other than Preferred Securities held
by DTC (or a successor Clearing Agency) or its nominee) ("Non Book-Entry
Preferred Securities") will be deemed to represent beneficial interests in
Notes in certificated form presented to the Trustee by the Property Trustee
having an aggregate principal amount equal to the aggregate stated
liquidation amount of the Non Book-Entry Preferred Securities until such
Preferred Security Certificates are presented to the Registrar for transfer
or reissuance, at which time such Preferred Security Certificates will be
canceled and a Note in certificated form, registered in the name of the
holder of such Preferred Security Certificate or the transferee of the
holder of such Preferred Security Certificate, as the case may be, with an
aggregate principal amount equal to the aggregate stated liquidation amount
of the Preferred Security Certificate canceled, will be executed by the
Company and delivered to the
<PAGE>
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Trustee for authentication and delivery in accordance with the Indenture
and this Second Supplemental Indenture. Upon issuance of such Notes, Notes
in certificated form with an equivalent aggregate principal amount that
were presented by the Property Trustee to the Trustee will be deemed to
have been canceled.
Section 2.5. Interest. (a) Each Note will bear interest at the
rate of % per annum (the "Coupon Rate") from the original date of issuance
until the principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the Coupon Rate,
compounded quarterly, payable (subject to the provisions of Article IV)
quarterly in arrears on , , and of each year
(each, an "Interest Payment Date"), commencing on , , to the Person
in whose name such Note or any predecessor Note is registered, at the close of
business on the Regular Record Date for such interest installment, which shall
be the close of business on the Business Day next preceding that Interest
Payment Date. If pursuant to the provisions of Section 2.08 of the Indenture
the Notes are no longer represented by a global Security, the Company may select
a regular record date for such interest installment which shall be any date at
least fifteen days before an Interest Payment Date.
(b) The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any date
on which interest is payable on the Notes is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. The amount of
interest payable for any period shorter than a full quarterly period for which
interest is computed will be computed on the basis of the actual number
<PAGE>
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of days elapsed in such a 90-day quarter.
(c) If at any time while the Property Trustee is the Holder of any
Notes, the Trust or the Property Trustee is required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
case, the Company will pay as additional interest ("Additional Interest") on the
Notes held by the Property Trustee, such additional amounts as shall be required
so that the net amounts received and retained by the Trust and the Property
Trustee after paying such taxes, duties, assessments or other governmental
charges will be equal to the amounts the Trust and the Property Trustee would
have received had no such taxes, duties, assessments or other governmental
charges been imposed.
Section 2.6. Denominations. In the event Notes are issued in
certificated form, such Notes will be in denominations of $1,000 and integral
multiples thereof.
ARTICLE III
REDEMPTION OF THE NOTES
Section 3.1. Tax Event Redemption. If a Tax Event has occurred and
is continuing and:
(a) the Company has received a Redemption Tax Opinion; or
(b) after receiving a Tax Event Opinion, the Regular Trustees shall
have been informed by tax counsel rendering the Tax Event Opinion that a No
Recognition Opinion cannot be delivered to the Trust,
then, notwithstanding Section 3.2(a) but subject to Section
<PAGE>
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3.2(b), the Company shall have the right, upon not less than 30 nor more than 60
days notice to the registered Holders of the Notes, to redeem the Notes, in
whole or in part, for cash within 90 days following the occurrence of such Tax
Event (the "90 Day Period") at a redemption price equal to 100% of the principal
amount to be redeemed plus any accrued and unpaid interest thereon to the date
of such redemption (the "Special Redemption Price"), provided, however, that if
at the time there is available to the Company the opportunity to eliminate,
within the 90 Day Period, the Tax Event by taking some ministerial action
("Ministerial Action"), such as filing a form or making an election, or pursuing
some other similar reasonable measure that has no adverse effect on the Company,
the Trust or the holders of the Trust Securities, the Company shall pursue such
Ministerial Action in lieu of redemption; and provided further, that the Company
shall have no right to redeem the Notes while the Trust is pursuing any
Ministerial Action pursuant to its obligations under the Declaration. The
Special Redemption Price shall be paid prior to 12:00 noon, New York City time,
on the date of such redemption or at such earlier time as the Company determines
and specifies in the notice of redemption; provided, however, the Company shall
deposit with the Trustee an amount sufficient to pay the Special Redemption
Price by 10:00 a.m., New York City time, on the date such Special Redemption
Price is to be paid.
Section 3.2. Optional Redemption by Company. (a) Subject to the
provisions of Article Three of the Indenture and to Section 3.2(b), the Company
shall have the right to redeem the Notes, in whole or in part, from time to
time, on or after , , at a redemption price equal to 100% of the
principal amount to be redeemed plus any accrued and unpaid interest thereon to
the date of such redemption (the "Optional Redemption Price"). Any redemption
pursuant to this paragraph will be made upon not less than 30 nor more than 60
days notice to the registered Holder of the Notes, at the Optional Redemption
Price. If the Notes are only partially redeemed pursuant to this Section 3.2,
the Notes will be redeemed by lot or by any other method utilized by the
Trustee; provided, however, that if at the time of redemption the Notes are
<PAGE>
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registered as a global security, the Depositary shall determine by lot the
interest of each of its participants in such global Note to be redeemed. The
Optional Redemption Price shall be paid prior to 12:00 noon, New York City time,
on the date of such redemption or at such earlier time as the Company determines
and specifies in the notice of redemption, provided the Company shall deposit
with the Trustee an amount sufficient to pay the Optional Redemption Price by
10:00 a.m., New York City time, on the date such Optional Redemption Price is to
be paid.
(b) If a partial redemption of the Notes would result in the
delisting of the Preferred Securities issued by the Trust from any national
securities exchange or other organization on or with which the Preferred
Securities are then listed, the Company shall not be permitted to effect such
partial redemption and may only redeem the Notes in whole.
Section 3.3. No Sinking Fund. The Notes are not entitled to the
benefit of any sinking fund.
<PAGE>
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ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
Section 4.1. Extension of Interest Payment Period. The Company
shall have the right, at any time and from time to time prior to the Maturity
Date, to extend the interest payment period of such Notes for up to twenty (20)
consecutive quarters (the "Extended Interest Payment Period"). To the extent
permitted by applicable law, interest, the payment of which has been deferred
because of the extension of the interest payment period pursuant to this Section
4.1, will bear interest compounded quarterly at the Coupon Rate for each quarter
of the Extended Interest Payment Period ("Compounded Interest"). At the end of
the Extended Interest Payment Period, the Company shall pay all interest accrued
and unpaid on the Notes, including any Additional Interest ("Deferred
Interest"), which shall be payable to the Holders of the Notes in whose names
the Notes are registered in the security register maintained by the Registrar on
the first Regular Record Date after the end of the Extended Interest Payment
Period. Before the termination of any Extended Interest Payment Period, the
Company may further extend such period, provided, however, that such period
together with all previous and such further extensions thereof shall not exceed
twenty (20) consecutive quarters or extend beyond the Maturity Date. Upon the
termination of any Extended Interest Payment Period and upon the payment of all
Deferred Interest then due, the Company may select a new Extended Interest
Payment Period, subject to the foregoing requirements. No interest shall be due
and payable during an Extended Interest Payment Period, except at the end
thereof.
Section 4.2. Notice of Extension. (a) If the Property Trustee is
the only registered Holder of the Notes at the time the Company selects an
Extended Interest Payment Period, the Company shall give written notice to both
the Regular Trustees and the Property Trustee of its selection of such Extended
Interest Payment Period one Business Day before the earlier of (i) the next
succeeding date on which Distributions on the Trust Securities are payable, or
(ii) the date the Trust is required to give notice of
<PAGE>
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the record or payment date for such Distributions to the New York Stock Exchange
or other applicable self-regulatory organization or to holders of the Preferred
Securities, but in any event at least one Business Day before such record date.
The Regular Trustees shall give notice of the Company's selection of such
Extended Interest Payment Period to the holders of the Preferred Securities.
(b) If the Property Trustee is not the only Holder of the Notes at
the time the Company selects an Extended Interest Payment Period, the Company
shall give the Holders of the Notes and the Trustee written notice of its
selection of such Extended Interest Payment Period ten (10) Business Days before
the earlier of (i) the next succeeding Interest Payment Date, or (ii) the date
the Company is required to give notice of the record or payment date of such
interest payment to the New York Stock Exchange or other applicable self-
regulatory organization or to Holders of the Notes.
(c) The quarter in which any notice is given pursuant to paragraphs
(a) or (b) of this Section 4.2 shall be counted as one of the twenty quarters
permitted in the maximum Extended Interest Payment Period permitted under
Section 4.1.
ARTICLE V
EXPENSES
Section 5.1. Payment of Expenses. In connection with the offering,
sale and issuance of the Notes to the Property Trustee in connection with the
sale of the Trust Securities by the Trust, and in connection with the
maintenance of the Trust for so long as the Trust Securities are outstanding,
the Company shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Notes, including compensation of the Trustee under the Indenture
in accordance with the provisions of Section 7.07 of the Indenture;
<PAGE>
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(b) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the Trust, the
offering, sale and issuance of the Trust Securities, the fees and expenses of
the Property Trustee and the Delaware Trustee, the costs and expenses relating
to the operation of the Trust, including without limitation, costs and expenses
of accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), any Clearing Agency for the Notes, duplicating,
travel and telephone and other telecommunications expenses and costs and
expenses incurred in connection with the acquisition, financing, and disposition
of Trust assets), other than obligations of the Trust in respect of the Common
Securities and the Preferred Securities;
(c) be primarily liable for any indemnification obligations arising
with respect to the Declaration;
(d) pay any and all taxes, duties, assessments or governmental
charges of whatever nature (other than United States withholding taxes
attributable to the Trust or its assets) imposed on the Trust or its assets and
all liabilities, costs and expenses of the Trust with respect to such taxes,
duties, assessments or governmental charges; and
(e) pay any and all fees and expenses related to the enforcement by
the Property Trustee of the rights of the holders of the Preferred Securities.
<PAGE>
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ARTICLE VI
SUBORDINATION
Section 6.1. Agreement to Subordinate. The Company covenants and
agrees, and each holder of Notes issued hereunder by such holder's acceptance
thereof likewise covenants and agrees, that all Notes shall be issued subject to
the provisions of this Article VI; and each holder of a Note, whether upon
original issue or upon transfer or assignment thereof, accepts and agrees to be
bound by such provisions.
The payment by the Company of the principal of, premium, if any, and
interest on all Notes issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and subject in right of payment to the
prior payment in full of all Senior Indebtedness, whether outstanding at the
date of this Second Supplemental Indenture or thereafter incurred.
This Article shall constitute a continuing offer to all Persons who,
in reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness and such holders are made obligees hereunder and they and/or
each of them may enforce such provisions.
No provision of this Article VI shall prevent the occurrence of any
default or Event of Default with respect to the Notes.
Section 6.2. Default on Senior Indebtedness. In the event and
during the continuation of any default by the Company in the payment of
principal, premium, interest or any other amount due on any Senior Indebtedness,
or in the event that the maturity of any Senior Indebtedness has been
accelerated because of a default, then, in either case, no payment shall be made
by the Company to the Holders of the Notes with respect to the principal
(including
<PAGE>
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redemption and sinking fund payments) of, premium, if any, interest on, or any
other amount owing in respect of, the Notes.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder of the Notes when such payment is
prohibited by the preceding paragraph of this Section 6.2, such payment shall be
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, but
only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee within 90
days of such payment of the amounts then due and owing on the Senior
Indebtedness and only the amounts specified in such notice to the Trustee shall
be paid to the holders of Senior Indebtedness.
Section 6.3. Liquidation; Dissolution; Bankruptcy. Upon any payment
by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors upon any
dissolution or winding-up or liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due upon all Senior Indebtedness shall first be
paid in full, or payment thereof provided for in money in accordance with its
terms, before any payment or distribution is made by the Company to the Holders
of the Notes on account of the principal of, premium, if any, interest on, or
any other amount owing in respect of, the Notes; and upon any such dissolution
or winding-up or liquidation or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Notes or the Trustee would
be entitled to receive from the Company, except for the provisions of this
Article VI, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders of the Notes or by the Trustee under this
Indenture if
<PAGE>
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received by them or it, directly to the holders of Senior Indebtedness (pro rata
to such holders on the basis of the respective amounts of Senior Indebtedness
held by such holders, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay such
Senior Indebtedness in full, in money or money's worth, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Holders of Notes
or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee or the Holders of the Notes before all Senior Indebtedness is paid in
full, or provision is made for such payment in money in accordance with its
terms, such payment or distribution shall be held in trust for the benefit of
and shall be paid over or delivered to the holders of such Senior Indebtedness
or their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing such Senior
Indebtedness may have been issued, as their respective interests may appear, as
calculated by the Company, for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay such Senior
Indebtedness in full in money in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the benefit of the holders
of such Senior Indebtedness.
For purposes of this Article VI, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this
<PAGE>
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Article VI with respect to the Notes to the payment of all Senior Indebtedness
that may at the time be outstanding, provided, however, that (i) such Senior
Indebtedness is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of such
Senior Indebtedness are not, without the consent of such holders, altered by
such reorganization or readjustment. The consolidation of the Company with, or
the merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided for in Article Five of the Indenture shall not be
deemed a dissolution, winding-up, liquidation or reorganization for the purposes
of this Section 6.3 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions stated
in Article Five of the Indenture. Nothing in Section 6.2 or in this Section 6.3
shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 7.07 of the Indenture.
Section 6.4. Subrogation. Subject to the payment in full of all
Senior Indebtedness, the rights of the Holders of the Notes shall be subrogated
to the rights of the holders of such Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company applicable to such
Senior Indebtedness until the principal of, premium, if any, and interest on,
and all other amounts owing in respect of, the Notes shall be paid in full; and,
for the purposes of such subrogation, no payments or distributions to the
holders of such Senior Indebtedness of any cash, property or securities to which
the Holders of the Notes or the Trustee would be entitled except for the
provisions of this Article VI, and no payment over pursuant to the provisions of
this Article VI, to or for the benefit of the holders of such Senior
Indebtedness by Holders of the Notes or the Trustee, shall, as between the
Company, its creditors other than holders of Senior Indebtedness, and the
Holders of the Notes be deemed to be a payment by the Company to or on account
of such Senior Indebtedness. It is
<PAGE>
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understood that the provisions of this Article VI are and are intended solely
for the purposes of defining the relative rights of the Holders of the Notes, on
the one hand, and the holders of Senior Indebtedness on the other hand.
Nothing contained in this Article VI or elsewhere in this Second
Supplemental Indenture or the Indenture or in the Notes is intended to or shall
impair, as between the Company, its creditors other than the holders of Senior
Indebtedness, and the Holders of the Notes, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the Notes the principal
of (and premium, if any) and interest on and all other amounts owing in respect
of the Notes as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of the
Holders of the Notes and creditors of the Company, other than the holders of
Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or
the Holder of any Note from exercising all remedies otherwise permitted by
applicable law upon default under the Indenture, as amended and supplemented by
this Second Supplemental Indenture, subject to the rights, if any, under this
Article VI of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article VI, the Trustee, subject to the provisions of Section 7.01 of
the Indenture, and the Holders of the Notes, shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the Notes, for the purposes of ascertaining the
Persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable
<PAGE>
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thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article VI.
Section 6.5. Trustee to Effectuate Subordination. Each Holder of a
Note by such holder's acceptance thereof authorizes and directs the Trustee on
such holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article VI and appoints the
Trustee as such holder's attorney-in-fact for any and all such purposes.
Section 6.6. Notice by the Company. The Company shall give prompt
written notice to a Trust Officer of any fact known to the Company that would
prohibit the making of any payment of monies to or by the Trustee in respect of
the Notes pursuant to the provisions of this Article VI. Notwithstanding the
provisions of this Article VI or any other provision of the Indenture and this
Second Supplemental Indenture, the Trustee shall not be charged with knowledge
of the existence of any facts that would prohibit the making of any payment of
monies to or by the Trustee in respect of the Notes pursuant to the provisions
of this Article VI unless and until a Trust Officer shall have received written
notice thereof from the Company or a holder or holders of Senior Indebtedness or
from any representative or trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 7.01 of the
Indenture, shall be entitled in all respects to assume that no such facts exist;
provided, however, that if the Trustee shall not have received the notice
provided for in this Section 6.6 at least two Business Days prior to the date
upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any) or interest on any Note) then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
money and to apply the same to the purposes for which they were received, and
shall not be affected by any notice to the contrary that may be received by it
within two Business Days prior to such date.
The Trustee, subject to the provisions of Section 7.01 of the
Indenture, shall be entitled to rely on the
<PAGE>
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delivery to it of a written notice by a Person representing himself to be a
holder of Senior Indebtedness (or a representative or trustee on behalf of such
holder) to establish that such notice has been given by a holder of such Senior
Indebtedness or a representative or trustee on behalf of any such holder or
holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of such
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article VI, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article VI, and if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
Section 6.7. Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the rights set
forth in this Article VI in respect of any Senior Indebtedness at any time held
by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article VI, and no implied covenants or
obligations with respect to the holders of such Senior Indebtedness shall be
read into the Indenture or this Second Supplemental Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and, subject to the provisions of Section 7.01 of
the Indenture, the Trustee shall not be liable to any holder of Senior
Indebtedness if it shall pay over or deliver to Holders of Notes, the Company or
any other Person money or assets to which
<PAGE>
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any holder of Senior Indebtedness shall be entitled by virtue of this Article VI
or otherwise.
Section 6.8. Subordination May Not Be Impaired. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of the Indenture or this Second
Supplemental Indenture, regardless of any knowledge thereof that any such holder
may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the Notes,
without incurring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article VI or the
obligations hereunder of the Holders of the Notes to the holders of such Senior
Indebtedness, do any one or more the following: (i) change the manner, place or
terms of payment or extend the time of payment of, or renew or alter, such
Senior Indebtedness, or otherwise amend or supplement in any manner such Senior
Indebtedness or any instrument evidencing the same or any agreement under which
such Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing such
senior Indebtedness; (iii) release any Person liable in any manner for the
collection of such Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
Section 6.9. Pari Passu Debt The payment by the Company of the
principal of and interest on all Notes issued hereunder shall rank pari passu
with the payment by the Company of the principal of and interest on the
Company's % Subordinated Deferrable Interest Debentures due ,
(which is a series of Securities issued under the
<PAGE>
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Indenture).
ARTICLE VII
COVENANT TO LIST ON EXCHANGE
Section 7.1. Listing on Exchange. If the Notes are distributed to
the holders of the Preferred Securities upon a Dissolution Event, the Company
will use its best efforts to list such Notes on the New York Stock Exchange,
Inc. or on such other national securities exchange or with the Nasdaq Stock
Market or such other organization as the Preferred Securities are then listed.
ARTICLE VIII
FORM OF NOTE
Section 8.1. Form of Note. The Notes and the Trustee's Certificate
of Authentication to be endorsed thereon are to be substantially in the
following forms:
(FORM OF FACE OF NOTE)
[IF THE NOTE IS TO BE A GLOBAL SECURITY, INSERT: THIS NOTE IS A
GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF
DTC. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO
A NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
<PAGE>
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No. $
CUSIP No.
THE COASTAL CORPORATION
% SUBORDINATED DEFERRABLE INTEREST NOTE DUE
The COASTAL CORPORATION, a Delaware corporation (the "Company", which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to ________________ or
registered assigns, the principal sum of ________________ Dollars on
and to pay interest on said principal sum from , or from the
most recent interest payment date (each such date, an "Interest Payment Date")
to which interest has been paid or duly provided for, quarterly (subject to
deferral as set forth herein) in arrears on , , and
of each year, commencing , , at the rate of % per annum until
the principal hereof shall have become due and payable, and on any overdue
principal and premium, if any, and (without duplication and to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest, compounded quarterly, at the same rate per annum. The
amount of interest payable on any Interest Payment Date shall be computed on the
basis of a 360-day year of twelve 30-day months. The amount of interest payable
for any period shorter than a full quarterly period for which interest is
computed will be computed on the basis of the actual number of days elapsed in
such 90-day quarter. In the event that any date on which interest is payable on
this Note is not a Business Day, then payment of interest payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date. The interest installment so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this Note (or one
or more Predecessor Securities, as defined in said Indenture) is registered at
the close of business on the Regular Record Date for such interest installment
[which shall be the close of business on the Business Day next preceding such
Interest Payment Date.] [IF PURSUANT TO THE PROVISIONS OF SECTION 2.08 OF THE
INDENTURE THE
<PAGE>
-24-
NOTES ARE NO LONGER REPRESENTED BY A GLOBAL SECURITY -- which shall be [insert
date (to be selected by the Company) which is not less than 15 days prior to
each Interest Payment Date.]] Any such interest installment not punctually paid
or duly provided for shall forthwith cease to be payable to the registered
Holders on such Regular Record Date, and may be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a special record date to be fixed by the Company for the payment of
such defaulted interest, notice whereof shall be given to the registered Holders
of the Notes not less than fifteen (15) days prior to such special record date,
or may be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in the Indenture. The principal of (and premium, if any) and the interest on
this Note shall be payable at the office or agency of the Trustee maintained for
that purpose in New York, New York, in any coin or currency of the United States
of America which at the time of payment is legal tender for payment of public
and private debts; provided, however, that payment of interest may be made at
the option of the Company by check mailed to the registered Holder at such
address as shall appear in the security register maintained by the Registrar.
Notwithstanding the foregoing, so long as the Holder of this Note is the
Property Trustee of Coastal Finance II, the payment of the principal of (and
premium, if any) and interest on this Note will be made in immediately available
funds at such place and to such account as may by designated by the Property
Trustee of Coastal Finance II.
The indebtedness evidenced by this Note is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness, and this Note is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on
<PAGE>
-25-
his behalf to take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination so provided and (c) appoints the Trustee his
attorney-in-fact for any and all such purposes. Each Holder hereof, by his
acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
This Note shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Note are continued on the reverse side hereof
and such continued provisions shall for all purposes have the same effect as
though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated:
THE COASTAL CORPORATION
By:
Name:
Title:
Attest:
By:__________________________
Name:
Title:
<PAGE>
-26-
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By:
Authorized Signatory
<PAGE>
-27-
(FORM OF REVERSE OF NOTE)
This Note is one of a duly authorized series of Securities of the
Company designated its " % Subordinated Deferrable Interest Notes due
" (herein sometimes referred to as the "Notes"), issued under and pursuant to an
Indenture dated as of , 1998, duly executed and delivered between the
Company and The Bank of New York, not in its individual capacity but solely as
trustee (the "Trustee"), as supplemented by a Second Supplemental Indenture
dated as of , , between the Company and the Trustee (such Indenture
as so supplemented, the "Indenture"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders of the Notes. The terms of the Notes
include those stated in the Indenture 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 (the "TIA"). This Note is subject to all such terms and the Holder of
this Note is referred to the Indenture and the TIA for a statement of those
terms.
The Notes are general unsecured obligations of the Company and are
limited (except as otherwise provided in the Indenture) to $ in
aggregate principal amount.
Upon the occurrence and continuation of a Tax Event, in certain
circumstances this Note may be redeemed by the Company at a redemption price
equal to 100% of the principal amount hereof, plus any accrued but unpaid
interest thereon to the date of such redemption (the "Special Redemption
Price"). The Special Redemption Price shall be paid prior to 12:00 noon, New
York City time, on the date of such redemption or at such earlier time as the
Company determines. The Company shall also have the right to redeem this Note
at the option of the Company, without premium or penalty, in whole or in part at
any time on or after , (an "Optional Redemption"), at
<PAGE>
-28-
a redemption price equal to 100% of the principal amount hereof, plus any
accrued but unpaid interest thereon to the date of such redemption (the
"Optional Redemption Price"). Any optional redemption pursuant to this paragraph
will be made upon not less than 30 nor more than 60 days notice, at the Optional
Redemption Price. If the Notes are only partially redeemed by the Company
pursuant to an Optional Redemption, the Notes will be redeemed by lot or by any
other method utilized by the Trustee; provided, however, that if at the time of
redemption the Notes are registered as a global Note, the depositary shall
determine by lot the interest of each of its participants in such global Note to
be redeemed.
In the event of redemption of this Note in part only, a new Note or
Notes of this series for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Notes may be declared,
and upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of a majority in aggregate principal
amount of the Securities of each series affected at the time outstanding, as
defined in the Indenture, to amend or supplement the Indenture or the Securities
of any series (including the Notes) for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of modifying in any manner the rights of the Holders of the Securities
(including the Notes); provided, however, that no such amendment or supplement
shall (i) extend the fixed maturity of any Securities of any series, or reduce
the principal amount thereof, or reduce the rate or extend the time for payment
of interest thereon, without the consent of the Holder of each Security of such
series so affected or (ii)
<PAGE>
-29-
reduce the aforesaid percentage in aggregate principal amount of Securities, the
Holders of which are required to consent to any such amendment or supplement,
without the consent of the Holders of each Security then outstanding and
affected thereby. The Indenture also contains provisions permitting the Holders
of a majority in aggregate principal amount of the Securities of any series at
the time outstanding affected thereby, on behalf of all of the Holders of the
Securities of such series, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to such series, and its consequences, except a default in
the payment of the principal of or interest, if any, on any of the Securities of
such series. Any such consent or waiver by the registered Holder of this Note
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Note and of any
Note issued in exchange herefor or in place hereof (whether by registration of
transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note at the time and place and at the rate and in the money
herein prescribed.
The Company shall have the right at any time during the term of the
Notes, and from time to time, to extend the interest payment period of the Notes
for up to twenty (20) consecutive quarters (an "Extended Interest Payment
Period"), at the end of which period the Company shall pay all interest then
accrued and unpaid (together with interest thereon at the rate specified for the
Notes to the extent that payment of such interest is enforceable under
applicable law). Before the termination of any such Extended Interest Payment
Period, the Company may further extend such Extended Interest Payment Period,
provided, however, that such Extended Interest Payment
<PAGE>
-30-
Period together with all previous and such further extensions thereof shall not
exceed twenty (20) consecutive quarters or extend beyond the maturity of the
Notes. At the termination of any such Extended Interest Payment Period and upon
the payment of all accrued and unpaid interest and any additional amounts then
due, the Company may select a new Extended Interest Payment Period, subject to
the foregoing requirements.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is transferable by the registered Holder hereof on
the security register of the Company maintained by the Registrar, upon surrender
of this Note for registration of transfer at the office or agency of the Trustee
in New York, New York accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company or the Trustee duly executed by the
registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes of authorized denominations and for the same
aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be made for any such transfer, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Note,
the Company, the Trustee, any Paying Agent and the Registrar may deem and treat
the registered Holder hereof as the absolute owner hereof (whether or not this
Note shall be overdue and notwithstanding any notice of ownership or writing
hereon made by anyone other than the Registrar) for the purpose of receiving
payment of principal of and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any Paying Agent nor the Registrar shall
be affected by any notice to the contrary.
No past, present or future director, officer, employee or stockholder,
as such, of the Company or the Trustee or any successor of either thereof shall
have any liability for any obligations of the Company or the Trustee under the
Notes
<PAGE>
-31-
or this Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof,
expressly waived and released.
[The Notes of this series are issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof.] [This global
Note is exchangeable for Notes in definitive certificated form only under
certain limited circumstances set forth in the Indenture. Notes so issued are
issuable only in registered form without coupons in denominations of $1000 and
any integral multiple thereof.] As provided in the Indenture and subject to
certain limitations therein set forth, Notes so issued are exchangeable for a
like aggregate principal amount of Notes of a different authorized denomination,
as requested by the Holder surrendering the same.
This Note shall be governed by the internal laws of the State of New
York, and for all purposes shall be construed in accordance with the laws of
said State.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
<PAGE>
-32-
ARTICLE IX
ORIGINAL ISSUE OF NOTES
Section 9.1. Original Issue of Notes. Notes in the aggregate
principal amount of $ may, upon execution of this Second
Supplemental Indenture, be executed by the Company and delivered to the Trustee
for authentication, and the Trustee shall thereupon authenticate and deliver
said Notes to or upon the written order of the Company, signed by its Chairman,
its President, or any Vice President and its Treasurer, an Assistant Treasurer,
or Secretary without any further action by the Company.
ARTICLE X
CERTAIN COVENANTS
The following covenants shall apply to the Notes (but not with respect
to any other series of Securities), and are in addition to the covenants set
forth in Article Four of the Indenture.
Section 10.1. Limitation on Dividends and Other Payments. If (i)
there shall have occurred any event that constitutes an Event of Default or (ii)
the Company shall be in default with respect to its payment of any obligations
under the Preferred Securities Guarantee, then (a) the Company shall not declare
or pay any dividend on, make any distributions with respect to, or redeem,
purchase or make a liquidation payment with respect to, any of its capital
stock, (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
the Company which rank pari passu with or junior to the Notes, and (c) the
Company shall not make any guarantee payments (other than pursuant to the
Preferred Securities Guarantee) with respect to the foregoing.
<PAGE>
-33-
If the Company shall have given notice of its election to defer
payments of interest on the Notes by extending the interest payment period as
provided in Article IV and such period, or any extension thereof, shall be
continuing, then (i) the Company shall not declare or pay any dividend, or make
any distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock, (ii) the Company shall not
make any payment of interest, principal, premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Company which rank pari
passu with or junior to the Notes, and (iii) the Company shall not make any
guarantee payments (other than pursuant to the Preferred Securities Guarantee)
with respect to the foregoing.
Notwithstanding the foregoing restrictions, nothing in this Section
10.1 shall prevent the Company, in any event, from making dividend, redemption,
liquidation or guarantee payments on capital stock, or interest, principal,
redemption or guarantee payments on debt securities issued by the Company
ranking pari passu with or junior to the Notes, where the payment is made by way
of securities (including capital stock) that rank junior to the securities on
which such payment is being made.
Section 10.2. Covenants as to the Trust. For so long as the Trust
Securities remain outstanding, the Company will (i) maintain 100% direct or
indirect ownership of the Common Securities; provided, however, that any
permitted successor of the Company under the Indenture may succeed to the
Company's ownership of the Common Securities, (ii) not cause, as sponsor of the
Trust, or permit, as the holder of the Common Securities of the Trust, the
termination, dissolution or winding-up of the Trust, except in connection with a
distribution of the Notes as provided in the Declaration and in connection with
certain mergers,
<PAGE>
-34-
consolidations or amalgamations as permitted by the Declaration, (iii) use its
reasonable efforts to cause the Trust (a) to remain a statutory business trust,
except in connection with a distribution of Notes to the holders of the
Preferred Securities in liquidation of the Trust, the redemption of all of the
Trust Securities of the Trust or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration, and (b) to otherwise
continue to be treated as a grantor trust for United States federal income tax
purposes and (iv) use its reasonable efforts to cause each holder of Trust
Securities to be treated as owning an individual beneficial interest in the
Notes.
ARTICLE XI
CERTAIN EVENTS OF DEFAULT
Section 11.1. Additional Events of Default. An Event of Default with
respect to the Notes shall include those events described in Section 6.01 of the
Indenture and, with respect to the Notes only, the occurrence of any of the
following events: the voluntary or involuntary dissolution, winding up or
termination of the Trust, except in connection with (i) the distribution of
Notes to holders of Preferred Securities in liquidation of their interests in
the Trust, (ii) the redemption of all of the outstanding Preferred Securities,
or (iii) certain mergers, consolidations or amalgamations, each as permitted by
the provisions of the Declaration.
Section 11.2. Waiver of Existing Defaults. Notwithstanding Section
6.04 of the Indenture, the Holders of a majority in aggregate principal amount
of the Notes may not waive a Default or an existing Event of Default (i) in the
payment of the principal of or accrued interest on the Notes, unless the Company
has paid or deposited with the Trustee a sum sufficient to pay all matured
installments of interest (with interest on overdue interest at the rate
specified in Section 2.5(a)) upon all of the Notes and the principal of the
Notes that shall have become due otherwise than by acceleration or (ii) that
arise out of a breach by the Company of Section 10.1. Section 6.04 of the
Indenture shall, in all other respects and as modified by this Section 11.2,
apply to the Notes.
<PAGE>
-35-
ARTICLE XII
MISCELLANEOUS
Section 12.1. Supplemental Indenture Incorporated Into Indenture.
This Second Supplemental Indenture is executed by the Company and the Trustee
pursuant to the provisions of Sections 2.01 and 2.02 of the Indenture, and the
terms and conditions hereof shall be deemed to be part of the Indenture for all
purposes relating to the Notes. The provisions of the Indenture, as modified by
this Second Supplemental Indenture, are effective with respect to the Notes, and
are not effective with respect to any series of Securities to be issued pursuant
to any previous or subsequent supplemental indenture or resolution of the Board
of Directors. The Indenture, as supplemented by this Second Supplemental
Indenture, is in all respects adopted, ratified and confirmed.
Section 12.2. Trustee Not Responsible for Recitals; Disclaimer. The
recitals herein contained are made by the Company and not by the Trustee, and
the Trustee assumes no responsibility for the correctness thereof. The Trustee
makes no representation as to the validity or sufficiency of this Second
Supplemental Indenture.
Section 12.3. Governing Law. This Second Supplemental Indenture and
each Note shall be deemed to be a contract made under the internal laws of the
State of New York, and for all purposes shall be construed in accordance with
the laws of said State.
Section 12.4. Separability. In case any one or more of the
provisions contained in this Second Supplemental Indenture or in the Notes shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provisions of this Second Supplemental Indenture or of the Notes, but this
Second Supplemental Indenture and the Notes shall be construed as if such
invalid or illegal or unenforceable provision had never been contained herein or
therein.
<PAGE>
-36-
Section 12.5. Counterparts. This Second Supplemental Indenture may
be executed in any number of counterparts each of which shall be an original;
but such counterparts shall together constitute but one and the same instrument.
Section 12.6. Acknowledgment of Rights of Holders of Preferred
Securities. The Company hereby acknowledges the right of each holder of
Preferred Securities, upon and during the continuance of an Event of Default
under the Declaration that results from the failure of the Company to pay
principal of or interest on the Notes when due, to directly institute
proceedings against the Company to obtain payment to such holder of an amount
equal to the principal or interest so defaulted on with respect to Notes in a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities owned by such holder.
<PAGE>
-37-
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, as of the day and year first above written.
THE COSTAL CORPORATION
By
Name:
Title:
[Seal]
Attest:________________________
Title:
THE BANK OF NEW YORK,
as Trustee
By:
Name:
Title:
<PAGE>
-38-
STATE OF )
COUNTY OF ) ss:
On the day of , 1998 before me personally came
, to me known, who, being by me duly sworn, did depose and say that he is the
of THE COASTAL CORPORATION, one of the corporations described in and which
executed the above instrument; that he knows the corporate seal of said
corporation; that the seal affixed to the said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
NOTARY PUBLIC
[seal] Commission expires
STATE OF )
COUNTY OF ) ss:
On the day of , 1998 before me personally came
, to me known, who, being by me duly sworn, did depose and say that he is the
of THE BANK OF NEW YORK, one of the corporations described in and which executed
the above instrument; that he knows the corporate seal of said corporation; that
the seal affixed to the said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation; and that he
signed his name thereto by like authority.
NOTARY PUBLIC
[seal] Commission expires
<PAGE>
EXHIBIT 4.9
CERTIFICATE OF TRUST
OF
COASTAL FINANCE I
THIS CERTIFICATE OF TRUST of COASTAL FINANCE I (the "Trust"), dated
April 8, 1998, is being duly executed and filed by the undersigned, as trustee,
to form a business trust under the Delaware business Trust Act (12 Del. Code
Section 3801 et seq.).
1. Name. The name of the business trust being formed hereby is
Coastal Finance I.
2. Delaware Trustee. The name and business address of the trustee of
the Trust with a principal place of business in the State of Delaware is The
Bank of New York (Delaware), 400 White Clay Center, Route 273, Newark, Delaware
19711 .
3. Effective Date. This Certificate of Trust shall be effective as
of its filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.
/s/ Coby C. Hesse
-------------------------------------
Coby C. Hesse, as Trustee
/s/ Donald H. Gullquist
-------------------------------------
Donald H. Gullquist, as Trustee
/s/ Austin M. O'Toole
-------------------------------------
Austin M. O'Toole, as Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
<PAGE>
-2-
By: /s/ Mary Jane Morrissey
-------------------------------------
Name: Mary Jane Morrissey
Title: Authorized Signatory
<PAGE>
EXHIBIT 4.10
CERTIFICATE OF TRUST
OF
COASTAL FINANCE II
THIS CERTIFICATE OF TRUST of COASTAL FINANCE II (the "Trust"), dated
April 8, 1998, is being duly executed and filed by the undersigned, as trustee,
to form a business trust under the Delaware business Trust Act (12 Del. Code
Section 3801 et seq.).
1. Name. The name of the business trust being formed hereby is
Coastal Finance II.
2. Delaware Trustee. The name and business address of the trustee of
the Trust with a principal place of business in the State of Delaware is The
Bank of New York (Delaware), 400 White Clay Center, Route 273, Newark, Delaware
19711.
3. Effective Date. This Certificate of Trust shall be effective as
of its filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.
/s/ Coby C. Hesse
-----------------------------------
Coby C. Hesse, as Trustee
/s/ Donald H. Gullquist
-----------------------------------
Donald H. Gullquist, as Trustee
/s/ Austin M. O'Toole
-----------------------------------
Austin M. O'Toole, as Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
<PAGE>
-2-
By: /s/ Mary Jane Morrissey
--------------------------------
Name: Mary Jane Morrissey
Title: Authorized Signatory
<PAGE>
EXHIBIT 4.11
DECLARATION OF TRUST
OF
COASTAL FINANCE I
THIS DECLARATION OF TRUST (this "Declaration"), dated and effective as
of April 8, 1998, by the undersigned trustees (together with all other Persons
from time to time duly appointed and serving as trustees in accordance with the
provisions of this Declaration, the "Trustees"), The Coastal Corporation, a
Delaware corporation, as trust sponsor (the "Sponsor"), and by the holders, from
time to time, of undivided beneficial interests in the Trust to be issued
pursuant to this Declaration;
W I T N E S S E T H:
WHEREAS, the Trustees and the Sponsor desire to establish a trust (the
"Trust") pursuant to the Delaware Business Trust Act for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
certain Debt Securities (as hereinafter defined) of the Debt Issuer (as
hereinafter defined);
NOW THEREFORE, it being the intention of the parties hereto that the
Trust constitute a business trust under the Delaware Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of undivided beneficial
interests in the assets of the Trust, subject to the provisions of this
Declaration.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions. Capitalized terms used in this Declaration
but not defined in the preamble above have the respective meanings assigned
thereto in this Section 1.1. A term defined anywhere in this Declaration has
the same meaning throughout.
<PAGE>
-2-
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Business Day" means any day other than a Saturday, Sunday or any day
on which banking institutions in New York, New York are authorized or required
by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. (S) 3801, et seq., as it may be amended from time to time.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Common Security" means a security representing a common undivided
beneficial interest in the assets of the Trust with such terms as may be set out
in any amendment to this Declaration.
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security.
"Covered Person" means: (a) any trustee, officer, director,
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) the Trust's Affiliates; and (b) any Holder.
"Debt Issuer" means The Coastal Corporation, a Delaware corporation,
or any successor entity in a merger, consolidation or amalgamation, in its
capacity as the issuer of the Debt Securities.
"Debt Securities" means the subordinated deferrable interest notes to
be issued by the Debt Issuer and purchased with the proceeds of the Securities.
"Delaware Trustee" has the meaning set forth in Section 3.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended from time to time, and any successor legislation.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
<PAGE>
-3-
"Indemnified Person" means (a) any Trustee; (b) any Affiliate of any
Trustee; (c) any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee; or (d) any employee or
agent of the Trust or its Affiliates.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Security" means a security representing a preferred
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Preferred Security Certificate" means a certificate representing a
Preferred Security.
"Regular Trustee" means any Trustee other than the Delaware Trustee.
"Securities" mean the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor legislation.
"Sponsor" means The Coastal Corporation, a Delaware corporation, or
any successor entity in a merger, consolidation or amalgamation, in its capacity
as Sponsor of the Trust.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who from time to time be
duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
SECTION 1.2. Interpretation. Each definition in this Declaration
includes the singular and the plural, and references to the neuter gender
include the masculine and feminine where appropriate. Terms which relate to
accounting matters shall be interpreted in accordance with generally accepted
<PAGE>
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accounting principles in effect from time to time. References to any statute
mean such statute as amended at that time and include any successor legislation.
The word "or" is not exclusive, and the words "herein," "hereof" and "hereunder"
refer to this Declaration as a whole. The headings to the Articles and Sections
are for convenience of reference and shall not affect the meaning or
interpretation of this Declaration. Reference to Articles, Sections and
Exhibits means the Articles, Sections and Exhibits of this Declaration. The
Exhibits are hereby incorporated by reference into, and shall be deemed a part
of, this Declaration.
ARTICLE II
ORGANIZATION
SECTION 2.1. Name. The Trust created by this Declaration is named
"Coastal Finance I." The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 2.2. Office. The address of the principal office of the
Trust is c/o The Coastal Corporation, Coastal Tower, Nine Greenway Plaza,
Houston, Texas 77046-0995. At any time, the Regular Trustees may designate
another principal office.
SECTION 2.3. Purpose. The exclusive purposes and functions of the
Trust are (a) to issue and sell Securities and use the proceeds from such sale
to acquire the Debt Securities and (b) except as otherwise limited herein, to
engage in only those other activities necessary or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments or pledge any of its assets.
SECTION 2.4. Authority. Subject to the limitations provided in this
Declaration, the Regular Trustees shall have exclusive and complete authority to
carry out the purposes of the Trust. An action taken by the Regular Trustees in
accordance with their powers shall constitute the act of, and serve to bind, the
Trust. In dealing with the Regular Trustees acting on behalf of the Trust, no
Person shall be required to inquire into the authority of the Regular Trustees
to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Regular Trustees as set forth in
this Declaration.
<PAGE>
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SECTION 2.5. Title to Property of the Trust. Legal title to all
assets of the Trust shall be vested in the Trust.
SECTION 2.6. Powers of the Regular Trustees. The Regular Trustees
shall have the exclusive power and authority to cause the Trust to engage in the
following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Preferred Securities and no more than
one series of Common Securities; and, provided further, there shall be no
interests in the Trust other than the Securities and the issuance of the
Securities shall be limited to a one-time, simultaneous issuance of both
Preferred Securities and Common Securities;
(b) in connection with the issue and sale of the Preferred
Securities, under the direction of the Sponsor, to:
(i) execute and file with the Securities and Exchange
Commission a registration statement on Form S-3 prepared by the Sponsor in
relation to the Preferred Securities, including any amendments thereto to
be prepared by the Sponsor;
(ii) determine the states in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and to
take any and all such acts as they deem necessary or advisable to comply
with the applicable laws of any of those states;
(iii) execute and file an application prepared by the Sponsor to
the New York Stock Exchange, Inc. or any other national stock exchange
and/or the Nasdaq National Market for listing upon notice of issuance of
any Preferred Securities;
(iv) execute and file with the Securities and Exchange
Commission a registration statement on Form 8-A prepared by the Sponsor
relating to the registration of the Preferred Securities under Section
12(b) or 12(g) of the Exchange Act, including any amendments thereto; and
(v) designate underwriters to be party to a purchase agreement
with respect to the offer and sale of the Preferred Securities and to
execute and enter into such purchase agreement;
<PAGE>
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(c) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and provide for reasonable compensation for such services;
(d) to incur expenses which are necessary or incidental to carry out
any of the purposes of this Declaration; and
(e) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
SECTION 2.7. Filing of Certificate of Trust. On or after the
effective date of this Declaration, the Trustees shall cause the Certificate of
Trust for the Trust in the form attached hereto as Exhibit A to be filed with
the Secretary of State of the State of Delaware.
SECTION 2.8. Duration of Trust. The Trust, absent termination
pursuant to the provisions of Section 5.2, shall have existence for fifty-five
years from the date hereof.
ARTICLE III
TRUSTEES
SECTION 3.1. Trustees. The number of Trustees shall initially be
four, and thereafter the number of Trustees shall be such number as shall be
fixed from time to time by a written instrument signed by the Sponsor. The
Sponsor is entitled to appoint or remove without cause any Trustee at any time;
provided, however, that the number of Trustees shall in no event be less than
three; and provided further that one Trustee, in the case of a natural person,
shall be a person who is resident of the State of Delaware or which, if not a
natural person, has its principal place of business in the State of Delaware and
meets the requirements of applicable Delaware law (the "Delaware Trustee").
Except as expressly set forth in this Declaration, any power of the
Regular Trustees may be exercised by, or with the consent of, a majority of the
Regular Trustees; provided, however, that if there are two or fewer Regular
Trustees, all powers of the Regular Trustees shall be exercised by, or with the
consent of, all of the Regular Trustees.
<PAGE>
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The initial Regular Trustees shall be:
Coby C. Hesse
Donald H. Gullquist
Austin M. O'Toole
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
SECTION 3.2. Delaware Trustee. Notwithstanding any other provisions
of this Declaration, the Delaware Trustee, in its capacity as Delaware Trustee,
shall not be entitled to exercise any of the powers, nor shall the Delaware
Trustee have any of the duties and responsibilities, of the Regular Trustees
described in this Declaration. The Delaware Trustee shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act.
SECTION 3.3. Execution of Documents. (a) The Regular Trustees are
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to cause the Trust to execute pursuant to
Section 2.6.
(b) The Regular Trustees may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 their
power for the purposes of signing any documents which the Regular Trustees have
power and authority to cause the Trust to execute pursuant to Section 2.6.
<PAGE>
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ARTICLE IV
LIMITATION OF LIABILITY OF HOLDERS
OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1. Exculpation. (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Trust or any Covered
Person for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which distributions to
Holders might properly be paid.
SECTION 4.2. Fiduciary Duty. (a) To the extent that, at law or in
equity, an Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable to the
Trust or to any other Covered Person for its good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of an Indemnified Person
otherwise existing at law or in equity, are agreed by the parties hereto to
replace such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between and
Indemnified Person and Covered Persons, or
<PAGE>
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(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person shall
act in a manner that is, or provide terms that are, fair and reasonable to
the Trust or any Holder,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interest and
factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of, or factors
affecting, the Trust or any other Person; or
(ii) in its "good faith" or under another express standard the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by the Declaration or by
applicable law.
SECTION 4.3. Indemnification. (a) To the fullest extent permitted
by applicable law, the Sponsor shall indemnify and hold harmless each
Indemnified Person from and against any loss, damage or claim incurred by such
Indemnified Person by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Declaration except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Indemnified Person by reason of gross
negligence or willful misconduct with respect to such acts or omissions.
<PAGE>
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(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Sponsor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Sponsor of an undertaking by or on behalf of the
Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
4.3(a).
SECTION 4.4. Other Businesses. Any Covered Person, the sponsor and
the Delaware Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders shall
have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom and the pursuit of any such venture,
even if competitive with the business of the Trust, shall not be deemed wrongful
or improper. No Covered Person, the Sponsor or the Delaware Trustee shall be
obligated to present any particular investment or other opportunity to the Trust
even if such opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Sponsor and the
Delaware Trustee shall have the right to take for its own account (individually
or as a partner or fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Covered Person and the Delaware Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act on any committee or body of
holders of securities or other obligations of the Sponsor or its Affiliates.
ARTICLE V
AMENDMENTS, DISSOLUTION, MISCELLANEOUS
SECTION 5.1. Amendments. At any time before the issue of any
Securities, this Declaration may be amended by, and only by, a written
instrument executed by a majority of the Regular Trustees and the Sponsor.
SECTION 5.2. Dissolution of Trust. (a) The Trust shall dissolve and
its affairs shall be wound up:
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(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor or the revocation of the Sponsor's
Certificate of Incorporation;
(iii) upon the entry of a decree of judicial dissolution of the
Sponsor or the Trust; or
(iv) before the issue of any Securities, with the consent of all
of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 5.2(a), the Trustees shall file a Certificate of
Cancellation for the Trust with the Secretary of State of the State of Delaware.
SECTION 5.3. Governing Law. This Declaration and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
laws of the State of Delaware and all rights and remedies shall be governed by
such laws without regard to principles of conflict of laws.
SECTION 5.4. Successors and Assigns. Whenever in this Declaration
any of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements in
this Declaration by the Sponsor and the Trustees shall bind and inure to the
benefit of their respective successors and assigns, whether or not so expressed.
SECTION 5.5. Partial Enforceability. If any provision of this
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to any Person or circumstances other than those to which it is
held invalid, shall not be affected thereby.
SECTION 5.6. Counterparts. This Declaration may contain more than
one counterpart of the signature page and this Declaration may be executed by
the affixing of the signature of each of the Trustees to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as
though one, and they shall have the same force and effect as though all of the
signers had signed a single signature page.
<PAGE>
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IN WITNESS WHEREOF, the undersigned has caused this Declaration of
Trust of Coastal Finance I to be executed as of the day and year first above
written.
TRUSTEES:
/s/ Coby C. Hesse
Coby C. Hesse, as Trustee
/s/ Donald H. Gullquist
Donald H. Gullquist, as Trustee
/s/ Austin M. O'Toole
Austin M. O'Toole, as Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ Mary Jane Morrissey
------------------------------------
Name: Mary Jane Morrissey
Title: Authorized Signatory
SPONSOR:
THE COASTAL CORPORATION
By: /s/ Austin M. O'Toole
------------------------------------
Name: Austin M. O'Toole
Title: Senior Vice President
and Secretary
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST
OF
COASTAL FINANCE I
This Certificate of Trust of Coastal Finance I (the "Trust") dated
April 8, 1998, is being duly executed and filed by the undersigned, as trustees,
to form a business trust pursuant to the Delaware Business Trust Act, 12 Del. C.
(S) 3810, et seq.. The undersigned, as trustees, do hereby certify as follows:
(1) The name of the business trust being formed hereby is
"Coastal Finance I."
(2) The name and business address of the trustee of the Trust
which has its principal place of business in the State of Delaware is as
follows:
The Bank of New York (Delaware)
400 White Clay Center
Route 273
Newark, Delaware 19711
(3) This Certificate of Trust shall be effective as of the date
of filing.
IN WITNESS WHEREOF, the undersigned being the sole trustees of the
Trust, have executed this Certificate of Trust as of the date first above
written.
<PAGE>
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Dated: April 8, 1998
_______________________________
Coby C. Hesse, as Trustee
_______________________________
Donald H. Gullquist, as Trustee
_______________________________
Austin M. O'Toole, as Trustee
THE BANK OF NEW YORK (DELAWARE)
as Delaware Trustee
By: ___________________________
Name:
Title:
<PAGE>
EXHIBIT 4.12
DECLARATION OF TRUST
OF
COASTAL FINANCE II
THIS DECLARATION OF TRUST (this "Declaration"), dated and effective as
of April 8, 1998, by the undersigned trustees (together with all other Persons
from time to time duly appointed and serving as trustees in accordance with the
provisions of this Declaration, the "Trustees"), The Coastal Corporation, a
Delaware corporation, as trust sponsor (the "Sponsor"), and by the holders, from
time to time, of undivided beneficial interests in the Trust to be issued
pursuant to this Declaration;
W I T N E S S E T H:
WHEREAS, the Trustees and the Sponsor desire to establish a trust (the
"Trust") pursuant to the Delaware Business Trust Act for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
certain Debt Securities (as hereinafter defined) of the Debt Issuer (as
hereinafter defined);
NOW THEREFORE, it being the intention of the parties hereto that the
Trust constitute a business trust under the Delaware Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of undivided beneficial
interests in the assets of the Trust, subject to the provisions of this
Declaration.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions. Capitalized terms used in this Declaration
but not defined in the preamble above have the respective meanings assigned
thereto in this Section 1.1. A term defined anywhere in this Declaration has
the same meaning throughout.
<PAGE>
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"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Business Day" means any day other than a Saturday, Sunday or any day
on which banking institutions in New York, New York are authorized or required
by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. ? 3801, et seq., as it may be amended from time to time.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Common Security" means a security representing a common undivided
beneficial interest in the assets of the Trust with such terms as may be set out
in any amendment to this Declaration.
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security.
"Covered Person" means: (a) any trustee, officer, director,
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) the Trust's Affiliates; and (b) any Holder.
"Debt Issuer" means The Coastal Corporation, a Delaware corporation,
or any successor entity in a merger, consolidation or amalgamation, in its
capacity as the issuer of the Debt Securities.
"Debt Securities" means the subordinated deferrable interest notes to
be issued by the Debt Issuer and purchased with the proceeds of the Securities.
"Delaware Trustee" has the meaning set forth in Section 3.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended from time to time, and any successor legislation.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
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"Indemnified Person" means (a) any Trustee; (b) any Affiliate of any
Trustee; (c) any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee; or (d) any employee or
agent of the Trust or its Affiliates.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Security" means a security representing a preferred
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Preferred Security Certificate" means a certificate representing a
Preferred Security.
"Regular Trustee" means any Trustee other than the Delaware Trustee.
"Securities" mean the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor legislation.
"Sponsor" means The Coastal Corporation, a Delaware corporation, or
any successor entity in a merger, consolidation or amalgamation, in its capacity
as Sponsor of the Trust.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who from time to time be
duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
SECTION 1.2. Interpretation. Each definition in this Declaration
includes the singular and the plural, and references to the neuter gender
include the masculine and feminine where appropriate. Terms which relate to
accounting matters shall be interpreted in accordance with generally accepted
<PAGE>
-4-
accounting principles in effect from time to time. References to any statute
mean such statute as amended at that time and include any successor legislation.
The word "or" is not exclusive, and the words "herein," "hereof" and "hereunder"
refer to this Declaration as a whole. The headings to the Articles and Sections
are for convenience of reference and shall not affect the meaning or
interpretation of this Declaration. Reference to Articles, Sections and
Exhibits means the Articles, Sections and Exhibits of this Declaration. The
Exhibits are hereby incorporated by reference into, and shall be deemed a part
of, this Declaration.
ARTICLE II
ORGANIZATION
SECTION 2.1. Name. The Trust created by this Declaration is named
"Coastal Finance II." The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 2.2. Office. The address of the principal office of the
Trust is c/o The Coastal Corporation, Coastal Tower, Nine Greenway Plaza,
Houston, Texas 77046-0995. At any time, the Regular Trustees may designate
another principal office.
SECTION 2.3. Purpose. The exclusive purposes and functions of the
Trust are (a) to issue and sell Securities and use the proceeds from such sale
to acquire the Debt Securities and (b) except as otherwise limited herein, to
engage in only those other activities necessary or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments or pledge any of its assets.
SECTION 2.4. Authority. Subject to the limitations provided in this
Declaration, the Regular Trustees shall have exclusive and complete authority to
carry out the purposes of the Trust. An action taken by the Regular Trustees in
accordance with their powers shall constitute the act of, and serve to bind, the
Trust. In dealing with the Regular Trustees acting on behalf of the Trust, no
Person shall be required to inquire into the authority of the Regular Trustees
to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Regular Trustees as set forth in
this Declaration.
<PAGE>
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SECTION 2.5. Title to Property of the Trust. Legal title to all
assets of the Trust shall be vested in the Trust.
SECTION 2.6. Powers of the Regular Trustees. The Regular Trustees
shall have the exclusive power and authority to cause the Trust to engage in the
following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Preferred Securities and no more than
one series of Common Securities; and, provided further, there shall be no
interests in the Trust other than the Securities and the issuance of the
Securities shall be limited to a one-time, simultaneous issuance of both
Preferred Securities and Common Securities;
(b) in connection with the issue and sale of the Preferred
Securities, under the direction of the Sponsor, to:
(i) execute and file with the Securities and Exchange
Commission a registration statement on Form S-3 prepared by the Sponsor in
relation to the Preferred Securities, including any amendments thereto to
be prepared by the Sponsor;
(ii) determine the states in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and to
take any and all such acts as they deem necessary or advisable to comply
with the applicable laws of any of those states;
(iii) execute and file an application prepared by the Sponsor to
the New York Stock Exchange, Inc. or any other national stock exchange
and/or the Nasdaq National Market for listing upon notice of issuance of
any Preferred Securities;
(iv) execute and file with the Securities and Exchange
Commission a registration statement on Form 8-A prepared by the Sponsor
relating to the registration of the Preferred Securities under Section
12(b) or 12(g) of the Exchange Act, including any amendments thereto; and
(v) designate underwriters to be party to a purchase agreement
with respect to the offer and sale of the Preferred Securities and to
execute and enter into such purchase agreement;
<PAGE>
-6-
(c) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and provide for reasonable compensation for such services;
(d) to incur expenses which are necessary or incidental to carry out
any of the purposes of this Declaration; and
(e) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
SECTION 2.7. Filing of Certificate of Trust. On or after the
effective date of this Declaration, the Trustees shall cause the Certificate of
Trust for the Trust in the form attached hereto as Exhibit A to be filed with
the Secretary of State of the State of Delaware.
SECTION 2.8. Duration of Trust. The Trust, absent termination
pursuant to the provisions of Section 5.2, shall have existence for fifty-five
years from the date hereof.
ARTICLE III
TRUSTEES
SECTION 3.1. Trustees. The number of Trustees shall initially be
four, and thereafter the number of Trustees shall be such number as shall be
fixed from time to time by a written instrument signed by the Sponsor. The
Sponsor is entitled to appoint or remove without cause any Trustee at any time;
provided, however, that the number of Trustees shall in no event be less than
three; and provided further that one Trustee, in the case of a natural person,
shall be a person who is resident of the State of Delaware or which, if not a
natural person, has its principal place of business in the State of Delaware and
meets the requirements of applicable Delaware law (the "Delaware Trustee").
Except as expressly set forth in this Declaration, any power of the
Regular Trustees may be exercised by, or with the consent of, a majority of the
Regular Trustees; provided, however, that if there are two or fewer Regular
Trustees, all powers of the Regular Trustees shall be exercised by, or with the
consent of, all of the Regular Trustees.
<PAGE>
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The initial Regular Trustees shall be:
Coby C. Hesse
Donald H. Gullquist
Austin M. O'Toole
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
SECTION 3.2. Delaware Trustee. Notwithstanding any other provisions
of this Declaration, the Delaware Trustee, in its capacity as Delaware Trustee,
shall not be entitled to exercise any of the powers, nor shall the Delaware
Trustee have any of the duties and responsibilities, of the Regular Trustees
described in this Declaration. The Delaware Trustee shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act.
SECTION 3.3. Execution of Documents. (a) The Regular Trustees are
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to cause the Trust to execute pursuant to
Section 2.6.
(b) The Regular Trustees may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 their
power for the purposes of signing any documents which the Regular Trustees have
power and authority to cause the Trust to execute pursuant to Section 2.6.
<PAGE>
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ARTICLE IV
LIMITATION OF LIABILITY OF HOLDERS
OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1. Exculpation. (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Trust or any Covered
Person for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which distributions to
Holders might properly be paid.
SECTION 4.2. Fiduciary Duty. (a) To the extent that, at law or in
equity, an Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable to the
Trust or to any other Covered Person for its good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of an Indemnified Person
otherwise existing at law or in equity, are agreed by the parties hereto to
replace such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between and
Indemnified Person and Covered Persons, or
<PAGE>
-9-
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person shall
act in a manner that is, or provide terms that are, fair and reasonable to
the Trust or any Holder,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interest and
factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of, or factors
affecting, the Trust or any other Person; or
(ii) in its "good faith" or under another express standard the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by the Declaration or by
applicable law.
SECTION 4.3. Indemnification. (a) To the fullest extent permitted
by applicable law, the Sponsor shall indemnify and hold harmless each
Indemnified Person from and against any loss, damage or claim incurred by such
Indemnified Person by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Declaration except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Indemnified Person by reason of gross
negligence or willful misconduct with respect to such acts or omissions.
<PAGE>
-10-
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Sponsor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Sponsor of an undertaking by or on behalf of the
Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
4.3(a).
SECTION 4.4. Other Businesses. Any Covered Person, the sponsor and
the Delaware Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders shall
have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom and the pursuit of any such venture,
even if competitive with the business of the Trust, shall not be deemed wrongful
or improper. No Covered Person, the Sponsor or the Delaware Trustee shall be
obligated to present any particular investment or other opportunity to the Trust
even if such opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Sponsor and the
Delaware Trustee shall have the right to take for its own account (individually
or as a partner or fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Covered Person and the Delaware Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act on any committee or body of
holders of securities or other obligations of the Sponsor or its Affiliates.
ARTICLE V
AMENDMENTS, DISSOLUTION, MISCELLANEOUS
SECTION 5.1. Amendments. At any time before the issue of any
Securities, this Declaration may be amended by, and only by, a written
instrument executed by a majority of the Regular Trustees and the Sponsor.
SECTION 5.2. Dissolution of Trust. (a) The Trust shall dissolve and
its affairs shall be wound up:
<PAGE>
-11-
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor or the revocation of the Sponsor's
Certificate of Incorporation;
(iii) upon the entry of a decree of judicial dissolution of the
Sponsor or the Trust; or
(iv) before the issue of any Securities, with the consent of all
of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 5.2(a), the Trustees shall file a Certificate of
Cancellation for the Trust with the Secretary of State of the State of Delaware.
SECTION 5.3. Governing Law. This Declaration and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
laws of the State of Delaware and all rights and remedies shall be governed by
such laws without regard to principles of conflict of laws.
SECTION 5.4. Successors and Assigns. Whenever in this Declaration
any of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements in
this Declaration by the Sponsor and the Trustees shall bind and inure to the
benefit of their respective successors and assigns, whether or not so expressed.
SECTION 5.5. Partial Enforceability. If any provision of this
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to any Person or circumstances other than those to which it is
held invalid, shall not be affected thereby.
SECTION 5.6. Counterparts. This Declaration may contain more than
one counterpart of the signature page and this Declaration may be executed by
the affixing of the signature of each of the Trustees to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as
though one, and they shall have the same force and effect as though all of the
signers had signed a single signature page.
<PAGE>
-12-
IN WITNESS WHEREOF, the undersigned has caused this Declaration of
Trust of Coastal Finance I to be executed as of the day and year first above
written.
TRUSTEES:
/s/ Coby C. Hesse
Coby C. Hesse, as Trustee
/s/ Donald H. Gullquist
Donald H. Gullquist, as Trustee
/s/ Austin M. O'Toole
Austin M. O'Toole, as Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ Mary Jane Morrissey
-----------------------------------
Name: Mary Jane Morrissey
Title: Authorized Signatory
SPONSOR:
THE COASTAL CORPORATION
By: /s/ Austin M. O'Toole
-----------------------------------
Name: Austin M. O'Toole
Title: Senior Vice President and Secretary
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST
OF
COASTAL FINANCE II
This Certificate of Trust of Coastal Finance II (the "Trust") dated
April 8, 1998, is being duly executed and filed by the undersigned, as trustees,
to form a business trust pursuant to the Delaware Business Trust Act, 12 Del. C.
? 3810, et seq.. The undersigned, as trustees, do hereby certify as follows:
(1) The name of the business trust being formed hereby is
"Coastal Finance II."
(2) The name and business address of the trustee of the Trust
which has its principal place of business in the State of Delaware is as
follows:
The Bank of New York (Delaware)
400 White Clay Center
Route 273
Newark, Delaware 19711
(3) This Certificate of Trust shall be effective as of the date
of filing.
IN WITNESS WHEREOF, the undersigned being the sole trustees of the
Trust, have executed this Certificate of Trust as of the date first above
written.
<PAGE>
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Dated: April 8, 1998
_______________________________
Coby C. Hesse, as Trustee
_______________________________
Donald H. Gullquist, as Trustee
_______________________________
Austin M. O'Toole, as Trustee
THE BANK OF NEW YORK (DELAWARE)
as Delaware Trustee
By: ___________________________
Name:
Title:
<PAGE>
EXHIBIT 4.13
================================================================================
AMENDED AND RESTATED DECLARATION OF TRUST
COASTAL FINANCE I
Dated as of , 1998
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
----------------------
<TABLE>
<CAPTION>
SECTION OF
TRUST INDENTURE ACT SECTION OF
OF 1939, AS AMENDED DECLARATION
<S> <C>
310(a) 5.3(a)
310(b) 5.3(c), 5.3(d)
310(c) Inapplicable
311(a) 2.2(b)
311(b) 2.2(b)
311(c) Inapplicable
312(a) 2.2(a)
312(b) 2.2(b)
313 2.3
314(a) 2.4
314(b) Inapplicable
314(c) 2.5
314(d) Inapplicable
314(e) 1.1, 2.5
314(f) Inapplicable
315(a) 3.9(b)
315(c) 3.9(a)
315(d) 3.9(b)
316(a) Annex I
316(c) 3.6(e)
317(a) 3.8(d)
317(b) 3.8(h)
</TABLE>
___________________
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I INTERPRETATION AND DEFINITIONS 2
SECTION 1.1. Definitions. 2
ARTICLE II TRUST INDENTURE ACT 9
SECTION 2.1. Trust Indenture Act; Application. 9
SECTION 2.2. Lists of Holders of Securities. 9
SECTION 2.3. Reports by the Property Trustee. 10
SECTION 2.4. Periodic Reports to Property Trustee. 10
SECTION 2.5. Evidence of Compliance with Conditions Precedent. 10
SECTION 2.6. Events of Default; Waiver. 10
SECTION 2.7. Event of Default; Notice. 13
ARTICLE III ORGANIZATION 13
SECTION 3.1. Name. 13
SECTION 3.2. Office. 14
SECTION 3.3. Purpose. 14
SECTION 3.4. Authority. 14
SECTION 3.5. Title to Property of the Trust. 14
SECTION 3.6. Powers and Duties of the Regular Trustees. 15
SECTION 3.7. Prohibition of Actions by the Trust and the Trustees. 18
SECTION 3.8. Powers and Duties of the Property Trustee. 19
SECTION 3.9. Certain Duties and Responsibilities of the Property Trustee. 21
SECTION 3.10. Certain Rights of the Property Trustee. 23
SECTION 3.11. Delaware Trustee. 26
SECTION 3.12. Execution of Documents. 26
SECTION 3.13. Not Responsible for Recitals or Issuance of Securities. 26
SECTION 3.14. Duration of Trust. 26
SECTION 3.15. Mergers. 26
ARTICLE IV SPONSOR 29
SECTION 4.1. Sponsor's Purchase of Common Securities. 29
SECTION 4.2. Responsibilities of the Sponsor. 29
SECTION 4.3. Expenses. 29
ARTICLE V TRUSTEES 30
SECTION 5.1. Number of Trustees. 30
SECTION 5.2. Delaware Trustee. 31
SECTION 5.3. Property Trustee; Eligibility. 31
SECTION 5.4. Qualifications of Regular Trustees and
Delaware Trustee Generally. 32
SECTION 5.5. Initial Trustees. 32
SECTION 5.6. Appointment, Removal and Resignation of Trustees. 33
SECTION 5.7. Vacancies Among Trustees. 34
SECTION 5.8. Effect of Vacancies. 35
SECTION 5.9. Meetings. 35
SECTION 5.10. Delegation of Power. 36
ARTICLE VI DISTRIBUTIONS 36
SECTION 6.1. Distributions. 36
ARTICLE VII ISSUANCE OF SECURITIES 37
SECTION 7.1. General Provisions Regarding Securities. 37
ARTICLE VIII DISSOLUTION OF TRUST 38
SECTION 8.1. Dissolution of Trust. 38
ARTICLE IX TRANSFER OF INTERESTS 39
SECTION 9.1. Transfer of Securities. 39
SECTION 9.2. Transfer of Certificates. 40
SECTION 9.3. Deemed Security Holders. 40
SECTION 9.4. Book Entry Interests. 40
SECTION 9.5. Notices to Clearing Agency. 41
SECTION 9.6. Appointment of Successor Clearing Agency. 42
SECTION 9.7. Definitive Preferred Security Certificates. 42
SECTION 9.8. Mutilated, Destroyed, Lost or Stolen Certificates. 43
ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
TRUSTEES OR OTHERS 43
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 10.1. Liability. 43
SECTION 10.2. Exculpation. 44
SECTION 10.3. Fiduciary Duty. 44
SECTION 10.4. Indemnification and Reimbursement. 46
SECTION 10.5. Outside Businesses. 47
ARTICLE XI ACCOUNTING 47
SECTION 11.1. Fiscal Year. 47
SECTION 11.2. Certain Accounting Matters. 47
SECTION 11.3. Banking. 48
SECTION 11.4. Withholding. 48
ARTICLE XII AMENDMENTS AND MEETINGS 49
SECTION 12.1. Amendments. 49
SECTION 12.2. Meetings of the Holders; Action by Written Consent. 51
ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE 53
SECTION 13.1. Representations and Warranties of Property Trustee. 53
SECTION 13.2. Representations and Warranties of Delaware Trustee. 54
ARTICLE XIV MISCELLANEOUS 55
SECTION 14.1. Notices. 55
SECTION 14.2. Governing Law. 56
SECTION 14.3. Intention of the Parties. 56
SECTION 14.4. Headings. 57
SECTION 14.5. Successors and Assigns. 57
SECTION 14.6. Partial Enforceability. 57
SECTION 14.7. Counterparts. 57
ANNEX I TERMS OF SECURITIES I-1
EXHIBIT A-1 FORM OF PREFERRED SECURITY CERTIFICATE A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE A2-1
EXHIBIT B SPECIMEN OF SUBORDINATED NOTE B-1
</TABLE>
-ii-
<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST
OF
COASTAL FINANCE I
, 1998
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration"), dated and
effective as of , 1998, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the assets of the Trust to be issued pursuant to this
Declaration.
W I T N E S S E T H:
--------------------
WHEREAS, the Trustees and the Sponsor created Coastal Finance I (the
"Trust") as a business trust under the Delaware Business Trust Act pursuant to a
Declaration of Trust dated as of April 8, 1998 (the "Original Declaration") and
a Certificate of Trust filed with the Secretary of State of the State of
Delaware on April 8, 1998, for the exclusive purposes of issuing and selling
certain securities representing undivided beneficial interests in the assets of
the Trust, investing the proceeds thereof in certain Subordinated Notes of the
Subordinated Note Issuer (as defined herein) and engaging in activities
necessary or incidental thereto;
WHEREAS, prior to the date hereof, no interests in the Trust have been
issued; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
<PAGE>
-2-
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1. Definitions.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires; and
(f) a reference in this Declaration to the singular includes the
plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday, a Sunday or any
other day on which banking institutions in New
<PAGE>
-3-
York, New York or the New York Stock Exchange are authorized or required by law
to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code (S)3801 et seq., as it may be amended from time to time.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Preferred Securities and in whose name or in the name of a nominee of
that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank or other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means , 1998.
"Code" means the Internal Revenue Code of 1986 as amended from time to
time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Securities Guarantee" means the guarantee agreement, dated as
of , 1998, of the Sponsor in respect of the Common Securities.
"Common Security" has the meaning specified in Section 7.1.
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security substantially in the form of
Exhibit A-2.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
<PAGE>
-4-
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Definitive Preferred Security Certificates" has the meaning set forth
in Section 9.4.
"Direction" by a Person means a written direction signed:
(a) if the Person is a natural Person, by that Person; or
(b) in any other case, in the name of such Person by one or more
Authorized Officers of that Person.
"Distribution" means a distribution payable to Holders of Securities
in accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Subordinated Notes.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Indemnified Person" means (a) any Trustee; (b) any Affiliate of any
Trustee; (c) any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee; or (d) any employee or
agent of the Trust or its Affiliates.
"Indenture" means the Indenture dated as of April , 1998, as
amended and supplemented by a First Supplemental Indenture, dated as of ,
1998 (the "Supplemental Indenture"), among the Subordinated Note Issuer and the
Subordinated Note Trustee, and any further indentures
<PAGE>
-5-
supplemental thereto relating to the Subordinated Notes.
"Investment Company" means an investment company (as defined in the
Investment Company Act) that is required to register as such under the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex I
hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities and by the Trust Indenture
Act, Holder(s) of outstanding Securities voting together as a single class or,
as the context may require, Holders of outstanding Preferred Securities or
Holders of outstanding Common Securities voting separately as a class, who are
the record owners of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of the relevant
class.
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Annex I.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such
<PAGE>
-6-
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association or government or any agency
or political subdivision thereof, or any other entity of whatever nature.
"Preferred Securities Guarantee" means the guarantee agreement, dated
as of , 1998, of the Sponsor in respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate representing a
Preferred Security substantially in the form of Exhibit A-1.
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in Section
3.8(c).
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.
<PAGE>
-7-
"Regular Trustee" means any Trustee other than the Property Trustee
and the Delaware Trustee.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, (a)
any vice president, any assistant vice president, any assistant secretary, the
treasurer, any assistant treasurer, any trust officer or assistant trust officer
or any other officer in the corporate trust department of the Property Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject and (b) who
shall have direct responsibility for the administration of this Declaration.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Securities Guarantees" means the Preferred Securities Guarantee and
the Common Securities Guarantee.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" means The Coastal Corporation, a Delaware corporation, or
any successor entity in a merger, consolidation or amalgamation, in its capacity
as sponsor of the Trust.
"Subordinated Note Issuer" means the Sponsor in its capacity as issuer
of the Subordinated Notes.
"Subordinated Note Trustee" means The Bank of New York, as trustee
under the Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.
<PAGE>
-8-
"Subordinated Notes" means the % Subordinated Deferrable Interest
Notes Due to be issued by the Subordinated Note Issuer under the
Indenture and held by the Property Trustee. A specimen certificate representing
a Subordinated Note is attached hereto as Exhibit B. The Subordinated Notes
will be subordinate and junior in right of payment to certain other indebtedness
of the Subordinated Note Issuer as set forth in the Indenture.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Supplemental Indenture" has the meaning ascribed thereto in the
definition of "Indenture."
"Tax Event" has the meaning set forth in Annex I hereto.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture Act,
Holders of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a class, representing 10% of
the aggregate liquidation amount (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accrued and unpaid Distributions
to the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended to the date hereof.
<PAGE>
-9-
"Underwriting Agreement" means the underwriting agreement among the
Trust, the Subordinated Note Issuer and the underwriters designated by the
Regular Trustees with respect to the offer and sale of the Preferred Securities.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee that is a Trustee
for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by (S)(S) 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
<PAGE>
-10-
SECTION 2.2. Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders of the
Securities ("List of Holders") as of such record date, provided that neither the
Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Property Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request therefor, a
List of Holders as of a date no more than 14 days before such List of Holders is
given to the Property Trustee. The Property Trustee shall preserve, in as
current a form as is reasonably practicable, all information contained in Lists
of Holders given to it or which it receives in the capacity of Paying Agent (if
acting in such capacity); provided that the Property Trustee may destroy any
List of Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
(S)(S) 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Property Trustee.
Within 60 days after of each year or at such other time as
required under (S) 313(b) of the Trust Indenture Act, the Property Trustee shall
provide to the Holders of the Securities such reports as are required by (S) 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
(S) 313 of the Trust Indenture Act. The Property Trustee shall also comply with
the requirements of (S) 313(d) of the Trust Indenture Act.
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SECTION 2.4. Periodic Reports to Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
required by (S) 314 of the Trust Indenture Act (if any) and the compliance
certificate required by (S) 314 of the Trust Indenture Act in the form, in the
manner and at the times required by (S) 314 of the Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in (S) 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to (S)
314(c)(1) of the Trust Indenture Act may be given in the form of an Officers'
Certificate.
SECTION 2.6. Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Subordinated Notes (a "Super
Majority") to be waived under the Indenture, the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least the
proportion in liquidation amount of the Preferred Securities outstanding
that the relevant Super Majority represents of the aggregate principal
amount of the Subordinated Notes outstanding.
The foregoing provisions of this Section 2.6(a) shall
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be in lieu of (S) 316(a)(1)(B) of the Trust Indenture Act and such (S)
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act. Upon
such waiver, any such default shall cease to exist, and any Event of Default
with respect to the Preferred Securities arising therefrom shall be deemed to
have been cured, for every purpose of this Declaration, but no such waiver shall
extend to any subsequent or other default or Event of Default with respect to
the Preferred Securities or impair any right consequent thereon. Any waiver by
the Holders of the Preferred Securities of an Event of Default with respect to
the Preferred Securities shall also be deemed to constitute a waiver by the
Holders of the Common Securities of any such Event of Default with respect to
the Common Securities for all purposes of this Declaration without any further
act, vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of Default under
the Declaration as provided below in this Section 2.6(b), the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to have waived
such Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration may only be
waived by the vote of the Holders of at least the proportion in liquidation
amount of the Common Securities outstanding that the relevant Super
Majority represents of the aggregate principal amount of the Subordinated
Notes outstanding;
provided, further, that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and their consequences until all Events of Default with
respect to
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the Preferred Securities have been cured, waived or otherwise eliminated, and
until such Events of Default have been so cured, waived or otherwise eliminated,
the Property Trustee will be deemed to be acting solely on behalf of the Holders
of the Preferred Securities and only the Holders of the Preferred Securities
will have the right to direct the Property Trustee in accordance with the terms
of the Securities. The foregoing provisions of this Section 2.6(b) shall be in
lieu of (S)(S) 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
(S)(S) 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Securities, as permitted by the
Trust Indenture Act. Subject to the foregoing provisions of this Section 2.6(b),
upon such waiver, any such default shall cease to exist and any Event of Default
with respect to the Common Securities arising therefrom shall be deemed to have
been cured for every purpose of this Declaration, but no such waiver shall
extend to any subsequent or other default or Event of Default with respect to
the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the Preferred Securities
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu
of (S) 316(a)(1)(B) of the Trust Indenture Act and such (S) 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
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SECTION 2.7. Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of the Securities, notices of all defaults with respect to the
Securities actually known to a Responsible Officer of the Property Trustee,
unless such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be an
Event of Default as defined in the Indenture, not including any periods of grace
provided for therein and irrespective of the giving of any notice provided
therein); provided that, except for a default in the payment of principal of (or
premium, if any) or interest on any of the Subordinated Notes, the Property
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
and/or Responsible Officers of the Property Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders of the
Securities.
(b) The Property Trustee shall not be deemed to have knowledge of any
default except:
(i) a default under Sections 6.01(a) and 6.01(b) of the Indenture;
or
(ii) any default as to which a Responsible Officer shall have actual
knowledge or a Responsible Officer charged with the administration of the
Declaration shall have obtained written notice.
ARTICLE III
ORGANIZATION
SECTION 3.1. Name.
The Trust is named "Coastal Finance I," as such name may be modified
from time to time by the Regular Trustees following written notice to the
Holders of the Securities. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.
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SECTION 3.2. Office.
The address of the principal office of the Trust is c/o The Coastal
Corporation, Coastal Tower, Nine Greenway Plaza, Houston, Texas 77046-0995. On
ten Business Days written notice to the Holders of the Securities, the Regular
Trustees may designate another principal office.
SECTION 3.3. Purpose.
The exclusive purposes and functions of the Trust are (a) to issue and
sell the Securities and use the proceeds from such sale to purchase and hold the
Subordinated Notes and the Preferred Securities Guarantee, and (b) except as
otherwise limited herein, to engage in only those other activities necessary, or
incidental thereto. The Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, pledge any of its assets, or otherwise
undertake (or permit to be undertaken) any activity that would cause the Trust
not to be classified for United States federal income tax purposes as a grantor
trust.
SECTION 3.4. Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee in accordance with its powers shall constitute the act of and
serve to bind the Trust. In dealing with the Trustees acting on behalf of the
Trust, no person shall be required to inquire into the authority of the Trustees
to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in this
Declaration.
SECTION 3.5. Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Subordinated
Notes and the Property Trustee Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
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SECTION 3.6. Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided that the Trust may
issue no more than one series of Preferred Securities and no more than one
series of Common Securities, and provided, further, that there shall be no
interests in the Trust other than the Securities, and the issuance of Securities
shall be limited to a one-time, simultaneous issuance of both Preferred
Securities and Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the registration statement
on Form S-3 prepared by the Sponsor, including any amendments thereto,
pertaining to the Preferred Securities;
(ii) execute and file any documents prepared by the Sponsor, or take
any acts as determined by the Sponsor to be necessary in order to qualify
or register all or part of the Preferred Securities in any State in which
the Sponsor has determined to qualify or register such Preferred Securities
for sale;
(iii) execute and file an application, prepared by the Sponsor, to
the New York Stock Exchange, Inc. or any other national securities exchange
or with The Nasdaq Stock Market for listing upon notice of issuance of any
Preferred Securities;
(iv) execute and file with the Commission a registration statement
on Form 8-A, including any amendments thereto, prepared by the Sponsor,
relating to the registration of the Preferred Securities under Section
12(b) of the Exchange Act; and
(v) designate underwriters to be party to the Underwriting Agreement
and execute and enter into the Purchase Agreement providing for the sale of
the Preferred Securities;
<PAGE>
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(c) to acquire the Subordinated Notes with the proceeds of the sale
of the Preferred Securities and the Common Securities; provided that the Regular
Trustees shall cause legal title to the Subordinated Notes to be held of record
in the name of the Property Trustee for the benefit of the Holders of the
Preferred Securities and the Holders of the Common Securities;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event; provided that the Regular Trustees
shall consult with the Sponsor and the Property Trustee before taking or
refraining from taking any Ministerial Action in relation to a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of (S) 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Preferred Securities and Holders of Common Securities
as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of
the Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by (S) 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Regular Trustee;
(k) to incur expenses that are necessary or
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incidental to carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities of
any notice received from the Subordinated Note Issuer of its election to defer
payments of interest on the Subordinated Notes by extending the interest payment
period under the Indenture;
(n) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Preferred
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(p) to take any action, not inconsistent with this Declaration or
with applicable law, that the Regular Trustees determine in their discretion to
be necessary or desirable in carrying out the activities of the Trust as set out
in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company;
(ii) causing the Trust to be classified for United States federal
income tax purposes as a grantor trust; and
(iii) cooperating with the Subordinated Note Issuer to ensure that
the Subordinated Notes will be treated as indebtedness of the Subordinated
Note Issuer for United States federal income tax purposes,
provided that such action does not adversely affect the interests of Holders;
and
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are
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required to be filed with respect to the Trust to be duly prepared and filed by
the Regular Trustees, on behalf of the Trust.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
SECTION 3.7. Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall not, engage in any activity other than as required or authorized
by this Declaration. In particular, the Trust shall not and the Trustees
(including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Subordinated Notes, but shall distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Subordinated Notes;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration, (A)
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direct the time, method and place of exercising any trust or power
conferred upon the Subordinated Note Trustee with respect to the
Subordinated Notes, (B) waive any past default that is waivable under
Section 6.04 of the Indenture, (C) exercise any right to rescind or annul
any declaration that the principal of all the Subordinated Notes shall be
due and payable, or (D) consent to any amendment or modification of the
Indenture or the Subordinated Notes where such consent shall be required
unless the Trust shall have received an opinion of counsel to the effect
that such amendment or modification will not cause more than an
insubstantial risk that for United States federal income tax purposes the
Trust will not be classified as a grantor trust.
SECTION 3.8. Powers and Duties of the Property Trustee.
(a) The legal title to the Subordinated Notes shall be owned by and
held of record in the name of the Property Trustee in trust for the benefit of
the Holders of the Securities. The right, title and interest of the Property
Trustee to the Subordinated Notes shall vest automatically in each Person who
may hereafter be appointed as Property Trustee in accordance with Section 5.6.
Such vesting (and cessation as to the resigning Property Trustee) of title shall
be effective whether or not conveyancing documents with regard to the
Subordinated Notes have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Subordinated Notes to the Regular Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Trustee Account") in the name of and under the
exclusive control of the Property Trustee on behalf of the Holders of the
Securities and, upon the receipt of payments of funds made in respect of
the Subordinated Notes held by the Property Trustee, deposit such funds
into the Property Trustee Account and make payments to the Holders of the
Preferred Securities and Holders of the Common Securities from the Property
Trustee Account in accordance with Section 6.1. Funds in the Property
Trustee Account shall be held uninvested until disbursed in accordance with
this
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Declaration. The Property Trustee Account shall be an account that is
maintained with a banking institution the rating on whose long-term
unsecured indebtedness is at least equal to the rating assigned to the
Preferred Securities by a "nationally recognized statistical rating
organization", as that term is defined for purposes of Rule 436(g)(2) under
the Securities Act;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Preferred Securities and the
Common Securities to the extent the Subordinated Notes are redeemed or
mature; and
(iii) upon notice of distribution issued by the Regular Trustees in
accordance with the terms of the Securities, engage in such ministerial
activities as shall be necessary or appropriate to effect the distribution
of the Subordinated Notes to Holders of Securities upon the occurrence of a
Special Event.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities.
(e) The Property Trustee shall take any Legal Action which arises out
of or in connection with an Event of Default or the Property Trustee's duties
and obligations under this Declaration or the Trust Indenture Act.
(f) The Property Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Securities pursuant to the terms
of the Securities; or
(ii) a successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.
(g) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a holder of Subordinated Notes under the
Indenture and, if an Event of Default occurs and is continuing, the Property
Trustee shall, for the benefit of Holders of the Securities, enforce its rights
as holder of the Subordinated Notes subject to the rights of the Holders
pursuant to the terms of such Securities.
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(h) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with (S) 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Property Trustee at any time and a successor
Paying Agent or additional Paying Agents may be appointed at any time by the
Property Trustee.
(i) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Regular Trustees set
forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.3.
SECTION 3.9. Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Property Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.6), the Property Trustee
shall exercise such of the rights and powers vested in it by this Declaration,
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 conduct of his or her own
affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express
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provisions of this Declaration and the Property Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Declaration, and no implied
covenants or obligations shall be read into this Declaration against
the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Declaration; but in
the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Property
Trustee, the Property Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of
this Declaration (but need not confirm or investigate the accuracy of
mathematical calculations or the facts stated therein;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in liquidation
amount of the Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property Trustee under
this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or adequate
indemnity against such
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risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Subordinated Notes and the
Property Trustee Account shall be to deal with such property in a manner
that is customary in the industry, subject to the protections and
limitations on liability afforded to the Property Trustee under this
Declaration, the Trust Indenture Act and Rule 3a-7;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Subordinated Notes or the payment of any taxes or assessments levied
thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree in writing with
the Sponsor. Money held by the Property Trustee need not be segregated
from other funds held by it except in relation to the Property Trustee
Account maintained by the Property Trustee pursuant to Section 3.8(c)(i)
and except to the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Regular Trustees or the Sponsor with their respective
duties under this Declaration, nor shall the Property Trustee be liable for
the default or misconduct of the Regular Trustees or the Sponsor.
SECTION 3.10. Certain Rights of the Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the
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Regular Trustees contemplated by this Declaration shall be sufficiently
evidenced by a Direction or an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and conclusively rely
upon an Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Regular Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or reregistration thereof;
(v) the Property Trustee may consult with counsel or other experts
of its selection and the advice or opinion of such counsel and experts with
respect to legal matters or advice within the scope of such experts' area
of expertise shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such counsel may be
counsel to the Sponsor or any of its Affiliates, and may include any of the
Sponsor's or its Affiliates' employees. The Property Trustee shall have
the right at any time to seek instructions concerning the administration of
this Declaration from any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the request
or direction of any Holder, unless such Holder shall have provided to the
Property Trustee adequate security and indemnity, which would satisfy a
reasonable person in the position of the Property Trustee, against the
costs, expenses (including attorneys' fees and expenses) and liabilities
that might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Property
Trustee; provided that nothing contained in this Section 3.10(a)(vi) shall
be taken to relieve the Property Trustee, upon the occurrence of an
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Event of Default, of its obligation to exercise the rights and powers
vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Property Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders, and the signature of the
Property Trustee or its agents alone shall be sufficient and effective to
perform any such action and no third party shall be required to inquire as
to the authority of the Property Trustee to so act or as to its compliance
with any of the terms and provisions of this Declaration, both of which
shall be conclusively evidenced by the Property Trustee's or its agent's
taking such action;
(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request instructions from the Holders of the
Securities which instructions may only be given by the Holders of the same
proportion in liquidation amount of the Securities as would be entitled to
direct the Property Trustee under the terms of the Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such remedy
or right or taking such other action until such instructions are received,
and (iii) shall be protected in acting in accordance with such
instructions; and
(xi) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any
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obligation to take any action that is discretionary under the provisions of
this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11. Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities, of
the Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of (S) 3807 of the
Business Trust Act.
SECTION 3.12. Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, a majority of or, if there are
only two, any Regular Trustee or, if there is only one, such Regular Trustee is
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6;
provided that the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by all of the Regular
Trustees.
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SECTION 3.13. Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14. Duration of Trust.
The Trust, unless dissolved pursuant to the provisions of Article VIII
hereof, shall have existence for fifty-five (55) years from the Closing Date.
SECTION 3.15. Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders, the Delaware Trustee or the Property Trustee,
consolidate, amalgamate, merge with or into, or be replaced by a trust organized
as such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under
the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the
Securities rank with respect to Distributions and payments upon
liquidation, redemption and otherwise;
(ii) the Subordinated Note Issuer expressly acknowledges a trustee
of the Successor Entity that
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possesses the same powers and duties as the Property Trustee as the Holder
of the Subordinated Notes;
(iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on the New York Stock Exchange, Inc. or such other national
securities exchange or with The Nasdaq Stock Market or such other
organization on which the Preferred Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or replacement does
not cause the Preferred Securities (including any Successor Securities) to
be downgraded by any nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the Holders of
the Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of such Holders' interests
in the Successor Entity as a result of such merger, consolidation,
amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a nationally recognized
independent counsel to the Trust experienced in such matters to the effect
that:
(A) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of the
Holders of the Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of the
Holders' interest in the Successor Entity); and
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company; and
(viii) the Sponsor guarantees the obligations of such
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Successor Entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes and any Holder of Securities
not to be treated as owning an undivided beneficial interest in the Subordinated
Notes.
ARTICLE IV
SPONSOR
SECTION 4.1. Sponsor's Purchase of Common Securities.
On the Closing Date the Sponsor will purchase all of the Common
Securities issued by the Trust, in an amount equal to at least 3% of the capital
of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2. Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Preferred Securities,
including any amendments thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and to do
any and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
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(c) to prepare for filing by the Trust an application to the New York
Stock Exchange, Inc. or any other national securities exchange or with The
Nasdaq Stock Market for listing upon notice of issuance of any Preferred
Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of the Underwriting Agreement providing
for the sale of the Preferred Securities.
SECTION 4.3. Expenses.
(a) The Sponsor shall be responsible for and shall pay for all debts
and obligations (other than with respect to the Securities) and all costs and
expenses of the Trust (including, but not limited to, costs and expenses
relating to the organization of the Trust, the issuance and sale of the
Preferred Securities, the fees and expenses (including reasonable counsel fees
and expenses) of the Trustees, the costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, Paying Agent(s), registrar(s), transfer
agent(s), duplication, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the disposition of
Trust assets).
(b) The Sponsor will pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust.
(c) The Sponsor's obligations under this Section 4.3 shall be for the
benefit of, and shall be enforceable by, the Property Trustee and any Person to
whom any such debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice hereof. The
Property Trustee and any such Creditor may enforce the Sponsor's obligations
under this Section 4.3 directly against the Sponsor and the Sponsor irrevocably
waives any right or remedy to require that the Property Trustee or any such
Creditor take any action against the Trust or any other Person before proceeding
against the Sponsor. The Sponsor agrees to
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execute such additional agreements as may be necessary or desirable in order to
give full effect to the provisions of this Section 4.3.
ARTICLE V
TRUSTEES
SECTION 5.1. Number of Trustees.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities,
provided that, if the Property Trustee does not also act as Delaware Trustee,
the number of Trustees shall be at least three (3).
SECTION 5.2. Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application. The Delaware Trustee may be an Affiliate of the
Property Trustee.
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SECTION 5.3. Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as
Property Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by federal, State,
Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to above,
then for the purposes of this Section 5.3(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published;
and
(iii) if the Trust is excluded from the definition of an Investment
Company solely by means of Rule 3a-7 and to the extent Rule 3a-7 requires a
trustee having certain qualifications to hold title to the "eligible
assets" of the Trust, the Property Trustee shall possess those
qualifications.
(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of (S) 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in (S) 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of (S) 310(b) of the Trust Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for
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purposes of clause (i) of the first provision contained in (S) 310(b) of the
Trust Indenture Act.
SECTION 5.4. Qualifications of Regular Trustees and Delaware Trustee
Generally.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 5.5. Initial Trustees.
The initial Regular Trustees shall be:
Coby C. Hesse
Donald H. Gullquist
Austin M. O'Toole
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
The initial Property Trustee shall be:
The Bank of New York
SECTION 5.6. Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the Holders of
a Majority in liquidation amount of the Common Securities voting as a class
at a meeting of the Holders of the Common Securities or by unanimous
written consent.
(b)(i) The Trustee that acts as Property Trustee shall not be removed
in accordance with Section 5.6(a) until a
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successor Property Trustee has been appointed and has accepted such appointment
by written instrument executed by such successor Property Trustee and delivered
to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed in
accordance with this Section 5.6(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided that:
(i) no such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and has
accepted such appointment by instrument executed by such Successor
Property Trustee and delivered to the Trust, the Sponsor and the
resigning Property Trustee; or
(B) if the Trust is deemed not to be an Investment Company solely
by reason of Rule 3a-7, until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to the
Holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Property
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Trustee or Successor Delaware Trustee, as the case may be, if the Property
Trustee or the Delaware Trustee delivers an instrument of resignation in
accordance with this Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.6 within 30 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may (at the expense of the Trust) petition any court of competent
jurisdiction for appointment of a Successor Property Trustee or Successor
Delaware Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper and prescribe, appoint a Successor Property Trustee
or Successor Delaware Trustee, as the case may be.
SECTION 5.7. Vacancies Among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
SECTION 5.8. Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust. Whenever a vacancy in the number of Regular
Trustees shall occur, until such vacancy is filled by the appointment of a
Regular Trustee in accordance with Section 5.6, the Regular Trustees in office,
regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees by
this Declaration.
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SECTION 5.9. Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before such meeting. Notices shall contain a brief statement
of the time, place and anticipated purposes of the meeting. The presence
(whether in person or by telephone) of a Regular Trustee at a meeting shall
constitute a waiver of notice of such meeting except where a Regular Trustee
attends a meeting for the express purpose of objecting to the transaction of any
activity on the ground that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the
Regular Trustees may be taken at a meeting by vote of a majority of the Regular
Trustees present (whether in person or by telephone) and eligible to vote with
respect to such matter, provided that a Quorum is present, or without a meeting
by the unanimous written consent of the Regular Trustees. In the event there is
only one Regular Trustee, any and all action of such Regular Trustee shall be
evidenced by a written consent of such Regular Trustee.
SECTION 5.10. Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) The Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to
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the provisions of the Trust, as set forth herein.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1. Distributions.
Holders shall receive Distributions (as defined herein) in accordance
with the applicable terms of the relevant Holder's Securities. Distributions
shall be made on the Preferred Securities and the Common Securities in
accordance with the preferences set forth in their respective terms. If and to
the extent that the Subordinated Note Issuer makes a payment of interest
(including Additional Interest (as defined in the Indenture)), premium and/or
principal on the Subordinated Notes held by the Property Trustee (the amount of
any such payment being a "Payment Amount"), the Property Trustee shall and is
directed, to the extent funds are available for that purpose, to make a
distribution (a "Distribution") of the Payment Amount to the Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1. General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one class
of preferred securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Annex I (the
"Preferred Securities") and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "Common Securities.") The Trust shall not issue
any securities or other interests in respect of the assets of the Trust other
than the Preferred Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the Trust by two
Regular Trustees. Each such signature shall be the manual or facsimile
signature of any present or any future Regular Trustee. In case any Regular
Trustee of the
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Trust who shall have signed any of the Certificates shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Certificate, shall be the Regular Trustees of
the Trust, although at the date of the execution and delivery of the Declaration
any such person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
Securities may be listed, or to conform to usage. Upon a written order of the
Trust signed by one Regular Trustee, the Property Trustee shall countersign the
Preferred Certificate for original issue.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(e) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
(f) Every Person who becomes a Holder or a Preferred Security
Beneficial Owner shall be deemed to have agreed to treat the Subordinated Notes
as indebtedness for United States federal income tax purposes and the Preferred
Securities as evidence of an indirect beneficial ownership in the Subordinated
Notes.
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ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1. Dissolution of Trust.
(a) The Trust shall dissolve and its affairs shall be wound up:
(i) upon the bankruptcy of the Holder of the Common Securities or
the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Holder of the Common Securities or the
Sponsor; the filing of a certificate of cancellation with respect to the
Trust or the revocation of the Holder of the Common Securities or the
Sponsor's charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of the
Holder of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been
paid to the Holders in accordance with the terms of the Securities;
(v) upon the occurrence and continuation of a Special Event pursuant
to which the Trust shall have been dissolved in accordance with the terms
of the Securities and all of the Subordinated Notes in accordance with the
terms thereof shall have been distributed to the Holders of Securities in
exchange for all of the Securities; or
(vi) before the issuance of any Securities, with the consent of all
of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
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ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1. Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the Securities. Any transfer or purported transfer of any Security not made in
accordance with this Declaration and these Securities shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be freely
transferable.
(c) Subject to this Article IX, (x) the Sponsor may only transfer
Common Securities to a Related Party and (y) a Related Party may only transfer
Common Securities to the Sponsor or another Related Party; provided that any
such transfer is subject to the condition precedent that the transferor obtain
the written opinion of nationally recognized independent counsel experienced in
such matters that such transfer would not cause more than an insubstantial risk
that:
(i) the Trust would no longer be classified for United States
federal income tax purposes as a grantor trust; or
(ii) the Trust would become an Investment Company or the transferee
would become an Investment Company.
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SECTION 9.2. Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration and
the terms of the Securities represented by such Certificate.
SECTION 9.3. Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole Holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
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SECTION 9.4. Book Entry Interests.
Unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance, will be issued in
the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will
receive a definitive Preferred Security Certificate representing such Preferred
Security Beneficial Owner's interests in such Global Certificates, except as
provided in Section 9.7. Unless and until definitive, fully registered
Preferred Security Certificates (the "Definitive Preferred Security
Certificates") have been issued to the Preferred Security Beneficial Owners
pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment of
Distributions on the Global Certificates and receiving approvals, votes or
consents hereunder) as the Holder of the Preferred Securities and the sole
holder of the Global Certificates and shall have no obligation to the Preferred
Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this Section
9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants. The
Clearing Agency will make book entry transfers among the Clearing Agency
Participants and receive and transmit payments of Distributions on the Global
Certificates to such Clearing Agency Participants.
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SECTION 9.5. Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, unless and until Definitive
Preferred Security Certificates shall have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give all
such notices and communications specified herein to be given to the Preferred
Security Holders to the Clearing Agency, and shall have no notice obligations to
the Preferred Security Beneficial Owners.
SECTION 9.6. Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to the Preferred Securities.
SECTION 9.7. Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities and a successor
Clearing Agency is not appointed within 90 days after such election pursuant to
Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor to
terminate the book entry system through the Clearing Agency with respect to the
Preferred Securities,
then:
(c) Definitive Preferred Security Certificates shall be prepared by
the Regular Trustees on behalf of the Trust with respect to the Preferred
Securities; and
(d) upon surrender of the Global Certificates by the Clearing Agency,
accompanied by registration instructions, the Regular Trustees shall cause
Definitive Preferred Security Certificates to be delivered to Preferred Security
Beneficial Owners in accordance with the instructions of the Clearing Agency.
Neither the Trustees nor the Trust shall be liable for any delay in delivery of
such instructions and each of them may conclusively rely on and shall be
protected in relying on, said
<PAGE>
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instructions of the Clearing Agency. The Definitive Preferred Security
Certificates shall be printed, lithographed or engraved or may be produced in
any other manner as is reasonably acceptable to the Regular Trustees, as
evidenced by their execution thereof, and may have such letters, numbers or
other marks of identification or designation and such legends or endorsements as
the Regular Trustees may deem appropriate, or as may be required to comply with
any law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Preferred Securities may be
listed, or to conform to usage.
SECTION 9.8. Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificate should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security or
indemnity as may be required by them to keep each of them harmless,
then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 9.8, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Securities, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
<PAGE>
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ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1. Liability.
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders, which shall be made
solely from assets of the Trust; or
(ii) required to pay to the Trust or to any Holder any deficit upon
dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to (S) 3803(a) of the Business Trust Act, the Holders of
the Preferred Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 10.2. Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence (or, in the
case of the Property Trustee, negligence) or willful misconduct with respect to
such acts or omissions.
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(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
SECTION 10.3. Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and liabilities
of an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a manner
that is, or provide terms that are, fair and reasonable to the Trust or any
Holder,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution,
<PAGE>
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action or term so made, taken or provided by the Indemnified Person shall not
constitute a breach of this Declaration or any other agreement contemplated
herein or of any duty or obligation of the Indemnified Person at law or in
equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and factors
as it desires, including its own interests, and shall have no duty or
obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 10.4. Indemnification and Reimbursement.
(a) The Sponsor shall indemnify and hold harmless each Indemnified
Person from and against any loss, damage, liability, tax, penalty, expense or
claim of any kind or nature whatsoever incurred by such Indemnified Person by
reason of the creation, operation or termination of the Trust or any act or
omission performed or omitted by such Indemnified Person in good faith on behalf
of the Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this
Declaration, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such Indemnified
Person by reason of gross negligence (or, in the case of the Property Trustee,
negligence) or willful misconduct with respect to such acts or omissions.
(b) Expenses (including legal fees and expenses) incurred by an
Indemnified Person in defending any claim, demand, action, suit or proceeding
(whether such claim, demand, action, suit or proceeding arises between the
parties hereto or results from suits involving third parties) shall, from time
to time, be advanced by the Sponsor prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt
<PAGE>
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by the Sponsor of an undertaking by or on behalf of the Indemnified Person to
repay such amount if it shall be determined that the Indemnified Person is not
entitled to be indemnified as authorized in Section 10.4(a). The indemnification
set forth in this Section 10.4 shall survive the termination of this
Declaration.
(c) The Sponsor shall reimburse the Trustees upon request for all
reasonable expenses, disbursements and advances incurred or made by the Trustees
in accordance with any provision of this Declaration (including the reasonable
compensation and the expenses and disbursements of its agents and counsel).
The Property Trustee shall have a lien prior to the Securities as to
all property and funds held by its hereunder for any amount owing it or any
predecessor Property Trustee pursuant to this Section 10.4, except with respect
to funds held in trust for the benefit of the Holders of particular Securities.
The provisions of this Section shall survive the termination of this
Declaration.
<PAGE>
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SECTION 10.5. Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders shall have no rights by
virtue of this Declaration in and to such independent ventures or the income or
profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor, the Delaware Trustee, or the Property
Trustee shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and any Covered Person, the
Sponsor, the Delaware Trustee and the Property Trustee shall have the right to
take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1. Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
<PAGE>
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SECTION 11.2. Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents which shall reflect, in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to
each of the Holders, within 90 days after the end of each Fiscal Year of the
Trust, annual financial statements of the Trust, including a balance sheet of
the Trust as of the end of such Fiscal Year, and the related statements of
income or loss.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each Holder, any annual United States federal income tax
information statement, required by the Code, containing such information with
regard to the Securities held by such Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver
all such statements within 30 days after the end of each Fiscal Year of the
Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority an annual United States federal income tax
return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
<PAGE>
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SECTION 11.3. Banking.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided that all payments of funds in respect of
the Subordinated Notes held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such accounts shall
be designated by the Regular Trustees; provided that the Property Trustee shall
designate the signatories for the Property Trustee Account.
SECTION 11.4. Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustee shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to such
Holder to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to such Holder. In the event of
any claim over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.
<PAGE>
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1. Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular
Trustees, a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property Trustee;
and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
(b) No amendment shall be made, and any purported amendment shall be
void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from each of the
Trust and the Sponsor and an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Property Trustee,
the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor or
the Trust) that such amendment is
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permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act.
(c) If the Trust has any Securities outstanding, any amendment that
would adversely affect the rights, privileges or preferences of any Holder of
such Securities may be effected only with such additional requirements as may be
set forth in the terms of such Securities.
(d) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders of the Securities.
(e) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities.
(f) The rights of the holders of the Common Securities under Article
V to increase or decrease the number of, and appoint and remove, Trustees shall
not be amended without the consent of the Holders of a Majority in liquidation
amount of the Common Securities.
(g) Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that
may be defective or inconsistent with any
<PAGE>
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other provision of this Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor;
(iv) in the event the Trust is deemed not to be an Investment
Company solely by reason of Rule 3a-7, conform to any change in Rule 3a-7
or written change in interpretation or application of Rule 3a-7 by any
legislative body, court, government agency or regulatory authority which
amendment does not have a material adverse effect on the rights,
preferences or privileges of the Holders; and
(v) cause the Trust to continue to be classified for purposes of
United States federal income taxation as a grantor trust; provided that
such amendment does not have a material adverse effect on the rights,
preferences or privileges of the Holders.
SECTION 12.2. Meetings of the Holders; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call
a meeting of the Holders of such class if directed to do so by the Holders of at
least 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders wish to call a meeting and indicating
the general or specific purpose for which the meeting is to be called. Any
Holders calling a meeting shall specify in writing the Security Certificates
held by the Holders exercising the right to call a meeting and only those
Securities specified shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been
met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of any
class of Securities:
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(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not more than
60 days before the date of such meeting. Whenever a vote, consent or
approval of Holders is permitted or required under this Declaration or the
rules of any stock exchange on which the Preferred Securities are listed or
admitted for trading, such vote, consent or approval may be given at a
meeting of such Holders. Any action that may be taken at a meeting of
Holders may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by Holders owning not less than the
minimum amount of Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders of
Securities having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given to the
Holders of Securities entitled to vote who have not consented in writing.
The Regular Trustees may specify that any written consent submitted to
Holders for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Regular Trustees;
(ii) each Holder may authorize any Person to act for it by proxy on
all matters in which such Holder is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting. No
proxy shall be valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Holder executing it. Except as otherwise
provided herein, all matters relating to the giving, voting or validity of
proxies shall be governed by the General Corporation Law of the State of
Delaware relating to proxies, and judicial interpretations thereunder, as
if the Trust were a Delaware corporation and the Holders were stockholders
of a Delaware corporation;
(iii) each meeting of Holders shall be conducted by the Regular
Trustees or by such other Person that the Regular Trustees may designate;
and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Preferred Securities are then listed or trading
otherwise
<PAGE>
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provides, the Regular Trustees, in their sole discretion, shall
establish all other provisions relating to meetings of Holders, including
notice of the time, place or purpose of any meeting at which any matter is
to be voted on by any Holders, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with respect to the
exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1. Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the successor Property Trustee's acceptance of its
appointment as Property Trustee, that:
(a) the Property Trustee is a banking corporation or association with
trust powers, duly organized, validly existing and in good standing under the
laws of a state of the United States or of the United States, with trust power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration;
(b) the execution, delivery and performance by the Property Trustee
of the Declaration has been duly authorized by all necessary corporate action on
the part of the Property Trustee. The Declaration has been duly executed and
delivered by the Property Trustee, and it constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) the execution, delivery and performance of the
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Declaration by the Property Trustee does not conflict with or constitute a
breach of the charter or by-laws of the Property Trustee; and
(d) no consent, approval or authorization of, or registration with or
notice to, any New York State or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee of the Declaration.
SECTION 13.2. Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee, that:
(a) the Delaware Trustee is a Delaware banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws of
the State of Delaware, with trust power and authority to execute and deliver,
and to carry out and perform its obligations under the terms of, the
Declaration;
(b) the Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration. The Declaration
under Delaware law constitutes a legal, valid and binding obligation of the
Delaware Trustee, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the enforcement of
such remedies is considered in a proceeding in equity or at law);
(c) no consent, approval or authorization of, or registration with or
notice to, any Delaware State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of the Declaration;
and
(d) the Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware.
<PAGE>
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. Notices.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders):
Coastal Finance I
c/o The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Attention: Director, Financial
Administration
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of to
the Holders):
The Bank of New York (Delaware)
400 White Clay Center
Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
(c) if given to the Property Trustee, at the mailing address set
forth below (or such other address as the Property Trustee may give notice of to
the Holders):
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attention: Remo Reale, Assistant Vice President
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give
<PAGE>
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notice of to the Trust):
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Attention: Director, Financial
Administration
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid.
SECTION 14.2. Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 14.3. Intention of the Parties.
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 14.4. Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 14.5. Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
<PAGE>
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SECTION 14.6. Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7. Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
<PAGE>
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IN WITNESS WHEREOF, the undersigned has caused this Declaration to be
executed as of the day and year first above written.
____________________________
Coby C. Hesse, as Trustee
____________________________
Donald H. Gullquist, as Trustee
____________________________
Austin M. O'Toole, as Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By:
Name:
Title:
THE BANK OF NEW YORK,
as Property Trustee
By:
Name:
Title:
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THE COASTAL CORPORATION,
as Sponsor
By:
Name:
Title:
<PAGE>
ANNEX I
-------
TERMS OF
% TRUST PREFERRED SECURITIES
% COMMON SECURITIES
Further to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of , 1998 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
(1) Designation and Amount.
(a) Preferred Securities. Preferred Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust of
Million dollars ($ ) and a liquidation amount with respect to the
assets of the Trust of $25 per preferred security, are hereby designated for the
purposes of identification only as " % Trust Preferred Securities" (the
"Preferred Securities"). The Preferred Security Certificates evidencing the
Preferred Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice or to conform to the rules
of any stock exchange on which the Preferred Securities are listed.
(b) Common Securities. Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of
dollars ($ ) and a liquidation amount with respect to the assets of the
Trust of $25 per common security, are hereby designated for the purposes of
identification only as " % Common Securities" (the "Common Securities").
The Common Security Certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice.
I-1
<PAGE>
(2) Distributions.
(a) Distributions payable on each Security will be fixed at a rate per
annum of % (the "Coupon Rate") of the stated liquidation amount of $25 per
Security, such rate being the rate of interest payable on the Subordinated Notes
to be held by the Property Trustee. Distributions in arrears for more than one
quarter will bear interest thereon compounded quarterly at the Coupon Rate (to
the extent permitted by applicable law). The term "Distributions" as used
herein includes such cash distributions and any such interest payable unless
otherwise stated. A Distribution is payable only to the extent that payments
are made in respect of the Subordinated Notes held by the Property Trustee and
to the extent the Property Trustee has funds available therefor in the Payment
Account. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue
from the date of original issuance, and will be payable quarterly in arrears, on
, , , and of each year, commencing on
, 1998, except as otherwise described below. The Distribution payable on
, 1998, which will be based on a period [longer/shorter] than a full quarter,
will be in an amount of $ per Preferred Security. The Subordinated Note
Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period from time to time on the Subordinated
Notes for a period not exceeding 20 consecutive quarters (each an "Extension
Period"), provided that no Extension Period shall last beyond the date of
maturity of the Subordinated Notes. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon at the Coupon Rate
compounded quarterly during any such Extension Period. Prior to the termination
of any such Extension Period (to the extent permitted by applicable law), the
Subordinated Note Issuer may further extend such Extension Period; provided that
such Extension Period together with all previous and such further extensions
thereof may not exceed 20 consecutive quarters or last beyond the date of
maturity of the Subordinated Notes. Payments of accrued Distributions will be
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<PAGE>
payable to Holders as they appear on the books and records of the Trust on the
first record date for the payment of Distributions after the end of the
Extension Period. Upon the termination of any Extension Period and the payment
of all amounts then due, the Subordinated Note Issuer may commence a new
Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. While the Preferred Securities remain in book-entry only form,
the relevant record dates shall be one Business Day prior to the relevant
payment dates which payment dates correspond to the interest payment dates on
the Subordinated Notes. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect of the Preferred
Securities will be made as described under the heading "Description of the
Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company" in the Prospectus Supplement, dated , 1998 (the "Prospectus
Supplement"), to the Prospectus, dated April , 1998 (the "Base Prospectus,"
and collectively with the Prospectus Supplement, the "Prospectus"), that form
part of the Registration Statement on Form S-3 of the Sponsor (in its capacity
as the Subordinated Note Issuer and the issuer of the Preferred Securities
Guarantee) and the Trust (Reg. No. 333- ). The relevant record dates for
the Common Securities shall be the same record dates as for the Preferred
Securities. If the Preferred Securities shall not continue to remain in book-
entry only form, the relevant record dates for the Preferred Securities shall
conform to the rules of any securities exchange on which such securities are
listed and, if none, shall be selected by the Regular Trustees, which dates
shall be at least one Business Day but less than 60 Business Days before the
relevant payment dates, which payment dates correspond to the interest payment
dates on the Subordinated Notes. Distributions payable on any Securities that
are not punctually paid on any Distribution payment date, as a result of the
Subordinated Note Issuer having failed to make a payment under the Subordinated
Notes, will cease to be payable to the Person in whose name such Securities are
registered on the relevant regular record date, and such defaulted Distribution
will instead be payable to the Person in whose name such Securities are
registered on the special record date or other specified date determined in
accordance with the Indenture for the making of such payment. If any date on
which Distributions are payable on the Securities is not a Business Day, then
payment of the Distribution payable on such date will
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<PAGE>
be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
(3) Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution, winding-up
or termination of the Trust, the Holders on the date of the dissolution,
winding-up or termination, as the case may be, will be entitled to receive out
of the assets of the Trust available for distribution to Holders after
satisfaction of liabilities of creditors an amount equal to the aggregate of the
liquidation amount of $25 per Security plus accrued and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"), unless, in connection with such dissolution, winding-up or
termination, Subordinated Notes in an aggregate principal amount equal to the
aggregate liquidation amount of such Securities, with an interest rate equal to
the Coupon Rate of, and bearing accrued and unpaid interest in an amount equal
to the accrued and unpaid Distributions on, such Securities, shall be
distributed on a Pro Rata basis to the Holders of the Securities in exchange for
such Securities.
If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Securities shall be paid on a Pro Rata basis.
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<PAGE>
(4) Redemption and Distribution.
(a) Upon the repayment of the Subordinated Notes in whole or in part,
whether at maturity or upon redemption, the proceeds from such repayment shall
be simultaneously applied to redeem Securities having an aggregate liquidation
amount equal to the aggregate principal amount of the Subordinated Notes so
repaid or redeemed at a redemption price of $25 per Security plus an amount
equal to accrued and unpaid Distributions thereon at the date of the redemption,
payable in cash (the "Redemption Price"). Holders will be given not less than
30 nor more than 60 days notice of such redemption.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Preferred Securities will be redeemed
Pro Rata and the procedure for redeeming Preferred Securities will be as
described in Section 4(f)(ii) below.
(c) If a Tax Event or an Investment Company Event (each as defined
below, and each a "Special Event") shall occur and be continuing, the Regular
Trustees shall, except in certain limited circumstances in relation to a Tax
Event described in this Section 4(c), dissolve the Trust and, after satisfaction
of liabilities to creditors, cause Subordinated Notes held by the Property
Trustee, having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate of,
and accrued and unpaid interest equal to accrued and unpaid Distributions on,
and having the same record date for payment, as the Securities, to be
distributed to the Holders in liquidation of such Holders' interests in the
Trust on a Pro Rata basis, within 90 days following the occurrence of such
Special Event (the "90 Day Period"); provided that, as a condition of such
dissolution and distribution, the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "No Recognition Opinion"), which opinion may rely on published
revenue rulings of the Internal Revenue Service, to the effect that the Holders
will not recognize any gain or loss for United States federal income tax
purposes as a result of the dissolution of the Trust and the distribution of
Subordinated Notes, and provided, further, that, if at the time there is
available to the Trust the opportunity to eliminate, within the 90 Day Period,
the Special Event by taking some ministerial action, such as filing a form or
making an election, or pursuing some other similar reasonable measure
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<PAGE>
that has no adverse effect on the Trust, the Subordinated Note Issuer, the
Sponsor or the Holders ("Ministerial Action"), the Trust will pursue such
Ministerial Action in lieu of dissolution.
If in the event of a Tax Event (i), after receipt of a Tax Event
Opinion (as defined hereinafter) by the Regular Trustees, the Subordinated Note
Issuer has received an opinion (a "Redemption Tax Opinion") from a nationally
recognized independent tax counsel experienced in such matters that, as a result
of a Tax Event, there is more than an insubstantial risk that the Subordinated
Note Issuer would be precluded from deducting the interest on the Subordinated
Notes for United States federal income tax purposes even if the Subordinated
Notes were distributed to the Holders in liquidation of such Holders' interests
in the Trust as described in this Section 4(c), or (ii), after receipt of a Tax
Event Opinion, the Regular Trustees shall have been informed by such tax counsel
that a No Recognition Opinion cannot be delivered to the Trust, the Subordinated
Note Issuer shall have the right at any time, upon not less than 30 nor more
than 60 days notice, to redeem the Subordinated Notes in whole or in part for
cash within 90 days following the occurrence of such Tax Event, and, following
such redemption, Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Subordinated Notes so redeemed shall be
redeemed by the Trust at the Redemption Price on a Pro Rata basis; provided
that, if at the time there is available to the Trust the opportunity to
eliminate, within such 90 day period, the Tax Event by taking some Ministerial
Action, the Trust or the Subordinated Note Issuer will pursue such Ministerial
Action in lieu of redemption.
"Tax Event" means that the Regular Trustees shall have received an
opinion from a nationally recognized independent tax counsel experienced in such
matters (a "Tax Event Opinion") to the effect that, on or after the date of the
Prospectus Supplement, as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof or
therein or (b) any amendment to, or change in, an interpretation or application
of any such laws or regulations by any legislative body, court, governmental
agency or regulatory authority, in each case which amendment or change is
enacted, promulgated, issued or announced or which interpretation or
pronouncement is issued or announced or which
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<PAGE>
action is taken, on or after the date of the Prospectus Supplement, there is
more than an insubstantial risk that (i) the Trust is, or will be within 90 days
of the date thereof, subject to United States federal income tax with respect to
interest accrued or received on the Subordinated Notes, (ii) interest payable by
the Subordinated Note Issuer to the Trust on the Subordinated Notes is not, or
within 90 days of the date thereof will not be, deductible, in whole or in part,
by the Subordinated Note Issuer for United States federal income tax purposes or
(iii) the Trust is, or will be within 90 days of the date thereof, subject to
more than a de minimis amount of taxes, duties or other governmental charges.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion from a nationally recognized independent counsel experienced
in practice under the Investment Company Act that, as a result of the occurrence
of a change in law or regulation or a written change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), there is a more
than an insubstantial risk that the Trust is or will be considered an Investment
Company which is required to be registered under the Investment Company Act,
which Change in 1940 Act Law becomes effective on or after the date of the
Prospectus Supplement.
On and from the date fixed by the Regular Trustees for any
distribution of Subordinated Notes and dissolution of the Trust: (i) the
Securities will no longer be deemed to be outstanding and (ii) DTC (the
"Depository") or its nominee (or any successor Clearing Agency or its nominee),
as the record Holder of the Preferred Securities, will receive a registered
global certificate or certificates representing the Subordinated Notes to be
delivered upon such distribution and any certificates representing Securities,
except for certificates representing Preferred Securities held by the Depository
or its nominee (or any successor Clearing Agency or its nominee), will be deemed
to represent beneficial interests in the Subordinated Notes having an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on such Securities until such
certificates are surrendered or presented to the Subordinated Note Issuer or its
agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the
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<PAGE>
outstanding Securities unless all accrued and unpaid Distributions have been
paid on all Securities for all quarterly Distribution periods terminating on or
before the date of redemption.
(e) If the Subordinated Notes are distributed to holders of the
Securities, pursuant to the terms of the Indenture the Subordinated Note Issuer
will use its best efforts to have the Subordinated Notes listed on the New York
Stock Exchange, Inc. or on such other national securities exchange or with The
Nasdaq Stock Market or such other organization as the Preferred Securities were
listed immediately prior to the distribution of the Subordinated Notes.
(f) The following provisions shall apply to any call for redemption of
Securities or any distribution of Subordinated Notes to Holders:
(i) Notice of any redemption of, or notice of distribution of
Subordinated Notes in exchange for, Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities to
be redeemed or exchanged not fewer than 30 nor more than 60 days before the
date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Subordinated
Notes. For purposes of the calculation of the date of redemption or
exchange and the dates on which notices are given pursuant to this Section
4(f)(i), a Redemption/Distribution Notice shall be deemed to be given on
the day such notice is first mailed by first-class mail, postage prepaid,
to Holders. Each Redemption/Distribution Notice shall be addressed to each
Holder at the address of such Holder appearing in the books and records of
the Trust. No defect in the Redemption/Distribution Notice or in the
mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any
other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata
from each Holder of Securities, it being understood that in respect of
Preferred Securities registered in the name of and held of record by the
Depository or its nominee (or any successor Clearing Agency or its
nominee), the distribution of the
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<PAGE>
proceeds of such redemption will be made to each Clearing Agency
Participant (or Person on whose behalf such Clearing Agency or nominee
holds such securities) by lot in accordance with the procedures applied by
such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Subordinated Notes are redeemed as set out in this Section 4 (which notice
will be irrevocable), then (A) while the Preferred Securities are in book-
entry only form, with respect to the Preferred Securities, by 12:00 noon,
New York City time, on the redemption date, the Property Trustee will
deposit irrevocably with the Depository or its nominee (or successor
Clearing Agency or its nominee) immediately available funds sufficient to
pay the applicable Redemption Price with respect to the Preferred
Securities and will give the Depository irrevocable instructions and
authority to pay the Redemption Price to the Holders of the Preferred
Securities; provided that the Subordinated Note Issuer has deposited with
the Property Trustee a sufficient amount of cash in connection with the
related redemption or maturity of the Subordinated Notes by 10:00 a.m., New
York City time, on the redemption date, and (B) with respect to Preferred
Securities issued in definitive form and Common Securities, the Property
Trustee will pay the relevant Redemption Price to the Holders of such
Securities by check mailed to the address of the relevant Holder appearing
on the books and records of the Trust on the redemption date; provided that
the Subordinated Note Issuer has deposited with the Property Trustee a
sufficient amount of cash in connection with the related redemption or
maturity of the Subordinated Notes, prior to such mailing. If a
Redemption/Distribution Notice shall have been given and funds deposited
with the Property Trustee on or before the redemption date as required,
then immediately prior to the close of business on the redemption date
Distributions will cease to accrue on the Securities so called for
redemption and all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such Securities
to receive the Redemption Price, but without interest on such Redemption
Price. Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Securities that have
been so called for redemption. If any date fixed for
<PAGE>
redemption of Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day falls in the
next calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on
such date fixed for redemption. If payment of the Redemption Price in
respect of any Securities is improperly withheld or refused and not paid on
the redemption date either by the Property Trustee or by the Sponsor as
guarantor pursuant to the relevant Securities Guarantee, Distributions on
such Securities will continue to accrue from the original redemption date
to the actual date of payment, in which case the actual payment date will
be considered the date fixed for redemption for purposes of calculating the
Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the Preferred
Securities, the Depository or its nominee (or any successor Clearing Agency
or its nominee) if the Global Certificates have been issued or, if
Definitive Preferred Security Certificates have been issued, to the Holders
thereof at their addresses appearing on the books and records of the Trust,
and (B) in respect of the Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Sponsor or any of
its subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
(5) Voting Rights - Preferred Securities.
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Preferred Securities
will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the
Holders of a Majority in liquidation amount of the Preferred Securities, voting
separately as a class, may direct the time, method, and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising
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<PAGE>
any trust or power conferred upon the Property Trustee under the Declaration,
including (i) directing the time, method, place of conducting any proceeding for
any remedy available to the Subordinated Note Trustee, or exercising any trust
or power conferred on the Subordinated Note Trustee with respect to the
Subordinated Notes, (ii) waive any past default and its consequences that is
waivable under Section 6.04 of the Indenture, or (iii) exercise any right to
rescind or annul a declaration that the principal of all the Subordinated Notes
shall be due and payable; provided that where a consent under the Indenture
would require the consent or act of the Holders of greater than a majority in
principal amount of Subordinated Notes affected thereby (a "Super Majority"),
the Property Trustee may only give such consent or take such action at the
direction of the Holders of at least the proportion in liquidation amount of the
Preferred Securities outstanding which the relevant Super Majority represents of
the aggregate principal amount of the Subordinated Notes outstanding. The
Property Trustee shall not revoke any action previously authorized or approved
by a vote of the Holders of the Preferred Securities. Other than with respect to
directing the time, method and place of conducting any remedy available to the
Property Trustee or the Subordinated Note Trustee as set forth above, the
Property Trustee shall not take any action in accordance with the directions of
the Holders of the Preferred Securities under this paragraph unless the Property
Trustee has received an opinion of tax counsel to the effect that for the
purposes of United States federal income tax the Trust will not be classified as
other than a grantor trust on account of such action. If the Property Trustee
fails to enforce its rights under the Declaration, any Holder of Preferred
Securities may, to the extent permitted by applicable law, institute a legal
proceeding directly against any Person to enforce the Property Trustee's rights
under the Declaration without first instituting a legal proceeding against the
Property Trustee or any other Person. If an Event of Default occurs that results
from the failure of the Subordinated Note Issuer to pay principal of or interest
on the Subordinated Notes when due, then during the continuance of such Event of
Default each Holder of Preferred Securities may directly institute proceedings
against the Subordinated Note Issuer to obtain payment to such Holder of an
amount equal to the principal or interest so defaulted on with respect to
Subordinated Notes in a principal amount equal to the aggregate liquidation
amount of the Preferred Securities owned by such Holder. No Holder of Preferred
Securities will be entitled to exercise directly against the Subordinated Note
Issuer any other remedy available
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<PAGE>
to the Property Trustee, as the record holder of the Subordinated Notes, unless
the Property Trustee first fails to exercise such remedy.
Any approval or direction of Holders of Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Preferred Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or to
distribute the Subordinated Notes in accordance with the Declaration and the
terms of the Securities.
Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
(6) Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), (c) and 7 or as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after all
Events of Default with respect to the Preferred Securities have been cured,
waived, or otherwise eliminated and
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subject to the requirements of the penultimate sentence of this paragraph, the
Holders of a Majority in liquidation amount of the Common Securities, voting
separately as a class, may direct the time, method, and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under the Declaration,
including (i) directing the time, method, place of conducting any proceeding for
any remedy available to the Subordinated Note Trustee, or exercising any trust
or power conferred on the Subordinated Note Trustee with respect to the
Subordinated Notes, (ii) waive any past default and its consequences that is
waivable under Section 6.04 of the Indenture, or (iii) exercise any right to
rescind or annul a declaration that the principal of all the Subordinated Notes
shall be due and payable; provided that where a consent or action under the
Indenture would require the consent or act of the Holders of a Super Majority,
the Property Trustee may only give such consent or take such action at the
direction of the Holders of at least the proportion in liquidation amount of the
Common Securities outstanding which the relevant Super Majority represents of
the aggregate principal amount of the Subordinated Notes outstanding.
Notwithstanding any vote pursuant to this Section 6(c), the Property Trustee
shall not revoke any action previously authorized or approved by a vote of the
Holders of the Preferred Securities. Other than with respect to directing the
time, method and place of conducting any remedy available to the Property
Trustee or the Subordinated Note Trustee as set forth above, the Property
Trustee shall not take any action in accordance with the directions of the
Holders of the Common Securities under this paragraph unless the Property
Trustee has received an opinion of tax counsel to the effect that for the
purposes of United States federal income tax the Trust will not be classified as
other than a grantor trust on account of such action. If the Property Trustee
fails to enforce its rights under the Declaration, any Holder of Common
Securities, to the extent permitted by applicable law, may institute a legal
proceeding directly against any Person to enforce the Property Trustee's rights
under the Declaration, without first instituting a legal proceeding against the
Property Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which Holders of Common Securities are entitled
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to vote, or of any matter upon which action by written consent of such Holders
is to be taken, to be mailed to each Holder of record of Common Securities. Each
such notice will include a statement setting forth (i) the date of such meeting
or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Subordinated Notes in accordance with the Declaration and the terms of the
Securities.
(7) Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than under the
circumstances described in Section 8.1 of the Declaration, then the Holders of
outstanding Securities will be entitled to vote on such amendment or proposal
(but not on any other amendment or proposal) and such amendment or proposal
shall not be effective except with the approval of the Holders of at least a
Majority in liquidation amount of the Securities, voting together as a single
class; provided that, if any amendment or proposal referred to in clause (i)
above would adversely affect only the Preferred Securities or only the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities.
(b) In the event the consent of the Property Trustee as the holder of
the Subordinated Notes is required under the Indenture with respect to any
amendment or modification of the Indenture or the Subordinated Notes, the
Property Trustee shall request the direction of the Holders of the Securities
with respect to such amendment or modification and shall vote with respect to
such amendment or modification as directed by a
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Majority in liquidation amount of the Securities voting together as a single
class; provided that where a consent under the Indenture would require the
consent of the holders of a Super Majority, the Property Trustee may only give
such consent at the direction of the Holders of at least the proportion in
liquidation amount of the Securities which the relevant Super Majority
represents of the aggregate principal amount of the Subordinated Notes
outstanding; provided, further, that the Property Trustee shall not take any
action in accordance with the directions of the Holders of the Securities under
this Section 7(b) unless the Property Trustee has received an opinion of tax
counsel to the effect that for the purposes of United States federal income tax
the Trust will not be classified as other than a grantor trust on account of
such action.
(8) Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration in respect of the Preferred Securities has occurred and is
continuing, in which case any funds available to make such payment shall be paid
first to each Holder of the Preferred Securities pro rata according to the
aggregate liquidation amount of Preferred Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Preferred Securities
outstanding, and only after satisfaction of all amounts owed to the Holders of
the Preferred Securities, then to each Holder of Common Securities pro rata
according to the aggregate liquidation amount of Common Securities held by the
relevant Holder relative to the aggregate liquidation amount of all Common
Securities outstanding.
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(9) Ranking.
The Preferred Securities rank pari passu, and payment thereon shall be
made Pro Rata, with the Common Securities except that, where an Event of Default
occurs and is continuing under the Indenture in respect of the Subordinated
Notes held by the Property Trustee, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights to payment of the
Holders of the Preferred Securities.
(10) Listing.
The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed for quotation on the New York Stock Exchange,
Inc.
(11) Acceptance of Securities Guarantee and
Indenture.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, and to the
provisions of the Indenture, including the subordination provisions of each
document.
(12) No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
(13) Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee or the Common Securities Guarantee (as may be appropriate)
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
I-16
<PAGE>
(14) Agreement of Holders and Preferred Security Beneficial Owners.
Every Person who becomes a Holder or a Preferred Security Beneficial
Owner shall be deemed to have agreed to treat the Subordinated Notes as
indebtedness for United States federal income tax purposes and the Preferred
Securities as evidence of an indirect beneficial ownership in the Subordinated
Notes.
I-17
<PAGE>
EXHIBIT A-1
-----------
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT - This
Preferred Security is a Global Certificate within the meaning of the Declaration
hereinafter referred to and is registered in the name of The Depository Trust
Company (the "Depositary") or a nominee of the Depositary. This Preferred
Security is exchangeable for Preferred Securities registered in the name of a
person other than the Depositary or its nominee only in the limited
circumstances described in the Declaration and no transfer of this Preferred
Security (other than a transfer of this Preferred Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered except in
limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.]
Certificate Number: Number of Preferred Securities
CUSIP NO.
A1-1
<PAGE>
Certificate Evidencing Preferred Securities
-------------------------------------------
of
COASTAL FINANCE I
% Trust Preferred Securities
(liquidation amount $25 per Preferred Security)
Coastal Finance I, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that ______________ (the
"Holder") is the registered owner of _______ preferred securities of the Trust
representing an undivided beneficial interest in the assets of the Trust
designated the % Trust Preferred Securities (liquidation amount $25 per
Preferred Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth in, and this certificate and the Preferred Securities represented hereby
are issued and shall in all respects be subject to the terms and provisions of,
the Amended and Restated Declaration of Trust of the Trust dated as of
, 1998, as the same may be amended from time to time (the "Declaration")
including the designation of the terms of Preferred Securities as set forth in
Annex I to the Declaration. The Preferred Securities and the Common Securities
(as defined in the Declaration) issued by the Trust pursuant to the Declaration
represent undivided beneficial interests in the assets of the Trust, including
the Subordinated Notes (as defined in the Declaration) issued by The Coastal
Corporation, a Delaware corporation ("Coastal"), to the Trust pursuant to the
Indenture referred to in the Declaration. The Holder is entitled to the
benefits of the Preferred Securities Guarantee Agreement of Coastal dated as of
, 1998 (the "Guarantee") to the extent provided therein. The Trust will furnish
a copy of the Declaration, the Guarantee and the Indenture to the Holder without
charge upon written request to the Trust at its principal place of business or
registered office.
The Holder of this certificate, by accepting this
A1-2
<PAGE>
certificate, is deemed to have: (i) agreed to the terms of the Indenture and the
Subordinated Notes, including that the Subordinated Notes are subordinate and
junior in right to payment to all Senior Indebtedness (as defined in the
Indenture) as and to the extent provided in the Indenture; (ii) agreed to the
terms of the Guarantee, including that the Guarantee is (x) subordinate and
junior in right to payment to all other liabilities of Coastal, including the
Subordinated Notes, except those made pari passu or subordinated by their terms,
(y) pari passu with the most senior preferred or preference stock now or
hereafter issued by Coastal and with any guarantee now or hereafter entered into
by Coastal in respect of any preferred or preference stock of any affiliate of
Coastal and (z) prior to Coastal's common stock; and (iii) agreed to treat the
Subordinated Notes as indebtedness for United States federal income tax purposes
and the Preferred Securities as evidence of an indirect beneficial ownership of
the Subordinated Notes.
This certificate and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A1-3
<PAGE>
IN WITNESS WHEREOF, the undersigned Regular Trustees of the Trust have
executed this certificate for and on behalf of the Trust.
Dated:
COASTAL FINANCE I
By:
Regular Trustee
By:
Regular Trustee
By:
Regular Trustee
COUNTERSIGNED AND REGISTERED:
THE BANK OF NEW YORK
(New York, New York)
Transfer Agent and Registrar
By:
Authorized Signature
A1-4
<PAGE>
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM --as tenants in common UNIF GIFT ACT ___ Custodian ___
TEN ENT --as tenants by the entireties (Cust) (Minor)
JT TEN --as joint tenants with Under Uniform Gifts to Minors
right of survivorship and Act _________
not as tenants in common State)
Additional abbreviations may also be used though not in the above
list.
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFICATION NUMBER
Please print or typewrite name(s) and address(es)
including postal zip code(s), of assignee(s)
_______ of the Preferred Securities represented by this
Certificate and does hereby irrevocably appoint
attorney to transfer such Preferred Securities on the books of the Trust.
The attorney may substitute another to act for him or her.
Date: _______________________
A1-5
<PAGE>
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
*IMPORTANT READ CAREFULLY!
The signature(s) to this assignment must correspond with the name(s) as written
upon the face of the certificate in every particular without alteration,
enlargement or change whatsoever. The signature(s) of the person(s) executing
this power must be guaranteed by an eligible guarantor institution which, at the
time of issuing the guarantee, is a member of, or a participant in the medallion
signature guarantee program recognized by the Securities Transfer Association.
A1-6
<PAGE>
EXHIBIT A-2
-----------
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number: Common Securities
Certificate Evidencing Common Securities
----------------------------------------
of
COASTAL FINANCE I
% Common Securities
(liquidation amount $25 per Common Security)
Coastal Finance I, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that _________________
(the "Holder") is the registered owner of common securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the % Common Securities (liquidation amount $25 per Common
Security) (the "Common Securities"). The Common Securities are transferable on
the books and records of the Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for
transfer. The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of , 1998, as
the same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Common Securities as set forth in Annex I to the
Declaration. Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits
of the Common Securities Guarantee to the extent provided therein. The Sponsor
will provide a copy of the Declaration, the Common Securities Guarantee and the
Indenture to the Holder without charge upon written request to the Sponsor at
its principal place of business.
A2-1
<PAGE>
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Subordinated Notes as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Subordinated
Notes.
This certificate and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
IN WITNESS WHEREOF, the undersigned Regular Trustees of the Trust have
executed this certificate this day of , 1998.
COASTAL FINANCE I
By:
Regular Trustee
By:
Regular Trustee
By:
Regular Trustee
A2-2
<PAGE>
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers this Common Security Certificate unto:
(Insert assignee's name and social security or tax identifica-tion number)
(Insert Address and zip code of assignee)
_______ of the Common Securities represented by this
Certificate and does hereby irrevocably appoint
attorney to transfer these Common Securities on the books of the Trust. The
attorney may substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
A2-3
<PAGE>
EXHIBIT B
---------
SPECIMEN OF SUBORDINATED NOTE
C-1
<PAGE>
EXHIBIT 4.14
================================================================================
AMENDED AND RESTATED DECLARATION OF TRUST
COASTAL FINANCE II
Dated as of ,
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
----------------------
<TABLE>
<CAPTION>
SECTION OF
TRUST INDENTURE ACT SECTION OF
OF 1939, AS AMENDED DECLARATION
<S> <C>
310(a) 5.3(a)
310(b) 5.3(c), 5.3(d)
310(c) Inapplicable
311(a) 2.2(b)
311(b) 2.2(b)
311(c) Inapplicable
312(a) 2.2(a)
312(b) 2.2(b)
313 2.3
314(a) 2.4
314(b) Inapplicable
314(c) 2.5
314(d) Inapplicable
314(e) 1.1, 2.5
314(f) Inapplicable
315(a) 3.9(b)
315(c) 3.9(a)
315(d) 3.9(b)
316(a) Annex I
316(c) 3.6(e)
317(a) 3.8(d)
317(b) 3.8(h)
</TABLE>
___________________
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I INTERPRETATION AND DEFINITIONS.................................. 2
SECTION 1.1. Definitions................................................... 2
ARTICLE II TRUST INDENTURE ACT............................................. 9
SECTION 2.1. Trust Indenture Act; Application.............................. 9
SECTION 2.2. Lists of Holders of Securities................................ 9
SECTION 2.3. Reports by the Property Trustee............................... 10
SECTION 2.4. Periodic Reports to Property Trustee.......................... 10
SECTION 2.5. Evidence of Compliance with Conditions Precedent.............. 10
SECTION 2.6. Events of Default; Waiver..................................... 10
SECTION 2.7. Event of Default; Notice...................................... 13
ARTICLE III ORGANIZATION.................................................... 13
SECTION 3.1. Name.......................................................... 13
SECTION 3.2. Office........................................................ 14
SECTION 3.3. Purpose....................................................... 14
SECTION 3.4. Authority..................................................... 14
SECTION 3.5. Title to Property of the Trust................................ 14
SECTION 3.6. Powers and Duties of the Regular Trustees..................... 15
SECTION 3.7. Prohibition of Actions by the Trust and the Trustees.......... 18
SECTION 3.8. Powers and Duties of the Property Trustee..................... 19
SECTION 3.9. Certain Duties and Responsibilities of the Property Trustee... 21
SECTION 3.10. Certain Rights of the Property Trustee........................ 23
SECTION 3.11. Delaware Trustee.............................................. 26
SECTION 3.12. Execution of Documents........................................ 26
SECTION 3.13. Not Responsible for Recitals or Issuance of Securities........ 26
SECTION 3.14. Duration of Trust............................................. 26
SECTION 3.15. Mergers....................................................... 26
ARTICLE IV SPONSOR.......................................................... 29
SECTION 4.1. Sponsor's Purchase of Common Securities....................... 29
SECTION 4.2. Responsibilities of the Sponsor............................... 29
SECTION 4.3. Expenses...................................................... 29
ARTICLE V TRUSTEES.......................................................... 30
SECTION 5.1. Number of Trustees............................................ 30
-i-
<PAGE>
SECTION 5.2. Delaware Trustee.............................................. 31
SECTION 5.3. Property Trustee; Eligibility................................. 31
SECTION 5.4. Qualifications of Regular Trustees and Delaware
Trustee Generally........................................... 32
SECTION 5.5. Initial Trustees.............................................. 32
SECTION 5.6. Appointment, Removal and Resignation of Trustees.............. 33
SECTION 5.7. Vacancies Among Trustees...................................... 34
SECTION 5.8. Effect of Vacancies........................................... 35
SECTION 5.9. Meetings...................................................... 35
SECTION 5.10. Delegation of Power........................................... 36
ARTICLE VI DISTRIBUTIONS.................................................... 36
SECTION 6.1. Distributions................................................. 36
ARTICLE VII ISSUANCE OF SECURITIES.......................................... 37
SECTION 7.1. General Provisions Regarding Securities....................... 37
ARTICLE VIII DISSOLUTION OF TRUST........................................... 38
SECTION 8.1. Dissolution of Trust.......................................... 38
ARTICLE IX TRANSFER OF INTERESTS............................................ 39
SECTION 9.1. Transfer of Securities........................................ 39
SECTION 9.2. Transfer of Certificates...................................... 40
SECTION 9.3. Deemed Security Holders....................................... 40
SECTION 9.4. Book Entry Interests.......................................... 40
SECTION 9.5. Notices to Clearing Agency.................................... 41
SECTION 9.6. Appointment of Successor Clearing Agency...................... 42
SECTION 9.7. Definitive Preferred Security Certificates.................... 42
SECTION 9.8. Mutilated, Destroyed, Lost or Stolen Certificates............. 43
ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
TRUSTEES OR OTHERS.............................................. 43
SECTION 10.1. Liability..................................................... 43
SECTION 10.2. Exculpation................................................... 44
SECTION 10.3. Fiduciary Duty................................................ 44
SECTION 10.4. Indemnification and Reimbursement............................. 46
SECTION 10.5. Outside Businesses............................................ 47
ARTICLE XI ACCOUNTING....................................................... 47
SECTION 11.1. Fiscal Year................................................... 47
SECTION 11.2. Certain Accounting Matters.................................... 47
SECTION 11.3. Banking....................................................... 48
SECTION 11.4. Withholding................................................... 48
-ii-
<PAGE>
ARTICLE XII AMENDMENTS AND MEETINGS......................................... 49
SECTION 12.1. Amendments.................................................... 49
SECTION 12.2. Meetings of the Holders; Action by Written Consent............ 51
ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE....... 53
SECTION 13.1. Representations and Warranties of Property Trustee............ 53
SECTION 13.2. Representations and Warranties of Delaware Trustee............ 54
ARTICLE XIV MISCELLANEOUS................................................... 55
SECTION 14.1. Notices....................................................... 55
SECTION 14.2. Governing Law................................................. 56
SECTION 14.3. Intention of the Parties...................................... 56
SECTION 14.4. Headings...................................................... 57
SECTION 14.5. Successors and Assigns........................................ 57
SECTION 14.6. Partial Enforceability........................................ 57
SECTION 14.7. Counterparts.................................................. 57
ANNEX I TERMS OF SECURITIES........................................ I-1
EXHIBIT A-1 FORM OF PREFERRED SECURITY CERTIFICATE..................... A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE........................ A2-1
EXHIBIT B SPECIMEN OF SUBORDINATED NOTE.............................. B-1
-iii-
<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST
OF
COASTAL FINANCE II
,
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration"), dated and
effective as of , , by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the assets of the Trust to be issued pursuant to this
Declaration.
W I T N E S S E T H:
WHEREAS, the Trustees and the Sponsor created Coastal Finance II (the
"Trust") as a business trust under the Delaware Business Trust Act pursuant to a
Declaration of Trust dated as of April 8, 1998 (the "Original Declaration") and
a Certificate of Trust filed with the Secretary of State of the State of
Delaware on April 8, 1998, for the exclusive purposes of issuing and selling
certain securities representing undivided beneficial interests in the assets of
the Trust, investing the proceeds thereof in certain Subordinated Notes of the
Subordinated Note Issuer (as defined herein) and engaging in activities
necessary or incidental thereto;
WHEREAS, prior to the date hereof, no interests in the Trust have been
issued; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
<PAGE>
-2-
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1. Definitions.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires; and
(f) a reference in this Declaration to the singular includes the
plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday, a Sunday or any
other day on which banking institutions in New York, New York or the New York
Stock Exchange are authorized or required by law to close.
<PAGE>
-3-
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code (S)3801 et seq., as it may be amended from time to time.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Preferred Securities and in whose name or in the name of a nominee of
that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank or other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means , .
"Code" means the Internal Revenue Code of 1986 as amended from time to
time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Securities Guarantee" means the guarantee agreement, dated as
of , , of the Sponsor in respect of the Common Securities.
"Common Security" has the meaning specified in Section 7.1.
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security substantially in the form of
Exhibit A-2.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
<PAGE>
-4-
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Definitive Preferred Security Certificates" has the meaning set forth
in Section 9.4.
"Direction" by a Person means a written direction signed:
(a) if the Person is a natural Person, by that Person; or
(b) in any other case, in the name of such Person by one or more
Authorized Officers of that Person.
"Distribution" means a distribution payable to Holders of Securities
in accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Subordinated Notes.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Indemnified Person" means (a) any Trustee; (b) any Affiliate of any
Trustee; (c) any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee; or (d) any employee or
agent of the Trust or its Affiliates.
"Indenture" means the Indenture dated as of April , 1998, as
amended and supplemented by a Second Supplemental Indenture, dated as of
, (the "Supplemental Indenture"), among the Subordinated Note Issuer and
the Subordinated Note Trustee, and any further indentures supplemental thereto
relating to the Subordinated Notes.
<PAGE>
-5-
"Investment Company" means an investment company (as defined in the
Investment Company Act) that is required to register as such under the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex I
hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities and by the Trust Indenture
Act, Holder(s) of outstanding Securities voting together as a single class or,
as the context may require, Holders of outstanding Preferred Securities or
Holders of outstanding Common Securities voting separately as a class, who are
the record owners of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of the relevant
class.
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Annex I.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
<PAGE>
-6-
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association or government or any agency
or political subdivision thereof, or any other entity of whatever nature.
"Preferred Securities Guarantee" means the guarantee agreement, dated
as of , , of the Sponsor in respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate representing a
Preferred Security substantially in the form of Exhibit A-1.
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in Section
3.8(c).
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.
"Regular Trustee" means any Trustee other than the Property Trustee
and the Delaware Trustee.
<PAGE>
-7-
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, (a)
any vice president, any assistant vice president, any assistant secretary, the
treasurer, any assistant treasurer, any trust officer or assistant trust officer
or any other officer in the corporate trust department of the Property Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject and (b) who
shall have direct responsibility for the administration of this Declaration.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Securities Guarantees" means the Preferred Securities Guarantee and
the Common Securities Guarantee.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" means The Coastal Corporation, a Delaware corporation, or
any successor entity in a merger, consolidation or amalgamation, in its capacity
as sponsor of the Trust.
"Subordinated Note Issuer" means the Sponsor in its capacity as issuer
of the Subordinated Notes.
"Subordinated Note Trustee" means The Bank of New York, as trustee
under the Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.
"Subordinated Notes" means the % Subordinated Deferrable Interest
Notes Due to be issued by the Subordinated Note Issuer under the
Indenture and held by the Property Trustee. A specimen certificate representing
<PAGE>
-8-
a Subordinated Note is attached hereto as Exhibit B. The Subordinated Notes
will be subordinate and junior in right of payment to certain other indebtedness
of the Subordinated Note Issuer as set forth in the Indenture.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Supplemental Indenture" has the meaning ascribed thereto in the
definition of "Indenture."
"Tax Event" has the meaning set forth in Annex I hereto.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture Act,
Holders of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a class, representing 10% of
the aggregate liquidation amount (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accrued and unpaid Distributions
to the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended to the date hereof.
"Underwriting Agreement" means the underwriting agreement among the
Trust, the Subordinated Note Issuer and the underwriters designated by the
Regular Trustees with respect to the offer and sale of the Preferred Securities.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee that is a Trustee
for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by (S)(S) 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2. Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders of the
Securities ("List of Holders") as of such record date, provided that neither the
Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Property Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request therefor, a
List of Holders as of a date no more than 14 days before such List of Holders is
given to the Property Trustee. The Property Trustee shall preserve, in as
current a form as is reasonably practicable, all information contained in Lists
of Holders given to it or which it receives in the capacity of Paying Agent (if
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acting in such capacity); provided that the Property Trustee may destroy any
List of Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
(S)(S) 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Property Trustee.
Within 60 days after of each year or at such other time as
required under (S) 313(b) of the Trust Indenture Act, the Property Trustee shall
provide to the Holders of the Securities such reports as are required by (S) 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
(S) 313 of the Trust Indenture Act. The Property Trustee shall also comply with
the requirements of (S) 313(d) of the Trust Indenture Act.
SECTION 2.4. Periodic Reports to Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
required by (S) 314 of the Trust Indenture Act (if any) and the compliance
certificate required by (S) 314 of the Trust Indenture Act in the form, in the
manner and at the times required by (S) 314 of the Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in (S) 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to (S)
314(c)(1) of the Trust Indenture Act may be given in the form of an Officers'
Certificate.
SECTION 2.6. Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
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(i) is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Subordinated Notes (a "Super
Majority") to be waived under the Indenture, the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least the
proportion in liquidation amount of the Preferred Securities outstanding
that the relevant Super Majority represents of the aggregate principal
amount of the Subordinated Notes outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of
(S) 316(a)(1)(B) of the Trust Indenture Act and such (S) 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to the Preferred
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event of
Default under the Declaration as provided below in this Section 2.6(b), the
Event of Default under the Declaration shall also not be waivable; or
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(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to
have waived such Event of Default under the Declaration as provided below
in this Section 2.6(b), the Event of Default under the Declaration may only
be waived by the vote of the Holders of at least the proportion in
liquidation amount of the Common Securities outstanding that the relevant
Super Majority represents of the aggregate principal amount of the
Subordinated Notes outstanding;
provided, further, that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and their consequences until all Events of Default with
respect to the Preferred Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.6(b) shall be in lieu of (S)(S) 316(a)(1)(A) and 316(a)(1)(B) of the
Trust Indenture Act and such (S)(S) 316(a)(1)(A) and 316(a)(1)(B) of the Trust
Indenture Act are hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Subject to the foregoing
provisions of this Section 2.6(b), upon such waiver, any such default shall
cease to exist and any Event of Default with respect to the Common Securities
arising therefrom shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Event of Default with respect to the Common Securities or impair any right
consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the Preferred Securities
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu
of (S) 316(a)(1)(B) of the Trust Indenture Act and such (S) 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
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SECTION 2.7. Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of the Securities, notices of all defaults with respect to the
Securities actually known to a Responsible Officer of the Property Trustee,
unless such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be an
Event of Default as defined in the Indenture, not including any periods of grace
provided for therein and irrespective of the giving of any notice provided
therein); provided that, except for a default in the payment of principal of (or
premium, if any) or interest on any of the Subordinated Notes, the Property
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
and/or Responsible Officers of the Property Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders of the
Securities.
(b) The Property Trustee shall not be deemed to have knowledge of any
default except:
(i) a default under Sections 6.01(a) and 6.01(b) of the
Indenture; or
(ii) any default as to which a Responsible Officer shall have
actual knowledge or a Responsible Officer charged with the administration
of the Declaration shall have obtained written notice.
ARTICLE III
ORGANIZATION
SECTION 3.1. Name.
The Trust is named "Coastal Finance II," as such name may be modified
from time to time by the Regular Trustees following written notice to the
Holders of the Securities. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.
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SECTION 3.2. Office.
The address of the principal office of the Trust is c/o The Coastal
Corporation, Coastal Tower, Nine Greenway Plaza, Houston, Texas 77046-0995. On
ten Business Days written notice to the Holders of the Securities, the Regular
Trustees may designate another principal office.
SECTION 3.3. Purpose.
The exclusive purposes and functions of the Trust are (a) to issue and
sell the Securities and use the proceeds from such sale to purchase and hold the
Subordinated Notes and the Preferred Securities Guarantee, and (b) except as
otherwise limited herein, to engage in only those other activities necessary, or
incidental thereto. The Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, pledge any of its assets, or otherwise
undertake (or permit to be undertaken) any activity that would cause the Trust
not to be classified for United States federal income tax purposes as a grantor
trust.
SECTION 3.4. Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee in accordance with its powers shall constitute the act of and
serve to bind the Trust. In dealing with the Trustees acting on behalf of the
Trust, no person shall be required to inquire into the authority of the Trustees
to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in this
Declaration.
SECTION 3.5. Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Subordinated
Notes and the Property Trustee Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
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SECTION 3.6. Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided that the Trust may
issue no more than one series of Preferred Securities and no more than one
series of Common Securities, and provided, further, that there shall be no
interests in the Trust other than the Securities, and the issuance of Securities
shall be limited to a one-time, simultaneous issuance of both Preferred
Securities and Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the registration
statement on Form S-3 prepared by the Sponsor, including any amendments
thereto, pertaining to the Preferred Securities;
(ii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary in order to
qualify or register all or part of the Preferred Securities in any State in
which the Sponsor has determined to qualify or register such Preferred
Securities for sale;
(iii) execute and file an application, prepared by the Sponsor,
to the New York Stock Exchange, Inc. or any other national securities
exchange or with The Nasdaq Stock Market for listing upon notice of
issuance of any Preferred Securities;
(iv) execute and file with the Commission a registration
statement on Form 8-A, including any amendments thereto, prepared by the
Sponsor, relating to the registration of the Preferred Securities under
Section 12(b) of the Exchange Act; and
(v) designate underwriters to be party to the Underwriting
Agreement and execute and enter into the Purchase Agreement providing for
the sale of the Preferred Securities;
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(c) to acquire the Subordinated Notes with the proceeds of the sale
of the Preferred Securities and the Common Securities; provided that the Regular
Trustees shall cause legal title to the Subordinated Notes to be held of record
in the name of the Property Trustee for the benefit of the Holders of the
Preferred Securities and the Holders of the Common Securities;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event; provided that the Regular Trustees
shall consult with the Sponsor and the Property Trustee before taking or
refraining from taking any Ministerial Action in relation to a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of (S) 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Preferred Securities and Holders of Common Securities
as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of
the Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by (S) 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
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(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities of
any notice received from the Subordinated Note Issuer of its election to defer
payments of interest on the Subordinated Notes by extending the interest payment
period under the Indenture;
(n) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Preferred
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(p) to take any action, not inconsistent with this Declaration or
with applicable law, that the Regular Trustees determine in their discretion to
be necessary or desirable in carrying out the activities of the Trust as set out
in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Subordinated Note Issuer to ensure
that the Subordinated Notes will be treated as indebtedness of the
Subordinated Note Issuer for United States federal income tax purposes,
provided that such action does not adversely affect the interests of Holders;
and
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Regular Trustees, on behalf of the
Trust.
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The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
SECTION 3.7. Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall not, engage in any activity other than as required or authorized
by this Declaration. In particular, the Trust shall not and the Trustees
(including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Subordinated Notes, but shall distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Subordinated Notes;
(v) possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) other than as provided in this Declaration, (A) direct the
time, method and place of exercising any trust or power conferred upon the
Subordinated Note Trustee with respect to the Subordinated Notes, (B) waive
any past default that is waivable under Section 6.04 of the Indenture, (C)
exercise any right to rescind or annul any declaration that the principal
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of all the Subordinated Notes shall be due and payable, or (D) consent to
any amendment or modification of the Indenture or the Subordinated Notes
where such consent shall be required unless the Trust shall have received
an opinion of counsel to the effect that such amendment or modification
will not cause more than an insubstantial risk that for United States
federal income tax purposes the Trust will not be classified as a grantor
trust.
SECTION 3.8. Powers and Duties of the Property Trustee.
(a) The legal title to the Subordinated Notes shall be owned by and
held of record in the name of the Property Trustee in trust for the benefit of
the Holders of the Securities. The right, title and interest of the Property
Trustee to the Subordinated Notes shall vest automatically in each Person who
may hereafter be appointed as Property Trustee in accordance with Section 5.6.
Such vesting (and cessation as to the resigning Property Trustee) of title shall
be effective whether or not conveyancing documents with regard to the
Subordinated Notes have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Subordinated Notes to the Regular Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Property Trustee Account") in the name of and under the
exclusive control of the Property Trustee on behalf of the Holders of the
Securities and, upon the receipt of payments of funds made in respect of
the Subordinated Notes held by the Property Trustee, deposit such funds
into the Property Trustee Account and make payments to the Holders of the
Preferred Securities and Holders of the Common Securities from the Property
Trustee Account in accordance with Section 6.1. Funds in the Property
Trustee Account shall be held uninvested until disbursed in accordance with
this Declaration. The Property Trustee Account shall be an account that is
maintained with a banking institution the rating on whose long-term
unsecured indebtedness is at least equal to the rating assigned to the
Preferred Securities by a "nationally recognized statistical rating
organization", as that term is defined for purposes of Rule 436(g)(2) under
the Securities Act;
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(ii) engage in such ministerial activities as shall be necessary
or appropriate to effect the redemption of the Preferred Securities and the
Common Securities to the extent the Subordinated Notes are redeemed or
mature; and
(iii) upon notice of distribution issued by the Regular Trustees
in accordance with the terms of the Securities, engage in such ministerial
activities as shall be necessary or appropriate to effect the distribution
of the Subordinated Notes to Holders of Securities upon the occurrence of a
Special Event.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities.
(e) The Property Trustee shall take any Legal Action which arises out
of or in connection with an Event of Default or the Property Trustee's duties
and obligations under this Declaration or the Trust Indenture Act.
(f) The Property Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds
of the liquidation distributed to the Holders of Securities pursuant to the
terms of the Securities; or
(ii) a successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.
(g) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a holder of Subordinated Notes under the
Indenture and, if an Event of Default occurs and is continuing, the Property
Trustee shall, for the benefit of Holders of the Securities, enforce its rights
as holder of the Subordinated Notes subject to the rights of the Holders
pursuant to the terms of such Securities.
(h) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with (S) 317(b) of the Trust Indenture Act. Any
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Paying Agent may be removed by the Property Trustee at any time and a successor
Paying Agent or additional Paying Agents may be appointed at any time by the
Property Trustee.
(i) Subject to this Section 3.8, the Property Trustee shall
have none of the duties, liabilities, powers or the authority of the Regular
Trustees set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.3.
SECTION 3.9. Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Property Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.6), the Property Trustee
shall exercise such of the rights and powers vested in it by this Declaration,
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 conduct of his or her own
affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of this
Declaration and the Property Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Declaration, and no implied covenants or obligations
shall be read into this Declaration against the Property Trustee; and
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(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Declaration; but in
the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Property
Trustee, the Property Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of
this Declaration (but need not confirm or investigate the accuracy of
mathematical calculations or the facts stated therein;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in
liquidation amount of the Securities relating to the time, method and place
of conducting any proceeding for any remedy available to the Property
Trustee, or exercising any trust or power conferred upon the Property
Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or adequate
indemnity against such risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Subordinated Notes
and the Property Trustee Account shall be to deal with such property in a
manner that is customary in the industry, subject to the protections and
limitations on liability afforded to the Property Trustee under this
Declaration, the Trust Indenture Act and Rule 3a-7;
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(vi) the Property Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or sufficiency of the
Subordinated Notes or the payment of any taxes or assessments levied
thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree in writing
with the Sponsor. Money held by the Property Trustee need not be segregated
from other funds held by it except in relation to the Property Trustee
Account maintained by the Property Trustee pursuant to Section 3.8(c)(i)
and except to the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with their
respective duties under this Declaration, nor shall the Property Trustee be
liable for the default or misconduct of the Regular Trustees or the
Sponsor.
SECTION 3.10. Certain Rights of the Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be sufficiently evidenced
by a Direction or an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically prescribed)
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may, in the absence of bad faith on its part, request and conclusively rely
upon an Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Regular Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or reregistration thereof;
(v) the Property Trustee may consult with counsel or other
experts of its selection and the advice or opinion of such counsel and
experts with respect to legal matters or advice within the scope of such
experts' area of expertise shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion. Such
counsel may be counsel to the Sponsor or any of its Affiliates, and may
include any of the Sponsor's or its Affiliates' employees. The Property
Trustee shall have the right at any time to seek instructions concerning
the administration of this Declaration from any court of competent
jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at
the request or direction of any Holder, unless such Holder shall have
provided to the Property Trustee adequate security and indemnity, which
would satisfy a reasonable person in the position of the Property Trustee,
against the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Property Trustee; provided that nothing contained in this Section
3.10(a)(vi) shall be taken to relieve the Property Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit;
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(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Property Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders, and the signature of the
Property Trustee or its agents alone shall be sufficient and effective to
perform any such action and no third party shall be required to inquire as
to the authority of the Property Trustee to so act or as to its compliance
with any of the terms and provisions of this Declaration, both of which
shall be conclusively evidenced by the Property Trustee's or its agent's
taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Property Trustee (i) may request instructions from the
Holders of the Securities which instructions may only be given by the
Holders of the same proportion in liquidation amount of the Securities as
would be entitled to direct the Property Trustee under the terms of the
Securities in respect of such remedy, right or action, (ii) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in acting in
accordance with such instructions; and
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to take
any action that is discretionary under the provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
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obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11. Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities, of
the Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of (S) 3807 of the
Business Trust Act.
SECTION 3.12. Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, a majority of or, if there are
only two, any Regular Trustee or, if there is only one, such Regular Trustee is
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6;
provided that the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by all of the Regular
Trustees.
SECTION 3.13. Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14. Duration of Trust.
The Trust, unless dissolved pursuant to the provisions of Article VIII
hereof, shall have existence for fifty-five (55) years from the Closing Date.
SECTION 3.15. Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
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substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders, the Delaware Trustee or the Property Trustee,
consolidate, amalgamate, merge with or into, or be replaced by a trust organized
as such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the
Securities rank with respect to Distributions and payments upon
liquidation, redemption and otherwise;
(ii) the Subordinated Note Issuer expressly acknowledges a
trustee of the Successor Entity that possesses the same powers and duties
as the Property Trustee as the Holder of the Subordinated Notes;
(iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on the New York Stock Exchange, Inc. or such other national
securities exchange or with The Nasdaq Stock Market or such other
organization on which the Preferred Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or replacement
does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical
rating organization;
(v) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and privileges of the
Holders of the Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of such Holders'
interests in the Successor Entity as a result of such merger,
consolidation, amalgamation or replacement);
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(vi) such Successor Entity has a purpose identical to that of
the Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a nationally recognized
independent counsel to the Trust experienced in such matters to the effect
that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Securities (including any Successor
Securities) in any material respect (other than with respect to any
dilution of the Holders' interest in the Successor Entity); and
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company; and
(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent provided by
the Preferred Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes and any Holder of Securities
not to be treated as owning an undivided beneficial interest in the Subordinated
Notes.
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ARTICLE IV
SPONSOR
SECTION 4.1. Sponsor's Purchase of Common Securities.
On the Closing Date the Sponsor will purchase all of the Common
Securities issued by the Trust, in an amount equal to at least 3% of the capital
of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2. Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Preferred Securities,
including any amendments thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and to do
any and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
(c) to prepare for filing by the Trust an application to the New York
Stock Exchange, Inc. or any other national securities exchange or with The
Nasdaq Stock Market for listing upon notice of issuance of any Preferred
Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of the Underwriting Agreement providing
for the sale of the Preferred Securities.
SECTION 4.3. Expenses.
(a) The Sponsor shall be responsible for and shall pay for all debts
and obligations (other than with respect to the Securities) and all costs and
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expenses of the Trust (including, but not limited to, costs and expenses
relating to the organization of the Trust, the issuance and sale of the
Preferred Securities, the fees and expenses (including reasonable counsel fees
and expenses) of the Trustees, the costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, Paying Agent(s), registrar(s), transfer
agent(s), duplication, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the disposition of
Trust assets).
(b) The Sponsor will pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust.
(c) The Sponsor's obligations under this Section 4.3 shall be for the
benefit of, and shall be enforceable by, the Property Trustee and any Person to
whom any such debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice hereof. The
Property Trustee and any such Creditor may enforce the Sponsor's obligations
under this Section 4.3 directly against the Sponsor and the Sponsor irrevocably
waives any right or remedy to require that the Property Trustee or any such
Creditor take any action against the Trust or any other Person before proceeding
against the Sponsor. The Sponsor agrees to execute such additional agreements
as may be necessary or desirable in order to give full effect to the provisions
of this Section 4.3.
ARTICLE V
TRUSTEES
SECTION 5.1. Number of Trustees.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
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(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities,
provided that, if the Property Trustee does not also act as Delaware Trustee,
the number of Trustees shall be at least three (3).
SECTION 5.2. Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application. The Delaware Trustee may be an Affiliate of the
Property Trustee.
SECTION 5.3. Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as
Property Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof or
of the District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by federal, State,
Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to above,
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then for the purposes of this Section 5.3(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published;
and
(iii) if the Trust is excluded from the definition of an
Investment Company solely by means of Rule 3a-7 and to the extent Rule 3a-7
requires a trustee having certain qualifications to hold title to the
"eligible assets" of the Trust, the Property Trustee shall possess those
qualifications.
(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of (S) 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in (S) 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of (S) 310(b) of the Trust Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in (S) 310(b) of the Trust Indenture Act.
SECTION 5.4. Qualifications of Regular Trustees and Delaware Trustee
Generally.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 5.5. Initial Trustees.
The initial Regular Trustees shall be:
Coby C. Hesse
Donald H. Gullquist
Austin M. O'Toole
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The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
The initial Property Trustee shall be:
The Bank of New York
SECTION 5.6. Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the
Holders of a Majority in liquidation amount of the Common Securities voting
as a class at a meeting of the Holders of the Common Securities or by
unanimous written consent.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Property Trustee has
been appointed and has accepted such appointment by written instrument executed
by such successor Property Trustee and delivered to the Regular Trustees and the
Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with this Section 5.6(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections 5.2 and
5.4 (a "Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided that:
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(i) no such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed
and has accepted such appointment by instrument executed by such
Successor Property Trustee and delivered to the Trust, the Sponsor and
the resigning Property Trustee; or
(B) if the Trust is deemed not to be an Investment Company
solely by reason of Rule 3a-7, until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to the
Holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee has
been appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the Sponsor and
the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.6 within 30 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may (at the expense of the Trust) petition any court of competent
jurisdiction for appointment of a Successor Property Trustee or Successor
Delaware Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper and prescribe, appoint a Successor Property Trustee
or Successor Delaware Trustee, as the case may be.
SECTION 5.7. Vacancies Among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
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evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
SECTION 5.8. Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust. Whenever a vacancy in the number of Regular
Trustees shall occur, until such vacancy is filled by the appointment of a
Regular Trustee in accordance with Section 5.6, the Regular Trustees in office,
regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees by
this Declaration.
SECTION 5.9. Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before such meeting. Notices shall contain a brief statement
of the time, place and anticipated purposes of the meeting. The presence
(whether in person or by telephone) of a Regular Trustee at a meeting shall
constitute a waiver of notice of such meeting except where a Regular Trustee
attends a meeting for the express purpose of objecting to the transaction of any
activity on the ground that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the
Regular Trustees may be taken at a meeting by vote of a majority of the Regular
Trustees present (whether in person or by telephone) and eligible to vote with
respect to such matter, provided that a Quorum is present, or without a meeting
by the unanimous written consent of the Regular Trustees. In the event there is
only one Regular Trustee, any and all action of such Regular Trustee shall be
evidenced by a written consent of such Regular Trustee.
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SECTION 5.10. Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) The Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1. Distributions.
Holders shall receive Distributions (as defined herein) in accordance
with the applicable terms of the relevant Holder's Securities. Distributions
shall be made on the Preferred Securities and the Common Securities in
accordance with the preferences set forth in their respective terms. If and to
the extent that the Subordinated Note Issuer makes a payment of interest
(including Additional Interest (as defined in the Indenture)), premium and/or
principal on the Subordinated Notes held by the Property Trustee (the amount of
any such payment being a "Payment Amount"), the Property Trustee shall and is
directed, to the extent funds are available for that purpose, to make a
distribution (a "Distribution") of the Payment Amount to the Holders.
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ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1. General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one class
of preferred securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Annex I (the
"Preferred Securities") and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "Common Securities.") The Trust shall not issue
any securities or other interests in respect of the assets of the Trust other
than the Preferred Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the Trust by two
Regular Trustees. Each such signature shall be the manual or facsimile
signature of any present or any future Regular Trustee. In case any Regular
Trustee of the Trust who shall have signed any of the Certificates shall cease
to be such Regular Trustee before the Certificates so signed shall be delivered
by the Trust, such Certificates nevertheless may be delivered as though the
person who signed such Certificates had not ceased to be such Regular Trustee;
and any Certificate may be signed on behalf of the Trust by such persons who, at
the actual date of execution of such Certificate, shall be the Regular Trustees
of the Trust, although at the date of the execution and delivery of the
Declaration any such person was not such a Regular Trustee. Certificates shall
be printed, lithographed or engraved or may be produced in any other manner as
is reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which Securities may be listed, or to conform to usage.
Upon a written order of the Trust signed by one Regular Trustee, the Property
Trustee shall countersign the Preferred Certificate for original issue.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
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(d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(e) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
(f) Every Person who becomes a Holder or a Preferred Security
Beneficial Owner shall be deemed to have agreed to treat the Subordinated Notes
as indebtedness for United States federal income tax purposes and the Preferred
Securities as evidence of an indirect beneficial ownership in the Subordinated
Notes.
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1. Dissolution of Trust.
(a) The Trust shall dissolve and its affairs shall be wound up:
(i) upon the bankruptcy of the Holder of the Common Securities
or the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Holder of the Common Securities or the
Sponsor; the filing of a certificate of cancellation with respect to the
Trust or the revocation of the Holder of the Common Securities or the
Sponsor's charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of the
Holder of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been
paid to the Holders in accordance with the terms of the Securities;
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(v) upon the occurrence and continuation of a Special Event
pursuant to which the Trust shall have been dissolved in accordance with
the terms of the Securities and all of the Subordinated Notes in accordance
with the terms thereof shall have been distributed to the Holders of
Securities in exchange for all of the Securities; or
(vi) before the issuance of any Securities, with the consent of
all of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1. Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the Securities. Any transfer or purported transfer of any Security not made in
accordance with this Declaration and these Securities shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be freely
transferable.
(c) Subject to this Article IX, (x) the Sponsor may only transfer
Common Securities to a Related Party and (y) a Related Party may only transfer
Common Securities to the Sponsor or another Related Party; provided that any
such transfer is subject to the condition precedent that the transferor obtain
the written opinion of nationally recognized independent counsel experienced in
such matters that such transfer would not cause more than an insubstantial risk
that:
(i) the Trust would no longer be classified for United States
federal income tax purposes as a grantor trust; or
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(ii) the Trust would become an Investment Company or the
transferee would become an Investment Company.
SECTION 9.2. Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration and
the terms of the Securities represented by such Certificate.
SECTION 9.3. Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole Holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
SECTION 9.4. Book Entry Interests.
Unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance, will be issued in
the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
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Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will
receive a definitive Preferred Security Certificate representing such Preferred
Security Beneficial Owner's interests in such Global Certificates, except as
provided in Section 9.7. Unless and until definitive, fully registered
Preferred Security Certificates (the "Definitive Preferred Security
Certificates") have been issued to the Preferred Security Beneficial Owners
pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment of
Distributions on the Global Certificates and receiving approvals, votes or
consents hereunder) as the Holder of the Preferred Securities and the sole
holder of the Global Certificates and shall have no obligation to the Preferred
Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this Section
9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants. The
Clearing Agency will make book entry transfers among the Clearing Agency
Participants and receive and transmit payments of Distributions on the Global
Certificates to such Clearing Agency Participants.
SECTION 9.5. Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, unless and until Definitive
Preferred Security Certificates shall have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give all
such notices and communications specified herein to be given to the Preferred
Security Holders to the Clearing Agency, and shall have no notice obligations to
the Preferred Security Beneficial Owners.
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SECTION 9.6. Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to the Preferred Securities.
SECTION 9.7. Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities and a successor
Clearing Agency is not appointed within 90 days after such election pursuant to
Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor to
terminate the book entry system through the Clearing Agency with respect to the
Preferred Securities,
then:
(c) Definitive Preferred Security Certificates shall be prepared by
the Regular Trustees on behalf of the Trust with respect to the Preferred
Securities; and
(d) upon surrender of the Global Certificates by the Clearing Agency,
accompanied by registration instructions, the Regular Trustees shall cause
Definitive Preferred Security Certificates to be delivered to Preferred Security
Beneficial Owners in accordance with the instructions of the Clearing Agency.
Neither the Trustees nor the Trust shall be liable for any delay in delivery of
such instructions and each of them may conclusively rely on and shall be
protected in relying on, said instructions of the Clearing Agency. The
Definitive Preferred Security Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Regular Trustees, as evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification or designation and such
legends or endorsements as the Regular Trustees may deem appropriate, or as may
be required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Preferred Securities may be listed, or to conform to usage.
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SECTION 9.8. Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificate should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security or
indemnity as may be required by them to keep each of them harmless,
then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 9.8, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Securities, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1. Liability.
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders, which shall
be made solely from assets of the Trust; or
(ii) required to pay to the Trust or to any Holder any deficit
upon dissolution of the Trust or otherwise.
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(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to (S) 3803(a) of the Business Trust Act, the Holders of
the Preferred Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 10.2. Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence (or, in the
case of the Property Trustee, negligence) or willful misconduct with respect to
such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
SECTION 10.3. Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and liabilities
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of an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between
any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person shall
act in a manner that is, or provide terms that are, fair and reasonable to
the Trust or any Holder,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
<PAGE>
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SECTION 10.4. Indemnification and Reimbursement.
(a) The Sponsor shall indemnify and hold harmless each Indemnified
Person from and against any loss, damage, liability, tax, penalty, expense or
claim of any kind or nature whatsoever incurred by such Indemnified Person by
reason of the creation, operation or termination of the Trust or any act or
omission performed or omitted by such Indemnified Person in good faith on behalf
of the Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this
Declaration, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such Indemnified
Person by reason of gross negligence (or, in the case of the Property Trustee,
negligence) or willful misconduct with respect to such acts or omissions.
(b) Expenses (including legal fees and expenses) incurred by an
Indemnified Person in defending any claim, demand, action, suit or proceeding
(whether such claim, demand, action, suit or proceeding arises between the
parties hereto or results from suits involving third parties) shall, from time
to time, be advanced by the Sponsor prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Sponsor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 10.4(a). The indemnification set forth in
this Section 10.4 shall survive the termination of this Declaration.
(c) The Sponsor shall reimburse the Trustees upon request for all
reasonable expenses, disbursements and advances incurred or made by the Trustees
in accordance with any provision of this Declaration (including the reasonable
compensation and the expenses and disbursements of its agents and counsel).
The Property Trustee shall have a lien prior to the Securities as to
all property and funds held by its hereunder for any amount owing it or any
predecessor Property Trustee pursuant to this Section 10.4, except with respect
to funds held in trust for the benefit of the Holders of particular Securities.
The provisions of this Section shall survive the termination of this
Declaration.
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SECTION 10.5. Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders shall have no rights by
virtue of this Declaration in and to such independent ventures or the income or
profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor, the Delaware Trustee, or the Property
Trustee shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and any Covered Person, the
Sponsor, the Delaware Trustee and the Property Trustee shall have the right to
take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1. Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2. Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents which shall reflect, in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
<PAGE>
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accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to
each of the Holders, within 90 days after the end of each Fiscal Year of the
Trust, annual financial statements of the Trust, including a balance sheet of
the Trust as of the end of such Fiscal Year, and the related statements of
income or loss.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each Holder, any annual United States federal income tax
information statement, required by the Code, containing such information with
regard to the Securities held by such Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver
all such statements within 30 days after the end of each Fiscal Year of the
Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority an annual United States federal income tax
return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3. Banking.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided that all payments of funds in respect of
the Subordinated Notes held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such accounts shall
be designated by the Regular Trustees; provided that the Property Trustee shall
designate the signatories for the Property Trustee Account.
SECTION 11.4. Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
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as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustee shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to such
Holder to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to such Holder. In the event of
any claim over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1. Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two
Regular Trustees, a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property Trustee;
and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
(b) No amendment shall be made, and any purported amendment shall be
void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from each of the
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Trust and the Sponsor and an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which affects
the rights, powers, duties, obligations or immunities of the Property
Trustee, the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of the
Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified
for purposes of United States federal income taxation as a grantor
trust;
(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company Act.
(c) If the Trust has any Securities outstanding, any amendment that
would adversely affect the rights, privileges or preferences of any Holder of
such Securities may be effected only with such additional requirements as may be
set forth in the terms of such Securities.
(d) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders of the Securities.
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(e) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities.
(f) The rights of the holders of the Common Securities under Article
V to increase or decrease the number of, and appoint and remove, Trustees shall
not be amended without the consent of the Holders of a Majority in liquidation
amount of the Common Securities.
(g) Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor;
(iv) in the event the Trust is deemed not to be an Investment
Company solely by reason of Rule 3a-7, conform to any change in Rule 3a-7
or written change in interpretation or application of Rule 3a-7 by any
legislative body, court, government agency or regulatory authority which
amendment does not have a material adverse effect on the rights,
preferences or privileges of the Holders; and
(v) cause the Trust to continue to be classified for purposes
of United States federal income taxation as a grantor trust; provided that
such amendment does not have a material adverse effect on the rights,
preferences or privileges of the Holders.
SECTION 12.2. Meetings of the Holders; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call
a meeting of the Holders of such class if directed to do so by the Holders of at
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least 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders wish to call a meeting and indicating
the general or specific purpose for which the meeting is to be called. Any
Holders calling a meeting shall specify in writing the Security Certificates
held by the Holders exercising the right to call a meeting and only those
Securities specified shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been
met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of any
class of Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at least 7 days and
not more than 60 days before the date of such meeting. Whenever a vote,
consent or approval of Holders is permitted or required under this
Declaration or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading, such vote, consent or
approval may be given at a meeting of such Holders. Any action that may be
taken at a meeting of Holders may be taken without a meeting if a consent
in writing setting forth the action so taken is signed by Holders owning
not less than the minimum amount of Securities in liquidation amount that
would be necessary to authorize or take such action at a meeting at which
all Holders of Securities having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a meeting shall be
given to the Holders of Securities entitled to vote who have not consented
in writing. The Regular Trustees may specify that any written consent
submitted to Holders for the purpose of taking any action without a meeting
shall be returned to the Trust within the time specified by the Regular
Trustees;
(ii) each Holder may authorize any Person to act for it by proxy
on all matters in which such Holder is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting. No
proxy shall be valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Holder executing it. Except as otherwise
provided herein, all matters relating to the giving, voting or validity of
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proxies shall be governed by the General Corporation Law of the State of
Delaware relating to proxies, and judicial interpretations thereunder, as
if the Trust were a Delaware corporation and the Holders were stockholders
of a Delaware corporation;
(iii) each meeting of Holders shall be conducted by the Regular
Trustees or by such other Person that the Regular Trustees may designate;
and
(iv) unless the Business Trust Act, this Declaration, the terms
of the Securities, the Trust Indenture Act or the listing rules of any
stock exchange on which the Preferred Securities are then listed or trading
otherwise provides, the Regular Trustees, in their sole discretion, shall
establish all other provisions relating to meetings of Holders, including
notice of the time, place or purpose of any meeting at which any matter is
to be voted on by any Holders, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with respect to the
exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1. Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the successor Property Trustee's acceptance of its
appointment as Property Trustee, that:
(a) the Property Trustee is a banking corporation or association with
trust powers, duly organized, validly existing and in good standing under the
laws of a state of the United States or of the United States, with trust power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration;
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(b) the execution, delivery and performance by the Property Trustee
of the Declaration has been duly authorized by all necessary corporate action on
the part of the Property Trustee. The Declaration has been duly executed and
delivered by the Property Trustee, and it constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) the execution, delivery and performance of the Declaration by the
Property Trustee does not conflict with or constitute a breach of the charter or
by-laws of the Property Trustee; and
(d) no consent, approval or authorization of, or registration with or
notice to, any New York State or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee of the Declaration.
SECTION 13.2. Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee, that:
(a) the Delaware Trustee is a Delaware banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws of
the State of Delaware, with trust power and authority to execute and deliver,
and to carry out and perform its obligations under the terms of, the
Declaration;
(b) the Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration. The Declaration
under Delaware law constitutes a legal, valid and binding obligation of the
Delaware Trustee, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the enforcement of
such remedies is considered in a proceeding in equity or at law);
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(c) no consent, approval or authorization of, or registration with or
notice to, any Delaware State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of the Declaration;
and
(d) the Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. Notices.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders):
Coastal Finance II
c/o The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Attention: Director, Financial
Administration
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of to
the Holders):
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The Bank of New York (Delaware)
400 White Clay Center
Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
(c) if given to the Property Trustee, at the mailing address set
forth below (or such other address as the Property Trustee may give notice of to
the Holders):
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attention: Remo Reale, Assistant Vice President
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice of to the Trust):
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Attention: Director, Financial
Administration
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid.
SECTION 14.2. Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 14.3. Intention of the Parties.
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
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SECTION 14.4. Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 14.5. Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6. Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7. Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused this Declaration to be
executed as of the day and year first above written.
____________________________
Coby C. Hesse, as Trustee
____________________________
Donald H. Gullquist, as Trustee
____________________________
Austin M. O'Toole, as Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By:
----------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Property Trustee
By:
----------------------------
Name:
Title:
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THE COASTAL CORPORATION,
as Sponsor
By:
----------------------------
Name:
Title:
<PAGE>
ANNEX I
TERMS OF
% TRUST PREFERRED SECURITIES
% COMMON SECURITIES
Further to Section 7.1 of the Amended and Restated Declaration of Trust,
dated as of , (as amended from time to time, the "Declaration"), the
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Preferred Securities and the Common Securities are set out
below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such Declaration, as defined in
the Prospectus referred to below):
(1) Designation and Amount.
(a) Preferred Securities. Preferred Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust of
Million dollars ($ ) and a liquidation amount with respect to the
assets of the Trust of $25 per preferred security, are hereby designated for the
purposes of identification only as " % Trust Preferred Securities" (the
"Preferred Securities"). The Preferred Security Certificates evidencing the
Preferred Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice or to conform to the rules
of any stock exchange on which the Preferred Securities are listed.
(b) Common Securities. Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of
dollars ($ ) and a liquidation amount with respect to the assets of the
Trust of $25 per common security, are hereby designated for the purposes of
identification only as " % Common Securities" (the "Common Securities").
The Common Security Certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice.
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(2) Distributions.
(a) Distributions payable on each Security will be fixed at a rate per
annum of % (the "Coupon Rate") of the stated liquidation amount of $25 per
Security, such rate being the rate of interest payable on the Subordinated Notes
to be held by the Property Trustee. Distributions in arrears for more than one
quarter will bear interest thereon compounded quarterly at the Coupon Rate (to
the extent permitted by applicable law). The term "Distributions" as used
herein includes such cash distributions and any such interest payable unless
otherwise stated. A Distribution is payable only to the extent that payments
are made in respect of the Subordinated Notes held by the Property Trustee and
to the extent the Property Trustee has funds available therefor in the Payment
Account. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue
from the date of original issuance, and will be payable quarterly in arrears, on
, , , and of each year, commencing on
, , except as otherwise described below. The Distribution payable on
, , which will be based on a period [longer/shorter] than a full quarter,
will be in an amount of $ per Preferred Security. The Subordinated Note
Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period from time to time on the Subordinated
Notes for a period not exceeding 20 consecutive quarters (each an "Extension
Period"), provided that no Extension Period shall last beyond the date of
maturity of the Subordinated Notes. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon at the Coupon Rate
compounded quarterly during any such Extension Period. Prior to the termination
of any such Extension Period (to the extent permitted by applicable law), the
Subordinated Note Issuer may further extend such Extension Period; provided that
such Extension Period together with all previous and such further extensions
thereof may not exceed 20 consecutive quarters or last beyond the date of
maturity of the Subordinated Notes. Payments of accrued Distributions will be
payable to Holders as they appear on the books and records of the Trust on the
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first record date for the payment of Distributions after the end of the
Extension Period. Upon the termination of any Extension Period and the payment
of all amounts then due, the Subordinated Note Issuer may commence a new
Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. While the Preferred Securities remain in book-entry only form,
the relevant record dates shall be one Business Day prior to the relevant
payment dates which payment dates correspond to the interest payment dates on
the Subordinated Notes. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect of the Preferred
Securities will be made as described under the heading "Description of the
Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company" in the Prospectus Supplement, dated , (the "Prospectus
Supplement"), to the Prospectus, dated April , 1998 (the "Base Prospectus,"
and collectively with the Prospectus Supplement, the "Prospectus"), that form
part of the Registration Statement on Form S-3 of the Sponsor (in its capacity
as the Subordinated Note Issuer and the issuer of the Preferred Securities
Guarantee) and the Trust (Reg. No. 333- ). The relevant record dates for
the Common Securities shall be the same record dates as for the Preferred
Securities. If the Preferred Securities shall not continue to remain in book-
entry only form, the relevant record dates for the Preferred Securities shall
conform to the rules of any securities exchange on which such securities are
listed and, if none, shall be selected by the Regular Trustees, which dates
shall be at least one Business Day but less than 60 Business Days before the
relevant payment dates, which payment dates correspond to the interest payment
dates on the Subordinated Notes. Distributions payable on any Securities that
are not punctually paid on any Distribution payment date, as a result of the
Subordinated Note Issuer having failed to make a payment under the Subordinated
Notes, will cease to be payable to the Person in whose name such Securities are
registered on the relevant regular record date, and such defaulted Distribution
will instead be payable to the Person in whose name such Securities are
registered on the special record date or other specified date determined in
accordance with the Indenture for the making of such payment. If any date on
which Distributions are payable on the Securities is not a Business Day, then
payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
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succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
(3) Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution, winding-up
or termination of the Trust, the Holders on the date of the dissolution,
winding-up or termination, as the case may be, will be entitled to receive out
of the assets of the Trust available for distribution to Holders after
satisfaction of liabilities of creditors an amount equal to the aggregate of the
liquidation amount of $25 per Security plus accrued and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"), unless, in connection with such dissolution, winding-up or
termination, Subordinated Notes in an aggregate principal amount equal to the
aggregate liquidation amount of such Securities, with an interest rate equal to
the Coupon Rate of, and bearing accrued and unpaid interest in an amount equal
to the accrued and unpaid Distributions on, such Securities, shall be
distributed on a Pro Rata basis to the Holders of the Securities in exchange for
such Securities.
If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Securities shall be paid on a Pro Rata basis.
(4) Redemption and Distribution.
(a) Upon the repayment of the Subordinated Notes in whole or in part,
whether at maturity or upon redemption, the proceeds from such repayment shall
be simultaneously applied to redeem Securities having an aggregate liquidation
amount equal to the aggregate principal amount of the Subordinated Notes so
repaid or redeemed at a redemption price of $25 per Security plus an amount
equal to accrued and unpaid Distributions thereon at the date of the redemption,
payable in cash (the "Redemption Price"). Holders will be given not less than
30 nor more than 60 days notice of such redemption.
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(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Preferred Securities will be redeemed
Pro Rata and the procedure for redeeming Preferred Securities will be as
described in Section 4(f)(ii) below.
(c) If a Tax Event or an Investment Company Event (each as defined
below, and each a "Special Event") shall occur and be continuing, the Regular
Trustees shall, except in certain limited circumstances in relation to a Tax
Event described in this Section 4(c), dissolve the Trust and, after satisfaction
of liabilities to creditors, cause Subordinated Notes held by the Property
Trustee, having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate of,
and accrued and unpaid interest equal to accrued and unpaid Distributions on,
and having the same record date for payment, as the Securities, to be
distributed to the Holders in liquidation of such Holders' interests in the
Trust on a Pro Rata basis, within 90 days following the occurrence of such
Special Event (the "90 Day Period"); provided that, as a condition of such
dissolution and distribution, the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "No Recognition Opinion"), which opinion may rely on published
revenue rulings of the Internal Revenue Service, to the effect that the Holders
will not recognize any gain or loss for United States federal income tax
purposes as a result of the dissolution of the Trust and the distribution of
Subordinated Notes, and provided, further, that, if at the time there is
available to the Trust the opportunity to eliminate, within the 90 Day Period,
the Special Event by taking some ministerial action, such as filing a form or
making an election, or pursuing some other similar reasonable measure that has
no adverse effect on the Trust, the Subordinated Note Issuer, the Sponsor or the
Holders ("Ministerial Action"), the Trust will pursue such Ministerial Action in
lieu of dissolution.
If in the event of a Tax Event (i), after receipt of a Tax Event
Opinion (as defined hereinafter) by the Regular Trustees, the Subordinated Note
Issuer has received an opinion (a "Redemption Tax Opinion") from a nationally
recognized independent tax counsel experienced in such matters that, as a result
of a Tax Event, there is more than an insubstantial risk that the Subordinated
Note Issuer would be precluded from deducting the interest on the Subordinated
Notes for United States federal income tax purposes even if the Subordinated
Notes were distributed to the Holders in liquidation of such Holders' interests
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in the Trust as described in this Section 4(c), or (ii), after receipt of a Tax
Event Opinion, the Regular Trustees shall have been informed by such tax counsel
that a No Recognition Opinion cannot be delivered to the Trust, the Subordinated
Note Issuer shall have the right at any time, upon not less than 30 nor more
than 60 days notice, to redeem the Subordinated Notes in whole or in part for
cash within 90 days following the occurrence of such Tax Event, and, following
such redemption, Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Subordinated Notes so redeemed shall be
redeemed by the Trust at the Redemption Price on a Pro Rata basis; provided
that, if at the time there is available to the Trust the opportunity to
eliminate, within such 90 day period, the Tax Event by taking some Ministerial
Action, the Trust or the Subordinated Note Issuer will pursue such Ministerial
Action in lieu of redemption.
"Tax Event" means that the Regular Trustees shall have received an
opinion from a nationally recognized independent tax counsel experienced in such
matters (a "Tax Event Opinion") to the effect that, on or after the date of the
Prospectus Supplement, as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof or
therein or (b) any amendment to, or change in, an interpretation or application
of any such laws or regulations by any legislative body, court, governmental
agency or regulatory authority, in each case which amendment or change is
enacted, promulgated, issued or announced or which interpretation or
pronouncement is issued or announced or which action is taken, on or after the
date of the Prospectus Supplement, there is more than an insubstantial risk that
(i) the Trust is, or will be within 90 days of the date thereof, subject to
United States federal income tax with respect to interest accrued or received on
the Subordinated Notes, (ii) interest payable by the Subordinated Note Issuer to
the Trust on the Subordinated Notes is not, or within 90 days of the date
thereof will not be, deductible, in whole or in part, by the Subordinated Note
Issuer for United States federal income tax purposes or (iii) the Trust is, or
will be within 90 days of the date thereof, subject to more than a de minimis
amount of taxes, duties or other governmental charges.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion from a nationally recognized independent counsel experienced
in practice under the Investment Company Act that, as a result of the occurrence
of a change in law or regulation or a written change in interpretation or
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application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), there is a more
than an insubstantial risk that the Trust is or will be considered an Investment
Company which is required to be registered under the Investment Company Act,
which Change in 1940 Act Law becomes effective on or after the date of the
Prospectus Supplement.
On and from the date fixed by the Regular Trustees for any
distribution of Subordinated Notes and dissolution of the Trust: (i) the
Securities will no longer be deemed to be outstanding and (ii) DTC (the
"Depository") or its nominee (or any successor Clearing Agency or its nominee),
as the record Holder of the Preferred Securities, will receive a registered
global certificate or certificates representing the Subordinated Notes to be
delivered upon such distribution and any certificates representing Securities,
except for certificates representing Preferred Securities held by the Depository
or its nominee (or any successor Clearing Agency or its nominee), will be deemed
to represent beneficial interests in the Subordinated Notes having an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on such Securities until such
certificates are surrendered or presented to the Subordinated Note Issuer or its
agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding Securities
unless all accrued and unpaid Distributions have been paid on all Securities for
all quarterly Distribution periods terminating on or before the date of
redemption.
(e) If the Subordinated Notes are distributed to holders of the
Securities, pursuant to the terms of the Indenture the Subordinated Note Issuer
will use its best efforts to have the Subordinated Notes listed on the New York
Stock Exchange, Inc. or on such other national securities exchange or with The
Nasdaq Stock Market or such other organization as the Preferred Securities were
listed immediately prior to the distribution of the Subordinated Notes.
(f) The following provisions shall apply to any call for redemption of
Securities or any distribution of Subordinated Notes to Holders:
(i) Notice of any redemption of, or notice of distribution of
Subordinated Notes in exchange for, Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities to
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be redeemed or exchanged not fewer than 30 nor more than 60 days before the
date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Subordinated
Notes. For purposes of the calculation of the date of redemption or
exchange and the dates on which notices are given pursuant to this Section
4(f)(i), a Redemption/Distribution Notice shall be deemed to be given on
the day such notice is first mailed by first-class mail, postage prepaid,
to Holders. Each Redemption/Distribution Notice shall be addressed to each
Holder at the address of such Holder appearing in the books and records of
the Trust. No defect in the Redemption/Distribution Notice or in the
mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any
other Holder.
(ii) In the event that fewer than all the outstanding Securities
are to be redeemed, the Securities to be redeemed shall be redeemed Pro
Rata from each Holder of Securities, it being understood that in respect of
Preferred Securities registered in the name of and held of record by the
Depository or its nominee (or any successor Clearing Agency or its
nominee), the distribution of the proceeds of such redemption will be made
to each Clearing Agency Participant (or Person on whose behalf such
Clearing Agency or nominee holds such securities) by lot in accordance with
the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Subordinated Notes are redeemed as set out in this Section 4 (which notice
will be irrevocable), then (A) while the Preferred Securities are in book-
entry only form, with respect to the Preferred Securities, by 12:00 noon,
New York City time, on the redemption date, the Property Trustee will
deposit irrevocably with the Depository or its nominee (or successor
Clearing Agency or its nominee) immediately available funds sufficient to
pay the applicable Redemption Price with respect to the Preferred
Securities and will give the Depository irrevocable instructions and
authority to pay the Redemption Price to the Holders of the Preferred
Securities; provided that the Subordinated Note Issuer has deposited with
the Property Trustee a sufficient amount of cash in connection with the
related redemption or maturity of the Subordinated Notes by 10:00 a.m., New
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York City time, on the redemption date, and (B) with respect to Preferred
Securities issued in definitive form and Common Securities, the Property
Trustee will pay the relevant Redemption Price to the Holders of such
Securities by check mailed to the address of the relevant Holder appearing
on the books and records of the Trust on the redemption date; provided that
the Subordinated Note Issuer has deposited with the Property Trustee a
sufficient amount of cash in connection with the related redemption or
maturity of the Subordinated Notes, prior to such mailing. If a
Redemption/Distribution Notice shall have been given and funds deposited
with the Property Trustee on or before the redemption date as required,
then immediately prior to the close of business on the redemption date
Distributions will cease to accrue on the Securities so called for
redemption and all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such Securities
to receive the Redemption Price, but without interest on such Redemption
Price. Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Securities that have
been so called for redemption. If any date fixed for redemption of
Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on such date fixed
for redemption. If payment of the Redemption Price in respect of any
Securities is improperly withheld or refused and not paid on the redemption
date either by the Property Trustee or by the Sponsor as guarantor pursuant
to the relevant Securities Guarantee, Distributions on such Securities will
continue to accrue from the original redemption date to the actual date of
payment, in which case the actual payment date will be considered the date
fixed for redemption for purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the Preferred
Securities, the Depository or its nominee (or any successor Clearing Agency
or its nominee) if the Global Certificates have been issued or, if
Definitive Preferred Security Certificates have been issued, to the Holders
thereof at their addresses appearing on the books and records of the Trust,
and (B) in respect of the Common Securities to the Holder thereof.
<PAGE>
(v) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), the Sponsor or
any of its subsidiaries may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market or by
private agreement.
(5) Voting Rights - Preferred Securities.
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Preferred Securities
will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the
Holders of a Majority in liquidation amount of the Preferred Securities, voting
separately as a class, may direct the time, method, and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under the Declaration,
including (i) directing the time, method, place of conducting any proceeding for
any remedy available to the Subordinated Note Trustee, or exercising any trust
or power conferred on the Subordinated Note Trustee with respect to the
Subordinated Notes, (ii) waive any past default and its consequences that is
waivable under Section 6.04 of the Indenture, or (iii) exercise any right to
rescind or annul a declaration that the principal of all the Subordinated Notes
shall be due and payable; provided that where a consent under the Indenture
would require the consent or act of the Holders of greater than a majority in
principal amount of Subordinated Notes affected thereby (a "Super Majority"),
the Property Trustee may only give such consent or take such action at the
direction of the Holders of at least the proportion in liquidation amount of the
Preferred Securities outstanding which the relevant Super Majority represents of
the aggregate principal amount of the Subordinated Notes outstanding. The
Property Trustee shall not revoke any action previously authorized or approved
by a vote of the Holders of the Preferred Securities. Other than with respect
to directing the time, method and place of conducting any remedy available to
the Property Trustee or the Subordinated Note Trustee as set forth above, the
Property Trustee shall not take any action in accordance with the directions of
the Holders of the Preferred Securities under this paragraph unless the Property
Trustee has received an opinion of tax counsel to the effect that for the
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purposes of United States federal income tax the Trust will not be classified as
other than a grantor trust on account of such action. If the Property Trustee
fails to enforce its rights under the Declaration, any Holder of Preferred
Securities may, to the extent permitted by applicable law, institute a legal
proceeding directly against any Person to enforce the Property Trustee's rights
under the Declaration without first instituting a legal proceeding against the
Property Trustee or any other Person. If an Event of Default occurs that
results from the failure of the Subordinated Note Issuer to pay principal of or
interest on the Subordinated Notes when due, then during the continuance of such
Event of Default each Holder of Preferred Securities may directly institute
proceedings against the Subordinated Note Issuer to obtain payment to such
Holder of an amount equal to the principal or interest so defaulted on with
respect to Subordinated Notes in a principal amount equal to the aggregate
liquidation amount of the Preferred Securities owned by such Holder. No Holder
of Preferred Securities will be entitled to exercise directly against the
Subordinated Note Issuer any other remedy available to the Property Trustee, as
the record holder of the Subordinated Notes, unless the Property Trustee first
fails to exercise such remedy.
Any approval or direction of Holders of Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Preferred Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or to
distribute the Subordinated Notes in accordance with the Declaration and the
terms of the Securities.
Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Sponsor or any Affiliate of the
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Sponsor shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
(6) Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), (c) and 7 or as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after all
Events of Default with respect to the Preferred Securities have been cured,
waived, or otherwise eliminated and subject to the requirements of the
penultimate sentence of this paragraph, the Holders of a Majority in liquidation
amount of the Common Securities, voting separately as a class, may direct the
time, method, and place of conducting any proceeding for any remedy available to
the Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under the Declaration, including (i) directing the time,
method, place of conducting any proceeding for any remedy available to the
Subordinated Note Trustee, or exercising any trust or power conferred on the
Subordinated Note Trustee with respect to the Subordinated Notes, (ii) waive any
past default and its consequences that is waivable under Section 6.04 of the
Indenture, or (iii) exercise any right to rescind or annul a declaration that
the principal of all the Subordinated Notes shall be due and payable; provided
that where a consent or action under the Indenture would require the consent or
act of the Holders of a Super Majority, the Property Trustee may only give such
consent or take such action at the direction of the Holders of at least the
proportion in liquidation amount of the Common Securities outstanding which the
relevant Super Majority represents of the aggregate principal amount of the
Subordinated Notes outstanding. Notwithstanding any vote pursuant to this
Section 6(c), the Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Preferred Securities.
Other than with respect to directing the time, method and place of conducting
any remedy available to the Property Trustee or the Subordinated Note Trustee as
set forth above, the Property Trustee shall not take any action in accordance
with the directions of the Holders of the Common Securities under this paragraph
unless the Property Trustee has received an opinion of tax counsel to the effect
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that for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action. If the
Property Trustee fails to enforce its rights under the Declaration, any Holder
of Common Securities, to the extent permitted by applicable law, may institute a
legal proceeding directly against any Person to enforce the Property Trustee's
rights under the Declaration, without first instituting a legal proceeding
against the Property Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which Holders of Common Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to
each Holder of record of Common Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Subordinated Notes in accordance with the Declaration and the terms of the
Securities.
(7) Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than under the
circumstances described in Section 8.1 of the Declaration, then the Holders of
outstanding Securities will be entitled to vote on such amendment or proposal
(but not on any other amendment or proposal) and such amendment or proposal
shall not be effective except with the approval of the Holders of at least a
Majority in liquidation amount of the Securities, voting together as a single
class; provided that, if any amendment or proposal referred to in clause (i)
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above would adversely affect only the Preferred Securities or only the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities.
(b) In the event the consent of the Property Trustee as the holder of
the Subordinated Notes is required under the Indenture with respect to any
amendment or modification of the Indenture or the Subordinated Notes, the
Property Trustee shall request the direction of the Holders of the Securities
with respect to such amendment or modification and shall vote with respect to
such amendment or modification as directed by a Majority in liquidation amount
of the Securities voting together as a single class; provided that where a
consent under the Indenture would require the consent of the holders of a Super
Majority, the Property Trustee may only give such consent at the direction of
the Holders of at least the proportion in liquidation amount of the Securities
which the relevant Super Majority represents of the aggregate principal amount
of the Subordinated Notes outstanding; provided, further, that the Property
Trustee shall not take any action in accordance with the directions of the
Holders of the Securities under this Section 7(b) unless the Property Trustee
has received an opinion of tax counsel to the effect that for the purposes of
United States federal income tax the Trust will not be classified as other than
a grantor trust on account of such action.
(8) Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration in respect of the Preferred Securities has occurred and is
continuing, in which case any funds available to make such payment shall be paid
first to each Holder of the Preferred Securities pro rata according to the
aggregate liquidation amount of Preferred Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Preferred Securities
outstanding, and only after satisfaction of all amounts owed to the Holders of
the Preferred Securities, then to each Holder of Common Securities pro rata
according to the aggregate liquidation amount of Common Securities held by the
I-14
<PAGE>
relevant Holder relative to the aggregate liquidation amount of all Common
Securities outstanding.
(9) Ranking.
The Preferred Securities rank pari passu, and payment thereon shall be
made Pro Rata, with the Common Securities except that, where an Event of Default
occurs and is continuing under the Indenture in respect of the Subordinated
Notes held by the Property Trustee, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights to payment of the
Holders of the Preferred Securities.
(10) Listing.
The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed for quotation on the New York Stock Exchange,
Inc.
(11) Acceptance of Securities Guarantee and
Indenture.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, and to the
provisions of the Indenture, including the subordination provisions of each
document.
(12) No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
(13) Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee or the Common Securities Guarantee (as may be appropriate)
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
I-15
<PAGE>
(14) Agreement of Holders and Preferred Security Beneficial Owners.
Every Person who becomes a Holder or a Preferred Security Beneficial
Owner shall be deemed to have agreed to treat the Subordinated Notes as
indebtedness for United States federal income tax purposes and the Preferred
Securities as evidence of an indirect beneficial ownership in the Subordinated
Notes.
I-16
<PAGE>
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT - This
Preferred Security is a Global Certificate within the meaning of the Declaration
hereinafter referred to and is registered in the name of The Depository Trust
Company (the "Depositary") or a nominee of the Depositary. This Preferred
Security is exchangeable for Preferred Securities registered in the name of a
person other than the Depositary or its nominee only in the limited
circumstances described in the Declaration and no transfer of this Preferred
Security (other than a transfer of this Preferred Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered except in
limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.]
Certificate Number: Number of Preferred Securities
CUSIP NO.
Certificate Evidencing Preferred Securities
of
COASTAL FINANCE II
% Trust Preferred Securities
(liquidation amount $25 per Preferred Security)
Coastal Finance II, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that ______________
A1-1
<PAGE>
(the "Holder") is the registered owner of _______ preferred securities of the
Trust representing an undivided beneficial interest in the assets of the Trust
designated the % Trust Preferred Securities (liquidation amount $25 per
Preferred Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth in, and this certificate and the Preferred Securities represented hereby
are issued and shall in all respects be subject to the terms and provisions of,
the Amended and Restated Declaration of Trust of the Trust dated as of
, , as the same may be amended from time to time (the "Declaration")
including the designation of the terms of Preferred Securities as set forth in
Annex I to the Declaration. The Preferred Securities and the Common Securities
(as defined in the Declaration) issued by the Trust pursuant to the Declaration
represent undivided beneficial interests in the assets of the Trust, including
the Subordinated Notes (as defined in the Declaration) issued by The Coastal
Corporation, a Delaware corporation ("Coastal"), to the Trust pursuant to the
Indenture referred to in the Declaration. The Holder is entitled to the
benefits of the Preferred Securities Guarantee Agreement of Coastal dated as of
, (the "Guarantee") to the extent provided therein. The Trust will furnish
a copy of the Declaration, the Guarantee and the Indenture to the Holder without
charge upon written request to the Trust at its principal place of business or
registered office.
The Holder of this certificate, by accepting this certificate, is
deemed to have: (i) agreed to the terms of the Indenture and the Subordinated
Notes, including that the Subordinated Notes are subordinate and junior in right
to payment to all Senior Indebtedness (as defined in the Indenture) as and to
the extent provided in the Indenture; (ii) agreed to the terms of the Guarantee,
including that the Guarantee is (x) subordinate and junior in right to payment
to all other liabilities of Coastal, including the Subordinated Notes, except
those made pari passu or subordinated by their terms, (y) pari passu with the
most senior preferred or preference stock now or hereafter issued by Coastal and
with any guarantee now or hereafter entered into by Coastal in respect of any
preferred or preference stock of any affiliate of Coastal and (z) prior to
Coastal's common stock; and (iii) agreed to treat the Subordinated Notes as
indebtedness for United States federal income tax purposes and the Preferred
Securities as evidence of an indirect beneficial ownership of the Subordinated
Notes.
A1-2
<PAGE>
This certificate and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A1-3
<PAGE>
IN WITNESS WHEREOF, the undersigned Regular Trustees of the Trust have
executed this certificate for and on behalf of the Trust.
Dated:
COASTAL FINANCE II
By:
------------------------------
Regular Trustee
By:
------------------------------
Regular Trustee
By:
------------------------------
Regular Trustee
COUNTERSIGNED AND REGISTERED:
THE BANK OF NEW YORK
(New York, New York)
Transfer Agent and Registrar
By:
------------------------------
Authorized Signature
A1-4
<PAGE>
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM --as tenants in common UNIF GIFT ACT ____ Custodian _____
TEN ENT --as tenants by the entireties (Cust) (Minor)
JT TEN --as joint tenants with Under Uniform Gifts to Minors
right of survivorship and Act _________
not as tenants in common (State)
Additional abbreviations may also be used though not in the above
list.
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFICATION NUMBER
Please print or typewrite name(s) and address(es)
including postal zip code(s), of assignee(s)
_______ of the Preferred Securities represented by this
Certificate and does hereby irrevocably appoint
attorney to transfer such Preferred Securities on the books of the Trust.
The attorney may substitute another to act for him or her.
Date: _______________________
A1-5
<PAGE>
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
*IMPORTANT READ CAREFULLY!
The signature(s) to this assignment must correspond with the name(s) as written
upon the face of the certificate in every particular without alteration,
enlargement or change whatsoever. The signature(s) of the person(s) executing
this power must be guaranteed by an eligible guarantor institution which, at the
time of issuing the guarantee, is a member of, or a participant in the medallion
signature guarantee program recognized by the Securities Transfer Association.
A1-6
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number: Common Securities
Certificate Evidencing Common Securities
of
COASTAL FINANCE II
% Common Securities
(liquidation amount $25 per Common Security)
Coastal Finance II, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that _________________
(the "Holder") is the registered owner of common securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the % Common Securities (liquidation amount $25 per Common
Security) (the "Common Securities"). The Common Securities are transferable on
the books and records of the Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for
transfer. The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of , , as
the same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Common Securities as set forth in Annex I to the
Declaration. Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits
of the Common Securities Guarantee to the extent provided therein. The Sponsor
will provide a copy of the Declaration, the Common Securities Guarantee and the
Indenture to the Holder without charge upon written request to the Sponsor at
its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
A2-1
<PAGE>
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Subordinated Notes as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Subordinated
Notes.
This certificate and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
IN WITNESS WHEREOF, the undersigned Regular Trustees of the Trust have
executed this certificate this day of , .
COASTAL FINANCE II
By:
--------------------------
Regular Trustee
By:
--------------------------
Regular Trustee
By:
--------------------------
Regular Trustee
A2-2
<PAGE>
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers this Common Security Certificate unto:
(Insert assignee's name and social security or tax identifica-tion number)
(Insert Address and zip code of assignee)
_______ of the Common Securities represented by this
Certificate and does hereby irrevocably appoint
attorney to transfer these Common Securities on the books of the Trust. The
attorney may substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
A2-3
<PAGE>
EXHIBIT B
SPECIMEN OF SUBORDINATED NOTE
C-1
<PAGE>
EXHIBIT 4.15
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
WARRANT AGREEMENT
BETWEEN
THE COASTAL CORPORATION
LOGO AND
, AS WARRANT AGENT
--------------------
DATED AS OF , 199
--------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Section 1. Appointment of Warrant Agent................................ 1
Section 2. Warrant Certificates........................................ 1
Section 3. Execution of Warrant Certificates........................... 1
Section 4. Registration and Countersignature........................... 2
Section 5. Registration of Transfers and Exchanges..................... 2
(a) Transfer and Exchange of Warrants........................... 2
Obligations with Respect to Transfers and Exchanges of
(b) Warrants.................................................... 3
Section 6. Exercise of Warrants........................................ 3
Section 7. Payment of Taxes............................................ 5
Section 8. Mutilated or Missing Warrant Certificates................... 5
Section 9. Reservation of Warrant Shares............................... 5
Section 10. Obtaining Stock Exchange Listings........................... 6
Section 11. Warrant Price: Adjustments.................................. 7
(a) Adjustment for Change in Common Stock....................... 7
(b) Adjustment for Rights and Warrants.......................... 7
(c) Adjustment for Certain Distributions........................ 8
(d) Certain Exercise Price and Exercise Rate Adjustments........ 9
(e) Voluntary Adjustment........................................ 9
(f) Reorganization of the Company............................... 9
(g) When Issuance or Payment May Be Deferred.................... 10
(h) When Adjustment May Be Deferred............................. 10
(i) Specificity of Adjustment................................... 11
(j) Company Determination Final................................. 11
(k) Adjustment for Tax Purposes................................. 11
(l) Adjustments to Par Value.................................... 11
(m) No Other Adjustment for Dividends........................... 11
(n) Multiple Adjustments........................................ 11
(o) Definitions................................................. 11
(p) Warrant Agent's Disclaimer.................................. 12
Section 12. Fractional Interests........................................ 12
Section 13. Notices to Warrant Holders.................................. 13
Section 14. Reports..................................................... 14
Section 15. Merger, Consolidation or Change of Name of Warrant Agent.... 14
Section 16. Warrant Agent............................................... 15
Section 17. Change of Warrant Agent..................................... 18
Section 18. Notices to the Company and Warrant Agent.................... 19
Section 19. Supplements and Amendments.................................. 19
Section 20. Successors.................................................. 20
Section 21. Termination................................................. 20
Section 22. Governing Law............................................... 20
Section 23. Benefits of This Agreement.................................. 20
Section 24. Severability................................................ 21
Section 25. Counterparts................................................ 21
Section 26. Headings.................................................... 21
Exhibit A--Form of Warrant Certificate................................ A-1
</TABLE>
i
<PAGE>
WARRANT AGREEMENT dated as of , 199 between The Coastal Corporation,
a Delaware corporation (the "Company"), and , as warrant agent (the "War-
rant Agent").
WHEREAS, the Company proposes to issue warrants (the "Warrants") to purchase
an aggregate of shares (the "Warrant Shares") of common stock, par value
$.33 1/3 per share (the "Common Stock"), of the Company at an initial cash
purchase price of $ per share at any time [after and] prior to P.M.
Houston time on (the "Expiration Date");
WHEREAS, the Company desires the Warrant Agent to act on behalf of the Com-
pany, and the Warrant Agent is willing so to act, in connection with the issu-
ance of Warrant Certificates (as defined below) and other matters as provided
herein; (as defined below) and other matters as provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
Section 1. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with the terms and
conditions set forth in this Agreement, and the Warrant Agent hereby accepts
such appointment.
Section 2. Warrant Certificates. (a) The Warrants will be issued in defini-
tive form substantially in the form of Exhibit A. Any certificates (the "War-
rant Certificates") evidencing the Warrants to be delivered pursuant to this
Agreement shall be substantially in the form set forth in Exhibit A attached
hereto.
Section 3. Execution of Warrant Certificates. Warrant Certificates shall be
signed on behalf of the Company by its Chairman of the Board, Chief Executive
Officer, Chief Operating Officer or its President or a Vice President or the
Chief Financial Officer (each an "Executing Officer"). Each such signature
upon the Warrant Certificates may be in the form of a facsimile signature of
the Executing Officer and may be imprinted or otherwise reproduced on the War-
rant Certificates.
In case any Executing Officer of the Company who shall have signed any of
the Warrant Certificates shall cease to be an Executing Officer before the
Warrant Certificates so signed shall have been countersigned by the Warrant
Agent, or disposed of by the Company, such Warrant Certificates nevertheless
<PAGE>
may be countersigned and delivered or disposed of as though such person had
not ceased to be an Executing Officer of the Company; and any Warrant Certifi-
cate may be signed on behalf of the Company by any person who, at the actual
date of the execution of such Warrant Certificate, shall be a proper Executing
Officer of the Company to sign such Warrant Certificate, although at the date
of the execution of this Warrant Agreement any such person was not such an
officer.
Section 4. Registration and Countersignature. The Warrant Agent, on behalf
of the Company, shall number and register the Warrant Certificates in a regis-
ter (the "Warrant Register") as they are issued by the Company. Warrant Cer-
tificates shall be manually countersigned by an authorized officer of the War-
rant Agent and shall not be valid for any purpose unless so countersigned.
Warrant Certificates shall be dated the date of such countersignature. The
Warrant Agent shall, upon written instructions of the Chairman of the Board,
Chief Executive Officer, Chief Operating Officer, President or Vice President
or Chief Financial Officer of the Company, initially countersign, issue and
deliver Warrants entitling the holders thereof to purchase not more than the
number of Warrant Shares referred to above in the first recital hereof and
shall countersign and deliver Warrants as otherwise provided in this Agree-
ment.
The Company and the Warrant Agent may deem and treat the registered hold-
er(s) of the Warrant Certificates as the absolute owner(s) thereof (notwith-
standing any notation of ownership or other writing thereon made by anyone),
for all purposes, and neither the Company nor the Warrant Agent shall be af-
fected by any notice to the contrary.
Section 5. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Warrants. When Warrants are presented to the
Warrant Agent with a request:
(i) to register the transfer of the Warrants; or
(ii) to exchange such Warrants for an equal number of Warrants of other
authorized denominations, the Warrant Agent shall register the transfer or
make the exchange as requested if the requirements for such transactions
are met; provided, however, that the Warrants presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied
by a written instruction of transfer in form satisfactory to the Company
and the Warrant Agent, duly executed by the holder thereof or by his at-
torney, duly authorized in writing.
2
<PAGE>
(b) Obligations with Respect to Transfers and Exchanges of Warrants.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Warrant Agent is hereby authorized to countersign,
in accordance with the provisions of Section 4 and this Section 5, War-
rants as required pursuant to the provisions of this Section 5.
(ii) All Warrants issued upon any registration of transfer or exchange
of Warrants shall be the valid obligations of the Company, entitled to the
same benefits under this Warrant Agreement as the Warrants surrendered
upon such registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any War-
rant, the Warrant Agent and the Company may deem and treat the person in
whose name any Warrant is registered as the absolute owner of such War-
rant, and neither the Warrant Agent nor the Company shall be affected by
notice to the contrary.
(iv) No service charge shall be made to a holder for any registration of
transfer or exchange.
Section 6. Exercise of Warrants.
(a) Upon the terms and subject to the conditions set forth in this Agreement
and the Warrant Certificates, each Warrant holder shall have the right, which
may be exercised at any time [commencing on , 199 and] until
P.M., Houston time, on , to receive from the Company the number of
fully paid and nonassessable Warrant Shares which the holder may at the time
be entitled to receive on exercise of such Warrants and payment of the Exer-
cise Price (as defined herein) then in effect for such Warrant Shares. Each
Warrant not exercised prior to P.M., New York time, on shall expire
and all rights thereunder and all rights in respect thereof under this Agree-
ment and the Warrant Certificates shall cease as of such time.
(b) A Warrant may be exercised upon surrender to the Company at the princi-
pal office of the Warrant Agent of the Warrant Certificate or Certificates ev-
idencing the Warrants to be exercised with the form of election to purchase on
the reverse thereof duly completed and signed (which signature shall be guar-
anteed by an "eligible guarantor" as defined in the regulations promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
and upon payment to the Warrant Agent of the exercise price of $ per share
of Common Stock, subject to adjustment as set forth herein (the "Exercise
Price"), plus transfer taxes (if applicable pursuant to Section 7) for each of
the Warrant Shares in respect of which such Warrants are then exercised. Pay-
ment of the
3
<PAGE>
aggregate Exercise Price shall be made (i) in cash or (ii) by certified or of-
ficial bank check payable to the order of the Company. All funds received upon
the exercise of the Warrants shall be delivered or deposited by the Warrant
Agent as instructed in writing by the Company.
(c) Subject to the provisions of Section 7 hereof, upon such surrender of
Warrants and payment of the Exercise Price, the Company shall issue and cause
to be delivered with all reasonable dispatch to or upon the written order of
the Warrant holder and in such name or names as the Warrant holder may desig-
nate, a certificate or certificates for the number of full Warrant Shares is-
suable upon the exercise of such Warrants together with cash as provided in
Section 12; provided, however, that if any consolidation, merger, transfer or
lease of assets is proposed to be effected by the Company as described in sub-
section (f) of Section 11 hereof, or a tender offer or an exchange offer for
shares of Common Stock of the Company shall be made, upon such surrender of
Warrants and payment of the Exercise Price as aforesaid, the Company shall, as
soon as possible, but in any event not later than three Business Days (as de-
fined in subsection (o) of Section 11) thereafter, issue and cause to be de-
livered the full number of Warrant Shares issuable upon the exercise of such
Warrants in the manner described in this sentence and/or any other considera-
tion to be issued to such Warrant holder pursuant to subsection (f) of Section
11 hereof, together with cash as provided in Section 12. Such certificate or
certificates shall be deemed to have been issued and any person so designated
to be named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrants and payment of
the Exercise Price.
(d) The Warrants shall be exercisable, at the election of the registered
holders thereof, either in full or from time to time in part, and, in the
event that a certificate evidencing Warrants is exercised in respect of fewer
than all of the Warrant Shares issuable on such exercise at any time prior to
the date of expiration of the Warrants, a new certificate evidencing the re-
maining Warrant or Warrants will be issued and the Warrant Agent is hereby ir-
revocably authorized to countersign and to deliver the required new Warrant
Certificate or Certificates pursuant to the provisions of this Section and of
Section 5 hereof, and the Company, whenever required by the Warrant Agent,
will supply the Warrant Agent with Warrant Certificates duly executed on be-
half of the Company for such purpose.
(e) All Warrant Certificates surrendered upon exercise of Warrants shall be
cancelled by the Warrant Agent and delivered to and disposed of by the Com-
4
<PAGE>
pany in accordance with applicable law. The Warrant Agent shall account
promptly to the Company with respect to Warrants exercised and concurrently
pay to the Company payments, in whatever form permitted by this Warrant Agree-
ment, received by the Warrant Agent for the purchase of the Warrant Shares
through the exercise of such Warrants. The Warrant Agent shall keep copies of
this Agreement and any notices given or received hereunder available for in-
spection by the registered holders during normal business hours at its office.
The Company shall supply the Warrant Agent from time to time with such numbers
of copies of the Agreement as the Warrant Agent may request.
Section 7. Payment of Taxes. The Company will pay all documentary stamp
taxes attributable to the initial issuance of Warrant Shares upon the exercise
of Warrants; provided, however, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in
the issue of any Warrant Certificates or any certificates for Warrant Shares
in a name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be re-
quired to issue or deliver such Warrant Certificates or certificates for War-
rant Shares unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
Section 8. Mutilated or Missing Warrant Certificates. In case any of the
Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Com-
pany may in its discretion issue and the Warrant Agent may countersign, in ex-
change and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing
an equivalent number of Warrants, but only upon receipt of evidence reasonably
satisfactory to the Company and the Warrant Agent of such loss, theft or de-
struction of such Warrant Certificate and indemnity, if requested, satisfac-
tory to each of them. Applicants for such substitute Warrant Certificates
shall also comply with such other reasonable regulations and pay such other
reasonable charges as the Company or the Warrant Agent may prescribe.
Section 9. Reservation of Warrant Shares. The Company will at all times re-
serve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock or its authorized and issued Common
Stock held in its treasury, for the purpose of enabling it to satisfy any
5
<PAGE>
obligation to issue Warrant Shares upon exercise of Warrants, the maximum num-
ber of shares of Common Stock (as adjusted from time to time pursuant to Sec-
tion 11) which may then be deliverable upon the exercise of all outstanding
Warrants.
The Company or, if appointed, the transfer agent for the Common Stock (the
"Transfer Agent") and every subsequent transfer agent for any shares of the
Company's Capital Stock (as defined in subsection (o) of Section 11) issuable
upon the exercise of any of the rights of purchase aforesaid will be irrevoca-
bly authorized and directed at all times to reserve such number of authorized
shares as shall be required for such purpose. The Company will keep a copy of
this Agreement on file with the Transfer Agent and with every subsequent
transfer agent for any shares of the Company's Capital Stock issuable upon the
exercise of the rights of purchase represented by the Warrants. The Warrant
Agent is hereby irrevocably authorized to requisition from time to time from
such Transfer Agent (including the Company if it is acting as Transfer Agent)
the stock certificates required to honor outstanding Warrants upon exercise
thereof in accordance with the terms of this Agreement. The Company will sup-
ply such Transfer Agent with duly executed certificates for such purposes and
will provide or otherwise make available any cash which may be payable as pro-
vided in Section 12. The Company will furnish such Transfer Agent a copy of
all notices of adjustments and certificates related thereto, transmitted to
each holder pursuant to Section 14 hereof.
The Company covenants that all Warrant Shares which may be issued upon exer-
cise of Warrants will, upon payment of the Exercise Price therefore and the
issuance thereof, be fully paid, nonassessable, free of preemptive rights,
free from all taxes (subject to Section 7 hereof) and free from all liens,
charges and security interests, created by or through the Company, with re-
spect to the issue thereof.
Section 10. Obtaining Stock Exchange Listings. The Company will from time to
time take all action which may be necessary so that the Warrant Shares, imme-
diately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets within the United States of
America, if any, on which other shares of Common Stock are then listed or
quoted. Upon the listing of such Warrant Shares, the Company shall notify the
Warrant Agent in writing.
6
<PAGE>
Section 11. Warrant Price; Adjustments. The Exercise Price and the number of
Warrant Shares issuable upon the exercise of each Warrant (the "Exercise
Rate") are subject to adjustment from time to time as set forth in this Sec-
tion 11.
(a) Adjustment for Change in Common Stock. In case the Company shall at any
time after the date of this Agreement (i) pay a dividend, or make a distribu-
tion on, the Common Stock which is payable in shares of its Common Stock, (ii)
subdivide or reclassify its outstanding shares of Common Stock into a greater
number of securities (including shares of Common Stock), or (iii) combine or
reclassify outstanding shares of Common Stock into a smaller number of shares
(including shares of Common Stock), the Exercise Rate immediately prior to the
occurrence of such event shall be adjusted so that the holder of each Warrant
shall be entitled to receive upon payment of the Exercise Price the aggregate
number of shares of Common Stock of the Company which, if such Warrant had
been exercised immediately prior to the occurence of such event, such holder
would have owned or have been entitled to receive immediately after the occur-
rence of such event. An adjustment pursuant to this subparagraph (a) shall be-
come effective immediately after the record date in the case of a dividend and
shall become effective immediately after the effective date in the case of a
subdivision or combination. If, as a result of an adjustment made pursuant to
this subparagraph (a), the holder of any Warrant thereafter exercised shall
become entitled to receive shares of two or more classes of Capital Stock of
the Company, the Board of Directors of the Company (whose determination shall
be conclusive) shall determine the allocation between or among shares of such
classes of Capital Stock.
In the event that at any time, as a result of an adjustment made pursuant to
this subparagraph (a), the holder of any Warrant thereafter exercised shall
become entitled to receive any shares or other securities of the Company other
than shares of Common Stock, thereafter the number of such other shares so re-
ceived upon exercise of any Warrant shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Common Stock contained in this para-
graph, and other provisions of this paragraph 11(a) with respect to the Common
Stock shall apply on like terms to any such other shares or other securities.
(b) Adjustment for Rights or Warrants. In case the Company shall fix a record
date for the issuance of rights or warrants to all holders of its Common
7
<PAGE>
Stock entitling them to subscribe for or purchase Common Stock at a price per
share less than the Current Market Value per share of Common Stock (as defined
in subparagraph (o) below) at such record date, the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Shares of Common Stock outstanding on such record date plus the number of
Shares of Common Stock which the aggregate offering price of the total number
of shares so offered would purchase at such Current Market Value, and the de-
nominator of which shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional Shares of Common Stock of-
fered for subscription or purchase. Such adjustment shall be made successively
whenever such a record date is fixed, and shall become effective immediately
after such record date. In determining whether any rights or warrants entitle
the holders to subscribe for or purchase shares of Common Stock at less than
such Current Market Value, and in determining the aggregate offering price of
such shares, there shall be taken into account any consideration received by
the Company for such rights or warrants, the value of such consideration, if
other than cash, to be determined by the Board of Directors of the Company.
Common Stock owned by or held for the account of the Company or any majority
owned subsidiary shall not be deemed outstanding for the purpose of any ad-
justment required under this subparagraph (b). To the extent that shares of
Common Stock are not delivered after the expiration of such rights or war-
rants, the Exercise Price shall be readjusted to the Exercise Price which
would then be in effect had the adjustments made in respect of the issuance of
such rights or warrants been made on the basis of delivery of only the number
of shares of Common Stock actualy delivered.
(c) Adjustment for Certain Distributions. In case the Company shall fix a
record date for making a distribution to all holders of its Common Stock of
evidences of its indebtedness or assets (excluding regular quarterly or other
periodic or recurring cash dividends or distributions and cash dividends or
distributions paid from retained earnings or referred to in subparagraph (a)
above) or rights or warrants to subscribe or warrants to purchase such evi-
dences of indebtedness or assets (excluding those referred to in subparagraph
(b) above), then in each such case the Exercise Price shall be adjusted by
multiplying the Exercise Price in effect immediatley prior to such record date
by a fraction (x) the numerator of which shall be the Current Market Value (as
defined in subparagraph (o) below) per share of Common Stock on such record
date, less the then fair market value (as determined in good faith by the
Board of Directors, whose determina-
8
<PAGE>
tion shall be conclusive) of the portion of the assets or evidence of indebt-
edness so distributed or of such subscription rights or warrants applicable to
one share of the Common Stock and (y) the denominator of which shall be the
Current Market Value per share of the Common Stock on such record date. Such
adjustment shall be made successively whenever such a record date is fixed and
shall become effective immediately after such record date. Common Stock owned
by or held for the account of the Company or any majority owned subsidiary
shall not be deemed outstanding for the purpose of any adjustment required un-
der this subparagraph (c).
(d) Certain Exercise Price and Exercise Rate Adjustments. After each Exercise
Rate adjustment pursuant to subparagraph 11(a), the Exercise Price shall be
adjusted by multiplying such Exercise Price immediately prior to such adjust-
ment by a fraction of which the numerator shall be the number of shares pur-
chasable upon exercise of each Warrant immediately prior to such adjustment,
and the denominator of which shall be the number of shares purchasable immedi-
ately thereafter. After each adjustment of the Exercise Price pursuant to sub-
paragraph 11(b) or (c), the Exercise Rate shall be adjusted by multiplying
such Exercise Rate by a fraction, the numerator of which the Exercise Price
immediately after such adjustment and the denominator of which is the Exercise
Price immediately prior to such adjustment.
(e) Voluntary Adjustment. The Company from time to time may decrease the Ex-
ercise Price by any amount for any period of time if the period is at least 20
days and if the decrease is irrevocable during the period. Whenever the Exer-
cise Price is so decreased, the Company shall mail to the Warrant Agent and
each of the Warrant holders a notice of the decrease. The Company shall mail
the notice at least 15 days before the date the decreased Exercise Price takes
effect. The notice shall state the decreased Exercise Price and the period it
will be in effect.
A decrease of the Exercise Price pursuant to this subsection (e) does not
change or adjust the Exercise Price otherwise in effect for purposes of this
Section 11.
(f) Reorganization of the Company. If the Company consolidates or merges with
or into, or transfers or leases all or substantially all its assets to, any
person, upon consummation of such transaction the Warrants shall automatically
become exercisable for the kind and amount of securities, cash or other assets
which the holder of a Warrant would have owned immediately after the consoli-
dation,
9
<PAGE>
merger, transfer or lease if the holder had exercised the Warrant immediately
before the effective date of the transaction. Concurrently with the consumma-
tion of such transaction, the corporation formed by or surviving any such con-
solidation or merger if other than the Company, or the person to which such
sale or conveyance shall have been made, shall enter into a supplemental War-
rant Agreement so providing and further providing for adjustments which shall
be as nearly equivalent as may be practical to the adjustments provided for in
this Section 11. The successor to the Company shall mail to Warrant holders a
notice describing the supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise of Warrants under the
supplemental Warrant Agreement is an affiliate of the formed, surviving,
transferee or lessee corporation, that issuer shall join in the supplemental
Warrant Agreement.
If this subsection (f) applies, subsections (a), (b) and (c) of this Section
11 shall not apply.
(g) When Issuance or Payment May Be Deferred. In any case in which this Sec-
tion 11 shall require that an adjustment in the Exercise Rate and Exercie
Price be made effective as of a record date for a specified event, the Company
may elect to defer until the occurrence of such event (i) issuing to the
holder of any Warrant exercised after such record date the Warrant Shares and
other Capital Stock of the Company, if any, issuable upon such exercise over
and above the Warrant Shares and other Capital Stock of the Company, if any,
issuable upon such exercise on the basis of the Exercise Rate and Exercie
Price prior to adjustment and (ii) paying to such holder any amount in cash in
lieu of a fractional share pursuant to Section 12, provided, however, that the
Company shall deliver to such holder a due bill or other appropriate instru-
ment evidencing such holder's right to receive such additional Warrant Shares,
other Capital Stock and cash upon the occurrence of the event requiring such
adjustment.
(h) When Adjustment May be Deferred. No adjustment in the Exercise Price and
Exercise Rate shall be required unless and until the earlier of the following
shall have occurred: (x) such adjustment would require an increase or decrease
of at least 1% in the Exercise Price and Exercise Rate or (y) a period of
three years shall have elapsed from the date of the occurrence of any event
requiring any such adjustment pursuant to subparagraphs (a), (b) or (c) above.
All adjustments shall be made to the nearest one hundredth of a Share and the
nearest cent, and any adjustments which by reason of this subparagraph (f) are
not required to
10
<PAGE>
be made shall be carried forward cumulatively and taken into account in any
subsequent adjustment which (including such carry-forward) is required to be
made under this subparagraph (h).
(i) Specificity of Adjustment. Irrespective of any adjustments in the number
or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same number and
kind of shares per Warrant as are stated on the Warrants initially issuable
pursuant to this Agreement.
(j) Company Determination Final. Any determination that the Company or the
Board of Directors of the Company must make pursuant to this Section 11 will
be conclusive if made in good faith.
(k) Adjustment for Tax Purposes. The Company may make such increases in the
Exercise Price and Exercise Rate, in addition to those otherwise required by
this Section 11, as it considers to be advisable in order that any event
treated for Federal income tax purposes as a dividend of stock or stock rights
shall not be taxable to the recipients.
(l) Adjustments to Par Value. The Company shall make such adjustments to the
par value of the Common Stock in order that, upon exercise of the Warrants,
the Warrant Shares will be fully paid and non-assessable.
(m) No Other Adjustment for Dividends. Except as provided in this Section
11, no adjustment will be made for dividends on any Common Stock.
(n) Multiple Adjustments. After an adjustment to the Exercise Price and Exer-
cise Rate under this Section 11, any subsequent event requiring an adjustment
under this Section 11 shall cause an adjustment to the Exercie Price and Exer-
cise Rate as so adjusted.
(o) Definitions.
"Business Day" shall mean any day on which (i) banks in New York City, (ii)
the principal national securities exchange or market, if any, on which the
Common Stock is listed or admitted to trading and (iii) the principal national
securities exchange or market, if any, on which the Warrants are listed or ad-
mitted to trading are each open for business.
"Capital Stock" means, with respect to any corporation, any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests (however designated) in stock issued by that cor-
poration.
11
<PAGE>
"Current Market Value" per share of Common Stock or of any other security at
any date shall be the average of the daily closing prices for the 30 consecu-
tive business days commencing 45 business days before the day in question. The
closing price for each day shall be (i) if the Common Stock is listed or ad-
mitted for trading on any national securities exchange, the last sale price
(regular way), or the average of the closing bid and ask prices, if no sale
occurred, of Common Stock on the principal securities exchange on which the
Common Stock is listed, (ii) if not listed as described in (i), the mean be-
tween the closing high bid and low asked quotations of Common Stock in the Na-
tional Association of Securities Dealers, Inc., Automated Quotation System, or
any similar system or automated dissemination of quotations or securities
prices then in common use, if so quoted, or (iii) if not quoted as described
in clause (ii), the mean between the high bid and low asked quotations for
Common Stock as reported by the National Quotation Bureau Incorporated if at
least two securities dealers have inserted both bid and asked quotations for
Common Stock on at least 5 of the 10 preceding days. If none of the conditions
set forth above is met, the Closing Price of Common Stock on any day or the
average of such Closing Prices for any period shall be the fair market value
of Common Stock as determined by a member firm of the New York Stock Exchange,
Inc., selected by the Company.
(p) Warrants Agent's Disclaimer. The Warrant Agent has no duty to determine
when an adjustment under this Section 11 should be made, how it should be made
or what it should be. The Warrant Agent has no duty to determine whether any
provisions of a supplemental Warrant Agreement under subsection (g) of this
Section 11 are correct. The Warrant Agent makes no representation as to the
validity or value of any securities or assets issued upon exercise of War-
rants. The Warrant Agent shall not be responsible for the Company's failure to
comply with this Section 11.
Section 12. Fractional Interests. The Company shall not be required to issue
fractional Warrant Shares on the exercise of Warrants. If more than one War-
rant shall be presented for exercise in full at the same time by the same
holder, the number of full Warrant Shares which shall be issuable upon the ex-
ercise thereof shall be computed on the basis of the aggregate number of War-
rant Shares purchasable on exercise of the Warrants so presented. If any frac-
tion of a Warrant Share would, except for the provisions of this Section 12,
be issuable on the exercise of any Warrants (or specified portion thereof),
the Company shall pay an amount in cash equal to the Current Market Value per
Warrant Share on the day immediately preceding the date the Warrant is pre-
sented for exercise, multiplied by such fraction.
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<PAGE>
Section 13. Notices to Warrant Holders. Upon any adjustment of the Exercise
Rate and Exercise Price pursuant to Section 11, the Company shall promptly
thereafter but in no event later than 15 days (i) cause to be filed with the
Warrant Agent a certificate of a firm of independent public accountants of na-
tionally recognized standing selected by the Board of Directors of the Company
(who may be the regular auditors of the Company) setting forth the Exercise
Rate after such adjustment and setting forth in reasonable detail the method
of calculation and the facts upon which such calculations are based, which
certificate shall be conclusive evidence of the correctness of the matters set
forth therein, and (ii) cause to be given to each of the registered holders of
the Warrant Certificates at his or her address appearing on the Warrant Regis-
ter written notice of such adjustments by first-class mail, postage prepaid.
Where appropriate, such notice may be given in advance and included as part of
the notice required to be mailed under the other provisions of this Section
13.
In case:
(a) the Company shall authorize the issuance to all holders of shares of
Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants; or
(b) of any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company is required, or of
the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of Com-
mon Stock issuable upon exercise of the Warrants (other than a change in
par value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or of a tender of-
fer or exchange offer for shares of Common Stock; or
(c) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company; or
(d) the Company proposes to take any action which would require an ad-
justment of the Exercise Rate and Exercise Price pursuant to Section 11;
or
(e) the Company takes any action that would require a supplemental War-
rant Agreement pursuant to subsection (f) of Section 11;
then the Company shall cause to be filed with the Warrant Agent and shall
cause to be given to each of the registered holders of the Warrant Certifi-
cates at his or her address appearing on the Warrant Register, at least 20
days (or 10 days in any case specified in clauses (a) or (b) above) prior to
the applicable record date
13
<PAGE>
hereinafter specified, or promptly in the case of events for which there is no
record date, by first class mail, postage prepaid, a written notice stating
(i) the date as of which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to
be determined, or (ii) the initial expiration date set forth in any tender of-
fer or exchange offer for shares of Common Stock, or (iii) the date on which
any such reclassification, consolidation, merger, conveyance, transfer, disso-
lution, liquidation or winding up is expected to become effective or consum-
mated, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares for securi-
ties or other property, if any, deliverable upon such reclassification, con-
solidation, merger, conveyance, transfer, dissolution, liquidation or winding
up. The failure to give the notice required by this Section 13 or any defect
therein shall not affect the legality or validity of any distribution, right,
option, warrant, reclassification, consolidation, merger, conveyance, trans-
fer, dissolution, liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant Certificates
shall be construed as conferring upon the holders thereof the right to vote or
to consent or to receive notice as shareholders in respect of the meetings of
shareholders or the election of Directors of the Company or any other matter,
or any rights whatsoever as shareholders of the Company.
Section 14. Reports. Whether or not required by the rules and regulations of
the SEC, so long as any Warrants or Warrant Shares are outstanding, the Com-
pany will furnish to the registered holders of Warrants and Warrant Shares all
financial information that would be required to be contained in a filing with
the SEC on Forms 10-Q, 10-K and 8-K if the Company were required to file such
forms. In addition, whether or not required by the rules and regulations of
the SEC, the Company will file a copy of all such information and reports with
the SEC for public availability (unless the SEC will not accept such a filing)
and make such information available to investors who request it in writing.
Section 15. Merger, Consolidation or Change of Name of Warrant Agent. Any
corporation into which the Warrant Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Warrant Agent shall be a party, or any corporation succeeding to all
or substantially all of the corporate trust business of the Warrant Agent,
shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties here-
to, provided that such corporation would be eligible for appointment as a
14
<PAGE>
successor warrant agent under the provisions successor warrant agent under the
provisions of Section 20. In case at the time such successor to the Warrant
Agent shall succeed to the agency created by this Agreement, and in case at
that time any of the Warrant Certificates shall have been countersigned but
not delivered, any such successor to the Warrant Agent may adopt the counter-
signature of the predecessor Warrant Agent; and in case at that time any of
the Warrant Certificates shall not have been countersigned, any successor to
the Warrant Agent may countersign such Warrant Certificates either in the name
of the predecessor Warrant Agent or in the name of the successor to the War-
rant Agent; and in all such cases such Warrant Certificates shall have the
full force and effect provided in the Warrant Certificates and in this Agree-
ment.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its
changed name, and in all such cases such Warrant Certificates shall have the
full force and effect provided in the Warrant Certificates and in this Agree-
ment.
Section 16. Warrant Agent. The Warrant Agent undertakes the duties and obli-
gations imposed by this Agreement upon the following terms and conditions, by
all of which the Company and the holders of Warrants, by their acceptance
thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates shall
be taken as statements of the Company, and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as de-
scribe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the
Warrant Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or
in the Warrant Certificates.
(c) The Warrant Agent may consult at any time with counsel satisfactory
to it (who may be counsel for the Company) and the Warrant Agent shall in-
cur no liability or responsibility to the Company or to any holder of any
Warrant Certificate in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the opinion or the ad-
vice of such counsel.
15
<PAGE>
(d) The Warrant Agent shall incur no liability or responsibility to the
Company or to any holder of any Warrant Certificate for any action taken
in reliance on any Warrant Certificate, certificate of shares, notice,
resolution, waiver, consent, order, certificate, or other paper, document
or instrument believed by it in good faith to be genuine and to have been
signed, sent or presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent compensation for all
services rendered by the Warrant Agent in the execution and performance of
this Agreement at such rates as have been separately agreed to by the Com-
pany and the Warrant Agent and to reimburse the Warrant Agent for all ex-
penses, taxes and governmental charges and other charges of any kind and
nature incurred by the Warrant Agent in the execution and performance of
this Agreement. The Company shall indemnify the Warrant Agent and its
agents and save each of them harmless against any and all losses, reason-
able expenses, liabilities, including judgments, costs and counsel fees
and the costs and expenses of investigating or defending any claim of such
liability, for anything done or omitted by the Warrant Agent or its agents
in the execution of and performance of its obligations under this Agree-
ment except as a result of its negligence or bad faith. The Warrant Agent
shall notify the Company promptly of any claim for which it may seek in-
demnity; provided that failure by the Warrant Agent to so notify the Com-
pany shall not relieve its obligations hereunder. The Company shall defend
the claim and the Warrant Agent shall cooperate in the defense. The War-
rant Agent may have separate counsel and the Company shall pay the reason-
able fees and expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be unreason-
ably withheld.
(f) The Warrant Agent shall be under no obligation to institute, appear
in or defend any action, suit or legal proceeding or to take any other ac-
tion likely to involve expense unless the Company or one or more regis-
tered holders of Warrant Certificates shall furnish the Warrant Agent with
security and indemnity reasonably satisfactory to it for any costs and ex-
penses which may be incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as it may consider proper,
whether with or without any such security or indemnity. All rights of ac-
tion under this Agreement or under any of the Warrants may be enforced by
the Warrant Agent without the possession of any of the Warrant Certifi-
cates or the production thereof at any trial or other proceeding relative
thereto, and any such action, suit or proceeding instituted by the Warrant
Agent shall be brought in its name as Warrant Agent and any recovery of
judgment shall be for the ratable benefit of the registered holders of the
Warrants, as their respective rights or interests may appear.
16
<PAGE>
(g) The Warrant Agent, and any stockholder, director, officer or employee
of it, may buy, sell or deal in any of the Warrants or other securities of
the Company or become pecuniarily interested in any transaction in which
the Company may be interested, or contract with or lend money to the Com-
pany or otherwise act as fully and freely as though it were not Warrant
Agent under this Agreement. Nothing herein shall preclude the Warrant
Agent from acting in any other capacity for the Company or for any other
legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the Compa-
ny, its duties shall be determined solely by the provisions hereof, and no
implied covenants or obligations shall be read into this Agreement against
the Warrant Agent. The Warrant Agent shall not be liable for anything
which it may do or refrain from doing in connection with this Agreement
except for its own negligence or bad faith.
(i) The Warrant Agent shall not at any time be under any duty or respon-
sibility to any holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or Exercise Rate or other secu-
rities or property deliverable as provided in this Agreement, or to deter-
mine whether any facts exist which may require any of such adjustments, or
with respect to the nature, accuracy, correctness or extent of any such
adjustments, when made, or with respect to the method employed in making
the same. The Warrant Agent shall not be accountable with respect to the
validity or value or the kind or amount of any Warrant Shares or of any
securities or property which may at any time be issued or delivered upon
the exercise of any Warrant or with respect to whether any such Warrant
Shares or other securities will when issued be validly issued and fully
paid and nonassessable, and makes no representation with respect thereto.
(j) In the absence of bad faith on its part, the Warrant Agent may con-
clusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Warrant Agent and, if required by the terms thereof, conforming to the
requirements of this Warrant Agreement. However, the Warrant Agent shall
examine the certificates and opinions, if required by the terms thereof,
to determine whether or not they conform to the requirements of this War-
rant Agreement.
(k) The Warrant Agent may rely and shall be fully protected in relying
upon any document believed by it in good faith to be genuine and to have
been signed or presented by the proper person. The Warrant Agent need not
investigate any fact or matter stated in the documents.
(l) The Warrant Agent may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed and monitored in
good faith and with due care.
17
<PAGE>
(m) The Company will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further
acts, instruments and assurances as may reasonably be required by the War-
rant Agent in order to enable it to carry out or perform its duties under
this Agreement.
Section 17. Change of Warrant Agent. The Warrant Agent may resign at any time
by so notifying the Company. If the Warrant Agent shall resign or become inca-
pable of acting as Warrant Agent, the Company shall appoint a successor to
such Warrant Agent. If the Company shall fail to make such appointment within
a period of 30 days after it has been notified in writing of such incapacity
or resignation by the Warrant Agent or by the registered holder of a Warrant
Certificate, then the registered holder of any Warrant Certificate may apply
to any court of competent jurisdiction for the appointment of a successor to
the Warrant Agent. Pending appointment of a successor to such Warrant Agent,
either by the Company or by such a court, the duties of the Warrant Agent
shall be carried out by the Company. The registered holders of a majority of
the unexercised Warrants shall be entitled at any time to remove the Warrant
Agent and appoint a successor to such Warrant Agent. Such successor to the
Warrant Agent need not be approved by the Company or the former Warrant Agent.
After appointment the successor to the Warrant Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Warrant Agent without further act or deed; but the former Warrant
Agent shall, after the payment of all outstanding amounts owed to it hereun-
der, deliver and transfer to the successor to the Warrant Agent any property
at the time held by it hereunder and execute and deliver any further assur-
ance, conveyance, act or deed necessary for the purpose. Failure to give any
notice provided for in this Section 17, however, or any defect therein, shall
not affect the legality or validity of the appointment of a successor to the
Warrant Agent. The provisions of Section 16 with respect to any Warrant Agent
shall survive such Warrant Agent's resignation or removal.
18
<PAGE>
Section 18. Notices to the Company and Warrant Agent. Any notice or demand
authorized by this Agreement to be given or made by the Warrant Agent or by
the registered holder of any Warrant Certificate to or on the Company shall be
sufficiently given or made when and if telecopied to the number indicated be-
low or deposited in the mail, first class or registered, postage prepaid, ad-
dressed (until another telecopy number or address is filed in writing by the
Company with the Warrant Agent), as follows:
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Attention: Corporate Secretary
Telecopier No.: (713) 877-7071
In case the Company shall fail to maintain such office or shall fail to give
such notice of any change in the location thereof, presentations may be made
and notices and demands may be served at the principal office of the Warrant
Agent.
Any notice pursuant to this Agreement to be given by the Company or by the
registered holder(s) of any Warrant Certificate to the Warrant Agent shall be
sufficiently given when and if telecopied to the number indicated below or de-
posited in the mail, first class or registered, postage prepaid, addressed
(until another telecopy number or address is filed in writing by the Warrant
Agent with the Company) to the Warrant as follows:
Attention: Corporate Trust Department
Telecopier No.:
Any notice to be mailed to a registered holder of Warrants shall be mailed to
each holder at its address as it appears on the Warrant Register maintained by
the Warrant Agent. Copies of any such communication shall also be mailed to
the Warrant Agent. The Warrant Agent shall furnish the Company promptly when
requested with a list of registered holders of Warrants for the purpose of
mailing any notice or communication to the registered holders of the Warrants
and at such other times as may be reasonably requested.
Section 19. Supplements and Amendments. The Company and the Warrant Agent may
from time to time supplement or amend this Agreement without the approval of
any registered holders of Warrant Certificates in order to cure any ambiguity
or to correct or supplement any provision contained herein which may
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<PAGE>
be defective or inconsistent with any other provisions herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company and the Warrant Agent may deem necessary or desirable and which shall
not, as evidenced by an opinion of counsel delivered to the Warrant Agent, in
any way adversely affect the interests of the holders of Warrant Certificates.
Any amendment or supplement to this Agreement that has an adverse effect on
the interests of holders shall require the written consent of registered hold-
ers of a majority of the then outstanding Warrants. However, the consent of
each registered holder of a Warrant affected shall be required for any amend-
ment pursuant to which the Exercise Price would be increased, the Exercise
Rate would be decreased or the period for exercise of the Warrants would be
shortened. The Warrant Agent shall be entitled to receive and, subject to Sec-
tion 16 shall be fully protected in relying upon an officers' certificate and
opinion of counsel as conclusive evidence that any such amendment or supple-
ment is authorized or permitted hereunder, that it is not inconsistent here-
with, and that it will be valid and binding upon the Company in accordance
with its terms. The Company may not sign any amendment or supplement until the
Company's board of directors approves it.
Section 20. Successors. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Warrant Agent shall bind and inure to
the benefit of its respective successors and assigns hereunder.
Section 21. Termination. This Agreement shall terminate at p.m., Hous-
ton time, on , . The provisions of Section 16 hereof regarding
compensation, reimbursement and indemnification shall survive such termina-
tion. Notwithstanding the foregoing, this Agreement shall not terminate until
the obligations of the Company with respect to the delivery of Warrant Shares
to any holder of Warrants who exercises such Warrants prior to p.m., New
York time, on , have been satisfied.
Section 22. Governing Law. THIS AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED
HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF
NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTER-
NAL LAWS OF SAID STATE.
Section 23. Benefits of This Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered holders of the Warrant Certificates and War-
rant
20
<PAGE>
Shares any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the registered holders of the Warrant Certificates and War-
rant Shares.
Section 24. Severability. The provisions of this Warrant Agreement are sever-
able, and if any clause or provision shall be held invalid, illegal or unen-
forceable in whole or in part in any jurisdiction, then such invalidity or un-
enforceability shall affect in that jurisdiction only such clause or provi-
sion, or part thereof, and shall not in any manner affect such clause or pro-
vision in any other jurisdiction or any other clause or provision of this War-
rant Agreement in any jurisdiction.
Section 25. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 26. Headings. The headings in this Agreement are for the convenience
of reference only and shall not limit or otherwise affect the meaning of any
provision hereof.
[Signature Page Follows]
21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
The Coastal Corporation
By: ___________________________________________
Name:
Title:
___________________________________________,
as Warrant Agent
By: ___________________________________________
Name:
Title:
22
<PAGE>
EXHIBIT A
[Form of Warrant Certificate]
[Face]
No. Warrants
Warrant Certificate
THE COASTAL CORPORATION
CUSIP No.:
This Warrant Certificate certifies that , or registered assigns, is
the registered holder of Warrants expiring , (the "Warrants") to
purchase Common Stock, par value $.33 1/3 per share (the "Common Stock"), of
THE COASTAL CORPORATION, a Delaware corporation (the "Company"). Each Warrant
entitles the registered holder upon exercise [from , , until] on or
before p.m. Houston time on , , to receive from the Company one
fully paid and nonassessable share of Common Stock (each such share, a "War-
rant Share") at the exercise price of $ per share (the "Exercise Price")
payable (i) in cash or (ii) by certified or official bank check. The Warrants
represented by this Warrant Certificate may be exercised upon surrender of
this Warrant Certificate and payment of the Exercise Price at the office of
the Warrant Agent designated for such purpose, but only subject to the condi-
tions set forth herein and in the Warrant Agreement referred to on the reverse
hereof.
The number of Warrant Shares issuable upon exercise of the Warrants is sub-
ject to adjustment upon the occurrence of certain events set forth in the War-
rant Agreement.
No Warrant may be exercised after p.m., New York time, on , ,
and to the extent not exercised by such time such Warrants shall expire.
Reference is hereby made to the further provisions of this Warrant Certifi-
cate set forth on the reverse hereof and such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
<PAGE>
This Warrant Certificate shall not be valid unless countersigned by the War-
rant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in accordance
with the internal laws of the State of New York.
IN WITNESS WHEREOF, The Coastal Corporation has caused this Warrant Certifi-
cate to be signed by its duly authorized officer.
Dated: , 199
The Coastal Corporation
By: __________________________________________
Title:
Countersigned:
as Warrant Agent
By: _________________________________
Authorized Signature
A-2
<PAGE>
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly autho-
rized issue of Warrants expiring , , entitling the holder on exercise
to receive shares of Common Stock, par value $.33 1/3 per share, of the Com-
pany (the "Common Stock"), and are issued or to be issued pursuant to a War-
rant Agreement dated as of , (the "Warrant Agreement"), between
the Company and , as Warrant Agent (the "Warrant Agent"), which
Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company, the Warrant Agent and the holders (the words "holders" or "holder"
meaning the registered holders or registered holder) of the Warrants. A copy
of the Warrant Agreement may be obtained by the holder hereof upon written re-
quest to the Company. Capitalized terms used herein without definition shall
have the meanings ascribed to them in the Warrant Agreement.
Warrants may be exercised at any time on or (after and) before
p.m., New York time, on , . The holder of Warrants evidenced by
this Warrant Certificate may exercise them by surrendering this Warrant Cer-
tificate, with the form of election to purchase set forth hereon properly com-
pleted and executed, together with payment of the Exercise Price (i) in cash
or (ii) by certified or official bank check. In the event that upon any exer-
cise of Warrants evidenced hereby the number of Warrants exercised shall be
less than the total number of Warrants evidenced hereby, there shall be issued
to the holder hereof or his assignee a new Warrant Certificate evidencing the
number of Warrants not exercised. No adjustment shall be made for any divi-
dends on any Common Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain events the
number of shares of Common Stock issuable upon the exercise of each Warrant
shall be adjusted. No fractions of a share of Common Stock will be issued upon
the exercise of any Warrant, but the Company will pay the cash value thereof
determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant Agent by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limi-
A-3
<PAGE>
tations provided in the Warrant Agreement, but without payment of any service
charge, for another Warrant Certificate or Warrant Certificates of like tenor
evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant Certifi-
cate at the office of the Warrant Agent a new Certificate or Warrant Certifi-
cates of like tenor and evidencing in the aggregate a like number of Warrants
shall be issued to the transferee(s) in exchange for this Warrant Certificate,
subject to the limitations provided in the Warrant Agreement, without charge
except for any tax or other governmental charge imposed in connection there-
with.
The Company and the Warrant Agent may deem and treat the registered holder(s)
hereon as the absolute owner(s) of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the
purpose of any exercise hereof, of any distribution to the holder(s) hereof,
and for all other purposes, and the Company and the Warrant Agent shall not be
affected by any notice to the contrary. Neither the Warrants nor this Warrant
Certificate entitles any holder hereof to any rights of a stockholder of the
Company.
A-4
<PAGE>
Form of Election to Purchase
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise Warrants contain-
ing the right, represented by this Warrant Certificate, to receive
shares of Common Stock and herewith (check item) tenders payment for such
shares to the order of The Coastal Corporation in the amount of $ per
share of Common Stock in accordance with the terms hereof, as follows:
[_] $ in cash or by certified or official bank check to the order
of The Coastal Corporation; or
The undersigned requests that a certificate for such shares be registered
in the name of , whose address is , and
that such shares be delivered to , whose address is
.
If said numbers of shares is less than all of the shares of Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certif-
icate for Warrants representing the remaining balance of such
Warrants be registered in the name of , whose address
is , and that such Warrant Certificate
be delivered to , whose address is
.
_______________________________________________
Signature
Date: _________________________________________
_______________________________________________
Signature Guaranteed
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Warrant Agent)
A-5
<PAGE>
ASSIGNMENT FORM
To assign this Warrant, fill in the form below: (I) or (we) assign and trans-
fer this Warrant to:
- --------------------------------------------------------------------------------
(INSERT ASSIGNEE'S SOC. SEC. OR TAX I.D. NO.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PRINT OR TYPE ASSIGNEE'S NAME, ADDRESS AND ZIP CODE)
and irrevocably appoint ___to transfer this Warrant on the books of the Company.
The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Dated: _____________________ Your Signature: __________________________________
(SIGN EXACTLY AS NAME APPEARS ON THE FACE
OF THIS WARRANT)
__________________________________________
Signature Guaranteed
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Warrant Agent)
A-6
<PAGE>
EXHIBIT 4.17
===================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
THE COASTAL CORPORATION
Dated as of , 1998
====================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions and Interpretation................................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application................................. 6
SECTION 2.2. Lists of Holders of Securities................................... 6
SECTION 2.3. Reports by the Preferred Guarantee Trustee....................... 6
SECTION 2.4. Periodic Reports to Preferred Guarantee Trustee.................. 7
SECTION 2.5. Evidence of Compliance with Conditions Precedent................. 7
SECTION 2.6. Events of Default; Waiver........................................ 7
SECTION 2.7. Events of Default; Notice........................................ 7
SECTION 2.8. Conflicting Interests............................................ 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Preferred Guarantee Trustee............. 8
SECTION 3.2. Certain Rights of Preferred Guarantee Trustee....................10
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee............13
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1. Preferred Guarantee Trustee; Eligibility.........................13
SECTION 4.2. Appointment, Removal and Resignation of Preferred
Guarantee Trustees.............................................14
-i-
<PAGE>
Page
----
ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee......................................................15
SECTION 5.2. Waiver of Notice and Demand....................................15
SECTION 5.3. Obligations Not Affected.......................................15
SECTION 5.4. Rights of Holders..............................................16
SECTION 5.5. Guarantee of Payment...........................................17
SECTION 5.6. Subrogation....................................................17
SECTION 5.7. Independent Obligations........................................17
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1. Limitation of Transactions.....................................18
SECTION 6.2. Ranking........................................................18
ARTICLE VII
TERMINATION
SECTION 7.1. Termination....................................................19
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. Exculpation....................................................19
SECTION 8.2. Indemnification................................................20
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Successors and Assigns.........................................21
SECTION 9.2. Amendments.....................................................21
SECTION 9.3. Notices........................................................21
SECTION 9.4. Benefit........................................................22
SECTION 9.5. Governing Law..................................................22
SECTION 9.6. No Recourse Against Certain Persons............................23
-ii-
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated
as of , 1998, is executed and delivered by The Coastal Corporation,
a Delaware corporation (the "Guarantor"), and The Bank of New York, a New York
banking corporation, as trustee (the "Preferred Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of Coastal Finance I, a Delaware statutory
business trust (the "Issuer").
WITNESSETH:
WHEREAS, pursuant to an amended and restated Declaration of Trust (the
"Declaration"), dated as of , 1998, among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof preferred securities having an aggregate
liquidation amount of $ designated the % Trust Preferred
Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein;
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee") with substantially identical terms
as this Preferred Securities Guarantee for the benefit of the holders of the
Common Securities (as defined herein), except that if an Indenture Event of
Default (as defined herein), has occurred and is continuing, the rights of
holders of the Common Securities to receive Guarantee Payments under the Common
Securities Guarantee are subordinated to the rights of Holders of Preferred
Securities to receive Guarantee Payments under this Preferred Securities
Guarantee.
NOW, THEREFORE, in consideration of the purchase by
<PAGE>
-2-
each Holder of Preferred Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Preferred
Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Preferred Securities Guarantee but
not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) a term defined anywhere in this Preferred Securities Guarantee
has the same meaning throughout;
(c) all references to "the Preferred Securities Guarantee" or "this
Preferred Securities Guarantee" are to this Preferred Securities
Guarantee as modified, supplemented or amended from time to time;
(d) all references in this Preferred Securities Guarantee to Articles
and Sections are to Articles and Sections of this Preferred
Securities Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Preferred Securities Guarantee, unless
otherwise defined in this Preferred Securities Guarantee or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
<PAGE>
-3-
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday, a Sunday or any
other day on which banking institutions in New York, New York are authorized or
required by law to close.
"Coastal" means The Coastal Corporation, a Delaware corporation.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee after
giving effect to all applicable cure periods.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as
defined in the Declaration) that are required to be paid on such Preferred
Securities to the extent the Issuer has funds available therefor, (ii) the
redemption price, including all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price"), to the extent the Issuer has funds
available therefor, with respect to any Preferred Securities called for
redemption by the Issuer, and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with the
distribution of Subordinated Notes to the Holders in exchange for Preferred
Securities as provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all accrued and unpaid Distributions on the Preferred
Securities to the date of payment, to the extent the Issuer shall have funds
available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution"). If an Indenture Event of Default has
occurred and is continuing, the
<PAGE>
-4-
rights of holders of the Common Securities to receive payments under the Common
Securities Guarantee are subordinated to the rights of Holders of Preferred
Securities to receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives or agents of the
Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of , 1998, between
the Guarantor and The Bank of New York, as trustee, and the First Supplemental
Indenture thereto pursuant to which certain subordinated debt securities of the
Guarantor are to be issued to the Property Trustee (as defined in the
Declaration), as from time to time amended.
"Indenture Event of Default" has the same meaning as that given to the
term "Event of Default" in the Indenture.
"Majority in liquidation amount of the Securities" means, except as
provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all Preferred Securities
outstanding as of the date of determination.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers (as defined in the Declaration) of
such Person. Any Officers' Certificate delivered with respect to compliance
with a condition or covenant provided for in this Preferred Securities Guarantee
shall include:
<PAGE>
-5-
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Guarantee Trustee" means The Bank of New York, until a
Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Property Trustee" shall have the meaning ascribed to such term in the
Declaration.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, (a) any vice president, any assistant vice president, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer or any other officer of the corporate trust department
of the Preferred Guarantee Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject and (b) who shall have direct responsibility for the
administration of this Agreement.
<PAGE>
-6-
"Subordinated Notes" means the series of subordinated debt securities
of the Guarantor designated the % Subordinated Deferrable Interest Notes due
, held by the Property Trustee.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions.
(b) If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
<PAGE>
-7-
SECTION 2.2. Lists of Holders of Securities
(a) The Guarantor shall provide the Preferred Guarantee Trustee
with a list, in such form as the Preferred Guarantee Trustee may reasonably
require, of the names and addresses of the Holders of the Preferred Securities
("List of Holders") (i) as of January 1 and June 30 of each year, within 10
Business Days thereafter, and (ii) at any other time within 30 days of receipt
by the Guarantor of a written request from the Preferred Guarantee Trustee for a
List of Holders, which shall be as of a date no more than 14 days before such
List of Holders is given to the Preferred Guarantee Trustee; provided, however,
that the Guarantor shall not be obligated to provide such List of Holders at any
time the List of Holders does not differ from the most recent List of Holders
given to the Preferred Guarantee Trustee by the Guarantor. The Preferred
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Section 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3. Reports by the Preferred Guarantee Trustee
Within 60 days after each May 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Preferred
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
SECTION 2.4. Periodic Reports to Preferred Guarantee Trustee
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 of the Trust
Indenture Act (if any) and the compliance certificate required by Section 314 of
the Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.
<PAGE>
-8-
SECTION 2.5. Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guarantee Trustee with a
certification of compliance with any conditions precedent, if any, provided for
in this Preferred Securities Guarantee that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) of the Trust
Indenture Act may be given in the form of an Officers' Certificate.
SECTION 2.6. Events of Default; Waiver
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7. Events of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default that is known to the Preferred Guarantee
Trustee (or as soon as reasonably practical thereafter), transmit by mail, first
class postage prepaid, to the Holders of the Preferred Securities, notices of
all Events of Default actually known to the Preferred Guarantee Trustee, unless
such defaults have been cured before the giving of such notice; provided,
however, that the Preferred Guarantee Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee,
or a trust committee of directors and/or Responsible Officers of the Preferred
Guarantee Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received actual knowledge, or a Responsible Officer charged with the
administration of the Declaration shall have obtained written notice, of such
Event of Default.
<PAGE>
-9-
SECTION 2.8. Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Preferred Guarantee Trustee
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee shall
automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting (and cessation as to the Preferred Guarantee Trustee) of title shall be
effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Preferred Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee
for the benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the Preferred Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6), the Preferred Guarantee Trustee shall exercise
such of the rights and powers vested in it by this Preferred Securities
<PAGE>
-10-
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Preferred Guarantee Trustee
shall be determined solely by the express provisions of this Preferred
Securities Guarantee, and the Preferred Guarantee Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Preferred Securities Guarantee, and no
implied covenants or obligations shall be read into this Preferred
Securities Guarantee against the Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may conclusively rely,
as to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the
Preferred Guarantee Trustee and conforming to the requirements of this
Preferred Securities Guarantee; but in the case of any such certificates or
opinions that by any provision hereof are specifically required to be
furnished to the Preferred Guarantee Trustee, the Preferred Guarantee
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Preferred Securities Guarantee
(but need not confirm or investigate the accuracy of mathematical
calculations or other facts stated therein);
<PAGE>
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(ii) the Preferred Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Preferred Guarantee Trustee, unless it shall be proved that the Preferred
Guarantee Trustee was negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority in
liquidation amount of the Preferred Securities relating to the time, method
and place of conducting any proceeding for any remedy available to the
Preferred Guarantee Trustee, or exercising any trust or power conferred
upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if the
Preferred Guarantee Trustee shall have reasonable grounds for believing
that the repayment of such funds or liability is not reasonably assured to
it under the terms of this Preferred Securities Guarantee or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 3.2. Certain Rights of Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties.
<PAGE>
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(ii) Any direction or act of the Guarantor contemplated by this
Preferred Securities Guarantee shall be sufficiently evidenced by a
Direction (as defined in the Declaration) or an Officers' Certificate.
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking, suffering
or omitting any action hereunder, the Preferred Guarantee Trustee (unless
other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be promptly
delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or any
rerecording, refiling or reregistration thereof).
(v) The Preferred Guarantee Trustee may consult with counsel of
its selection, and the advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may include any of
its employees. The Preferred Guarantee Trustee shall have the right at any
time to seek instructions concerning the administration of this Preferred
Securities Guarantee from any court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Preferred Securities Guarantee at the request or direction of any Holder,
unless such Holder shall have provided to the Preferred Guarantee Trustee
such adequate security and indemnity as would satisfy a reasonable person
in the position of the Preferred Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses) and liabilities that
might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Preferred
Guarantee Trustee; provided, however, that nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Preferred Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Preferred Securities
Guarantee.
<PAGE>
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(vii) The Preferred Guarantee Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Preferred Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents or attorneys, and the Preferred Guarantee Trustee
shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders of the Preferred Securities, and
the signature of the Preferred Guarantee Trustee or its agents alone shall
be sufficient and effective to perform any such action. No third party
shall be required to inquire as to the authority of the Preferred Guarantee
Trustee to so act or as to its compliance with any of the terms and
provisions of this Preferred Securities Guarantee, both of which shall be
conclusively evidenced by the Preferred Guarantee Trustee's or its agent's
taking such action.
(x) Whenever in the administration of this Preferred Securities
Guarantee the Preferred Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Preferred Guarantee Trustee (i) may
request instructions from the Holders of a Majority in liquidation amount
of the Preferred Securities, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received, and
(iii) shall be protected in acting in accordance with such instructions.
<PAGE>
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(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal, or
in which the Preferred Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Preferred Securities Guarantee shall be
taken as the statements of the Guarantor, and the Preferred Guarantee Trustee
does not assume any responsibility for their correctness. The Preferred
Guarantee Trustee makes no representation as to the validity or sufficiency of
this Preferred Securities Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1. Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof or
of the District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to
<PAGE>
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law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2. Appointment, Removal and Resignation of Preferred Guarantee
Trustees
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
<PAGE>
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(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 30
days after delivery of an instrument of resignation or removal, the Preferred
Guarantee Trustee resigning or being removed may (at the expense of the
Guarantor) petition any court of competent jurisdiction for appointment of a
Successor Preferred Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Preferred Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of set-
off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.2. Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
<PAGE>
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SECTION 5.3. Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions or other sum payable that results from the extension of
any interest payment period on the Subordinated Notes permitted by the
Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor;
<PAGE>
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it being the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4. Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee.
(b) If the Preferred Guarantee Trustee fails to enforce this
Preferred Securities Guarantee, any Holder of Preferred Securities may institute
a legal proceeding directly against the Guarantor to enforce its rights under
this Preferred Securities Guarantee, without first instituting a legal
proceeding against the Issuer, the Preferred Guarantee Trustee or any other
Person.
(c) Notwithstanding subsection 5.4(b), any Holder of Preferred
Securities may directly institute proceedings against the Guarantor to obtain
Guarantee Payments in respect of the Preferred Securities owned by such Holder,
without first waiting to determine if the Preferred Guarantee Trustee has
enforced this Preferred Securities Guarantee or first instituting a legal
proceeding against the Issuer, the Preferred Guarantee Trustee or any other
Person.
SECTION 5.5. Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee of payment and
not of collection.
<PAGE>
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SECTION 5.6. Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Preferred Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7. Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
<PAGE>
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ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1. Limitation of Transactions
(a) So long as any Preferred Securities remain outstanding, if an
Event of Default or Indenture Event of Default shall exist, then (a) the
Guarantor shall not declare or pay any dividend on, or make any distribution
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock, and (b) the Guarantor shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Guarantor which rank pari passu with or
junior to the Subordinated Notes.
(b) Notwithstanding subsection 6.1(a) or any other language to the
contrary contained in this Preferred Securities Guarantee, nothing shall prevent
the Guarantor from: (i) declaring or paying any dividend on, or making any
distribution with respect to, or redeeming, purchasing, acquiring or making a
liquidation payment with respect to, any of its capital stock in or with
securities of the Guarantor (including capital stock) that rank junior to such
capital stock or (ii) paying any interest, principal or premium on, or repaying,
repurchasing or redeeming, any debt securities issued by the Guarantor which
rank pari passu with or junior to the Subordinated Notes, with (x) securities of
the Guarantor (including capital stock) that rank junior to such debt securities
or (y) securities (including capital stock) of Coastal.
SECTION 6.2. Ranking
This Preferred Securities Guarantee constitutes an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, (ii) pari passu with the most
senior preferred or preference stock issued by the Guarantor from time to time
and with any guarantee now or hereafter entered into by the Guarantor in respect
of any preferred or preference stock of any Affiliate of the Guarantor and (iii)
senior to the Guarantor's common stock.
<PAGE>
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ARTICLE VII
TERMINATION
SECTION 7.1. Termination
This Preferred Securities Guarantee shall terminate upon the earliest
to occur of (i) the full payment of the Redemption Price of all Preferred
Securities, (ii) the distribution of Subordinated Notes to the Holder(s) of all
of the Preferred Securities or (iii) full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Issuer. Notwithstanding
the foregoing, this Preferred Securities Guarantee will continue to be effective
or will be reinstated, as the case may be, if at any time any Holder of
Preferred Securities must restore payment of any sums paid under the Preferred
Securities or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. Exculpation
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Preferred
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Preferred Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omission.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
<PAGE>
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losses, or any other facts pertinent to the existence and amount of assets from
which Distributions, the Redemption Price or the Liquidation Distribution to
Holders of Preferred Securities might properly be paid.
(c) The provisions of this Section 8.1 shall survive the termination
of this Preferred Securities Guarantee.
SECTION 8.2. Indemnification
(a) The Guarantor shall indemnify and hold harmless each Indemnified
Person from and against any loss, damage or claim incurred by such Indemnified
Person by reason of any act or omission performed or omitted by such Indemnified
Person in good faith in accordance with this Preferred Securities Guarantee and
in a manner such Indemnified Person reasonably believed to be within the scope
of authority conferred on such Indemnified Person in accordance with this
Preferred Securities Guarantee, except that no Indemnified Person shall be
entitled to be indemnified in respect of any loss, damage or claim incurred by
such Indemnified Person by reason of negligence or willful misconduct with
respect to such acts or omissions.
(b) Expenses (including legal fees and expenses) incurred by an
Indemnified Person in defending any claim, demand, action, suit or proceeding
(whether such claim, demand, action, suit or proceeding arises between the
parties hereto or results from suits involving third parties) shall, from time
to time, be advanced by the Guarantor prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.2(a).
(c) The Guarantor agrees
(i) to pay to the Preferred Guarantee Trustee from time to time
such compensation as the Guarantor and the Preferred Guarantee Trustee
shall from time to time agree in writing for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);
<PAGE>
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(ii) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Preferred Guarantee Trustee in accordance
with any provision of this Agreement (including the reasonable compensation
and expenses and disbursements of its agents and counsel).
(d) The provisions of this Section 8.2 shall survive the termination
of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Successors and Assigns
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.
SECTION 9.2. Amendments
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Preferred Securities Guarantee may only be amended with the prior approval of
the Holders of at least a Majority in liquidation amount of the Preferred
Securities. The provisions of Section 12.2 of the Declaration with respect to
meetings of Holders of the Securities apply to the giving of such approval.
In executing, or accepting the additional trusts created by, and
amendment permitted by this Section or the modification thereby of the trust
created by this Agreement, the Preferred Guarantee Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement. The Preferred Guarantee Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Trustee's own rights, duties or
immunities under this Agreement or otherwise.
<PAGE>
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SECTION 9.3. Notices
All notices provided for in this Preferred Securities Guarantee shall
be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attention: Remo Reale, Assistant Vice President
(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Preferred Securities):
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Attention: Director, Financial Administration
(c) If given to any Holder of Preferred Securities, at the address
set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid.
<PAGE>
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SECTION 9.4. Benefit
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5. Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
SECTION 9.6. No Recourse Against Certain Persons
No past, present or future director, officer, employee or stockholder,
as such, of the Guarantor or any successor thereof shall have any liability for
any obligations of the Guarantor under this Preferred Securities Guarantee or
for any claim based on, in respect of, or by reason of, such obligations or
their creation and all such liability is hereby waived and released. Such
waiver and release are part of the consideration for the issue of this Preferred
Securities Guarantee and the Preferred Securities.
<PAGE>
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THIS PREFERRED SECURITIES GUARANTEE AGREEMENT is executed as of the
day and year first above written.
THE COASTAL CORPORATION,
as Guarantor
By:
----------------------------------
Name: Donald H. Gullquist
Title: Senior Vice President
THE BANK OF NEW YORK,
as Preferred Guarantee Trustee
By:
----------------------------------
Name:
Title:
<PAGE>
Exhibit 4.18
====================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
THE COASTAL CORPORATION
Dated as of ,
====================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions and Interpretation......................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application....................... 6
SECTION 2.2. Lists of Holders of Securities......................... 6
SECTION 2.3. Reports by the Preferred Guarantee Trustee............. 6
SECTION 2.4. Periodic Reports to Preferred Guarantee Trustee........ 7
SECTION 2.5. Evidence of Compliance with Conditions Precedent....... 7
SECTION 2.6. Events of Default; Waiver.............................. 7
SECTION 2.7. Events of Default; Notice.............................. 7
SECTION 2.8. Conflicting Interests.................................. 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Preferred Guarantee Trustee... 8
SECTION 3.2. Certain Rights of Preferred Guarantee Trustee.......... 10
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee.. 13
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1. Preferred Guarantee Trustee; Eligibility............... 13
SECTION 4.2. Appointment, Removal and Resignation of Preferred
Guarantee Trustees.................................... 14
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<PAGE>
ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee.............................................. 15
SECTION 5.2. Waiver of Notice and Demand............................ 15
SECTION 5.3. Obligations Not Affected............................... 15
SECTION 5.4. Rights of Holders...................................... 16
SECTION 5.5. Guarantee of Payment................................... 17
SECTION 5.6. Subrogation............................................ 17
SECTION 5.7. Independent Obligations................................ 17
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1. Limitation of Transactions............................. 18
SECTION 6.2. Ranking................................................ 18
ARTICLE VII
TERMINATION
SECTION 7.1. Termination............................................ 19
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. Exculpation............................................ 19
SECTION 8.2. Indemnification........................................ 20
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Successors and Assigns................................. 21
SECTION 9.2. Amendments............................................. 21
SECTION 9.3. Notices................................................ 21
SECTION 9.4. Benefit................................................ 22
SECTION 9.5. Governing Law.......................................... 22
SECTION 9.6. No Recourse Against Certain Persons.................... 23
-ii-
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated
as of , , is executed and delivered by The Coastal Corporation,
a Delaware corporation (the "Guarantor"), and The Bank of New York, a New York
banking corporation, as trustee (the "Preferred Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of Coastal Finance II, a Delaware statutory
business trust (the "Issuer").
WITNESSETH:
WHEREAS, pursuant to an amended and restated Declaration of Trust (the
"Declaration"), dated as of , , among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof preferred securities having an aggregate
liquidation amount of $ designated the % Trust Preferred
Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein;
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee") with substantially identical terms
as this Preferred Securities Guarantee for the benefit of the holders of the
Common Securities (as defined herein), except that if an Indenture Event of
Default (as defined herein), has occurred and is continuing, the rights of
holders of the Common Securities to receive Guarantee Payments under the Common
Securities Guarantee are subordinated to the rights of Holders of Preferred
Securities to receive Guarantee Payments under this Preferred Securities
Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
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ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Preferred Securities Guarantee but not
defined in the preamble above have the respective meanings assigned to them
in this Section 1.1;
(b) a term defined anywhere in this Preferred Securities Guarantee has the same
meaning throughout;
(c) all references to "the Preferred Securities Guarantee" or "this Preferred
Securities Guarantee" are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;
(d) all references in this Preferred Securities Guarantee to Articles and
Sections are to Articles and Sections of this Preferred Securities
Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when used in
this Preferred Securities Guarantee, unless otherwise defined in this
Preferred Securities Guarantee or unless the context otherwise requires;
and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday, a Sunday or any
other day on which banking institutions in New York, New York are authorized or
required by law to close.
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"Coastal" means The Coastal Corporation, a Delaware corporation.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee after
giving effect to all applicable cure periods.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as
defined in the Declaration) that are required to be paid on such Preferred
Securities to the extent the Issuer has funds available therefor, (ii) the
redemption price, including all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price"), to the extent the Issuer has funds
available therefor, with respect to any Preferred Securities called for
redemption by the Issuer, and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with the
distribution of Subordinated Notes to the Holders in exchange for Preferred
Securities as provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all accrued and unpaid Distributions on the Preferred
Securities to the date of payment, to the extent the Issuer shall have funds
available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution"). If an Indenture Event of Default has
occurred and is continuing, the rights of holders of the Common Securities to
receive payments under the Common Securities Guarantee are subordinated to the
rights of Holders of Preferred Securities to receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
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"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives or agents of the
Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of , 1998, between
the Guarantor and The Bank of New York, as trustee, and the First Supplemental
Indenture thereto pursuant to which certain subordinated debt securities of the
Guarantor are to be issued to the Property Trustee (as defined in the
Declaration), as from time to time amended.
"Indenture Event of Default" has the same meaning as that given to the
term "Event of Default" in the Indenture.
"Majority in liquidation amount of the Securities" means, except as
provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all Preferred Securities
outstanding as of the date of determination.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers (as defined in the Declaration) of
such Person. Any Officers' Certificate delivered with respect to compliance
with a condition or covenant provided for in this Preferred Securities Guarantee
shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
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"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Guarantee Trustee" means The Bank of New York, until a
Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Property Trustee" shall have the meaning ascribed to such term in the
Declaration.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, (a) any vice president, any assistant vice president, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer or any other officer of the corporate trust department
of the Preferred Guarantee Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject (b) who shall have direct responsibility for the
administration of this Agreement.
"Subordinated Notes" means the series of subordinated debt securities
of the Guarantor designated the % Subordinated Deferrable Interest Notes due
, held by the Property Trustee.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application
(a) This Preferred Securities Guarantee is subject to the provisions
of the Trust Indenture Act that are required to be part of this Preferred
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions.
(b) If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2. Lists of Holders of Securities
(a) The Guarantor shall provide the Preferred Guarantee Trustee with
a list, in such form as the Preferred Guarantee Trustee may reasonably require,
of the names and addresses of the Holders of the Preferred Securities ("List of
Holders") (i) as of January 1 and June 30 of each year, within 10 Business Days
thereafter, and (ii) at any other time within 30 days of receipt by the
Guarantor of a written request from the Preferred Guarantee Trustee for a List
of Holders, which shall be as of a date no more than 14 days before such List of
Holders is given to the Preferred Guarantee Trustee; provided, however, that the
Guarantor shall not be obligated to provide such List of Holders at any time the
List of Holders does not differ from the most recent List of Holders given to
the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its obligations
under Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Preferred Guarantee Trustee
Within 60 days after each May 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The
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Preferred Guarantee Trustee shall also comply with the requirements of Section
313(d) of the Trust Indenture Act.
SECTION 2.4. Periodic Reports to Preferred Guarantee Trustee
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 of the Trust
Indenture Act (if any) and the compliance certificate required by Section 314 of
the Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guarantee Trustee with a
certification of compliance with any conditions precedent, if any, provided for
in this Preferred Securities Guarantee that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) of the Trust
Indenture Act may be given in the form of an Officers' Certificate.
SECTION 2.6. Events of Default; Waiver
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7. Events of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default that is known to the Preferred Guarantee
Trustee (or as soon as reasonably practical thereafter), transmit by mail, first
class postage prepaid, to the Holders of the Preferred Securities, notices of
all Events of Default actually known to the Preferred Guarantee Trustee, unless
such defaults have been cured before the giving of such notice; provided,
however, that the Preferred Guarantee Trustee shall be protected in withholding
such notice if and so
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long as the board of directors, the executive committee, or a trust committee of
directors and/or Responsible Officers of the Preferred Guarantee Trustee in good
faith determines that the withholding of such notice is in the interests of the
Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received actual knowledge, or a Responsible Officer charged with the
administration of the Declaration shall have obtained written notice, of such
Event of Default.
SECTION 2.8. Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Preferred Guarantee Trustee
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee shall
automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting (and cessation as to the Preferred Guarantee Trustee) of title shall be
effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Preferred Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this
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Preferred Securities Guarantee for the benefit of the Holders of the Preferred
Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the Preferred Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6), the Preferred Guarantee Trustee shall exercise
such of the rights and powers vested in it by this Preferred Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Preferred Guarantee Trustee
shall be determined solely by the express provisions of this Preferred
Securities Guarantee, and the Preferred Guarantee Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Preferred Securities Guarantee, and no
implied covenants or obligations shall be read into this Preferred
Securities Guarantee against the Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Preferred Guarantee
Trustee, the Preferred Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Preferred
Guarantee Trustee and conforming to the requirements of this Preferred
Securities Guarantee; but in the case of any such certificates or opinions
that by any provision hereof are specifically required to be furnished to
the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall be
under a duty to examine the same to
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determine whether or not they conform to the requirements of this Preferred
Securities Guarantee (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein);
(ii) the Preferred Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Preferred Guarantee Trustee, unless it shall be proved that the Preferred
Guarantee Trustee was negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority in
liquidation amount of the Preferred Securities relating to the time, method
and place of conducting any proceeding for any remedy available to the
Preferred Guarantee Trustee, or exercising any trust or power conferred
upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if the
Preferred Guarantee Trustee shall have reasonable grounds for believing
that the repayment of such funds or liability is not reasonably assured to
it under the terms of this Preferred Securities Guarantee or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 3.2. Certain Rights of Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties.
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(ii) Any direction or act of the Guarantor contemplated by this
Preferred Securities Guarantee shall be sufficiently evidenced by a
Direction (as defined in the Declaration) or an Officers' Certificate.
(iii) Whenever, in the administration of this Preferred Securities
Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or omitting any
action hereunder, the Preferred Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instrument (or any
rerecording, refiling or reregistration thereof).
(v) The Preferred Guarantee Trustee may consult with counsel of its
selection, and the advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion. Such counsel may be counsel to
the Guarantor or any of its Affiliates and may include any of its
employees. The Preferred Guarantee Trustee shall have the right at any
time to seek instructions concerning the administration of this Preferred
Securities Guarantee from any court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this Preferred
Securities Guarantee at the request or direction of any Holder, unless such
Holder shall have provided to the Preferred Guarantee Trustee such adequate
security and indemnity as would satisfy a reasonable person in the position
of the Preferred Guarantee Trustee, against the costs, expenses (including
attorneys' fees and expenses) and liabilities that might be incurred by it
in complying with such request or direction, including such reasonable
advances as may be requested by the Preferred Guarantee Trustee; provided,
however, that nothing contained in this Section 3.2(a)(vi) shall be taken
to relieve the Preferred Guarantee Trustee, upon the
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occurrence of an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Preferred Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents or attorneys, and the Preferred Guarantee Trustee
shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders of the Preferred Securities, and
the signature of the Preferred Guarantee Trustee or its agents alone shall
be sufficient and effective to perform any such action. No third party
shall be required to inquire as to the authority of the Preferred Guarantee
Trustee to so act or as to its compliance with any of the terms and
provisions of this Preferred Securities Guarantee, both of which shall be
conclusively evidenced by the Preferred Guarantee Trustee's or its agent's
taking such action.
(x) Whenever in the administration of this Preferred Securities
Guarantee the Preferred Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Preferred Guarantee Trustee (i) may
request instructions from the Holders of a Majority in liquidation amount
of the Preferred Securities, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received, and
(iii) shall be protected in acting in accordance with such instructions.
(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or exer-
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cise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Preferred Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Preferred
Guarantee Trustee shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Preferred Securities Guarantee shall be
taken as the statements of the Guarantor, and the Preferred Guarantee Trustee
does not assume any responsibility for their correctness. The Preferred
Guarantee Trustee makes no representation as to the validity or sufficiency of
this Preferred Securities Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1. Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and
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surplus as set forth in its most recent report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2. Appointment, Removal and Resignation of Preferred Guarantee
Trustees
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 30
days after delivery of an instrument of resignation or removal, the Preferred
Guarantee Trustee resigning or being removed may (at the expense of the
Guarantor) petition any court of competent jurisdiction for appointment of a
Successor Preferred Guarantee Trustee. Such court
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may thereupon, after prescribing such notice, if any, as it may deem proper,
appoint a Successor Preferred Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of set-
off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.2. Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3. Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time
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for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time
for payment of Distributions or other sum payable that results from the
extension of any interest payment period on the Subordinated Notes permitted by
the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor;
it being the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4. Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee.
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(b) If the Preferred Guarantee Trustee fails to enforce this
Preferred Securities Guarantee, any Holder of Preferred Securities may institute
a legal proceeding directly against the Guarantor to enforce its rights under
this Preferred Securities Guarantee, without first instituting a legal
proceeding against the Issuer, the Preferred Guarantee Trustee or any other
Person.
(c) Notwithstanding subsection 5.4(b), any Holder of Preferred
Securities may directly institute proceedings against the Guarantor to obtain
Guarantee Payments in respect of the Preferred Securities owned by such Holder,
without first waiting to determine if the Preferred Guarantee Trustee has
enforced this Preferred Securities Guarantee or first instituting a legal
proceeding against the Issuer, the Preferred Guarantee Trustee or any other
Person.
SECTION 5.5. Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee of payment and
not of collection.
SECTION 5.6. Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Preferred Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7. Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event
<PAGE>
-18-
referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1. Limitation of Transactions
(a) So long as any Preferred Securities remain outstanding, if an
Event of Default or Indenture Event of Default shall exist, then (a) the
Guarantor shall not declare or pay any dividend on, or make any distribution
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock, and (b) the Guarantor shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Guarantor which rank pari passu with or
junior to the Subordinated Notes.
(b) Notwithstanding subsection 6.1(a) or any other language to the
contrary contained in this Preferred Securities Guarantee, nothing shall prevent
the Guarantor from: (i) declaring or paying any dividend on, or making any
distribution with respect to, or redeeming, purchasing, acquiring or making a
liquidation payment with respect to, any of its capital stock in or with
securities of the Guarantor (including capital stock) that rank junior to such
capital stock or (ii) paying any interest, principal or premium on, or repaying,
repurchasing or redeeming, any debt securities issued by the Guarantor which
rank pari passu with or junior to the Subordinated Notes, with (x) securities of
the Guarantor (including capital stock) that rank junior to such debt securities
or (y) securities (including capital stock) of Coastal.
SECTION 6.2. Ranking
This Preferred Securities Guarantee constitutes an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, (ii) pari passu with the most
senior preferred or preference stock issued by the Guarantor from time to time
and with any guarantee now or hereafter entered into by the Guarantor in respect
of any preferred or preference stock of any Affiliate of the Guarantor and (iii)
senior to the Guarantor's common stock.
<PAGE>
-19-
ARTICLE VII
TERMINATION
SECTION 7.1. Termination
This Preferred Securities Guarantee shall terminate upon the earliest
to occur of (i) the full payment of the Redemption Price of all Preferred
Securities, (ii) the distribution of Subordinated Notes to the Holder(s) of all
of the Preferred Securities or (iii) full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Issuer. Notwithstanding
the foregoing, this Preferred Securities Guarantee will continue to be effective
or will be reinstated, as the case may be, if at any time any Holder of
Preferred Securities must restore payment of any sums paid under the Preferred
Securities or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. Exculpation
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Preferred
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Preferred Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omission.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts
<PAGE>
-20-
pertinent to the existence and amount of assets from which Distributions, the
Redemption Price or the Liquidation Distribution to Holders of Preferred
Securities might properly be paid.
(c) The provisions of this Section 8.1 shall survive the termination
of this Preferred Securities Guarantee.
SECTION 8.2. Indemnification
(a) The Guarantor shall indemnify and hold harmless each Indemnified
Person from and against any loss, damage or claim incurred by such Indemnified
Person by reason of any act or omission performed or omitted by such Indemnified
Person in good faith in accordance with this Preferred Securities Guarantee and
in a manner such Indemnified Person reasonably believed to be within the scope
of authority conferred on such Indemnified Person in accordance with this
Preferred Securities Guarantee, except that no Indemnified Person shall be
entitled to be indemnified in respect of any loss, damage or claim incurred by
such Indemnified Person by reason of negligence or willful misconduct with
respect to such acts or omissions.
(b) Expenses (including legal fees and expenses) incurred by an
Indemnified Person in defending any claim, demand, action, suit or proceeding
(whether such claim, demand, action, suit or proceeding arises between the
parties hereto or results from suits involving third parties) shall, from time
to time, be advanced by the Guarantor prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.2(a).
(c) The Guarantor agrees
(i) to pay to the Preferred Guarantee Trustee from time to time
such compensation as the Guarantor and the Preferred Guarantee Trustee
shall from time to time agree in writing for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);
(ii) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Preferred Guarantee Trustee in accordance
with any
<PAGE>
-21-
provision of this Agreement (including the reasonable compensation and
expenses and disbursements of its agents and counsel).
(d) The provisions of this Section 8.2 shall survive the termination
of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Successors and Assigns
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.
SECTION 9.2. Amendments
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Preferred Securities Guarantee may only be amended with the prior approval of
the Holders of at least a Majority in liquidation amount of the Preferred
Securities. The provisions of Section 12.2 of the Declaration with respect to
meetings of Holders of the Securities apply to the giving of such approval.
In executing, or accepting the additional trusts created by, and
amendment permitted by this Section or the modification thereby of the trust
created by this Agreement, the Preferred Guarantee Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement. The Preferred Guarantee Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Trustee's own rights, duties or
immunities under this Agreement or otherwise.
SECTION 9.3. Notices
All notices provided for in this Preferred Securities Guarantee shall
be in writing, duly signed by the party giving
<PAGE>
-22-
such notice, and shall be delivered, telecopied or mailed by first class mail,
as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attention: Remo Reale, Assistant Vice President
(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Preferred Securities):
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Attention: Director, Financial Administration
(c) If given to any Holder of Preferred Securities, at the address
set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid.
SECTION 9.4. Benefit
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5. Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
<PAGE>
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SECTION 9.6. No Recourse Against Certain Persons
No past, present or future director, officer, employee or stockholder,
as such, of the Guarantor or any successor thereof shall have any liability for
any obligations of the Guarantor under this Preferred Securities Guarantee or
for any claim based on, in respect of, or by reason of, such obligations or
their creation and all such liability is hereby waived and released. Such
waiver and release are part of the consideration for the issue of this Preferred
Securities Guarantee and the Preferred Securities.
<PAGE>
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THIS PREFERRED SECURITIES GUARANTEE AGREEMENT is executed as of the
day and year first above written.
THE COASTAL CORPORATION,
as Guarantor
By:
Name: Donald H. Gullquist
Title: Senior Vice President
THE BANK OF NEW YORK,
as Preferred Guarantee Trustee
By:
Name:
Title:
<PAGE>
Exhibit 4.19
____________________________________
COMMON SECURITIES GUARANTEE AGREEMENT
THE COASTAL CORPORATION
Dated as of , 1998
____________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
<S> <C> <C>
SECTION 1.1 Definitions Interpretation. 2
ARTICLE II
GUARANTEE
SECTION 2.1 Guarantee 3
SECTION 2.2 Waiver of Notice and Demand 4
SECTION 2.3 Obligations Not Affected 4
SECTION 2.4 Rights of Holders 5
SECTION 2.5 Guarantee of Payment 5
SECTION 2.6 Subrogation 5
SECTION 2.7 Independent Obligations 5
ARTICLE III
LIMITATION OF TRANSACTIONS;
SUBORDINATION
SECTION 3.1 Limitation of Transactions 6
SECTION 3.2 Ranking 6
ARTICLE IV
TERMINATION
SECTION 4.1 Termination 7
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Successors and Assigns 7
SECTION 5.2 Amendments 7
SECTION 5.3 Notices 8
SECTION 5.4 Benefit 8
SECTION 5.5 Governing Law 9
SECTION 5.6 No Recourse Against Certain
Persons 9
</TABLE>
-i-
<PAGE>
COMMON SECURITIES GURARANTEE AGREEMENT
GUARANTEE AGREEMENT (this "Common Securities Guarantee"), dated as of
, 1998, is executed and delivered by The Coastal Corporation, a Delaware
corporation (the "Guarantor"), for the benefit of the Holders (as defined
herein) from time to time of the Common Securities (as defined herein) of
Coastal Finance I, a Delaware business trust (the "Issuer").
WHEREAS, pursuant to an amended and restated Declaration of Trust (the
"Declaration"), dated as of , 1998, among the Trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof common securities having an aggregate
liquidation amount of $ designated the % Common Securities (the
"Common Securities");
WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth in this Common Securities Guarantee, to pay to the Holders
of the Common Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Preferred Securities Guarantee") in substantially identical
terms to this Common Securities Guarantee for the benefit of the holders of the
Preferred Securities (as defined herein), except that if an Event of Default (as
such term is defined in the Indenture) has occurred and is continuing, the
rights of Holders of the Common Securities to receive Guarantee Payments under
this Common Securities Guarantee are subordinated to the rights of holders of
Preferred Securities to receive guarantee payments under the Preferred
Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Common Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Common Securities Guarantee
for the benefit of the Holders.
<PAGE>
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ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions Interpretation.
In this Common Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Common Securities Guarantee but
not defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) terms defined in the Declaration as at the date of execution of
this Common Securities Guarantee have the same meaning when used in this
Common Securities Guarantee unless otherwise defined in this Common
Securities Guarantee;
(c) a term defined anywhere in this Common Securities Guarantee has
the same meaning throughout;
(d) all references to "the Common Securities Guarantee" or "this
Common Securities Guarantee" are to this Common Securities Guarantee as
modified, supplemented or amended from time to time;
(e) all references in this Common Securities Guarantee to Articles
and Sections are to Articles and Sections of this Common Securities
Guarantee unless otherwise specified; and
(f) a reference to the singular includes the plural and vice versa.
"Coastal" shall mean The Coastal Corporation, a Delaware corporation.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Common Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions that are required to be paid on such Common Securities, to the
extent the Issuer has funds available therefor, (ii) the redemption price,
including all accrued and unpaid Distributions to the date of redemption (the
"Redemption Price"), to the extent the Issuer has funds available therefor, with
respect to any Common Securities called for redemption by the Issuer, and (iii)
upon a voluntary or involuntary dissolution, winding-up or termination of the
Issuer (other than in connection with the distribution of Subordinated Notes to
the Holders in exchange for Common Securities as provided in the Declaration),
the lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid Distributions on the Common Securities to the date of payment, to the
extent the Issuer
<PAGE>
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has funds available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer (in
either case, the "Liquidation Distribution"). If an Event of Default (as defined
in the Indenture) has occurred and is continuing, the rights of Holders of the
Common Securities to receive Guarantee Payments under this Common Securities
Guarantee are subordinated to the rights of holders of Preferred Securities to
receive guarantee payments under the Preferred Securities Guarantee.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Common Securities.
"Indenture" means the Indenture dated as of , 1998, between the
Guarantor and The Bank of New York, as Trustee, and the First Supplemental
Indenture thereto pursuant to which certain subordinated debt securities of the
Guarantor are to be issued to the Property Trustee (as defined in the
Declaration), as from time to time amended.
"Property Trustee" shall have the meaning ascribed to such term in the
Declaration.
"Subordinated Notes" means the series of subordinated debt securities
of the Guarantor designated the % Subordinated Deferrable Interest Notes
due , held by the Property Trustee.
"Preferred Securities" shall mean the securities representing
preferred undivided beneficial interests in the assets of the Issuer.
ARTICLE II
GUARANTEE
SECTION 2.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of set-
off or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
<PAGE>
-4-
SECTION 2.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Common
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 2.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Common Securities Guarantee shall in no way be affected or impaired
by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Common Securities to
be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Common Securities or the
extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Common Securities (other than an
extension of time for payment of Distributions or other sum payable that
results from the extension of any interest payment period on the
Subordinated Notes permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Common
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Common
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
<PAGE>
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(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor;
it being the intent of this Section 2.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 2.4 Rights of Holders
The Guarantor expressly acknowledges that any Holder of Common
Securities may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Common Securities Guarantee, without first
instituting a legal proceeding against the Issuer or any other Person.
SECTION 2.5 Guarantee of Payment
This Common Securities Guarantee creates a guarantee of payment and
not of collection.
SECTION 2.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Common Securities against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Common Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any rights
which it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Common
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Common Securities Guarantee. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders and to pay over such amount to the
Holders.
SECTION 2.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Common
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Common
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.3 hereof.
<PAGE>
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ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1 Limitation of Transactions
(a) So long as any Common Securities remain outstanding, if (i) the
Guarantor shall be in default with respect to its Guarantee Payments or other
obligations hereunder, or (ii) if an Event of Default (as defined in the
Indenture) shall exist then (a) the Guarantor shall not declare or pay any
dividend on, or make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
and (b) the Guarantor shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
the Guarantor which rank pari passu with or junior to the Subordinated Notes.
(b) Notwithstanding subsection 3.1(a) or any other language to the
contrary contained in this Common Securities Guarantee, nothing shall prevent
the Guarantor from: (i) declaring or paying any dividend on, or making any
distribution with respect to, or redeeming, purchasing, acquiring or making a
liquidation payment with respect to, any of its capital stock in or with (x)
securities of the Guarantor (including capital stock) that rank junior to such
capital stock or (y) securities (including capital stock) of Coastal or (ii)
paying any interest, principal or premium on, or repaying, repurchasing or
redeeming, any debt securities issued by the Guarantor which rank pari passu
with or junior to the Subordinated Notes, with (x) securities of the Guarantor
(including capital stock) that rank junior to such debt securities or (y)
securities (including capital stock) of Coastal.
SECTION 3.2 Ranking
This Common Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, including the Subordinated
Notes and the Preferred Securities Guarantee, except those liabilities of the
Guarantor made pari passu or subordinate by their terms, (ii) pari passu with
the most senior preferred stock issued from time to time by the Guarantor and
with any guarantee now or hereafter entered into by the Guarantor in respect of
any preferred stock of any Subsidiary or Affiliate of the Guarantor, except the
Preferred Securities Guarantee, and (iii) senior to the Guarantor's common
stock.
<PAGE>
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ARTICLE IV
TERMINATION
SECTION 4.1 Termination
This Common Securities Guarantee shall terminate upon the first to
occur of (i) full payment of the Redemption Price of all Common Securities, (ii)
the distribution of Subordinated Notes to the Holders of all of the Common
Securities or (iii) the full payment of the amounts payable in accordance with
the Declaration upon liquidation of the Issuer. Notwithstanding the foregoing,
this Common Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Common Securities
must restore payment of any sums paid under the Common Securities or under this
Common Securities Guarantee.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Successors and Assigns
All guarantees and agreements contained in this Common Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Common Securities then outstanding.
SECTION 5.2 Amendments
Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Common Securities Guarantee may only be amended with the prior approval of the
Holders of at least a majority in liquidation amount of all the outstanding
Common Securities. The provisions of Section 12.2 of the Declaration with
respect to meetings of Holders of the Securities apply to the giving of such
approval.
SECTION 5.3 Notices
All notices provided for in this Common Securities Guarantee shall be
in writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
<PAGE>
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(a) if given to the Issuer, in care of the Regular Trustees at the
Issuer's mailing address set forth below (or such other address as the
Issuer may give notice of to the Holders of the Common Securities):
Coastal Finance I
c/o The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Attention: Director, Financial Administration
(b) if given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to
the Holders of the Common Securities):
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Attention: Director, Financial Administration
(c) if given to any Holder of Common Securities, at the address set
forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 5.4 Benefit
This Common Securities Guarantee is solely for the benefit of the
Holders of the Common Securities and is not separately transferable from the
Common Securities.
SECTION 5.5 Governing Law
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES.
<PAGE>
-9-
SECTION 5.6 No Recourse Against Certain Persons
No past, present or future director, officer, employee or stockholder,
as such, of the Guarantor or any successor thereof shall have any liability for
any obligations of the Guarantor under this Preferred Securities Guarantee or
for any claim based on, in respect of, or by reason of, such obligations or
their creation and all such liability is hereby waived and released. Such
waiver and release are part of the consideration for the issue of this Common
Securities Guarantee and the Common Securities.
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO CONFLICTS OF
This Common Securities Guarantee is executed as of the day and year
first above written.
THE COASTAL CORPORATION.
By:
-------------------------------
Name: Donald H. Gullquist
Title: Senior Vice President
<PAGE>
EXHIBIT 4.20
____________________________________
COMMON SECURITIES GUARANTEE AGREEMENT
THE COASTAL CORPORATION
Dated as of ,
____________________________________
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions Interpretation. 2
ARTICLE II
GUARANTEE
SECTION 2.1 Guarantee 3
SECTION 2.2 Waiver of Notice and Demand 4
SECTION 2.3 Obligations Not Affected 4
SECTION 2.4 Rights of Holders 5
SECTION 2.5 Guarantee of Payment 5
SECTION 2.6 Subrogation 5
SECTION 2.7 Independent Obligations 5
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1 Limitation of Transactions 6
SECTION 3.2 Ranking 6
ARTICLE IV
TERMINATION
SECTION 4.1 Termination 7
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Successors and Assigns 7
SECTION 5.2 Amendments 7
SECTION 5.3 Notices 8
SECTION 5.4 Benefit 8
SECTION 5.5 Governing Law 9
SECTION 5.6 No Recourse Against Certain Persons 9
-i-
<PAGE>
COMMON SECURITIES GUARANTEE AGREEMENT
GUARANTEE AGREEMENT (this "Common Securities Guarantee"), dated as of
, , is executed and delivered by The Coastal Corporation, a Delaware
corporation (the "Guarantor"), for the benefit of the Holders (as defined
herein) from time to time of the Common Securities (as defined herein) of
Coastal Finance II, a Delaware business trust (the "Issuer").
WHEREAS, pursuant to an amended and restated Declaration of Trust (the
"Declaration"), dated as of , , among the Trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof common securities having an aggregate
liquidation amount of $ designated the % Common Securities (the
"Common Securities");
WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth in this Common Securities Guarantee, to pay to the Holders
of the Common Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Preferred Securities Guarantee") in substantially identical
terms to this Common Securities Guarantee for the benefit of the holders of the
Preferred Securities (as defined herein), except that if an Event of Default (as
such term is defined in the Indenture) has occurred and is continuing, the
rights of Holders of the Common Securities to receive Guarantee Payments under
this Common Securities Guarantee are subordinated to the rights of holders of
Preferred Securities to receive guarantee payments under the Preferred
Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Common Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Common Securities Guarantee
for the benefit of the Holders.
<PAGE>
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ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions Interpretation.
In this Common Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Common Securities Guarantee but
not defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) terms defined in the Declaration as at the date of execution of
this Common Securities Guarantee have the same meaning when used in this
Common Securities Guarantee unless otherwise defined in this Common
Securities Guarantee;
(c) a term defined anywhere in this Common Securities Guarantee has
the same meaning throughout;
(d) all references to "the Common Securities Guarantee" or "this
Common Securities Guarantee" are to this Common Securities Guarantee as
modified, supplemented or amended from time to time;
(e) all references in this Common Securities Guarantee to Articles
and Sections are to Articles and Sections of this Common Securities
Guarantee unless otherwise specified; and
(f) a reference to the singular includes the plural and vice versa.
"Coastal" shall mean The Coastal Corporation, a Delaware corporation.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Common Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions that are required to be paid on such Common Securities, to the
extent the Issuer has funds available therefor, (ii) the redemption price,
including all accrued and unpaid Distributions to the date of redemption (the
"Redemption Price"), to the extent the Issuer has funds available therefor, with
respect to any Common Securities called for redemption by the Issuer, and (iii)
upon a voluntary or involuntary dissolution, winding-up or termination of the
Issuer (other than in connection with the distribution of Subordinated Notes to
the Holders in exchange for Common Securities as provided in the Declaration),
the lesser of (a) the aggregate of the liquidation amount and all accrued and
<PAGE>
-3-
unpaid Distributions on the Common Securities to the date of payment, to the
extent the Issuer has funds available therefor, and (b) the amount of assets of
the Issuer remaining available for distribution to Holders in liquidation of the
Issuer (in either case, the "Liquidation Distribution"). If an Event of Default
(as defined in the Indenture) has occurred and is continuing, the rights of
Holders of the Common Securities to receive Guarantee Payments under this Common
Securities Guarantee are subordinated to the rights of holders of Preferred
Securities to receive guarantee payments under the Preferred Securities
Guarantee.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Common Securities.
"Indenture" means the Indenture dated as of , 1998, between the
Guarantor and The Bank of New York, as Trustee, and the First Supplemental
Indenture thereto pursuant to which certain subordinated debt securities of the
Guarantor are to be issued to the Property Trustee (as defined in the
Declaration), as from time to time amended.
"Property Trustee" shall have the meaning ascribed to such term in the
Declaration.
"Subordinated Notes" means the series of subordinated debt securities
of the Guarantor designated the % Subordinated Deferrable Interest Notes
due , held by the Property Trustee.
"Preferred Securities" shall mean the securities representing
preferred undivided beneficial interests in the assets of the Issuer.
ARTICLE II
GUARANTEE
SECTION 2.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of set-
off or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
<PAGE>
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SECTION 2.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Common
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 2.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Common Securities Guarantee shall in no way be affected or impaired
by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Common Securities to
be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Common Securities or the
extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Common Securities (other than an
extension of time for payment of Distributions or other sum payable that
results from the extension of any interest payment period on the
Subordinated Notes permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Common
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Common
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
<PAGE>
-5-
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor;
it being the intent of this Section 2.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 2.4 Rights of Holders
The Guarantor expressly acknowledges that any Holder of Common
Securities may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Common Securities Guarantee, without first
instituting a legal proceeding against the Issuer or any other Person.
SECTION 2.5 Guarantee of Payment
This Common Securities Guarantee creates a guarantee of payment and
not of collection.
SECTION 2.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Common Securities against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Common Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any rights
which it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Common
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Common Securities Guarantee. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders and to pay over such amount to the
Holders.
SECTION 2.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Common
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Common
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.3 hereof.
<PAGE>
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ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1 Limitation of Transactions
(a) So long as any Common Securities remain outstanding, if (i) the
Guarantor shall be in default with respect to its Guarantee Payments or other
obligations hereunder, or (ii) if an Event of Default (as defined in the
Indenture) shall exist then (a) the Guarantor shall not declare or pay any
dividend on, or make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
and (b) the Guarantor shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
the Guarantor which rank pari passu with or junior to the Subordinated Notes.
(b) Notwithstanding subsection 3.1(a) or any other language to the
contrary contained in this Common Securities Guarantee, nothing shall prevent
the Guarantor from: (i) declaring or paying any dividend on, or making any
distribution with respect to, or redeeming, purchasing, acquiring or making a
liquidation payment with respect to, any of its capital stock in or with (x)
securities of the Guarantor (including capital stock) that rank junior to such
capital stock or (y) securities (including capital stock) of Coastal or (ii)
paying any interest, principal or premium on, or repaying, repurchasing or
redeeming, any debt securities issued by the Guarantor which rank pari passu
with or junior to the Subordinated Notes, with (x) securities of the Guarantor
(including capital stock) that rank junior to such debt securities or (y)
securities (including capital stock) of Coastal.
SECTION 3.2 Ranking
This Common Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, including the Subordinated
Notes and the Preferred Securities Guarantee, except those liabilities of the
Guarantor made pari passu or subordinate by their terms, (ii) pari passu with
the most senior preferred stock issued from time to time by the Guarantor and
with any guarantee now or hereafter entered into by the Guarantor in respect of
any preferred stock of any Subsidiary or Affiliate of the Guarantor, except the
Preferred Securities Guarantee, and (iii) senior to the Guarantor's common
stock.
<PAGE>
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ARTICLE IV
TERMINATION
SECTION 4.1 Termination
This Common Securities Guarantee shall terminate upon the first to
occur of (i) full payment of the Redemption Price of all Common Securities, (ii)
the distribution of Subordinated Notes to the Holders of all of the Common
Securities or (iii) the full payment of the amounts payable in accordance with
the Declaration upon liquidation of the Issuer. Notwithstanding the foregoing,
this Common Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Common Securities
must restore payment of any sums paid under the Common Securities or under this
Common Securities Guarantee.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Successors and Assigns
All guarantees and agreements contained in this Common Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Common Securities then outstanding.
SECTION 5.2 Amendments
Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Common Securities Guarantee may only be amended with the prior approval of the
Holders of at least a majority in liquidation amount of all the outstanding
Common Securities. The provisions of Section 12.2 of the Declaration with
respect to meetings of Holders of the Securities apply to the giving of such
approval.
SECTION 5.3 Notices
All notices provided for in this Common Securities Guarantee shall be
in writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
<PAGE>
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(a) if given to the Issuer, in care of the Regular Trustees at the
Issuer's mailing address set forth below (or such other address as the
Issuer may give notice of to the Holders of the Common Securities):
Coastal Finance II
c/o The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Attention: Director, Financial Administration
(b) if given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to
the Holders of the Common Securities):
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Attention: Director, Financial Administration
(c) if given to any Holder of Common Securities, at the address set
forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 5.4 Benefit
This Common Securities Guarantee is solely for the benefit of the
Holders of the Common Securities and is not separately transferable from the
Common Securities.
SECTION 5.5 Governing Law
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES.
<PAGE>
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SECTION 5.6 No Recourse Against Certain Persons
No past, present or future director, officer, employee or stockholder,
as such, of the Guarantor or any successor thereof shall have any liability for
any obligations of the Guarantor under this Preferred Securities Guarantee or
for any claim based on, in respect of, or by reason of, such obligations or
their creation and all such liability is hereby waived and released. Such
waiver and release are part of the consideration for the issue of this Common
Securities Guarantee and the Common Securities.
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO CONFLICTS OF
This Common Securities Guarantee is executed as of the day and year
first above written.
THE COASTAL CORPORATION.
By:
------------------------------
Name: Donald H. Gullquist
Title: Senior Vice President
<PAGE>
EXHIBIT 5.1
April 14, 1998
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") and Coastal Finance I and Coastal Finance II (each, a
"Trust"), each a statutory business trust formed under the laws of Delaware in
connection with the registration by the Company and the Trusts of up to $100
million aggregate public offering price of various debt and equity securities
of the Company and/or the Trusts, pursuant to a registration statement on Form
S-3 (the "Registration Statement"), filed by the Company and the Trusts with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"). The Securities issued by the Company may be in the form
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, (v) warrants to purchase shares of Common
Stock (the "Common Stock Warrants"), (vi) its unsecured subordinated
deferrable interest debentures (the "Subordinated Deferrable Interest
Debentures") and/or (vii) the Trust Preferred Securities Guarantees (as
defined below). The Securities issued by the Trusts may be in the form of
preferred securities evidencing preferred undivided beneficial interests in
the assets of the respective Trust (the "Trust Preferred Securities"). The
payment of periodic cash distributions with respect to Trust Preferred
Securities of each of the Trusts, out of moneys held by each of the Trusts,
and payments on liquidation, redemption or otherwise with respect to such
Trust Preferred Securities will be guaranteed by the Company (each, a "Trust
Preferred Securities Guarantee"). The Debt Securities, the Subordinated
Deferrable Interest Debentures, the Common Stock, the Preferred Stock, the
Trust Preferred Securities, the Trust Preferred Securities Guarantees and the
Common Stock Warrants are referred to collectively 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
Subordinated Deferrable Interest Debentures are proposed to be issued under an
indenture (the "Subordinated Deferrable Interest Debentures Indenture") to be
executed between the Company and a trustee to be selected by the Company. The
Trust Preferred Securities Guarantees are proposed to be issued under a
Preferred Securities Guarantee Agreement (the "Preferred Securities Guarantee
Agreement") to be executed between the Company and a Preferred Securities
Guarantee 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.
<PAGE>
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 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.
<PAGE>
6. With respect to the Subordinated Deferrable Interest Debentures to be
issued under the Subordinated Deferrable Interest Debentures 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 Deferrable Interest Debentures, the terms of the offering
thereof and related matters; and (iii) such Subordinated Deferrable
Interest Debentures have been duly executed, authenticated, issued and
delivered in accordance with the provisions of the Subordinated
Deferrable Interest Debentures 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 Deferrable Interest Debentures
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 Deferrable Interest Debentures Indenture and except that
the waiver as to usury in the Subordinated Deferrable Interest
Debentures Indenture may be unenforceable.
7. 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.
8. With respect to the Trust Preferred Securities Guarantees, when (i) the
Trust Preferred Securities Guarantee Agreement 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
Trust Preferred Securities Guarantees, the terms of the Offering thereof
and related matters; and (iii) the Trust Preferred Securities have been
duly issued, the Trust Preferred Securities Guarantees 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 Trust Preferred Securities
Guarantee 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 5.2
April 14, 1998
Coastal Finance Trust I
c/o The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046
Re: Coastal Finance I
Ladies and Gentlemen:
We have acted as special Delaware counsel for The Coastal Corporation,
a Delaware corporation (the "Company"), and Coastal Finance I, a Delaware
business trust (the "Trust"), in connection with the matters set forth herein.
At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated April 8, 1998 (the
"Certificate"), as filed in the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on April 8, 1998;
<PAGE>
Coastal Finance I
c/o The Coastal Corporation
April 14, 1998
Page 2
(b) The Declaration of Trust of the Trust, dated as of April 8, 1998,
among the Company and the trustees of the Trust named therein;
(c) The Registration Statement (the "Registration Statement") on Form
S-3, including a preliminary Prospectus and a preliminary Prospectus
Supplement (as so supplemented, the "Prospectus"), relating to the __%
Trust Preferred Securities of the Trust representing preferred undivided
beneficial interests in the assets of the Trust (each, a "Preferred
Security" and collectively, the "Preferred Securities"), as proposed to be
filed by the Company and the Trust with the Securities and Exchange
Commission on or about April 14, 1998;
(d) A form of Amended and Restated Declaration of Trust of the Trust,
to be entered into among the Company, the trustees of the Trust named
therein and the holders, from time to time, of the undivided beneficial
interests in the assets of the Trust (the "Trust Agreement"); and
(e) A Certificate of Good Standing for the Trust, dated April 14,
1998, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular,
we have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our
own but rather have relied solely upon the foregoing documents, the statements
and information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
<PAGE>
Coastal Finance I
c/o The Coastal Corporation
April 14, 1998
Page 3
For purposes of this opinion, we have assumed that (i) the Trust
Agreement and the Certificate are in full force and effect and have not been
amended, (ii) except to the extent provided in paragraph 1 below, each of the
parties to the documents examined by us has been duly organized or duly formed,
as the case may be, and is validly existing in good standing under the laws of
the jurisdiction governing its organization or formation, (iii) each natural
person who is a party to the documents examined by us has the legal capacity to
execute, deliver and perform such documents, (iv) each of the parties to the
documents examined by us has the power and authority to execute and deliver, and
to perform its obligations under, such documents, (v) each of the parties to the
documents examined by us has duly authorized, executed and delivered such
documents, (vi) each Person to whom a Preferred Security is to be issued by the
Trust (each, a "Preferred Security Holder" and collectively, the "Preferred
Security Holders") has received an appropriate Preferred Securities Certificate
for such Preferred Security, and the Trust has received payment for the
Preferred Security acquired by each such Preferred Security Holder, in
accordance with the Trust Agreement and the Prospectus, and (vii) the Preferred
Securities are issued and sold to the Preferred Security Holders in accordance
with the Trust Agreement and the Prospectus. We have not participated in the
preparation of the Registration Statement and assume no responsibility for its
contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
<PAGE>
Coastal Finance I
c/o The Coastal Corporation
April 14, 1998
Page 4
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, 12 Del.
C. (S) 3801, et seq.
2. The Preferred Securities to be issued to the Preferred Security
Holders will represent valid and, subject to the qualifications set forth
in paragraph 3 below, fully paid and nonassessable undivided beneficial
interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under
the General Corporation Law of the State of Delaware. We note that the
Preferred Security Holders may be obligated to make payments as set forth
in the Trust Agreement.
<PAGE>
Coastal Finance I
c/o The Coastal Corporation
April 14, 1998
Page 5
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of Persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
<PAGE>
EXHIBIT 5.3
April 14, 1998
Coastal Finance Trust II
c/o The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046
Re: Coastal Finance II
Ladies and Gentlemen:
We have acted as special Delaware counsel for The Coastal Corporation,
a Delaware corporation (the "Company"), and Coastal Finance II, a Delaware
business trust (the "Trust"), in connection with the matters set forth herein.
At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated April 8, 1998 (the
"Certificate"), as filed in the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on April 8, 1998;
(b) The Declaration of Trust of the Trust, dated as of April 8, 1998,
among the Company and the trustees of the Trust named therein;
1
<PAGE>
Coastal Finance II
c/o The Coastal Corporation
April 14, 1998
Page 2
(c) The Registration Statement (the "Registration Statement") on Form
S-3, including a preliminary Prospectus and a preliminary Prospectus
Supplement (as so supplemented, the "Prospectus"), relating to the __%
Trust Preferred Securities of the Trust representing preferred undivided
beneficial interests in the assets of the Trust (each, a "Preferred
Security" and collectively, the "Preferred Securities"), as proposed to be
filed by the Company and the Trust with the Securities and Exchange
Commission on or about April 14, 1998;
(d) A form of Amended and Restated Declaration of Trust of the Trust,
to be entered into among the Company, the trustees of the Trust named
therein and the holders, from time to time, of the undivided beneficial
interests in the assets of the Trust (the "Trust Agreement"); and
(e) A Certificate of Good Standing for the Trust, dated April 14,
1998, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular,
we have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our
own but rather have relied solely upon the foregoing documents, the statements
and information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
2
<PAGE>
Coastal Finance II
c/o The Coastal Corporation
April 14, 1998
Page 3
For purposes of this opinion, we have assumed that (i) the Trust
Agreement and the Certificate are in full force and effect and have not been
amended, (ii) except to the extent provided in paragraph 1 below, each of the
parties to the documents examined by us has been duly organized or duly formed,
as the case may be, and is validly existing in good standing under the laws of
the jurisdiction governing its organization or formation, (iii) each natural
person who is a party to the documents examined by us has the legal capacity to
execute, deliver and perform such documents, (iv) each of the parties to the
documents examined by us has the power and authority to execute and deliver, and
to perform its obligations under, such documents, (v) each of the parties to the
documents examined by us has duly authorized, executed and delivered such
documents, (vi) each Person to whom a Preferred Security is to be issued by the
Trust (each, a "Preferred Security Holder" and collectively, the "Preferred
Security Holders") has received an appropriate Preferred Securities Certificate
for such Preferred Security, and the Trust has received payment for the
Preferred Security acquired by each such Preferred Security Holder, in
accordance with the Trust Agreement and the Prospectus, and (vii) the Preferred
Securities are issued and sold to the Preferred Security Holders in accordance
with the Trust Agreement and the Prospectus. We have not participated in the
preparation of the Registration Statement and assume no responsibility for its
contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, 12 Del.
C. (S) 3801, et seq.
3
<PAGE>
Coastal Finance II
c/o The Coastal Corporation
April 14, 1998
Page 4
2. The Preferred Securities to be issued to the Preferred Security
Holders will represent valid and, subject to the qualifications set forth
in paragraph 3 below, fully paid and nonassessable undivided beneficial
interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under
the General Corporation Law of the State of Delaware. We note that the
Preferred Security Holders may be obligated to make payments as set forth
in the Trust Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of Persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
4
<PAGE>
EXHIBIT 8
April 14, 1998
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
Re: The Coastal Corporation
We have acted as special tax counsel for you ("Coastal") and for Coastal
Finance I and Coastal Finance II, each a statutory business trust created under
the laws of the State of Delaware (each, a "Coastal Finance Trust"), in
connection with the preparation of a Registration Statement on Form S-3 (the
"Registration Statement") about to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "1933 Act"),
relating, among other things, to the public offering of up to $700,000,000 in
the aggregate of (i) debt securities representing subordinated deferrable
interest obligations of Coastal (the "Subordinated Deferrable Interest
Debentures"), to be issued pursuant to an Indenture to be executed between
Coastal and The Bank of New York, as trustee, (the "Subordinated Deferrable
Interest Debentures Indenture") and (ii) preferred securities representing
preferred undivided beneficial interests in the assets of the respective Coastal
Finance Trust (the "Preferred Securities"). The proceeds of the offering of
preferred securities by a Coastal Finance Trust will be loaned to Coastal
(together with
<PAGE>
-2-
proceeds from issuance of common securities in that Coastal Finance Trust),
with such loan being evidenced by Subordinated Deferrable Interest Debentures.
In addition, certain payment obligations of a Coastal Finance Trust with respect
to the preferred securities will be guaranteed by Coastal to the extent set
forth in a subordinated guarantee.
In so acting, we have reviewed (i) the original Declaration of Trust of
each of Coastal Finance I and Coastal Finance II, each dated as of April 8,
1998, and (ii) the form of Amended and Restated Declaration of Trust for each of
Coastal Finance I and Coastal Finance II (each an "Amended Trust Agreement").
Our opinion is based upon the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder, administrative pronouncements by
the Internal Revenue Service, judicial decisions, and such other legal
authorities as we have deemed necessary or appropriate for purposes of our
opinion, as each exists on the date of this letter. Existing tax laws may be
changed by legislation or promulgation of regulations or may be interpreted
differently than they are at present by the Internal Revenue Service or the
courts, and such changes may alter the conclusions set forth in this letter.
In connection with issuance pursuant to the Registration Statement of
the Preferred Securities, you have requested that we render the opinion set
forth below. In rendering our opinion, we have examined and relied upon
representations and warranties as to factual matters made in or pursuant to the
documents referred to above and upon the originals, or copies certified or
otherwise identified to our satisfaction, of such records, documents,
certificates or other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. We have not,
however, undertaken any independent investigation of any factual matter set
forth in any of the foregoing. We also have assumed that the Amended Trust
Agreements will be duly executed and delivered substantially in the form of
Exhibits 4.13 and 4.14 to the Registration Statement, that the Amended Trust
Agreements will be valid and enforceable in accordance with their terms and that
the Coastal Finance Trusts will at all times comply with the Delaware Business
Trust Act and the terms of the Amended Trust Agreements. Our opinion addresses
only the United States federal income tax considerations of general application
relevant to a beneficial owner acquiring Preferred Securities upon original
issue at the original offering price that is (i) an individual citizen or
resident of the United States, (ii) a corporation or partnership created or
organized in or under the laws of the United States or any state thereof or the
District
<PAGE>
-3-
of Columbia or (iii) an estate or trust treated as a United States person for
federal income tax purposes.
Subject to the foregoing and to the qualifications and limitations set
forth herein, the statements relating to issuance of the Preferred Securities
set forth in the Prospectus Supplement forming a part of the Registration
Statement (the "Prospectus Supplement"), under the caption "Certain Federal
Income Tax Considerations," insofar as they relate to matters of law or legal
conclusions, constitute our opinion.
Our opinion is limited to the United States federal income tax matters
addressed, and no opinion is rendered as to any other issue. In addition, our
conclusions are based upon United States federal income tax law currently in
effect, which is subject to change on a prospective or retroactive basis,
representations concerning relevant facts that exist as of the date hereof and
the assumptions described above. If any assumption or representation described
above is not true, correct and complete, or in the event of a change in United
States federal income tax law adversely affecting the conclusions set forth in
this letter or in the Prospectus Supplement under "Certain Federal Income Tax
Considerations," our opinion shall be void and of no force or effect. We
undertake no obligation to update our opinion at any time. Our opinion is not
binding on the courts or on any administrative agency, and a court or agency may
hold or act to the contrary.
This opinion is addressed solely to you, and no other person may rely on
it, provided, however, that we hereby consent to the filing of this opinion as
an exhibit to the Registration Statement and to the use of our name under the
captions "Certain Federal Income Tax Considerations" and "Legal Opinions" in the
Prospectus Supplement. In giving such consent, we do not thereby concede that we
are within the category of persons whose consent is required under Section 7 of
the 1933 Act or the Rules and Regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
/s/ Cahill Gordon & Reindel
<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 3, 1998
(February 13, 1998 as to Note 15), appearing in the Annual Report on Form 10-K
of The Coastal Corporation for the year ended December 31, 1997, 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
April 8, 1998
<PAGE>
EXHIBIT 25.2
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [_]
______________________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
______________________
THE COASTAL CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 74-1734212
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
(Address of principal executive offices) (Zip code)
______________________
Subordinated Deferrable Interest Debentures
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
2
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 8th day of April, 1998.
THE BANK OF NEW YORK
By: /S/ VAN K. BROWN
_______________________
Name: VAN K. BROWN
Title: ASSISTANT VICE PRESIDENT
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin..................... $ 5,004,638
Interest-bearing balances............. 1,271,514
Securities:
Held-to-maturity securities........... 1,105,782
Available-for-sale securities......... 3,164,271
Federal funds sold and Securities pur-
chased under agreements to resell....... 5,723,829
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................34,916,196
LESS: Allowance for loan and
lease losses ..............581,177
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 34,334,590
Assets held in trading accounts......... 2,035,284
Premises and fixed assets (including
capitalized leases)................... 671,664
Other real estate owned................. 13,306
Investments in unconsolidated
subsidiaries and associated
companies............................. 210,685
Customers' liability to this bank on
acceptances outstanding............... 1,463,446
Intangible assets....................... 753,190
Other assets............................ 1,784,796
-----------
Total assets............................ $57,536,995
===========
LIABILITIES
Deposits:
In domestic offices................... $27,270,824
Noninterest-bearing .................. 12,160,977
Interest-bearing ..................... 15,109,847
In foreign offices, Edge and
Agreement subsidiaries, and IBFs...... 14,687,806
Noninterest-bearing .................. 657,479
Interest-bearing ..................... 14,030,327
Federal funds purchased and Securities
sold under agreements to repurchase. 1,946,099
Demand notes issued to the U.S.
Treasury.............................. 283,793
Trading liabilities..................... 1,553,539
Other borrowed money:
With remaining maturity of one year
or less............................. 2,245,014
With remaining maturity of more than
one year through three years............ 0
With remaining maturity of more than
three years......................... 45,664
Bank's liability on acceptances exe-
cuted and outstanding................. 1,473,588
Subordinated notes and debentures....... 1,018,940
Other liabilities....................... 2,193,031
-----------
Total liabilities....................... 52,718,298
-----------
EQUITY CAPITAL
Common stock............................ 1,135,284
Surplus................................. 731,319
Undivided profits and capital
reserves.............................. 2,943,008
Net unrealized holding gains
(losses) on available-for-sale
securities............................ 25,428
Cumulative foreign currency transla-
tion adjustments...................... (16,342)
-----------
Total equity capital.................... 4,818,697
-----------
Total liabilities and equity
capital ........................... $57,536,995
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
_
J. Carter Bacot |
Thomas A. Renyi |
Alan R. Griffith | Directors
_|
<PAGE>
EXHIBIT 25.3
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [_]
______________________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
______________________
COASTAL FINANCE I
(Exact name of obligor as specified in its charter)
Delaware Applied For
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
(Address of principal executive offices) (Zip code)
______________________
Preferred Securities
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
2
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 8th day of April, 1998.
THE BANK OF NEW YORK
By: /S/ VAN K. BROWN
_______________________
Name: VAN K. BROWN
Title: ASSISTANT VICE PRESIDENT
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin..................... $ 5,004,638
Interest-bearing balances............. 1,271,514
Securities:
Held-to-maturity securities........... 1,105,782
Available-for-sale securities......... 3,164,271
Federal funds sold and Securities pur-
chased under agreements to resell....... 5,723,829
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ...................34,916,196
LESS: Allowance for loan and
lease losses ................581,177
LESS: Allocated transfer risk
reserve..........................429
Loans and leases, net of unearned
income, allowance, and reserve 34,334,590
Assets held in trading accounts......... 2,035,284
Premises and fixed assets (including
capitalized leases)................... 671,664
Other real estate owned................. 13,306
Investments in unconsolidated
subsidiaries and associated
companies............................. 210,685
Customers' liability to this bank on
acceptances outstanding............... 1,463,446
Intangible assets....................... 753,190
Other assets............................ 1,784,796
-----------
Total assets............................ $57,536,995
===========
LIABILITIES
Deposits:
In domestic offices................... $27,270,824
Noninterest-bearing .................. 12,160,977
Interest-bearing ..................... 15,109,847
In foreign offices, Edge and
Agreement subsidiaries, and IBFs...... 14,687,806
Noninterest-bearing .................. 657,479
Interest-bearing ..................... 14,030,327
Federal funds purchased and Securities
sold under agreements to repurchase. 1,946,099
Demand notes issued to the U.S.
Treasury.............................. 283,793
Trading liabilities..................... 1,553,539
Other borrowed money:
With remaining maturity of one year
or less............................. 2,245,014
With remaining maturity of more than
one year through three years............ 0
With remaining maturity of more than
three years......................... 45,664
Bank's liability on acceptances exe-
cuted and outstanding................. 1,473,588
Subordinated notes and debentures....... 1,018,940
Other liabilities....................... 2,193,031
-----------
Total liabilities....................... 52,718,298
-----------
EQUITY CAPITAL
Common stock............................ 1,135,284
Surplus................................. 731,319
Undivided profits and capital
reserves.............................. 2,943,008
Net unrealized holding gains
(losses) on available-for-sale
securities............................ 25,428
Cumulative foreign currency transla-
tion adjustments...................... (16,342)
-----------
Total equity capital.................... 4,818,697
-----------
Total liabilities and equity
capital ........................... $57,536,995
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
_
J. Carter Bacot |
Thomas A. Renyi |
Alan R. Griffith | Directors
_|
<PAGE>
EXHIBIT 25.4
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [_]
------------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
------------------------------
THE COASTAL CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 74-1734212
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
(Address of principal executive offices) (Zip code)
------------------------------
Guarantee of Preferred Securities of
Coastal Finance I
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
2
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 8th day of April, 1998.
THE BANK OF NEW YORK
By: /S/ VAN K. BROWN
_______________________
Name: VAN K. BROWN
Title: ASSISTANT VICE PRESIDENT
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin..................... $ 5,004,638
Interest-bearing balances............. 1,271,514
Securities:
Held-to-maturity securities........... 1,105,782
Available-for-sale securities......... 3,164,271
Federal funds sold and Securities pur-
chased under agreements to resell....... 5,723,829
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................34,916,196
LESS: Allowance for loan and
lease losses ..............581,177
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 34,334,590
Assets held in trading accounts......... 2,035,284
Premises and fixed assets (including
capitalized leases)................... 671,664
Other real estate owned................. 13,306
Investments in unconsolidated
subsidiaries and associated
companies............................. 210,685
Customers' liability to this bank on
acceptances outstanding............... 1,463,446
Intangible assets....................... 753,190
Other assets............................ 1,784,796
-----------
Total assets............................ $57,536,995
===========
LIABILITIES
Deposits:
In domestic offices................... $27,270,824
Noninterest-bearing .................. 12,160,977
Interest-bearing ..................... 15,109,847
In foreign offices, Edge and
Agreement subsidiaries, and IBFs...... 14,687,806
Noninterest-bearing .................. 657,479
Interest-bearing ..................... 14,030,327
Federal funds purchased and Securities
sold under agreements to repurchase. 1,946,099
Demand notes issued to the U.S.
Treasury.............................. 283,793
Trading liabilities..................... 1,553,539
Other borrowed money:
With remaining maturity of one year
or less............................. 2,245,014
With remaining maturity of more than
one year through three years............ 0
With remaining maturity of more than
three years......................... 45,664
Bank's liability on acceptances exe-
cuted and outstanding................. 1,473,588
Subordinated notes and debentures....... 1,018,940
Other liabilities....................... 2,193,031
-----------
Total liabilities....................... 52,718,298
-----------
EQUITY CAPITAL
Common stock............................ 1,135,284
Surplus................................. 731,319
Undivided profits and capital
reserves.............................. 2,943,008
Net unrealized holding gains
(losses) on available-for-sale
securities............................ 25,428
Cumulative foreign currency transla-
tion adjustments...................... (16,342)
-----------
Total equity capital.................... 4,818,697
-----------
Total liabilities and equity
capital ........................... $57,536,995
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
_
J. Carter Bacot |
Thomas A. Renyi |
Alan R. Griffith | Directors
_|
<PAGE>
EXHIBIT 25.5
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [_]
______________________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
______________________
COASTAL FINANCE II
(Exact name of obligor as specified in its charter)
Delaware Applied For
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
(Address of principal executive offices) (Zip code)
______________________
Preferred Securities
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
2
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 8th day of April, 1998.
THE BANK OF NEW YORK
By: /S/ VAN K. BROWN
_______________________
Name: VAN K. BROWN
Title: ASSISTANT VICE PRESIDENT
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin..................... $ 5,004,638
Interest-bearing balances............. 1,271,514
Securities:
Held-to-maturity securities........... 1,105,782
Available-for-sale securities......... 3,164,271
Federal funds sold and Securities pur-
chased under agreements to resell....... 5,723,829
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................34,916,196
LESS: Allowance for loan and
lease losses ..............581,177
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 34,334,590
Assets held in trading accounts......... 2,035,284
Premises and fixed assets (including
capitalized leases)................... 671,664
Other real estate owned................. 13,306
Investments in unconsolidated
subsidiaries and associated
companies............................. 210,685
Customers' liability to this bank on
acceptances outstanding............... 1,463,446
Intangible assets....................... 753,190
Other assets............................ 1,784,796
-----------
Total assets............................ $57,536,995
===========
LIABILITIES
Deposits:
In domestic offices................... $27,270,824
Noninterest-bearing .................. 12,160,977
Interest-bearing ..................... 15,109,847
In foreign offices, Edge and
Agreement subsidiaries, and IBFs...... 14,687,806
Noninterest-bearing .................. 657,479
Interest-bearing ..................... 14,030,327
Federal funds purchased and Securities
sold under agreements to repurchase. 1,946,099
Demand notes issued to the U.S.
Treasury.............................. 283,793
Trading liabilities..................... 1,553,539
Other borrowed money:
With remaining maturity of one year
or less............................. 2,245,014
With remaining maturity of more than
one year through three years............ 0
With remaining maturity of more than
three years......................... 45,664
Bank's liability on acceptances exe-
cuted and outstanding................. 1,473,588
Subordinated notes and debentures....... 1,018,940
Other liabilities....................... 2,193,031
-----------
Total liabilities....................... 52,718,298
-----------
EQUITY CAPITAL
Common stock............................ 1,135,284
Surplus................................. 731,319
Undivided profits and capital
reserves.............................. 2,943,008
Net unrealized holding gains
(losses) on available-for-sale
securities............................ 25,428
Cumulative foreign currency transla-
tion adjustments...................... (16,342)
-----------
Total equity capital.................... 4,818,697
-----------
Total liabilities and equity
capital ........................... $57,536,995
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
_
J. Carter Bacot |
Thomas A. Renyi |
Alan R. Griffith | Directors
_|
<PAGE>
EXHIBIT 25.6
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [_]
______________________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
______________________
THE COASTAL CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 74-1734212
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046-0995
(Address of principal executive offices) (Zip code)
______________________
Guarantee of Preferred Securities of
Coastal Finance II
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
2
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 8th day of April, 1998.
THE BANK OF NEW YORK
By: /S/ VAN K. BROWN
_______________________
Name: VAN K. BROWN
Title: ASSISTANT VICE PRESIDENT
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin..................... $ 5,004,638
Interest-bearing balances............. 1,271,514
Securities:
Held-to-maturity securities........... 1,105,782
Available-for-sale securities......... 3,164,271
Federal funds sold and Securities pur-
chased under agreements to resell....... 5,723,829
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ...................34,916,196
LESS: Allowance for loan and
lease losses ................581,177
LESS: Allocated transfer risk
reserve..........................429
Loans and leases, net of unearned
income, allowance, and reserve 34,334,590
Assets held in trading accounts......... 2,035,284
Premises and fixed assets (including
capitalized leases)................... 671,664
Other real estate owned................. 13,306
Investments in unconsolidated
subsidiaries and associated
companies............................. 210,685
Customers' liability to this bank on
acceptances outstanding............... 1,463,446
Intangible assets....................... 753,190
Other assets............................ 1,784,796
-----------
Total assets............................ $57,536,995
===========
LIABILITIES
Deposits:
In domestic offices................... $27,270,824
Noninterest-bearing .................. 12,160,977
Interest-bearing ..................... 15,109,847
In foreign offices, Edge and
Agreement subsidiaries, and IBFs...... 14,687,806
Noninterest-bearing .................. 657,479
Interest-bearing ..................... 14,030,327
Federal funds purchased and Securities
sold under agreements to repurchase. 1,946,099
Demand notes issued to the U.S.
Treasury.............................. 283,793
Trading liabilities..................... 1,553,539
Other borrowed money:
With remaining maturity of one year
or less............................. 2,245,014
With remaining maturity of more than
one year through three years............ 0
With remaining maturity of more than
three years......................... 45,664
Bank's liability on acceptances exe-
cuted and outstanding................. 1,473,588
Subordinated notes and debentures....... 1,018,940
Other liabilities....................... 2,193,031
-----------
Total liabilities....................... 52,718,298
-----------
EQUITY CAPITAL
Common stock............................ 1,135,284
Surplus................................. 731,319
Undivided profits and capital
reserves.............................. 2,943,008
Net unrealized holding gains
(losses) on available-for-sale
securities............................ 25,428
Cumulative foreign currency transla-
tion adjustments...................... (16,342)
-----------
Total equity capital.................... 4,818,697
-----------
Total liabilities and equity
capital ........................... $57,536,995
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
_
J. Carter Bacot |
Thomas A. Renyi |
Alan R. Griffith | Directors
_|
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COASTAL CORPORATION FORM 10-K ANNUAL REPORT FOR THE PERIOD
ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 58
<SECURITIES> 0
<RECEIVABLES> 1,192
<ALLOWANCES> 0
<INVENTORY> 781
<CURRENT-ASSETS> 2,250
<PP&E> 10,018
<DEPRECIATION> 3,556
<TOTAL-ASSETS> 10,659
<CURRENT-LIABILITIES> 2,207
<BONDS> 3,662
1
3
<COMMON> 36
<OTHER-SE> 2,640
<TOTAL-LIABILITY-AND-EQUITY> 10,659
<SALES> 10,458
<TOTAL-REVENUES> 10,509
<CGS> 7,554
<TOTAL-COSTS> 9,707
<OTHER-EXPENSES> 65
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 415
<INCOME-PRETAX> 322
<INCOME-TAX> 52
<INCOME-CONTINUING> 270
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 270
<EPS-PRIMARY> 2.41
<EPS-DILUTED> 2.39
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COASTAL CORPORATION FORM 10-Q QUARTERLY REPORT FOR THE PERIOD
ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 64
<SECURITIES> 0
<RECEIVABLES> 1,463
<ALLOWANCES> 0
<INVENTORY> 1,024
<CURRENT-ASSETS> 2,794
<PP&E> 10,576
<DEPRECIATION> 3,808
<TOTAL-ASSETS> 11,461
<CURRENT-LIABILITIES> 2,719
<BONDS> 3,792
0
3
<COMMON> 37
<OTHER-SE> 2,800
<TOTAL-LIABILITY-AND-EQUITY> 11,461
<SALES> 8,819
<TOTAL-REVENUES> 8,882
<CGS> 6,702
<TOTAL-COSTS> 8,299
<OTHER-EXPENSES> 43
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 278
<INCOME-PRETAX> 262
<INCOME-TAX> 55
<INCOME-CONTINUING> 207
<DISCONTINUED> 0
<EXTRAORDINARY> (12)
<CHANGES> 0
<NET-INCOME> 195
<EPS-PRIMARY> 1.73
<EPS-DILUTED> 1.71
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COASTAL CORPORATION FORM 10-K ANNUAL REPORT FOR THE PERIOD
ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 106
<SECURITIES> 0
<RECEIVABLES> 1,801
<ALLOWANCES> 0
<INVENTORY> 1,144
<CURRENT-ASSETS> 3,196
<PP&E> 9,962
<DEPRECIATION> 3,307
<TOTAL-ASSETS> 11,613
<CURRENT-LIABILITIES> 2,947
<BONDS> 3,526
0
3
<COMMON> 37
<OTHER-SE> 2,997
<TOTAL-LIABILITY-AND-EQUITY> 11,613
<SALES> 12,167
<TOTAL-REVENUES> 12,252
<CGS> 8,980
<TOTAL-COSTS> 11,156
<OTHER-EXPENSES> 65
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 368
<INCOME-PRETAX> 663
<INCOME-TAX> 163
<INCOME-CONTINUING> 500
<DISCONTINUED> 0
<EXTRAORDINARY> (97)
<CHANGES> 0
<NET-INCOME> 403
<EPS-PRIMARY> 3.65
<EPS-DILUTED> 3.61
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COASTAL CORPORATION FORM 10-Q QUARTERLY REPORT FOR THE
PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 51
<SECURITIES> 0
<RECEIVABLES> 1,201
<ALLOWANCES> 0
<INVENTORY> 776
<CURRENT-ASSETS> 2,189
<PP&E> 10,315
<DEPRECIATION> 3,498
<TOTAL-ASSETS> 10,903
<CURRENT-LIABILITIES> 2,179
<BONDS> 3,537
100
3
<COMMON> 37
<OTHER-SE> 3,061
<TOTAL-LIABILITY-AND-EQUITY> 10,903
<SALES> 5,285
<TOTAL-REVENUES> 5,329
<CGS> 3,862
<TOTAL-COSTS> 4,888
<OTHER-EXPENSES> 29
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 152
<INCOME-PRETAX> 260
<INCOME-TAX> 79
<INCOME-CONTINUING> 181
<DISCONTINUED> 0
<EXTRAORDINARY> 91
<CHANGES> 0
<NET-INCOME> 90
<EPS-PRIMARY> .77
<EPS-DILUTED> .76
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COASTAL CORPORATION FORM 10-Q QUARTERLY REPORT FOR THE
PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 63
<SECURITIES> 0
<RECEIVABLES> 1,297
<ALLOWANCES> 0
<INVENTORY> 906
<CURRENT-ASSETS> 2,439
<PP&E> 10,426
<DEPRECIATION> 3,553
<TOTAL-ASSETS> 11,242
<CURRENT-LIABILITIES> 2,419
<BONDS> 3,636
100
3
<COMMON> 37
<OTHER-SE> 3,129
<TOTAL-LIABILITY-AND-EQUITY> 11,242
<SALES> 7,428
<TOTAL-REVENUES> 7,498
<CGS> 5,290
<TOTAL-COSTS> 6,848
<OTHER-EXPENSES> 44
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 230
<INCOME-PRETAX> 376
<INCOME-TAX> 115
<INCOME-CONTINUING> 261
<DISCONTINUED> 0
<EXTRAORDINARY> 91
<CHANGES> 0
<NET-INCOME> 170
<EPS-PRIMARY> 1.49
<EPS-DILUTED> 1.47
</TABLE>
