<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 13, 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 II DELAWARE APPLIED FOR
COASTAL FINANCE III 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
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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. [_]
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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
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<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.................. | $600,000,000 100% $600,000,000 $177,000
- --------------------------------- |
The Coastal Corporation Subordi- |
nated Deferrable Interest Deben- |
tures .......................... |
- --------------------------------- |
Coastal Finance II Preferred |
Securities...................... |
- --------------------------------- |
Coastal Finance III 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.
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<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1998)
PREFERRED SECURITIES
COASTAL FINANCE II
[LOGO OF COASTAL APPEARS HERE]
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $ PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
THE COASTAL CORPORATION
---------------
The % Trust Preferred Securities (the "Preferred Securities") offered
hereby represent undivided preferred beneficial interests in the assets of
Coastal Finance II, 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-8 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"). 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 SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. 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)
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<S> <C> <C> <C>
Per Preferred Security.......... $ (3) $
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Total........................... $ (3) $
</TABLE>
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(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) Before deducting expenses of the offering payable by the Company estimated
at $ .
---------------
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 $ per
Preferred Security, accruing from , 1998 and payable quarterly in arrears
on , , and of each year, commencing , 1998
("distributions"). The distribution payable on , 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 March 31, 1998. 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 March 31,
1998, the subsidiaries of the Company had total indebtedness outstanding of
approximately $1.5 billion and other liabilities of approximately $1.7 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
S-2
<PAGE>
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
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 $ 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 $
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."
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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-43
for the location in this Prospectus Supplement of the definitions of certain
capitalized terms used herein.
THE COMPANY
The Company, acting through its subsidiaries, is a diversified energy holding
company with operations in natural gas gathering, marketing, processing,
storage and transmission; petroleum refining, marketing and distribution;
chemicals; gas and oil exploration and production; coal mining; and power.
Natural Gas Systems. The Company's natural gas pipelines are involved in the
transportation, storage and gathering of natural gas. The Company's major
natural gas pipeline subsidiaries include ANR Pipeline Company ("ANR Pipeline")
and Colorado Interstate Gas Company ("Colorado"). The Company has interests in
other pipeline systems including Wyoming Interstate Company Ltd., Alliance
Pipeline System, Great Lakes Gas Transmission L.P. and Empire State Pipeline
("Empire"). ANR Pipeline transports natural gas to the Midwest and the
Northeast from production areas in the central United States. ANR Pipeline's
principal pipeline facilities at December 31, 1997 consisted of 10,611 miles of
pipeline and 75 compressor stations. The design peak day delivery capacity of
the ANR Pipeline system is approximately 5.9 Bcf per day. ANR Pipeline also
operates two offshore pipelines in the Gulf of Mexico and Empire, an intrastate
pipeline in New York, in which it owns a 50% interest. Colorado's natural gas
transmission system extends from production areas in Texas, Oklahoma and Kansas
northwesterly through eastern Colorado to the Denver area, and from production
areas in Montana, Wyoming and Utah southeasterly to the Denver area. Colorado's
principal pipeline transmission and storage facilities at December 31, 1997
consisted of 4,160 miles of pipeline, 59 compressor stations and underground
storage facilities with a working capacity of 29 Bcf. The design peak day
delivery capacity of Colorado's transmission system is approximately 2.0 Bcf
per day. Colorado also owns over 2,300 miles of gathering facilities and five
gas processing plants in production areas adjacent to its transmission system.
The Company, primarily through two subsidiaries, Coastal Field Services Company
("CFSC") and Coastal Gas International Ltd. ("CGI"), operates an unregulated
natural gas business. CFSC owns or operates domestic gathering and processing
assets for various affiliates. CGI conducts the international unregulated
natural gas operations of the Company. In 1997, the Company and Westcoast
Energy Inc. ("Westcoast") jointly formed one of North America's largest
marketers of natural gas and electricity through the combination of the two
companies' related marketing and services businesses. The combination created
Engage Energy US, L.P. and Engage Energy Canada, L.P., in which the Company and
Westcoast each indirectly owns 50% interests.
Refining, Marketing and Chemicals. The Company, through subsidiaries, has
operations involved in the purchase, transportation and sale of refined
products, crude oil, condensate and natural gas liquids; the operation of
refineries and chemical plants; the sale at retail of gasoline, petroleum
products and convenience items; petroleum product terminaling and marketing of
crude oil and refined products worldwide. The Company-owned refineries in
Aruba, Texas, Alabama and New Jersey have a combined refining capacity of
468,000 barrels per day and produce a full range of petroleum products. The
Company, through Coastal Mart, Inc. and branded marketers, conducts retail
marketing using the C-MART(R), C and Design and/or COASTAL(R) trademarks in 36
states and Aruba through approximately 1,731 Coastal branded outlets. Coastal's
subsidiaries operate plants in Nevada, Oregon, Texas and Wyoming producing
chemical products for the agriculture, refining and mining industries. Coastal
Chem, Inc. operates an integrated methyl teritiary butyl ether ("MTBE") plant
with a production capacity of 4,200 barrels per day. The Company's
petrochemical facility in Montreal East, Quebec, Canada, has the capacity to
produce 330,000 tons per year of paraxylene, a component used in the
manufacturing of polyester fibers and containers.
S-4
<PAGE>
Exploration and Production. The Company has subsidiaries engaged in oil and
gas exploration, development and production operations in most major producing
regions of the United States and internationally in Australia, Colombia,
Hungary, Indonesia and Peru. The Company's domestic proved reserves of crude
oil, condensate and natural gas liquids at December 31, 1997 were 40.1 million
barrels and proved natural gas reserves were 1,752.5 Bcf. In 1997, natural gas
production averaged 540 MMcf per day and crude oil and liquids production
averaged 13,736 barrels per day. Many of the Company's domestic gas wells are
located in areas near, and are connected to, its natural gas systems.
Generally, the Company's domestic production of crude oil, condensate and
natural gas liquids is purchased by marketing and refining affiliates.
Other Operations. The Company, through the operations of ANR Coal Company,
LLC and its affiliates, produces and markets high quality bituminous coal from
reserves in the eastern United States. The Company, through Coastal Power
Company ("Coastal Power") and its affiliates, develop, operate and own various
equity interests in cogeneration and independent power projects. Coastal Power
has interests in four domestic cogeneration projects and five foreign operating
independent power projects as well as interests in other projects in various
stages of development and construction. The projects produce and sell
electrical and thermal energy.
THE OFFERING
Preferred Securities Offered
% Trust Originated Preferred Securities evidencing undivided preferred
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 $ 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 $ 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
S-5
<PAGE>
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 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) $ 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."
S-6
<PAGE>
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. 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-7
<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 March 31, 1998, 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
March 31, 1998, the subsidiaries of the Company had total indebtedness
outstanding of approximately $1.5 billion and other liabilities of
approximately $1.7 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
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<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."
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<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 , . The Trust's business is defined in a Declaration of Trust,
dated as of , , 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 the Trust. 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.......................................... 1.35x 1.63x 1.58x 2.43x 2.22x
</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
.
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<PAGE>
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, 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 $ 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 , 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
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<PAGE>
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 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
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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 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
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<PAGE>
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.
It has recently been reported that the Internal Revenue Service challenged
the deductibility, for U.S. federal income tax purposes, of interest payments
pursuant to instruments analogous to the Subordinated Debt Securities, held by
an entity similar in certain respects to the Trust. Based on the information
available to it, the Company does not believe that deductibility of interest
pursuant to the Subordinated Debt Securities is jeopardized by the position
reported to have been taken by the Internal Revenue Service, and the Company
intends to take the position that the interest payments pursuant to the
Subordinated Debt Securities will be deductible by the Company for federal
income tax purposes. See "Certain Federal Income Tax Consequences--
Classification of the Subordinated Debt Securities." Adverse developments in
respect of the reported proceeding, or otherwise, could give rise to a Tax
Event.
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 interpretation or application
of such laws or regulations by any 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.
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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.
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 $ 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.
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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
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
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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 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."
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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 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
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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.
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.
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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.
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
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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.
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. The Bank of New York 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,
to be 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 March 31, 1998, 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.
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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 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
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<PAGE>
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 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.
S-33
<PAGE>
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
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.
S-35
<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. It has recently been reported that the Internal Revenue Service
challenged the status as indebtedness, for U.S. federal income tax purposes,
of certain instruments analogous to the Subordinated Debt Securities, held by
an entity similar in certain respects to the Trust. See "Description of the
Preferred Securities--Special Event Redemption or Distribution." Based on the
information available to it, the Company does not believe that the treatment
of the Subordinated Debt Securities as indebtedness for federal income tax
purposes is jeopardized by the position reported to have been taken. 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 II
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.
S-36
<PAGE>
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 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.
S-37
<PAGE>
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 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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<PAGE>
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.
S-39
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement") among the Trust, the Company and each of the
underwriters named below (the "Underwriters"), the Trust has agreed to sell to
each of the Underwriters, and each of the Underwriters, for whom
are acting as representatives (the
"Representatives"), has severally agreed to purchase the number of Preferred
Securities set forth opposite its name below.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER PREFERRED SECURITIES
----------- --------------------
<S> <C>
$
--------
Total.............................................
========
</TABLE>
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<PAGE>
In the Underwriting 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 Underwriting
Agreement provides that, in certain circumstances, the purchase commitments of
the nondefaulting Underwriters may be increased or the Underwriting Agreement
may be terminated.
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 Underwriting 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 Representatives, directly or indirectly, sell, offer to sell, contract to
sell, grant any option for the sale of, or otherwise dispose of, any Trust
Preferred Securities (as defined in the accompanying Prospectus), any security
convertible into, or exchangeable or exercisable for, Trust Preferred
Securities or any debt securities substantially similar to the Subordinated
Debt Securities or any equity securities substantially similar to the Trust
Preferred Securities (except for the Subordinated Debt Securities and the
Preferred Securities offered hereby and subject to certain exceptions
specified in the Underwriting Agreement).
Prior to this Offering there has been no public market for the Preferred
Securities. The Representatives have 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
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.
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.
S-41
<PAGE>
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.
S-42
<PAGE>
DEFINITIONS
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Additional Interest........... S-30
Beneficial Owner.............. S-22
Business Day.................. S-14
Change in 1940 Act Law........ S-16
Common Securities............. S-1
Common Securities Guarantee... S-24
Company....................... S-1
Company Trustees.............. S-11
Creditor...................... S-22
DTC........................... S-23
Declaration................... S-11
Declaration Event of Default.. S-20
Delaware Trustee.............. S-11
Direct Participants........... S-21
Dissolution Tax Opinion....... S-16
distributions................. S-2
Event of Default.............. S-31
Exchange Act.................. S-21
Extension Period.............. S-2
Global Security............... S-31
Guarantee Payments............ S-24
Indenture..................... S-27
Indenture Event of Default.... S-18
Indirect Participants......... S-21
Interest Payment Date......... S-29
Investment Company Event...... S-16
Liquidation Distribution...... S-17
1940 Act...................... S-16
No Recognition Opinion........ S-15
</TABLE>
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Non-U.S. Holder....................................................... S-36
OID................................................................... S-36
Participants.......................................................... S-21
Preferred Guarantee Trustee........................................... S-11
Preferred Securities.................................................. S-1
Preferred Securities Guarantee........................................ S-1
Property Account...................................................... S-11
Property Trustee...................................................... S-11
Redemption Price...................................................... S-3
Redemption Tax Opinion................................................ S-15
Regular Trustees...................................................... S-11
Regulations........................................................... S-37
Representative........................................................ S-40
Senior Indebtedness................................................... S-28
Special Event......................................................... S-15
Sponsor............................................................... S-11
Successor Securities.................................................. S-21
Subordinated Debt Securities.......................................... S-2
Subordinated Debt Trustee............................................. S-27
Super-Majority........................................................ S-20
Tax Event............................................................. S-16
Trust................................................................. S-1
Trust Act............................................................. S-11
Trust Indenture Act................................................... S-11
Trust Securities...................................................... S-1
Underwriting Agreement................................................ S-40
Underwriters.......................................................... S-40
Underwriters' Compensation............................................ S-40
U.S. Holder........................................................... S-36
</TABLE>
S-43
<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 , 1998
PROSPECTUS THE COASTAL CORPORATION
[LOGO OF
COASTAL CORPORATION DEBT SECURITIES
APPEARS HERE] PREFERRED STOCK
COMMON STOCK
COMMON STOCK WARRANTS
SUBORDINATED DEFERRABLE INTEREST DEBENTURES
----------
COASTAL FINANCE II
COASTAL FINANCE III
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 II and Coastal Finance III (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
$ (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.
2
<PAGE>
INCORPORATION OF DOCUMENTS BY REFERENCE
Coastal hereby incorporates in this Prospectus by reference the following
documents, which have been filed by Coastal with the Commission pursuant to
the Exchange Act (File No. 1-7176):
1. Annual Report on Form 10-K for the year ended December 31, 1997 (the
"1997 Annual Report");
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1998;
3. Current Report on Form 8-K dated May 4, 1998; and
4. Current Report on Form 8-K dated June 3, 1998.
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 II and Coastal Finance III 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;
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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 Harris Trust and
Savings Bank. 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, adjusted to give effect to
the two-for-one split in Common Stock as of record date May 29, 1998, was as
follows:
<TABLE>
<CAPTION>
CLASS OF STOCK SHARES
-------------- ------
<S> <C>
Common Stock.................................................... 211,994,674
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")............................................ 8,000,000/1/
</TABLE>
All issued and outstanding shares are fully-paid and non-assessable.
- --------
/1/ Series H redeemed in full on April 15, 1998.
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.
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<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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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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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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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 $ 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
32
<PAGE>
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 July 1, 1998, Mr.
O'Toole beneficially owned approximately 46,858 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>
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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 II, 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 II 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-8
The Trust................................................................. S-11
Accounting Treatment...................................................... S-12
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. S-12
Use of Proceeds........................................................... S-12
Description of the Preferred Securities................................... S-13
Description of the Preferred Securities Guarantee......................... S-24
Description of the Subordinated Debt Securities........................... S-27
Effect of Obligations Under the Subordinated Debt Securities and the
Preferred Securities Guarantee........................................... S-35
Certain Federal Income Tax Consequences................................... S-36
Underwriting.............................................................. S-40
Legal Matters............................................................. S-42
Definitions............................................................... S-43
PROSPECTUS
Available Information..................................................... 2
Incorporation of Documents by Reference................................... 3
The Company............................................................... 4
The Trusts................................................................ 4
Use of Proceeds........................................................... 5
Accounting Treatment Relating to Trust Securities......................... 5
Ratio of Earnings to Fixed Charges and 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>
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COASTAL FINANCE II
% TRUST PREFERRED SECURITIES
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY
[LOGO OF COASTAL APPEARS HERE]
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.................................................. $177,000
Printing and Engraving Expenses................................... 75,000
Legal Fees and Expenses........................................... 25,000
Accounting Fees and Expenses...................................... 50,000
Miscellaneous..................................................... 25,000
--------
Total........................................................... $352,000
========
</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) (filed as Exhibit 1.1 of
Registrant's Registration Statement on Form S-3 (Registration No.
333-50075) and incorporated herein by reference).
1.2 Form of Underwriting Agreement with respect to Equity Securities
(including form of Terms Agreement) (filed as Exhibit 1.2 of
Registrant's Registration Statement on Form S-3 (Registration No.
333-50075) and incorporated herein by reference).
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-ARTL-INCORP on March 28, 1994).
3.2 By-Laws of the Company, as amended on January 16, 1990 (filed as
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 (filed as Exhibit 4.1
of Registrant's Registration Statement on Form S-3 (Registration No.
333-50075) and incorporated herein by reference).
4.2 Form of Senior Debt Security (included in Exhibit No. 4.1).
4.3 Form of Indenture for the Subordinated Debt Securities (filed as
Exhibit 4.3 of Registrant's Registration Statement on Form S-3
(Registration No. 333-50075) and incorporated herein by reference).
4.4 Form of Subordinated Debt Security (included in Exhibit 4.3).
4.5 Form of Indenture for the Subordinated Deferrable Interest Debentures
(filed as Exhibit 4.5 of Registrant's Registration Statement on Form
S-3 (Registration No. 333-50075) and incorporated herein by
reference).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
4.6 Form of Second Supplemental Indenture to Indenture to be used in
connection with the issuance of the Subordinated Deferrable Interest
Debentures (filed as Exhibit 4.7 of Registrant's Registration
Statement on Form S-3 (Registration No. 333-50075) and incorporated
herein by reference).
4.7 Form of Third 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).
4.9 Certificate of Trust of Coastal Finance II (filed as Exhibit 4.10 of
Registrant's Registration Statement on Form S-3 (Registration No.
333-50075) and incorporated herein by reference).
4.10 Certification of Trust of Coastal Finance III.
4.11 Declaration of Trust of Coastal Finance II (filed as exhibit 4.12 of
Registrant's Registration Statement on Form S-3 (Registration No.
333-50075) and incorporated herein by reference).
4.12 Declaration of Trust of Coastal Finance III.
4.13 Form of Amended and Restated Declaration of Trust of Coastal Finance
II (filed as Exhibit 4.14 of Registrant's Registration Statement on
Form S-3 (Registration No. 333-50075) and incorporated herein by
reference).
4.14 Form of Amended and Restated Declaration of Trust of Coastal Finance
III.
4.15 Form of Common Stock Warrant Agreement (filed as Exhibit 4.15 of
Registrant's Registration Statement on Form S-3 (File No. 333-50075)
and incorporated herein by reference.
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 II (filed as Exhibit 4.18 of Registrant's
Registration Statement on Form S-3 (Registration No. 333-50075) and
incorporated herein by reference.
4.18 Form of Guarantee Agreement with respect to Preferred Securities of
Coastal Finance III.
4.19 Form of Guarantee Agreement with respect to Common Securities of
Coastal Finance II (filed as Exhibit 4.20 of Registrant's
Registration Statement on Form S-3 (Registration No. 333-50075) and
incorporated herein by reference).
4.20 Form of Guarantee Agreement with respect to Common Securities of
Coastal Finance III.
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 II Trust Preferred
Securities being registered (filed as Exhibit 5.3 of Registrant's
Registration Statement on Form S-3 (Registration No. 333-50075) and
incorporated herein by reference).
5.3 Opinion of Richards, Layton & Finger, P.A. regarding the validity
under Delaware law of the Coastal Finance III 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
(filed as Exhibit 25.2 of Registrant's Registration Statement on
Form S-3 (Registration No. 333-50075) and incorporated herein by
reference).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
25.3 Statement of Eligibility of The Bank of New York, as Trustee for
Preferred Securities of Coastal Finance II on Form T-1 (filed as
Exhibit 25.5 of Registrant's Registration Statement on Form S-3
(Registration No. 333-50075) and incorporated herein by reference).
25.4 Statement of Eligibility of The Bank of New York, as Trustee for
Guarantee of Preferred Securities of Coastal Finance II on Form T-1
(filed as Exhibit 25.6 of Registrant's Registration Statement on Form
S-3 (Registration No. 333-50075) and incorporated herein by
reference).
25.5 Statement of Eligibility of the Bank of New York, as Trustee for
Preferred Securities of Coastal Finance III, 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 III, on Form T-
1.
27.1 Restated Financial Data Schedule for the year December 31, 1995 (filed
as Exhibit 27.1 of Registrant's Registration Statement on Form S-3
(Registration No. 333-50075) and incorporated herein by reference).
27.2 Restated Financial Data Schedule for the period ended September 30,
1996 (filed as Exhibit 27.2 of Registrant's Registration Statement on
Form S-3 (Registration No. 333-50075) and incorporated herein by
reference).
27.3 Restated Financial Data Schedule for the year December 31, 1996 (filed
as Exhibit 27.3 of Registrant's Registration Statement on Form S-3
(Registration No. 333-50075) and incorporated herein by reference).
27.4 Restated Financial Data Schedule for the period ended June 30, 1997
(filed as Exhibit 27.4 of Registrant's Registration Statement on Form
S-3 (Registration No. 333-50075) and incorporated herein by
reference).
27.5 Restated Financial Data Schedule for the period ended September 30,
1997 (filed as Exhibit 27.5 of Registrant's Registration Statement on
Form S-3 (Registration No. 333-50075) and incorporated herein by
reference).
</TABLE>
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* 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. 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
II-3
<PAGE>
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-4
<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 JULY 13, 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 JULY 13,
1998.
Coastal Finance II
/s/ Coby C. Hesse
By: _________________________________
Name: Coby C. Hesse
Title: Trustee
/s/ Donald H. Gullquist
By: _________________________________
Name: Donald H. Gullquist
Title: Trustee
/s/ Austin M. O'Toole
By: _________________________________
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 JULY 13,
1998.
Coastal Finance III
/s/ Coby C. Hesse
By: _________________________________
Name: Coby C. Hesse
Title: Trustee
/s/ Donald H. Gullquist
By: _________________________________
Name: Donald H. Gullquist
Title: Trustee
/s/ Austin M. O'Toole
By: _________________________________
Name: Austin M. O'Toole
Title: Trustee
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 (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, July 13, 1998
- ------------------------------------ President,
DAVID A. ARLEDGE Chief Executive Officer,
Chief Financial Officer and
Director (Principal
Executive Officer and
Principal Financial
Officer)
/s/ Coby C. Hesse Executive Vice President July 13, 1998
- ------------------------------------ (Principal Accounting
COBY C. HESSE Officer)
/s/ John M. Bissell Director July 13, 1998
- ------------------------------------
JOHN M. BISSELL
/s/ George L. Brundrett, Jr. Director July 13, 1998
- ------------------------------------
GEORGE L. BRUNDRETT, JR.
/s/ Harold Burrow Director July 13, 1998
- ------------------------------------
HAROLD BURROW
/s/ Roy D. Chapin, Jr. Director July 13, 1998
- ------------------------------------
ROY D. CHAPIN, JR.
/s/ James F. Cordes Director July 13, 1998
- ------------------------------------
JAMES F. CORDES
/s/ Roy L. Gates Director July 13, 1998
- ------------------------------------
ROY L. GATES
/s/ Kenneth O. Johnson Director July 13, 1998
- ------------------------------------
KENNETH O. JOHNSON
/s/ Jerome S. Katzin Director July 13, 1998
- ------------------------------------
JEROME S. KATZIN
/s/ Thomas R. McDade Director July 13, 1998
- ------------------------------------
THOMAS R. MCDADE
/s/ J. Carleton MacNeil, Jr. Director July 13, 1998
- ------------------------------------
J. CARLETON MACNEIL, JR.
/s/ O. S. Wyatt, Jr. Director July 13, 1998
- ------------------------------------
O. S. WYATT, JR.
/s/ L. D. Wooddy, Jr. Director July 13, 1998
- ------------------------------------
L. D. WOODDY, JR.
</TABLE>
II-6
<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 July 13, 1998
______________________________________ Finance II
COBY H. HESSE
/s/ Donald H. Gullquist Trustee of Coastal July 13, 1998
______________________________________ Finance II
DONALD H. GULLQUIST
/s/ Austin M. O'Toole Trustee of Coastal July 13, 1998
______________________________________ Finance II
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 July 13, 1998
______________________________________ Finance III
COBY H. HESSE
/s/ Donald H. Gullquist Trustee of Coastal July 13, 1998
______________________________________ Finance III
DONALD H. GULLQUIST
/s/ Austin M. O'Toole Trustee of Coastal July 13, 1998
______________________________________ Finance III
AUSTIN M. O'TOOLE
</TABLE>
II-7
<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]
Ladies and Gentlemen:
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) (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 Trust exists for the exclusive purpose of issuing and
selling the Preferred Securities and investing the proceeds thereof in an
equivalent principal amount of Subordinated Deferrable Interest Notes of the
Company (the "Subordinated Debt 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
<PAGE>
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 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 the 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 were filed with the Commission,
complied in all material respects with the requirements of the Exchange
Act, 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 Exchange Act.
(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.
2
<PAGE>
(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 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. The
Trust has no Subsidiaries.
(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 the Company and its
Subsidiaries taken as a whole or of the Trust, from the date as of which
information is given in the Prospectus.
(j) Neither of the Issuers nor any of the Company's 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 the Company's 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 or of the
Trust.
(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 The Bank of New York, 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
3
<PAGE>
or otherwise) under, or result in the imposition of a lien on any
properties of the Issuers or any of the Company's 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 the Company's 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 the Company's
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 the Company's 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 the
Company's 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 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
Declaration, will be validly issued and fully paid and nonassessable
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 "Capitalization" table set forth in the
Prospectus Supplement, the Company had the authorized, issued and
outstanding capitalization set forth thereunder. 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 and the Terms
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.
4
<PAGE>
(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 the Company's 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
either of the Issuers or any of the Company's 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 or of the Trust.
(t) 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.
(u) Except as described in the Prospectus, there is no litigation or
governmental proceeding to which either of the Issuers or any of the
Company's Subsidiaries is a party or to which any property of any of them
is subject or which is pending or, to the knowledge of the Issuers,
contemplated against either of the Issuers or any of the Company's
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 or
of the Trust.
(v) Neither of the Issuers nor any of the Company's 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 the Company and its
Subsidiaries taken as a whole or of the Trust.
(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
5
<PAGE>
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 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.
(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, nor upon consummation of the
offering of the Securities and the application of the proceeds therefrom as
described in the Prospectus will be, 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, distribution 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 below) 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 (the "Purchase Price") for the
Purchased Securities, as set forth in the Terms Agreement, shall be made to
the order of the Trust in immediately available (same day) funds against
delivery to the nominee of The Depository Trust Company for the accounts of
the Underwriters or such other persons designated in writing by the
Underwriters of one or more global securities representing the Purchased
Securities (the "Global Security"), with any transfer taxes payable in
connection with the
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transfer to the Underwriters paid by the Company. Each applicable Global
Security will be made available for inspection by the Underwriters at the
office of the Underwriters at the address set forth above, or at such other
location as the Company and the Underwriters agree, not later than 1:00
P.M., New York City time, on the Business Day prior to the Closing Date. In
view of the fact that the proceeds of the sale of the Purchased Securities
will be used to purchase Subordinated Debt Securities, the Company agrees
to pay compensation ("Underwriters' Compensation") to the Underwriters for
arranging the investment therein of such proceeds in an amount in
immediately available (same day) funds per Purchased Security as set forth
in the applicable Term Agreement.
(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 a form agreed to between the
Trust and you (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
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
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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.
(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 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.
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(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.
(j) During a period of 30 days from the date of a Terms Agreement,
neither Issuer will, without the prior written consent of the
Representatives, directly or indirectly, sell, offer to sell, contract to
sell, grant any option for the sale of, or otherwise dispose of, any
Preferred Securities or any Subordinated Debt Securities, any security
convertible into or exchangeable into or exercisable for Preferred
Securities or any Subordinated Debt Securities or any debt securities
substantially similar to the Subordinated Debt Securities or any equity
securities substantially similar to the Trust Preferred Securities (except
for the Purchased Securities and Subordinated Debt Securities being issued
to the Trust).
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, 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;
(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 (to the extent it is a party thereto) 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;
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(iii) each of the Guarantee Agreement, the 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 the Company's Subsidiaries is a party, or of which
the business or properties of either of the Issuers or any of the
Company's 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 the Company's 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
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 either of the
Issuers or any of the Company's 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 the Company's 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 the Company's 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 on the Trust, 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 the Company's 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;
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(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; any 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) (a) the Trust and the Company jointly meet the requirements for
use of Form S-3 under the Securities Act, and (b) 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 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;
(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, nor upon consummation of
the offering of the Securities and the application of the proceeds
therefrom as described in the Prospectus will be, 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
(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; 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 representatives of the
Underwriters at which conferences the contents of the Registration
Statement and the Prospectus and related matters were discussed. Given the
character of determinations involved in the preparation of the Registration
Statement and the Prospectus, such counsel may state that he is not passing
upon and does not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or
the Prospectus and has made no independent check or verification thereof.
Subject to the foregoing, such counsel shall state that no facts have come
to such counsel's attention that would cause such counsel to believe that
the Registration Statement or any amendment thereto, at the time the
Registration Statement or any such 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 or any amendment or supplement
thereto, at the time the Prospectus was issued, at the time any such
amended or supplemented prospectus was issued or at the Closing Date,
included or includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the
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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, including the notes
thereto, or any other financial or statistical data found in or derived
from the internal accounting and other records of the Company and its
Subsidiaries set forth or referred to in the Registration Statement or the
Prospectus).
(d) You shall have received an opinion of Cahill Gordon & Reindel, your
counsel, dated the Closing Date, to the effect set forth in clauses (ii),
(iii), (iv), (v), (viii), (ix)(b), (xi) and (xiii)(a) (except with respect
to the Incorporated Documents) 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 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
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) You shall have received an opinion of Richards, Layton & Finger,
P.A., special Delaware counsel to the Issuers, dated the Closing Date, to
the effect that:
(i) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware 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 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.
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(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.
(f) You shall have received an opinion of Emmet, Marvin & Martin, LLP,
counsel to The Bank of New York, as Property Trustee under the Declaration,
dated the Closing Date, 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.
(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.
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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.
(g) 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.
(h) Since the execution of the Terms Agreement, neither of the Issuers
nor any of the Company's 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 or to the Trust, 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 or of the Trust, 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.
(i) 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, as of 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.
(j) 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.
(k) 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.
(l) You shall have been furnished with such additional documents and
certificates as you may reasonably request.
(m) Since the execution of any Terms Agreement, (i) no downgrading shall
have occurred in the rating assigned to the Company's debt securities by
any "nationally recognized statistical rating organization," as
14
<PAGE>
that term is defined by the Commission for purposes of Rule 436(g)(2) under
the Securities Act, and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities.
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 through
Merrill Lynch specifically for use in the preparation of the Registration
Statement, the 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 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 through
Merrill Lynch specifically for use in the preparation thereof.
15
<PAGE>
(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 hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which
it may have otherwise than on account of this indemnity agreement. 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 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 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
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.
16
<PAGE>
(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
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
17
<PAGE>
all of the Purchased 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 hereof and
the representations, warranties and agreements of the Issuers in Sections 1
and 3 hereof 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
"Underwriting", 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.
11. PARTIES. This Agreement shall inure to the benefit of and be binding
upon the Underwriters, each of the Issuers, any officer, director, trustee, 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.
18
<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: _________________________________
19
<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 of Trust Originated 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
Preferred 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 $25.00 per Preferred Security. 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 (same day) 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:
(a) Distributions: % per annum of the liquidation amount of $25.00 per
Preferred Security
(b) Conversion:
(c) Initial Public Offering Price:
(d) Purchase Price:
(e) Underwriters' Compensation
(f) Distribution Payment Dates: , , , and of each year,
commencing .
(g) Redemption:(i) upon repayment, whether at maturity or upon acceleration,
redemption or otherwise, of the Subordinated Debt Securities (ii) upon a
Tax Event or (iii) upon an Investment Company Event
1
<PAGE>
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.
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>
SCHEDULE A
TO
TERMS AGREEMENT
<TABLE>
<CAPTION>
NUMBER
OF
PURCHASED
NAME SECURITIES
---- -----------
<S> <C>
-----------
Total.....................................................
===========
</TABLE>
3
<PAGE>
<PAGE> 1
RESTATED CERTIFICATE OF INCORPORATION
OF
THE COASTAL CORPORATION<PAGE>
<PAGE> 2
RESTATED CERTIFICATE OF INCORPORATION
OF
THE COASTAL CORPORATION
The original Certificate of Incorporation of THE COASTAL CORPORATION
(hereinafter called the Corporation), was filed on September 7, 1972 under
the name "Coastal States Gas Corporation". This Restated Certificate of
Incorporation only restates and integrates and does not further amend the
provisions of the Certificate of Incorporation of the Corporation as
heretofore amended or supplemented and there is no discrepancy between those
provisions and the provisions of this Restated Certificate of Incorporation:
FIRST: The name of the corporation is:
THE COASTAL CORPORATION
SECOND: The address of the Corporation's registered office in the
State of Delaware is 1209 Orange Street, City of Wilmington, County of New
Castle. The name of the Corporation's registered agent at such address is
The Corporation Trust Company.
THIRD: The purposes of the Corporation are to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 302,700,000 shares, consisting
of 250,000,000 shares of Common Stock, par value $.33-1/3 per share ("Common
Stock"), 50,000,000 shares of Preferred Stock, par value $.33-1/3 per share
("Preferred Stock"), and 2,700,000 shares of Class A Common Stock, par value
$.33-1/3 per share ("Class A Common Stock").
The powers, preferences and rights, and the qualifications,
limitations and restrictions thereof, of each class of stock, and the
express grant of authority to the Board of Directors to fix by resolution
the designations and the powers, preferences and rights of each share of
Preferred Stock and the qualifications, limitations and restrictions thereof
which are not fixed by this Certificate of Incorporation, are as follows:
(A) Common Stock and Class A Common Stock.
Except as provided in this Article FOURTH, the Common Stock and the
Class A Common Stock shall have the same rights and privileges and shall
rank equally, share ratably and be identical in all respects as to all
matters.
(1) Dividends, Combinations, and Subdivisions.
(a) Subject to the rights of the holders of
Preferred Stock, holders of Common Stock and Class A Common
Stock shall be entitled to receive such dividends, payable in
cash or otherwise, as may be declared thereon by the Board of
Directors from time to time out of assets or funds of the
Corporation legally available therefor, provided that no
dividend may be declared and paid to holders of Class A
Common Stock unless at the same time the Board of Directors
shall also declare and pay to the holders of Common Stock a
per share dividend greater than the per share dividend
declared and paid to holders of Class A Common Stock. In
-1-<PAGE>
<PAGE> 3
addition, the Board of Directors may declare and pay
dividends to the holders of Common Stock without declaring
and paying dividends to the holders of Class A Common Stock.
(b) In the event that the outstanding shares of
either the Common Stock or the Class A Common Stock are
changed into, exchanged for or reclassified into a different
number, class or kind of shares of the Corporation or any
other corporation or entity which does not result in the
receipt by the Corporation of any new consideration (other
than a transfer of surplus of the Corporation) without such
action being taken on a proportionate basis with respect to
the other class of common stock, whether such change,
exchange or reclassification occurs through a reorganization,
recapitalization, stock split or otherwise, then the
requirement that a greater per share dividend be declared and
paid with respect to the Common Stock shall be appropriately
and equitably adjusted to reflect such action.
(c) Notwithstanding the foregoing, the requirement
that a greater per share dividend be declared and paid with
respect to the Common Stock shall not apply (i) to a dividend
paid in partial or complete liquidation of the Corporation or
(ii) in the event of a dividend payable in shares of Common
Stock. In the event that a dividend payable in Common Stock
is declared on the Common Stock, the Board of Directors shall
also declare a dividend on the Class A Common Stock payable
in Common Stock equal on a per share basis to the number of
shares of Common Stock which are paid to holders of Common
Stock.
(2) Voting.
(a) Except as expressly provided herein, at every
meeting of stockholders of the Corporation, every holder of
Common Stock shall be entitled to one vote in person or by
proxy for each share of Common Stock standing in his name on
the transfer books of the Corporation and every holder of
Class A Common Stock shall be entitled to one hundred votes
in person or by proxy for each share of Class A Common Stock
standing in his name on the transfer books of the
Corporation. At every meeting of the stockholders called for
the election of directors, the holders of Common Stock,
voting as a class with the Preferred Stock entitled to vote,
shall be entitled to elect one-quarter (1/4) of the number of
directors to be elected at such meeting (excluding from such
number any directors to be elected by the holders of
Preferred Stock), and if one-quarter (1/4) of such number of
directors is not a whole number, then the holders of Common
Stock, voting as a class with the Preferred Stock entitled to
vote, 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 Preferred Stock
entitled to vote, voting as a single class, shall be entitled
to elect the remaining directors to be elected at such
meeting (excluding from such number any directors to be
elected by the holders of Preferred Stock). 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
-2-<PAGE>
<PAGE> 4
class with the Preferred Stock entitled to vote or by the
holders of Class A Common Stock, Common Stock and Preferred
Stock entitled to vote, 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 directors
designated by the holders of Common Stock and Preferred Stock
entitled to vote 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 Preferred Stock entitled to vote.
(b) Except as may otherwise be required by law or
by this Article FOURTH, the holders of Common Stock and Class
A Common Stock shall vote together as a single class, subject
to any voting rights which may be granted to holders of
Preferred Stock.
(3) Conversion.
(a) Each share of Class A Common Stock may at any
time be converted into one fully paid and nonassessable share
of Common Stock. Such right shall be exercised by the
surrender of the certificate representing such share of Class
A Common Stock to be converted to the Corporation at any time
during normal business hours at the principal executive
offices of the Corporation, or if an agent for the
registration of transfer of shares of Class A Common Stock is
then duly appointed and acting (said agent being hereinafter
called the "Transfer Agent") then at the office of the
Transfer Agent, accompanied by a written notice of the
election by the holder thereof to convert and (if so required
by the Corporation or the Transfer Agent) by instruments of
transfer, in form satisfactory to the Corporation and to the
Transfer Agent, duly executed by such holder or his duly
authorized attorney, and transfer tax stamps or funds
therefor, if required pursuant to subparagraph (e) below.
(b) As promptly as practicable after the surrender
for conversion of a certificate representing shares of Class
A Common Stock in the manner provided in subparagraph (a)
above and the payment in cash of any amount required by the
provisions of subparagraphs (a) and (e), the Corporation will
deliver or cause to be delivered at the office of the
Transfer Agent to or upon the written order of the holder of
such certificate, a certificate or certificates representing
the number of full shares of Common Stock issuable upon such
conversion, issued in such name or names as such holder may
direct. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of the
surrender of the certificate representing shares of Class A
Common Stock, and all rights of the holder of such shares as
such holder shall cease at such time and the person or
persons in whose name or names the certificate or
certificates representing the shares of Common Stock are to
be issued shall be treated for all purposes as having become
the record holder or holders of such shares of Common Stock
at such time; provided, however, that any such surrender and
payment on any date when the stock transfer books of the
Corporation shall be closed shall constitute the person or
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<PAGE> 5
persons in whose name or names the certificate or
certificates representing shares of Common Stock are to be
issued as the record holder or holders thereof for all
purposes immediately prior to the close of business on the
next succeeding day on which such stock transfer books are
open.
(c) No adjustments in respect of dividends shall be
made upon the conversion of any share of Class A Common
Stock, provided, however, that if a share shall be converted
subsequent to the record date for the payment of a dividend
or other distribution on shares of Class A Common Stock but
prior to such payment, the registered holder of such share at
the close of business on such record date shall be entitled
to receive the dividend or other distribution payable on such
share on the date set for payment of such dividend or other
distribution notwithstanding the conversion thereof or the
Corporation's default in payment of the dividend due on such
date.
(d) The Corporation covenants that it will at all
times reserve and keep available, solely for the purpose of
issuance upon conversion of the outstanding shares of Class A
Common Stock, such number of shares of Common Stock as shall
be issuable upon the conversion of all such outstanding
shares, provided, that nothing contained herein shall be
construed to preclude the Corporation from satisfying its
obligations in respect of the conversion of the outstanding
shares of Class A Common Stock by delivery of purchased
shares of Common Stock which are held in the treasury of the
Corporation. The Corporation covenants that if any shares of
Common Stock, required to be reserved for purposes of
conversion hereunder require registration with or approval of
any governmental authority under any federal or state law
before such shares of Common Stock may be issued upon
conversion, the Corporation will cause such shares to be duly
registered or approved, as the case may be. The Corporation
covenants that all shares of Common Stock which shall be
issued upon conversion of the shares of Class A Common Stock,
will, upon issue, be fully paid and nonassessable and not
subject to any preemptive rights.
(e) The issuance of certificates for shares of
Common Stock upon conversion of shares of Class A Common
Stock shall be made without charge for any stamp or other
similar tax in respect of such issuance. However, if any
such certificate is to be issued in a name other than that of
the holder of the share or shares of Class A Common Stock
converted, the person or persons requesting the issuance
thereof shall pay to the Corporation the amount of any tax
which may be payable in respect of any transfer involved in
such issuance or shall establish to the satisfaction of the
Corporation that such tax has been paid.
(f) At any time while there are shares of Class A
Common Stock issued and outstanding, the Board of Directors
of the Corporation may, in its sole discretion, by a majority
vote of the Directors then in office convert all outstanding
shares of Class A Common Stock into Common Stock on a share
for share basis. Notice of automatic conversion of Class A
Common Stock specifying the date fixed for said conversion
shall be mailed, postage prepaid, at least 20 days but not
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<PAGE> 6
more than 30 days prior to said conversion date to the
holders of record of the Class A Common Stock at their
respective addresses as the same shall appear on the books of
the Corporation. Following the expiration of such notice
period, each outstanding share of Class A Common Stock shall
be deemed to be a share of Common Stock for all purposes.
(4) Transfer.
(a) No person holding shares of Class A Common
Stock (a "Class A Holder") may transfer, and the Corporation
and the Transfer Agent shall not register the transfer of,
such shares of Class A Common Stock, whether by sale,
assignment, gift, devise, bequest, appointment or otherwise.
Any purported transfer of shares of Class A Common Stock
shall be null and void and of no effect and the purported
transfer by a Class A Holder will result in the immediate and
automatic conversion of the shares of Class A Common Stock
held by such Class A Holder into shares of Common Stock. The
purported transferee shall have no rights as a stockholder of
the Corporation and no other rights against, or with respect
to, the Corporation except the right to receive shares of
Common Stock upon the immediate and automatic conversion of
his shares of Class A Common Stock into shares of Common
Stock. Upon the death of any Class A Holder which is a
natural person, or the liquidation, dissolution or winding up
of the business or affairs of any corporation, partnership or
trust, the shares of Class A Common Stock held by such person
shall immediately and automatically convert into an equal
number of shares of Common Stock.
(b) Shares of Class A Common Stock shall be
registered in the name(s) of the beneficial owner(s) thereof
(as hereafter defined) and not in "street" or "nominee"
names; provided, however, certificates representing shares of
Class A Common Stock issued as a stock dividend on the
Corporation's then outstanding common stock may be registered
in the same name and manner as the certificates representing
the shares of Common Stock with respect to which the shares
of Class A Common Stock are issued. For the purposes of this
paragraph 4, the term "beneficial owner(s)" of any shares of
Class A Common Stock shall mean the person or persons who
possess the power to dispose, or to direct the disposition
of, such shares. Any shares of Class A Common Stock
registered in "street" or "nominee" name may be transferred
to the beneficial owner of such shares on the record date for
such stock dividend, upon proof satisfactory to the
Corporation and the Transfer Agent that such person was in
fact the beneficial owner of such shares on the record date
for such stock dividend.
(c) Notwithstanding anything to the contrary set
forth herein, any Class A Holder may pledge such holder's
shares of Class A Common Stock to a pledgee pursuant to a
bona fide pledge of such shares as collateral security for
indebtedness due to the pledgee, provided that such shares
shall not be transferred to, or registered in the name of,
the pledgee and shall remain subject to the provisions of
this paragraph 4 of Section A. In the event of foreclosure
or other similar action by the pledgee, such pledged shares
of Class A Common Stock may not be transferred to the pledgee
and may only be converted into shares of Common Stock.
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<PAGE> 7
(d) The Corporation shall note on the certificates
representing the shares of Class A Common Stock the
restrictions on transfer and registration of transfer imposed
by this paragraph 4.
(e) For purposes of this paragraph 4:
(i) Each joint owner of shares of Class A
Common Stock shall be considered a Class A Holder of
such shares.
(ii) A minor for whom shares of Class A
Common Stock are held pursuant to a Uniform Gifts to
Minors Act or similar law shall be considered a Class
A Holder of such shares.
(iii) Unless otherwise specified, the term
"person" includes a natural person, corporation,
partnership, unincorporated association, firm, joint
venture, trust or other entity.
(iv) Persons participating in the Thrift or
Employee Stock Ownership Plans of the Corporation (or
any similar or successor plans) shall be deemed to be
the Class A Holders of the shares of Class A Common
Stock allocated to their accounts pursuant to such
plans.
(5) Distribution of Assets.
(a) In the event the Corporation shall be
liquidated, dissolved or wound up, whether voluntarily or
involuntarily, after there shall have been paid to or set
aside for the holders of the Preferred Stock of all series
then outstanding the full preferential amounts to which they
are respectively entitled under this Article FOURTH and their
respective Certificates of Designation, the holders of the
Class A Common Stock shall be entitled to share ratably with
the holders of the Common Stock of the Corporation as a
single class in the remaining net assets of the Corporation,
that is, an equal amount of net assets for each share of
Common Stock and Class A Common Stock. A merger or
consolidation of the Corporation with or into any other
corporation or a sale or conveyance of all or any part of the
assets of the Corporation (which shall not in fact result in
the liquidation of the Corporation and the distribution of
assets to stockholders) shall not be deemed to be a voluntary
or involuntary liquidation or dissolution or winding up of
the Corporation within the meaning of this paragraph 5.
(6) Authorized Shares; Fractional Shares.
(a) The number of authorized shares of Class A
Common Stock may not be increased unless approved by the
holders of a majority of the then outstanding shares of
Common Stock and Preferred Stock entitled to vote, voting
together as a single class.
(b) No fractional shares of Common Stock shall be
issued upon conversion of shares of Class A Common Stock. In
lieu of fractional shares, the Transfer Agent shall pay an
amount in cash equal to the closing market price of the
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<PAGE> 8
shares of Common Stock on the conversion date multiplied by
the fraction of a share of Common Stock that would otherwise
be issuable.
(B) Preferred Stock.
Shares of Preferred Stock may be issued from time to time in one or
more series as may be determined from time to time by the Board of
Directors, each such series to be distinctly designated. Except in respect
of the particulars fixed by the Board of Directors for series provided for
by the Board of Directors as permitted hereby, all shares of Preferred Stock
shall be of equal rank and shall be identical. All shares of any one series
of Preferred Stock so designated by the Board of Directors shall be alike in
every particular, except that shares of any one series issued at different
times may differ as to the dates from which dividends thereon shall be
cumulative. The voting rights, if any, of each such series and the
preferences and relative, participating, optional and other special rights
of each such series and the qualifications, limitations and restrictions
thereof, if any, may differ from those of any and all other series at any
time outstanding; and the Board of Directors of the Corporation is hereby
expressly granted authority to fix, by resolutions duly adopted prior to the
issuance of any shares of a particular series of Preferred Stock so
designated by the Board of Directors, the voting powers of stock of such
series, if any, and the designations, preferences and relative,
participating, optional and other special rights and the qualifications,
limitations and restrictions of such series, including, but without limiting
the generality of the foregoing, the following:
(a) The rate and times at which, and the terms and
conditions on which, dividends on Preferred Stock of such
series will be paid;
(b) The right, if any, of the holders of Preferred
Stock of such series to convert the same into, or exchange
the same for, shares of other classes or series of stock of
the Corporation and the terms and conditions of such
conversion or exchange, including provision for adjustment of
the conversion price or rate in such events as the Board of
Directors shall determine;
(c) The redemption price or prices and the time or
times at which, and the terms and conditions on which,
Preferred Stock of such series may be redeemed; and
(d) The rights of the holders of Preferred Stock of
such series upon the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation.
Subject to the provisions of this Article FOURTH, shares of one or
more series of Preferred Stock may be authorized or issued in an aggregate
amount not exceeding the total number of shares of Preferred Stock
authorized by this Certificate of Incorporation, from time to time as the
Board of Directors of the Corporation shall determine, and for such
consideration as shall be fixed by the Board of Directors.
DESIGNATION OF $1.19 CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES A
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of the
Restated Certificate of Incorporation of the Corporation, this Board of
Directors hereby creates a series of the Preferred Stock, par value 33-1/3
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<PAGE> 9
cents per share, of the Corporation, to consist of 123,169 shares of such
Preferred Stock, and this Board of Directors hereby fixes the designations,
preferences and relative, participating, optional or other special rights of
the shares of such series, and the qualifications, limitations, or
restrictions thereof (in addition to the designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, set forth in the
Restated Certificate of Incorporation of the Corporation which are
applicable to Preferred Stock of all series) as follows:
I. DESIGNATION
The designation of the series of Preferred Stock created by this
resolution shall be "$1.19 Cumulative Convertible Preferred Stock, Series A"
(hereinafter called the "Series A Preferred Stock").
II. CASH DIVIDENDS ON SERIES A PREFERRED STOCK
(a) The holders of the Series A Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors out of the funds
of the Corporation legally available therefor, cumulative cash dividends at
the annual rate of $1.19 per share, payable quarterly on the 15th day of
March, June, September and December in each year. If the dividend on the
Series A Preferred Stock for any dividend period shall not have been paid or
set apart in full for the Series A Preferred Stock, the aggregate deficiency
shall be cumulative and shall be fully paid or set apart for payment before
any dividends shall be paid upon or set apart for the Common Stock of the
Corporation. Accumulations of dividends on the Series A Preferred Stock
shall not bear interest.
(b) Cash dividends on the Series A Preferred Stock shall commence
to accrue and shall be cumulative from September 16, 1972, reduced by any
dividends accrued on the $1.19 Cumulative Convertible Preferred Stock,
Series A, without par value, of Coastal States Gas Producing Company, a
Delaware corporation.
(c) If dividends on the Series A Preferred Stock are not paid in
full or declared in full and sums set apart for the payment thereof, then no
dividends shall be declared and paid on any Preferred Stock unless declared
and paid ratably on all shares of each series of the Preferred Stock then
outstanding, including dividends accrued or in arrears, if any, in
proportion to the respective amounts that would be payable per share if all
such dividends were declared and paid in full. The term "dividends accrued
or in arrears" whenever used herein with reference to the Preferred Stock
shall be deemed to mean an amount which shall be equal to dividends thereon
at the annual dividend rates per share for the respective series from the
date or dates on which such dividends commence to accrue to the end of the
then current quarterly dividend period for such stock (or, in the case of
redemption, to the date of redemption), less the amount of all dividends
paid upon such stock.
III. REDEMPTION OF SERIES A PREFERRED STOCK
(a) The Series A Preferred Stock shall be redeemable, in whole or
in part, at the option of the Corporation by resolution of its Board of
Directors, at any time and from time to time on or after July 1, 1973, at
thirty-three dollars ($33.00) per share, plus all dividends accrued and
unpaid on such Series A Preferred Stock up to the date fixed for redemption,
upon giving the notice hereinafter provided.
(b) If less than all of the outstanding shares of Series A
Preferred Stock are to be redeemed the shares to be redeemed shall be
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<PAGE> 10
determined by lot in such usual manner and subject to such regulations as
the Board of Directors in its sole discretion shall prescribe.
(c) At least 45 days but not more than 90 days prior to the date
fixed for the redemption of shares of the Series A Preferred Stock, a
written notice shall be mailed to each holder of record of shares of Series
A Preferred Stock to be redeemed in a postage prepaid envelope addressed to
such holder at his post office address as shown on the records of the
Corporation, notifying such holder of the election of the Corporation to
redeem such shares, stating the date fixed for redemption thereof (here-
inafter referred to as the redemption date), and calling upon such holder to
surrender to the Corporation on the redemption date at the place designated
in such notice his certificate or certificates representing the number of
shares specified in such notice of redemption. On or after the redemption
date each holder of shares of Series A Preferred Stock to be redeemed shall
present and surrender his certificate or certificates for such shares to the
Corporation at the place designated in such notice and thereupon the
redemption price of such shares shall be paid to or on the order of the
person whose name appears on such certificate or certificates as the owner
thereof and each surrendered certificate shall be cancelled. In case less
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares. From and
after the redemption date (unless default shall be made by the Corporation
in payment of the redemption price) all dividends on the shares of Series A
Preferred Stock designated for redemption in such notice shall cease to
accrue, and all rights of the holders thereof as stockholders of the
Corporation, except the right to receive the redemption price thereof upon
the surrender of certificates representing the same, shall cease and
determine and such shares shall not thereafter be transferred (except with
the consent of the Corporation) on the books of the Corporation, and such
shares shall not be deemed to be outstanding for any purpose whatsoever. At
its election the Corporation prior to the redemption date may deposit the
redemption price of the shares of Series A Preferred Stock so called for
redemption in trust for the holders thereof with a bank or trust company
(having a capital and surplus of not less than $5,000,000) in the Borough of
Manhattan, City and State of New York, or in any other city in which the
Corporation at the time shall maintain a transfer agency with respect to
such stock, in which case such notice to holders of the Series A Preferred
Stock to be redeemed shall state the date of such deposit, shall specify the
office of such bank or trust company as the place of payment of the
redemption price, and shall call upon such holders to surrender the
certificates representing such shares at such price on or after the date
fixed in such redemption notice (which shall not be later than the
redemption date) against payment of the redemption price. From and after the
making of such deposit, the shares of Series A Preferred Stock so designated
for redemption shall not be deemed to be outstanding for any purpose
whatsoever, and the rights of the holders of such shares shall be limited to
the right to receive the redemption price of such shares, without interest,
upon surrender of the certificates representing the same to the Corporation
at said office of such bank or trust company, and the right of conversion
(on or before the tenth day prior to the date fixed for redemption) herein
provided. Any funds so deposited which shall not be required for such
redemption because of the exercise of such right of conversion after the
date of such deposit shall be returned to the Corporation forthwith. Any
interest accrued on such funds shall be paid to the Corporation from time to
time. Any moneys so deposited which shall remain unclaimed by the holders of
such Series A Preferred Stock at the end of six years after the redemption
date shall be returned by such bank or trust company to the Corporation,
after which the holders of the Series A Preferred Stock shall have no
further interest in such moneys.
IV. VOTING RIGHTS
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(a) At every meeting of stockholders of the Corporation, every
holder of Series A Preferred Stock shall be entitled to one vote for each
share of Series A Preferred Stock standing in his name on the books of the
Corporation, with the same and identical voting rights, except as expressly
provided herein, as a holder of a share of Common Stock.
(b) The Series A Preferred Stock and any other stock having
voting rights shall vote together as one class, except as provided by law
and in Article VII hereof, and except that while the holders of Preferred
Stock, voting as a class, are entitled to elect two (2) directors of the
Corporation as hereinafter provided, they shall not be entitled to
participate with the holders of the Common Stock in the election of any
other directors.
(c) 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 (hereinafter in this
subparagraph (c) called the Class Voting Period) commencing with such time
and ending with the time when all arrears in dividends on all Preferred
Stock shall have been paid and the full dividend on all Preferred Stock for
the then current quarterly dividend period shall have been paid or declared
and set a part for payment, at any meeting of the stockholders of the
Corporation held for the election of directors during the Class Voting
Period, the holders of Preferred Stock 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 Corporation, to elect two directors of
the Corporation, 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 Class 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 given at a special meeting of such
stockholders called for the purpose and any vacancy thereby created may be
filled during such Class Voting Period by the holders of Preferred Stock,
present in person or represented by proxy at such meeting. Any director to
be elected by the Board of Directors of the Corporation to replace a
director elected by holders of Preferred Stock, or elected by a director as
in this sentence provided, and who dies, resigns, or otherwise ceases to be
a director shall except as otherwise provided in the preceding sentence be
elected by the remaining director theretofore elected by the holders of
Preferred Stock. At the end of the Class Voting Period the holders of
Preferred Stock shall be automatically divested of all voting power vested
in them under this subparagraph (c) but subject always to the subsequent
vesting hereunder of voting power in the holders of Preferred Stock in the
event of any similar default or defaults thereafter. The term of all
directors elected pursuant to the provisions of this subparagraph (c) shall
in all events expire at the end of the Class Voting Period.
V. PRIORITY OF SERIES A PREFERRED STOCK IN EVENT OF DISSOLUTION
In the event of any liquidation, dissolution, or winding up of the
affairs of the Corporation, whether voluntary or otherwise, after payment or
provision for payment of the debts and other liabilities of the Corporation,
the holders of the Series A Preferred Stock shall be entitled to receive,
out of the remaining net assets of the Corporation, the amount of thirty-
three dollars ($33.00) in cash for each share of Series A Preferred Stock,
plus an amount equal to all dividends accrued and unpaid on each such share
up to the date fixed for distribution, before any distribution shall be made
to the holders of the Common Stock of the Corporation. If upon any
liquidation, dissolution or winding up of the Corporation, the assets
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distributable among the holders of any series of Preferred Stock shall be
insufficient to permit the payment in full to the holders of all series of
the Preferred Stock of all preferential amounts payable to all such holders,
then the entire assets of the Corporation thus distributable shall be
distributed ratably among the holders of all series of the Preferred Stock
in proportion to the respective amounts that would be payable per share if
such assets were sufficient to permit payment in full.
VI. CONVERSION OF SERIES A PREFERRED STOCK INTO COMMON STOCK
(a) Subject to the provisions of this Article VI, the holder of
record of any Series A Preferred Stock shall have the right, at his option,
at any time after the issuance of such share(s) to convert each share of
Series A Preferred Stock into one fully-paid and non-assessable share of
Common Stock of the Corporation.
In case any shares of the Series A Preferred Stock shall have been
called for redemption, such right of conversion in respect to the shares so
called for redemption shall cease and terminate at the close of business on
the tenth (10th) day prior to the date fixed for the redemption of such
shares, unless default shall be made in the payment of the redemption price.
(b) Any holder of a share or shares of Series A Preferred Stock
desiring to convert such Series A Preferred Stock into Common Stock shall
surrender the certificate or certificates representing the share or shares
of Series A Preferred Stock so to be converted, duly endorsed to the
Corporation or in blank, at the office of any Transfer Agent for the Series
A Preferred Stock (or such other place as may be designated by the
Corporation), and shall give written notice to the Corporation at said
office that he elects to convert the same, and setting forth the name or
names (with the address or addresses) in which the shares of Common Stock
are to be issued.
If the last day for the exercise of the conversion right in the city
where the principal place of business of any Transfer Agent for the Series A
Preferred Stock (or in the city of the principal office of such other entity
as the Corporation shall have designated as the place so to surrender Series
A Preferred Stock for conversion, as aforesaid) shall be a legal holiday or
a day on which banking institutions are authorized by law to close, then
such conversion right may be exercised in such city on the next succeeding
day not in such city a legal holiday or a day on which banking institutions
are authorized by law to close.
(c) Conversion of Series A Preferred Stock shall be subject to
the following additional terms and provisions:
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(1) As promptly as practicable after the surrender for
conversion of any Series A Preferred Stock, the Corporation shall
deliver or cause to be delivered at the principal office of any
Transfer Agent for the Series A Preferred Stock (or such other place
as may be designated by the Corporation), to or upon the written
order of the holder of such Series A Preferred Stock, certificates
representing the shares of Common Stock issuable upon such
conversion, issued in such name or names as such holder may direct,
and cash in respect to any fraction of a share as provided in
sub-paragraph (3) below. Shares of the Series A Preferred Stock shall
be deemed to have been converted as of the close of business on the
date of the surrender of the Series A Preferred Stock for conversion,
as provided above, and the rights of the holders of such Series A
Preferred Stock shall cease at such time, and the person or persons
in whose name or names the certificate for such shares are to be
issued shall be treated for all purposes as having become the record
holder or holders of such Common Stock at such time; provided,
however, that any such surrender on any date when the stock transfer
books of the Corporation shall be closed shall constitute the person
or persons in whose name or names the certificates for such shares
are to be issued as the record holder or holders thereof for all
purposes at the close of business on the next succeeding day on which
such stock transfer books are open.
(2) The Corporation shall make no payment or adjustment on
account of any dividends accrued on the shares of the Series A
Preferred Stock surrendered for conversion.
(3) The Corporation shall not be required to issue any
fractions of shares of Common Stock upon conversions of Series A
Preferred Stock. If more than one share certificate of Series A
Preferred Stock shall be surrendered for conversion at one time by
the same holder, the number of full shares of Common Stock which
shall be issuable upon conversion of such Series A Preferred Stock
shall be computed on the basis of the aggregate number of shares of
Series A Preferred Stock so surrendered. If any interest in a
fractional share of Common Stock would otherwise be deliverable upon
the conversion of any Series A Preferred Stock, the Corporation shall
make adjustment for such fractional share interest by payment of an
amount in cash equal to the same fraction of the market value of a
full share of Common Stock of the Corporation. For such purpose, the
market value of a share of Common Stock shall be the last recorded
sale price of such share of Common Stock on the New York Stock
Exchange on the day immediately preceding the date upon which such
shares are surrendered for conversion, or, if there be no such
recorded sale price on such day, the last quoted bid price per share
of the Common Stock on such Exchange at the close of trading on such
date. If the Common Stock shall not at the time be dealt in on the
New York Stock Exchange, such market value of the Common Stock shall
be the prevailing market value of the Common Stock on any other
securities exchange or in the open market, as determined by the
Corporation, which determination shall be conclusive.
(4) In the event that the Corporation shall at any time
subdivide or combine in a greater or lesser number of shares the
outstanding shares of Common Stock, the number of shares of Common
Stock issuable upon conversion of the Series A Preferred Stock shall
be proportionately increased in the case of subdivision or decreased
in the case of a combination effective in either case at the close of
business on the date when such subdivision or combination shall
become effective.
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(5) In the event that the Corporation shall be
recapitalized, consolidated with or merged into any other
corporation, or shall sell or convey to any other corporation all or
substantially all of its property as an entirety, provision shall be
made as part of the terms of such recapitalization, consolidation,
merger, sale or conveyance so that any holder of Series A Preferred
Stock may thereafter receive in lieu of the Common Stock otherwise
issuable to him upon conversion of his Series A Preferred Stock, but
at the conversion ratio stated in this Article VI which would
otherwise be applicable at the time of conversion, the same kind and
amount of securities or assets as may be distributable upon such
recapitalization, consolidation, merger, sale or conveyance with
respect to the Common Stock of the Corporation.
(6) In the event that the Corporation shall at any time
pay to the holders of Common Stock a dividend in Common Stock, the
number of shares of Common Stock issuable upon conversion of the
Series A Preferred Stock shall be proportionately increased,
effective at the close of business on the record date for
determination of the holders of Common Stock entitled to such
dividend.
(7) No adjustment of the conversion ratio shall be made by
reason of any declaration or payment to the holders of the Common
Stock of the Corporation of a dividend or distribution payable in any
property or securities other than Common Stock, any redemption of the
Common Stock, any issuance of any securities convertible into Common
Stock, or for any other reason, except as expressly provided herein.
(8) The Corporation shall at all times reserve and keep
available solely for the purpose of issuance upon conversion of
Series A Preferred Stock, as herein provided, such number of shares
of Common Stock as shall be issuable upon the conversion of all
outstanding Series A Preferred Stock.
(d) The issuance of certificates for shares of Common Stock upon
conversion of the Series A Preferred Stock shall be made without charge for
any tax in respect of such issuance. However, if any certificate is to be
issued in a name other than that of the holder of record of the Series A
Preferred Stock so converted, the person or persons requesting the issuance
thereof shall pay to the Corporation the amount of any tax which may be
payable in respect of any transfer involved in such issuance, or shall
establish to the satisfaction of the Corporation that such tax has been paid
or is not due and payable.
VII. LIMITATIONS
So long as any shares of Series A Preferred Stock are outstanding,
the Corporation shall not, without the affirmative vote or the written
consent as provided by law, of the holders of at least two-thirds ( ) of the
outstanding shares of Series A Preferred Stock, voting as a class,
(a) create, authorize or issue any class or series of stock
ranking either as to payment of dividends or distribution of assets prior to
the Series A Preferred Stock; or
(b) change the preferences, rights or powers with respect to the
Series A Preferred Stock so as to affect such stock adversely;
but nothing herein contained shall require such a class vote or consent (i)
in connection with any increase in the total number of authorized shares of
Common Stock, or (ii) in connection with authorization or increase of any
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<PAGE> 15
class of stock ranking on a parity with the Series A Preferred Stock;
provided, however, that no such vote or written consent of the holders of
the Series A Preferred Stock shall be required if, at or prior to the time
when the issuance of any such prior stock is to be made or any such change
is to take effect, as the case may be, provision is made for the redemption
of all shares of Series A Preferred Stock at the time outstanding, and
further provided, that the provisions of this Article VII shall not in any
way limit the right and power of the Corporation to issue the presently
authorized but unissued shares of stock, or bonds, notes, mortgages,
debentures, and other obligations, and to incur indebtedness to banks and to
other lenders.
DESIGNATION OF $1.83 CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES B
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of the
Restated Certificate of Incorporation of the Corporation, this Board of
Directors hereby creates a series of the Preferred Stock, par value 33-1/3
cents per share, of the Corporation, to consist of 348,015 shares of such
Preferred Stock, and this Board of Directors hereby fixes the designations,
preferences and relative, participating, optional or other special rights of
the shares of such series, and the qualifications, limitations, or
restrictions thereof (in addition to the designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, set forth in the
Restated Certificate of Incorporation of the Corporation which are
applicable to Preferred Stock of all series) as follows:
I. DESIGNATION
The designation of the series of Preferred Stock created by this
resolution shall be "$1.83 Cumulative Convertible Preferred Stock, Series B"
(hereinafter called the "Series B Preferred Stock").
II. CASH DIVIDENDS ON SERIES B PREFERRED STOCK
(a) The holders of the Series B Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors out of the funds
of the Corporation legally available therefor, cumulative cash dividends at
the annual rate of $1.83 per share, payable quarterly on the 15th day of
March, June, September and December in each year. If the dividend on the
Series B Preferred Stock for any dividend period shall not have been paid or
set apart in full for the Series B Preferred Stock, the aggregate deficiency
shall be cumulative and shall be fully paid or set apart for payment before
any dividends shall be paid upon or set apart for the Common Stock of the
Corporation. Accumulations of dividends on the Series B Preferred Stock
shall not bear interest.
(b) Cash dividends on shares of Series B Preferred Stock into
which shares of the Common Stock, par value $5.00 per share, of Colorado
Interstate Corporation, a Delaware corporation, are converted on January 2,
1973, shall commence to accrue and shall be cumulative from December 16,
1972. As to shares of Series B Preferred Stock issued on or after January 3,
1973, cash dividends shall accrue and be cumulative from such date as shall
make the dividend rights per share of the shares of Series B Preferred Stock
so issued uniform with the dividend rights per share of the shares of Series
B Preferred Stock then outstanding, excluding rights to dividends declared
and directed to be paid to shareholders of record as of a date preceding the
date of issuance of the shares being issued.
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<PAGE> 16
(c) If dividends on the Series B Preferred Stock are not paid in
full or declared in full and sums set apart for the payment thereof, then no
dividends shall be declared and paid on any Preferred Stock unless declared
and paid ratably on all shares of each series of the Preferred Stock then
outstanding, including dividends accrued or in arrears, if any, in
proportion to the respective amounts that would be payable per share if all
such dividends were declared and paid in full. The term "dividends accrued
or in arrears" whenever used herein with reference to the Preferred Stock
shall be deemed to mean an amount which shall be equal to dividends thereon
at the annual dividend rates per share for the respective series from the
date or dates on which such dividends commence to accrue to the end of the
then current quarterly dividend period for such stock (or, in the case of
redemption, to the date of redemption), less the amount of all dividends
paid upon such stock.
III. REDEMPTION OF SERIES B PREFERRED STOCK
(a) The Series B Preferred Stock shall be redeemable, in whole or
in part, at the option of the Corporation by resolution of its Board of
Directors, at any time and from time to time on or after December 1, 1977,
at fifty dollars ($50.00) per share, plus all dividends accrued and unpaid
on such Series B Preferred Stock up to the date fixed for redemption, upon
giving the notice hereinafter provided.
(b) If less than all of the outstanding shares of Series B
Preferred Stock are to be redeemed the shares to be redeemed shall be
determined by lot in such usual manner and subject to such regulations as
the Board of Directors in its sole discretion shall prescribe.
(c) At least 45 days but not more than 90 days prior to the date
fixed for the redemption of shares of the Series B Preferred Stock, a
written notice shall be mailed to each holder of record of shares of Series
B Preferred Stock to be redeemed in a postage prepaid envelope addressed to
such holder at his post office address as shown on the records of the
Corporation, notifying such holder of the election of the Corporation to
redeem such shares, stating the date fixed for redemption thereof (here-
inafter referred to as the redemption date), and calling upon such holder to
surrender to the Corporation on the redemption date at the place designated
in such notice his certificate or certificates representing the number of
shares specified in such notice of redemption. On or after the redemption
date each holder of shares of Series B Preferred Stock to be redeemed shall
present and surrender his certificate or certificates for such shares to the
Corporation at the place designated in such notice and thereupon the
redemption price of such shares shall be paid to or on the order of the
person whose name appears on such certificate or certificates as the owner
thereof and each surrendered certificate shall be cancelled. In case less
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares. From and
after the redemption date (unless default shall be made by the Corporation
in payment of the redemption price) all dividends on the shares of Series B
Preferred Stock designated for redemption in such notice shall cease to
accrue, and all rights of the holders thereof as stockholders of the
Corporation, except the right to receive the redemption price thereof upon
the surrender of certificates representing the same, shall cease and
determine and such shares shall not thereafter be transferred (except with
the consent of the Corporation) on the books of the Corporation, and such
shares shall not be deemed to be outstanding for any purpose whatsoever. At
its election the Corporation prior to the redemption date may deposit the
redemption price of the shares of Series B Preferred Stock so called for
redemption in trust for the holders thereof with a bank or trust company
(having a capital and surplus of not less than $5,000,000) in the Borough of
Manhattan, City and State of New York, or in any other city in which the
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<PAGE> 17
Corporation at the time shall maintain a transfer agency with respect to
such stock, in which case such notice to holders of the Series B Preferred
Stock to be redeemed shall state the date of such deposit, shall specify the
office of such bank or trust company as the place of payment of the
redemption price, and shall call upon such holders to surrender the
certificates representing such shares at such price on or after the date
fixed in such redemption notice (which shall not be later than the
redemption date) against payment of the redemption price. From and after the
making of such deposit, the shares of Series B Preferred Stock so designated
for redemption shall not be deemed to be outstanding for any purpose
whatsoever, and the rights of the holders of such shares shall be limited to
the right to receive the redemption price of such shares, without interest,
upon surrender of the certificates representing the same to the Corporation
at said office of such bank or trust company, and the right of conversion
(on or before the tenth day prior to the date fixed for redemption) herein
provided. Any funds so deposited which shall not be required for such
redemption because of the exercise of such right of conversion after the
date of such deposit shall be returned to the Corporation forthwith. Any
interest accrued on such funds shall be paid to the Corporation from time to
time. Any moneys so deposited which shall remain unclaimed by the holders of
such Series B Preferred Stock at the end of six years after the redemption
date shall be returned by such bank or trust company to the Corporation,
after which the holders of the Series B Preferred Stock shall have no
further interest in such moneys.
IV. VOTING RIGHTS
(a) At every meeting of stockholders of the Corporation, every
holder of Series B Preferred Stock shall be entitled to one vote for each
share of Series B Preferred Stock standing in his name on the books of the
Corporation, with the same and identical voting rights, except as expressly
provided herein, as a holder of a share of Common Stock.
(b) The Series B Preferred Stock and any other stock having
voting rights shall vote together as one class, except as provided by law
and in Article VII hereof, and except that while the holders of Preferred
Stock, voting as a class, are entitled to elect two (2) directors of the
Corporation as hereinafter provided, they shall not be entitled to
participate with the holders of the Common Stock in the election of any
other directors.
(c) 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 (hereinafter in this
subparagraph (c) called the Class Voting Period) commencing with such time
and ending with the time when all arrears in dividends on all Preferred
Stock shall have been paid and the full dividend on all Preferred Stock 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
Corporation held for the election of directors during the Class Voting
Period, the holders of Preferred Stock 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 Corporation, to elect two directors of
the Corporation, 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 Class 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 given at a special meeting of such
stockholders called for the purpose and any vacancy thereby created may be
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<PAGE> 18
filled during such Class Voting Period by the holders of Preferred Stock,
present in person or represented by proxy at such meeting. Any director to
be elected by the Board of Directors of the Corporation to replace a
director elected by holders of Preferred Stock, or elected by a director as
in this sentence provided, and who dies, resigns, or otherwise ceases to be
a director shall, except as otherwise provided in the preceding sentence, be
elected by the remaining director theretofore elected by the holders of
Preferred Stock. At the end of the Class Voting Period the holders of
Preferred Stock shall be automatically divested of all voting power vested
in them under this subparagraph (c) but subject always to the subsequent
vesting hereunder of voting power in the holders of Preferred Stock in the
event of any similar default or defaults thereafter. The term of all
directors elected pursuant to the provisions of this subparagraph (c) shall
in all events expire at the end of the Class Voting Period.
V. PRIORITY OF SERIES B PREFERRED STOCK IN EVENT OF DISSOLUTION
In the event of any liquidation, dissolution, or winding-up of the
affairs of the Corporation, whether voluntary or otherwise, after payment or
provision for payment of the debts and other liabilities of the Corporation,
the holders of the Series B Preferred Stock shall be entitled to receive,
out of the remaining net assets of the Corporation, the amount of fifty
dollars ($50.00) in cash for each share of Series B Preferred Stock, plus an
amount equal to all dividends accrued and unpaid on each such share up to
the date fixed for distribution, before any distribution shall be made to
the holders of the Common Stock of the Corporation. If upon any liquidation,
dissolution or winding-up of the Corporation, the assets distributable among
the holders of any series of Preferred Stock shall be insufficient to permit
the payment in full to the holders of all series of the Preferred Stock of
all preferential amounts payable to all such holders, then the entire assets
of the Corporation thus distributable shall be distributed ratably among the
holders of all series of the Preferred Stock in proportion to the respective
amounts that would be payable per share if such assets were sufficient to
permit payment in full.
VI. CONVERSION OF SERIES B PREFERRED STOCK INTO COMMON STOCK
(a) Subject to the provisions of this Article VI, the holder of
record of any Series B Preferred Stock shall have the right, at his option,
at any time after the issuance of such share(s) to convert each share of
Series B Preferred Stock into one fully paid and nonassessable share of
Common Stock of the Corporation.
In case any shares of the Series B Preferred Stock shall have been
called for redemption, such right of conversion in respect to the shares so
called for redemption shall cease and terminate at the close of business on
the tenth (10th) day prior to the date fixed for the redemption of such
shares, unless default shall be made in the payment of the redemption price.
(b) Any holder of a share or shares of Series B Preferred Stock
desiring to convert such Series B Preferred Stock into Common Stock shall
surrender the certificate or certificates representing the share or shares
of Series B Preferred Stock so to be converted, duly endorsed to the
Corporation or in blank, at the office of any Transfer Agent for the Series
B Preferred Stock (or such other place as may be designated by the
Corporation), and shall give written notice to the Corporation at said
office that he elects to convert the same, and setting forth the name or
names (with the address or addresses) in which the shares of Common Stock
are to be issued.
If the last day for the exercise of the conversion right in the city
where the principal place of business of any Transfer Agent for the Series B
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<PAGE> 19
Preferred Stock (or in the city of the principal office of such other entity
as the Corporation shall have designated as the place so to surrender Series
B Preferred Stock for conversion, as aforesaid) shall be a legal holiday or
a day on which banking institutions are authorized by law to close, then
such conversion right may be exercised in such city on the next succeeding
day not in such city a legal holiday or a day on which banking institutions
are authorized by law to close.
(c) Conversion of Series B Preferred Stock shall be subject to
the following additional terms and provisions:
(1) As promptly as practicable after the surrender for
conversion of any Series B Preferred Stock, the Corporation shall
deliver or cause to be delivered at the principal office of any
Transfer Agent for the Series B Preferred Stock (or such other place
as may be designated by the Corporation), to or upon the written
order of the holder of such Series B Preferred Stock, certificates
representing the shares of Common Stock issuable upon such
conversion, issued in such name or names as such holder may direct,
and cash in respect to any fraction of a share as provided in
sub-paragraph (3) below. Shares of the Series B Preferred Stock shall
be deemed to have been converted as of the close of business on the
date of the surrender of the Series B Preferred Stock for conversion,
as provided above, and the rights of the holders of such Series B
Preferred Stock shall cease at such time, and the person or persons
in whose name or names the certificate for such shares are to be
issued shall be treated for all purposes as having become the record
holder or holders of such Common Stock at such time; provided,
however, that any such surrender on any date when the stock transfer
books of the Corporation shall be closed shall constitute the person
or persons in whose name or names the certificates for such shares
are to be issued as the record holder or holders thereof for all
purposes at the close of business on the next succeeding day on which
such stock transfer books are open.
(2) The Corporation shall make no payment or adjustment on
account of any dividends accrued on the shares of the Series B
Preferred Stock surrendered for conversion.
(3) The Corporation shall not be required to issue any
fractions of shares of Common Stock upon conversions of Series B
Preferred Stock. If more than one share certificate of Series B
Preferred Stock shall be surrendered for conversion at one time by
the same holder, the number of full shares of Common Stock which
shall be issuable upon conversion of such Series B Preferred Stock
shall be computed on the basis of the aggregate number of shares of
Series B Preferred Stock so surrendered. If any interest in a
fractional share of Common Stock would otherwise be deliverable upon
the conversion of any Series B Preferred Stock, the Corporation shall
make adjustment for such fractional share interest by payment of an
amount in cash equal to the same fraction of the market value of a
full share of Common Stock of the Corporation. For such purpose, the
market value of a share of Common Stock shall be the last recorded
sale price of such share of Common Stock on the New York Stock
Exchange on the day immediately preceding the date upon which such
shares are surrendered for conversion, or, if there be no such
recorded sale price on such day, the last quoted bid price per share
of the Common Stock on such Exchange at the close of trading on such
date. If the Common Stock shall not at the time be dealt in on the
New York Stock Exchange, such market value of the Common Stock shall
be the prevailing market value of the Common Stock on any other
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<PAGE> 20
securities exchange or in the open market, as determined by the
Corporation, which determination shall be conclusive.
(4) In the event that the Corporation shall at any time
subdivide or combine in a greater or lesser number of shares the
outstanding shares of Common Stock, the number of shares of Common
Stock issuable upon conversion of the Series B Preferred Stock shall
be proportionately increased in the case of subdivision or decreased
in the case of a combination effective in either case at the close of
business on the date when such subdivision or combination shall
become effective.
(5) In the event that the Corporation shall be
recapitalized, consolidated with or merged into any other
corporation, or shall sell or convey to any other corporation all or
substantially all of its property as an entirety, provision shall be
made as part of the terms of such recapitalization, consolidation,
merger, sale or conveyance so that any holder of Series B Preferred
Stock may thereafter receive in lieu of the Common Stock otherwise
issuable to him upon conversion of his Series B Preferred Stock, but
at the conversion ratio stated in this Article VI which would
otherwise be applicable at the time of conversion, the same kind and
amount of securities or assets as may be distributable upon such
recapitalization, consolidation, merger, sale or conveyance with
respect to the Common Stock of the Corporation.
(6) In the event that the Corporation shall at any time
pay to the holders of Common Stock a dividend in Common Stock, the
number of shares of Common Stock issuable upon conversion of the
Series B Preferred Stock shall be proportionately increased,
effective at the close of business on the record date for
determination of the holders of Common Stock entitled to such
dividend.
(7) No adjustment of the conversion ratio shall be made by
reason of any declaration or payment to the holders of the Common
Stock of the Corporation of a dividend or distribution payable in any
property or securities other than Common Stock, any redemption of the
Common Stock, any issuance of any securities convertible into Common
Stock, or for any other reason, except as expressly provided herein.
(8) The Corporation shall at all times reserve and keep
available solely for the purpose of issuance upon conversion of
Series B Preferred Stock, as herein provided, such number of shares
of Common Stock as shall be issuable upon the conversion of all
outstanding Series B Preferred Stock.
(d) The issuance of certificates for shares of Common Stock upon
conversion of the Series B Preferred Stock shall be made without charge for
any tax in respect of such issuance. However, if any certificate is to be
issued in a name other than that of the holder of record of the Series B
Preferred Stock so converted, the person or persons requesting the issuance
thereof shall pay to the Corporation the amount of any tax which may be
payable in respect of any transfer involved in such issuance, or shall
establish to the satisfaction of the Corporation that such tax has been paid
or is not due and payable.
VII. LIMITATIONS
So long as any shares of Series B Preferred Stock are outstanding,
the Corporation shall not, without the affirmative vote or the written
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<PAGE> 21
consent as provided by law, of the holders of at least two-thirds ( ) of the
outstanding shares of Series B Preferred Stock, voting as a class,
(a) create, authorize or issue any class or series of stock
ranking either as to payment of dividends or distribution of assets prior to
the Series B Preferred Stock; or
(b) change the preferences, rights or powers with respect to the
Series B Preferred Stock so as to affect such stock adversely;
but nothing herein contained shall require such a class vote or consent (i)
in connection with any increase in the total number of authorized shares of
Common Stock, or (ii) in connection with authorization or increase of any
class of stock ranking on a parity with the Series B Preferred Stock;
provided, however, that no such vote or written consent of the holders of
the Series B Preferred Stock shall be required if, at or prior to the time
when the issuance of any such prior stock is to be made or any such change
is to take effect, as the case may be, provision is made for the redemption
of all shares of Series B Preferred Stock at the time outstanding, and
further provided, that the provisions of this Article VII shall not in any
way limit the right and power of the Corporation to issue the presently
authorized but unissued shares of stock, or bonds, notes, mortgages,
debentures, and other obligations, and to incur indebtedness to banks and to
other lenders.
DESIGNATION OF $5.00 CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES C
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of the
Restated Certificate of Incorporation of the Corporation, this Board of
Directors hereby creates a series of the Preferred Stock, par value 33-1/3
cents per share, of the Corporation, to consist of 100,000 shares of such
Preferred Stock, and this Board of Directors hereby fixes the designations,
preferences and relative, participating, optional or other special rights of
the shares of such series, and the qualifications, limitations, or
restrictions thereof (in addition to the designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, set forth in the
Restated Certificate of Incorporation of the Corporation which are
applicable to Preferred Stock of all series) as follows:
I. DESIGNATION
The designation of the series of Preferred Stock created by this
resolution shall be "$5.00 Cumulative Convertible Preferred Stock, Series C"
(hereinafter called the "Series C Preferred Stock").
II. CASH DIVIDENDS ON SERIES C PREFERRED STOCK
(a) The holders of the Series C Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors out of the funds
of the Corporation legally available therefor, cash dividends at the annual
rate of $5.00 per share, payable quarterly on the first day of January,
April, July and October in each year. If the dividend on the Series C
Preferred Stock for any dividend period shall not have been paid or set
apart in full for the Series C Preferred Stock, the aggregate deficiency
shall be cumulative and shall be fully paid or set apart for payment before
any dividends shall be paid upon or set apart for the Common Stock of the
Corporation. Accumulations of dividends on the Series C Preferred Stock
shall not bear interest.
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(b) Cash dividends on the Series C Preferred Stock shall commence
to accrue and shall be cumulative from January 2, 1973.
(c) If dividends on the Series C Preferred Stock are not paid in
full or declared in full and sums set apart for the payment thereof, then no
dividends shall be declared and paid on any Preferred Stock unless declared
and paid ratably on all shares of each series of the Preferred Stock then
outstanding, including dividends accrued or in arrears, if any, in
proportion to the respective amounts that would be payable per share if all
such dividends were declared and paid in full. The term "dividends accrued
or in arrears" whenever used herein with reference to the Preferred Stock
shall be deemed to mean an amount which shall be equal to dividends thereon
at the annual dividend rates per share for the respective series from the
date or dates on which such dividends commence to accrue to the end of the
then current quarterly dividend period for such stock (or, in the case of
redemption, to the date of redemption), less the amount of all dividends
paid upon such stock.
III. REDEMPTION OF SERIES C PREFERRED STOCK
(a) The Series C Preferred Stock shall be redeemable, in whole or
in part, at the option of the Corporation by resolution of its Board of
Directors, at any time and from time to time on or after July 1, 1977, at
the following optional redemption prices per share, plus in each case all
dividends accrued and unpaid on such Series C Preferred Stock up to the date
fixed for redemption, upon giving the notice hereinafter provided:
If redeemed on or prior to June 30, 1982, $106;
If Redeemed
During the
12 Mouth
Period Ending
June 30
1983 . . . . . . . . . . . . . . . $105
1984 . . . . . . . . . . . . . . . 104
1985 . . . . . . . . . . . . . . . 103
1986 . . . . . . . . . . . . . . . 102
1987 . . . . . . . . . . . . . . . 101
and $100 after June 30, 1987.
(b) If less than all of the outstanding shares of Series C
Preferred Stock are to be redeemed, the shares to be redeemed shall be
determined by lot in such usual manner and subject to such regulations as
the Board of Directors in its sole discretion shall prescribe.
(c) At least 45 days but not more than 90 days prior to the date
fixed for the redemption of shares of the Series C Preferred Stock, a
written notice shall be mailed to each holder of record of shares of Series
C Preferred Stock to be redeemed in a postage prepaid envelope addressed to
such holder at his post office address as shown on the records of the
Corporation, notifying such holder of the election of the Corporation to
redeem such shares, stating the date fixed for redemption thereof
(hereinafter referred to as the redemption date), and calling upon such
holder to surrender to the Corporation on the redemption date at the place
designated in such notice his certificate or certificates representing the
number of shares specified in such notice of redemption. On or after the
redemption date each holder of shares of Series C Preferred Stock to be
redeemed shall present and surrender his certificate or certificates for
such shares to the Corporation at the place designated in such notice and
thereupon the redemption price of such shares shall be paid to or on the
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<PAGE> 23
order of the person whose name appears on such certificate or certificates
as the owner thereof and each surrendered certificate shall be cancelled. In
case less than all the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed
shares. From and after the redemption date (unless default shall be made by
the Corporation in payment of the redemption price) all dividends on the
shares of Series C Preferred Stock designated for redemption in such notice
shall cease to accrue, and all rights of the holders thereof as stockholders
of the Corporation, except the right to receive the redemption price thereof
upon the surrender of certificates representing the same, shall cease and
determine and such shares shall not thereafter be transferred (except with
the consent of the Corporation) on the books of the Corporation, and such
shares shall not be deemed to be outstanding for any purpose whatsoever. At
its election the Corporation prior to the redemption date may deposit the
redemption price of the shares of Series C Preferred Stock so called for
redemption in trust for the holders thereof with a bank or trust company
(having a capital and surplus of not less than $5,000,000) in the Borough of
Manhattan, City and State of New York, or in any other city in which the
Corporation at the time shall maintain a transfer agency with respect to
such stock, in which case such notice to holders of the Series C Preferred
Stock to be redeemed shall state the date of such deposit, shall specify the
office of such bank or trust company as the place of payment of the
redemption price, and shall call upon such holders to surrender the
certificates representing such shares at such price on or after the date
fixed in such redemption notice (which shall not be later than the
redemption date) against payment of the redemption price. From and after the
making of such deposit, the shares of Series C Preferred Stock so designated
for redemption shall not be deemed to be outstanding for any purpose
whatsoever, and the rights of the holders of such shares shall be limited to
the right to receive the redemption price of such shares, without interest,
upon surrender of the certificates representing the same to the Corporation
at said office of such bank or trust company, and the right of conversion
(on or before the tenth day prior to the date fixed for redemption) herein
provided. Any funds so deposited which shall not be required for such
redemption because of the exercise of such right of conversion after the
date of such deposit shall be returned to the Corporation forthwith. Any
interest accrued on such funds shall be paid to the Corporation from time to
time. Any moneys so deposited which shall remain unclaimed by the holders of
such Series C Preferred Stock at the end of six years after the redemption
date shall be returned by such bank or trust company to the Corporation,
after which the holders of the Series C Preferred Stock shall have no
further interest in such moneys.
IV. VOTING RIGHTS
(a) At every meeting of stockholders of the Corporation, every
holder of Series C Preferred Stock shall be entitled to one vote for each
share of Series C Preferred Stock standing in his name on the books of the
Corporation, with the same and identical voting rights, except as expressly
provided herein, as a holder of a share of Common Stock.
(b) The Series C Preferred Stock and any other stock having voting
rights shall vote together as one class, except as provided by law and in
Article VII hereof, and except that while the holders of Preferred Stock,
voting as a class, are entitled to elect two (2) directors of the
Corporation as hereinafter provided, they shall not be entitled to
participate with the holders of the Common Stock in the election of any
other directors.
(c) 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 (hereinafter in this
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<PAGE> 24
subparagraph (c) called the Class Voting Period) commencing with such time
and ending with the time when all arrears in dividends on all Preferred
Stock shall have been paid and the full dividend on all Preferred Stock 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
Corporation held for the election of directors during the Class Voting
Period, the holders of Preferred Stock 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 Corporation, to elect two directors of
the Corporation, 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 Class 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 given at a special meeting of such
stockholders called for the purpose and any vacancy thereby created may be
filled during such Class Voting Period by the holders of Preferred Stock,
present in person or represented by proxy at such meeting. Any director to
be elected by the Board of Directors of the Corporation to replace a
director elected by holders of Preferred Stock, or elected by a director as
in this sentence provided, and who dies, resigns, or otherwise ceases to be
a director shall, except as otherwise provided in the preceding sentence, be
elected by the remaining director theretofore elected by the holders of
Preferred Stock. At the end of the Class Voting Period the holders of
Preferred Stock shall be automatically divested of all voting power vested
in them under this subparagraph (c) but subject always to the subsequent
vesting hereunder of voting power in the holders of Preferred Stock in the
event of any similar default or defaults thereafter. The term of all
directors elected pursuant to the provisions of this subparagraph (c) shall
in all events expire at the end of the Class Voting Period.
V. PRIORITY OF SERIES C PREFERRED STOCK IN EVENT OF DISSOLUTION
In the event of any liquidation, dissolution, or winding-up of the
affairs of the Corporation, whether voluntary or otherwise, after payment or
provision for payment of the debts and other liabilities of the Corporation,
the holders of the Series C Preferred Stock shall be entitled to receive,
out of the remaining net assets of the Corporation, an amount per share
equal to the price per share set forth in Article III hereof applicable to
optional redemption in cash, plus an amount equal to all dividends accrued
and unpaid on each such share up to the date fixed for distribution, before
any distribution shall be made to the holders of the Common Stock of the
Corporation. If upon any liquidation, dissolution or winding-up of the
Corporation, the assets distributable among the holders of any series of
Preferred Stock shall be insufficient to permit the payment in full to the
holders of all series of the Preferred Stock of all preferential amounts
payable to all such holders, then the entire assets of the Corporation thus
distributable shall be distributed ratably among the holders of all series
of the Preferred Stock in proportion to the respective amounts that would be
payable per share if such assets were sufficient to permit payment in full.
VI. CONVERSION OF SERIES C PREFERRED STOCK INTO COMMON STOCK
(a) Each share of the Series C Preferred Stock shall be
convertible at any time at the option of the holder thereof, into shares
(calculated as to each conversion to the nearest 1/100th of a share) of
Common Stock (for purposes of this Article VI, the term "Common Stock" means
the common stock, par value 33-1/3 cents per share, of the Corporation, as
authorized at the date of adoption of this resolution, or stock of any other
class or classes into which such common stock or any such other class may
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<PAGE> 25
thereafter be changed or reclassified) at the rate of 1.96875 shares of
Common Stock for each share of the Series C Preferred Stock, subject to
adjustment as hereinafter provided; provided, however, that as to any shares
of the Series C Preferred Stock called for redemption such right of
conversion shall cease and terminate at the close of business on the fifth
business day prior to the date fixed for redemption.
(b) Any holder of shares of the Series C Preferred Stock electing
to convert such shares or any portion thereof shall deliver the certificates
therefor to the principal office of any transfer agent for the Common Stock,
with the form of notice of election to convert endorsed on such certificates
fully completed and duly executed. The conversion right with respect to any
such shares of the Series C Preferred Stock shall be deemed to have been
exercised at the date upon which the certificates therefor with such notice
of election duly executed shall have been so delivered, and the person or
persons entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such
Common Stock upon said date.
(c) No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon conversion of shares of the Series C
Preferred Stock. If more than one share of the Series C Preferred Stock
shall be surrendered for conversion at one time by the same holder, the
number of full shares of Common Stock which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of the Series C Preferred Stock so surrendered. Instead of any
fractional share of Common Stock which would otherwise be issuable upon
conversion of any share or shares of the Series C Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fraction in an
amount equal to the same fraction of the last sales price (or the quoted
closing bid price if there were no sales) per share of Common Stock on the
New York Stock Exchange on the business day next preceding the date of
conversion, or, if the Common Stock is not then listed on the New York Stock
Exchange, an amount equal to the same fraction of the market price per share
of Common Stock (as determined in a manner prescribed by the Board of
Directors of the Corporation) at the close of business on such next
preceding business day.
(d) The number of shares of Common Stock issuable upon conversion
of each share of the Series C Preferred Stock as provided in this Article VI
shall be subject to adjustment from time to time in certain instances as
follows:
(1) In case of any combination or subdivision of the
outstanding shares of Common Stock of the Corporation, or in case any
dividend or other distribution payable in Common Stock shall be
declared or made upon the Common Stock, then in each such case from
and after the effective date of such combination or subdivision or
the record date for determining stockholders entitled to receive such
dividend or distribution, as the case may be, the number of shares of
Common Stock deliverable upon the conversion of a share of the Series
C Preferred Stock shall be decreased or increased in proportion to
the decrease or increase in the number of outstanding shares of
Common Stock through such combination, subdivision or stock dividend
or distribution;
(2) In case of any other capital reorganization or
reclassification of capital stock of the Corporation, or in case of
consolidation or merger of the Corporation with another corporation,
the number of shares of stock or other securities or property
(including cash) which would have been delivered upon such
reorganization, reclassification, merger or consolidation to a holder
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<PAGE> 26
of the number of shares of Common Stock into which each share of the
Series C Preferred Stock, would have been convertible immediately
prior to such reorganization, reclassification, consolidation or
merger shall thereafter be deliverable upon the conversion of a share
of the Series C Preferred Stock, and appropriate adjustment (as
determined by the Board of Directors) shall be made with respect to
the rights and interest thereafter of the holders of the Series C
Preferred Stock under this clause (2) to the end that the conversion
rights of holders of the Series C Preferred Stock hereunder shall be
applicable, as nearly as reasonably may be, in relation to any shares
or other property thereafter deliverable upon conversion of the
Series C Preferred Stock.
Whenever the number of shares of Common Stock deliverable upon the
conversion of the Series C Preferred Stock shall be adjusted pursuant to the
provisions hereof, the Corporation shall forthwith mail a notice to each
record holder of shares of the Series C Preferred Stock at his address
appearing on the stock transfer books of the Corporation stating the
adjusted number of shares of Common Stock deliverable upon the conversion of
a share of the Series C Preferred Stock, and showing in reasonable detail
the facts requiring such adjustment and the method of calculation thereof.
No adjustment is to be made upon conversion of shares of the Series C
Preferred Stock for dividends accrued thereon or for dividends upon the
Common Stock issuable upon such conversion.
(e) The Corporation shall at all times reserve and keep available,
out of its authorized and unissued shares of Common Stock, solely for the
purpose of effecting the conversion of the Series C Preferred Stock, such
number of shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all shares of the Series C Preferred Stock from
time to time outstanding.
VII. LIMITATIONS
So long as any shares of Series C Preferred Stock are outstanding,
the Corporation shall not, without the affirmative vote or the written
consent as provided by law, of the holders of at least two-thirds ( ) of the
outstanding shares of Series C Preferred Stock, voting as a class,
(a) create, authorize or issue any class or series of stock
ranking either as to payment of dividends or distribution of assets prior to
the Series C Preferred Stock; or
(b) change the preferences, rights or powers with respect to the
Series C Preferred Stock so as to affect such stock adversely;
but nothing herein contained shall require such a class vote or consent (i)
in connection with any increase in the total number of authorized shares of
Common Stock, or (ii) in connection with authorization or increase of any
class of stock ranking on a parity with the Series C Preferred Stock;
provided, however, that no such vote or written consent of the holders of
the Series C Preferred Stock shall be required if, at or prior to the time
when the issuance of any such prior stock is to be made or any such change
is to take effect, as the case may be, provision is made for the redemption
of all shares of Series C Preferred Stock at the time outstanding, and
further provided, that the provisions of this Article VII shall not in any
way limit the right and power of the Corporation to issue the presently
authorized but unissued shares of stock, or bonds, notes, mortgages,
debentures, and other obligations, and to incur indebtedness to banks and to
other lenders.
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<PAGE> 27
DESIGNATION OF $2.125 CUMULATIVE PREFERRED STOCK, SERIES H
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of the
Certificate of Incorporation of the Corporation, this Board of Directors
hereby creates a series of the preferred stock, par value 33-1/3 cents per
share (the "Preferred Stock"), of the Corporation, to consist of 8,000,000
shares of such Preferred Stock, and this Board of Directors hereby fixes the
designations, preferences and relative, participating, optional or other
special rights of the shares of such series, and the qualifications,
limitations, or restrictions thereof (in addition to the designations,
preferences and relative, participating, optional or other special rights,
and the qualifications, limitations or restrictions thereof, set forth in
the Certificate of Incorporation of the Corporation which are applicable to
Preferred Stock of all series) as follows:
I. DESIGNATION
The designation of the series of Preferred Stock created by this
resolution shall be "$2.125 Cumulative Preferred Stock, Series H"
(hereinafter called the "Series H Preferred Stock").
II. CASH DIVIDENDS ON SERIES H PREFERRED STOCK
(a) The holders of the Series H Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors out of the funds
of the Corporation legally available therefor, cumulative cash dividends on
the shares of the Series H Preferred Stock at the annual rate of $2.125 per
share, payable quarterly on March 15, June 15, September 15 and December 15,
commencing June 15, 1993. Dividends shall be cumulative from April 26, 1993.
Each such dividend shall be paid to the holders of record of shares of the
Series H Preferred Stock as they appear on the stock register of the Corpo-
ration on such record date, not more than 30 days nor less than 10 days
preceding the dividend payment date thereof, as shall be fixed by the Board
of Directors of the Corporation or a duly authorized committee thereof.
Dividends in arrears on the Series H Preferred Stock shall accrue dividends
at the dividend rate payable on the Preferred Stock.
(b) If dividends are not paid in full or declared in full and sums
set apart for the payment thereof upon the Series H Preferred Stock and any
other Preferred Stock ranking on a parity as to dividends with the Series H
Preferred Stock, all dividends declared upon shares of Series H Preferred
Stock 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 Series H Preferred Stock 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 Series H Pre-
ferred Stock 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
Series H Preferred Stock have been paid or declared in full and sums set
aside for the payment thereof, no dividends shall be declared or paid or set
aside for payment or other distribution made upon the common stock, par
value 33-1/3 cents per share, of the Corporation (the "Common Stock"), or
the Class A common stock, par value 33-1/3 cents per share, of the
Corporation (the "Class A Common Stock") or any other capital stock of the
Corporation ranking junior to or on a parity with the Series H Preferred
Stock as to dividends or liquidation rights, nor shall any Common Stock,
Class A Common Stock or any other capital stock of the Corporation ranking
junior to or on a parity with the Series H Preferred Stock 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
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<PAGE> 28
the redemption of any shares of such stock) by the Corporation or any
subsidiary of the Corporation (except by conversion into or exchange for
stock of the Corporation ranking junior to the Series H Preferred Stock as
to dividends and liquidation rights).
The term "dividends accrued or in arrears" whenever used herein with
reference to the Preferred Stock shall be deemed to mean an amount which
shall be equal to dividends thereon at the annual dividend rates per share
for the respective series from the date or dates on which such dividends
commence to accrue to the end of the then current quarterly dividend period
for such Preferred Stock (or, in the case of redemption, to the date of
redemption), less the amount of all dividends paid, or declared in full and
sums set aside for the payment thereof, upon such Preferred Stock.
(c) Dividends payable on the Series H Preferred Stock 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.
III. OPTIONAL REDEMPTION OF SERIES-H PREFERRED STOCK
(a) The Series H Preferred Stock shall be redeemable, in whole or
in part, at the option of the Corporation by resolution of its Board of
Directors, at any time and from time to time on or after April 15, 1998 at
the redemption price of $25 per share, plus in each case, all dividends
accrued and unpaid on such Series H Preferred Stock up to the date fixed for
redemption upon giving notice as provided below.
(b) If less than all of the outstanding shares of Series H
Preferred Stock are to be redeemed the shares to be redeemed shall be
determined pro rata or by lot in such usual manner and subject to such
regulations as the Board of Directors in its sole discretion shall
prescribe.
(c) At least 30 days but not more than 60 days prior to the date
fixed for the redemption of shares of the Series H Preferred Stock, a
written notice shall be mailed to each holder of record of shares of Series
H Preferred Stock to be redeemed in a postage prepaid envelope addressed to
such holder at his post office address as shown on the records of the Cor-
poration, notifying such holder of the election of the Corporation to redeem
such shares, stating the date fixed for redemption thereof (hereinafter
referred to as the "Redemption Date"), and calling upon such holder to
surrender to the Corporation on the Redemption Date at the place designated
in such notice his certificate or certificates representing the number of
shares specified in such notice of redemption. On or after the Redemption
Date each holder of shares of Series H Preferred Stock to be redeemed shall
present and surrender his certificate or certificates for such shares to the
Corporation at the place designated in such notice and thereupon the
redemption price of such shares shall be paid to or on the order of the
person whose name appears on such certificate or certificates as the owner
thereof and each surrendered certificate shall be cancelled. In case less
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares. From and
after the Redemption Date (unless default shall be made by the Corporation
in payment of the redemption price) all dividends on the shares of Series H
Preferred Stock designated for redemption in such notice shall cease to
accrue, and all rights of the holders thereof as stockholders of the
Corporation, except the right to receive the redemption price thereof
(including all accrued and unpaid dividends up to the Redemption Date) upon
the surrender of certificates representing the same, shall cease and
terminate and such shares shall not thereafter be transferred (except with
the consent of the Corporation) on the books of the Corporation, and such
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<PAGE> 29
shares shall not be deemed to be outstanding for any purpose whatsoever. At
its election the Corporation prior to the Redemption Date may deposit the
redemption price (including all accrued and unpaid dividends up to the
Redemption Date) of the shares of Series H Preferred Stock so called for
redemption in trust for the holders thereof with a bank or trust company
(having a capital, surplus and undivided profits aggregating not less than
$50,000,000) in The Borough of Manhattan, City and State of New York, the
City of Houston, State of Texas, or in any other city in which the Cor-
poration at the time shall maintain a transfer agency with respect to such
stock, in which case such notice to holders of the Series H Preferred Stock
to be redeemed shall state the date of such deposit, shall specify the
office of such bank or trust company as the place of payment of the
redemption price, and shall call upon such holders to surrender the
certificates representing such shares at such price on or after the date
fixed in such redemption notice (which shall not be later than the
Redemption Date) against payment of the redemption price (including all
accrued and unpaid dividends up to the Redemption Date). From and after the
making of such deposit, the shares of Series H Preferred Stock so designated
for redemption shall not be deemed to be outstanding for any purpose whatso-
ever, and the rights of the holders of such shares shall be limited to the
right to receive the redemption price of such shares (including all accrued
and unpaid dividends up to the Redemption Date), without interest, upon
surrender of the certificates representing the same to the Corporation at
said office of such bank or trust company. Any interest accrued on such
funds shall be paid to the Corporation from time to time. Any moneys so
deposited which shall remain unclaimed by the holders of such Series H
Preferred Stock at the end of two years after the Redemption Date shall be
returned by such bank or trust company to the Corporation, after which the
holders of the Series H Preferred Stock shall have no further interest in
such moneys.
(d) Shares of the Series H Preferred Stock retired pursuant to the
provisions of this Article III shall not be reissued.
IV. VOTING RIGHTS
(a) The holders of the Series H Preferred Stock shall not, except
as required by law or as set forth herein, 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 Series H Preferred Stock shall be entitled to vote, they shall be
entitled to one vote for each share held.
(b) 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 (hereinafter in this
paragraph (b) called the "Class Voting Period") commencing with such time
and ending with the time when all arrears in dividends on all Preferred
Stock shall have been paid and the full dividend on all Preferred Stock 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
Corporation held for the election of directors during the Class Voting
Period, the holders of a majority of the outstanding shares of Preferred
Stock 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 Corporation, to elect two directors of the Corporation, 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 Class Voting Period, either for or without cause, by,
and only by, the affirmative votes of the holders of record of a majority of
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<PAGE> 30
the outstanding shares of Preferred Stock given at a special meeting of such
stockholders called for the purpose, and any vacancy thereby created may be
filled during such Class Voting Period by the holders of Preferred Stock,
present in person or represented by proxy at such meeting. Any director
elected by holders of Preferred Stock, or elected by a director as in this
sentence provided, 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 Class Voting Period the holders of Preferred Stock
shall be automatically divested of all voting power vested in them under
this paragraph (b) but subject always to the subsequent vesting hereunder 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 the provisions of this
paragraph (b) shall in all events expire at the end of the Class Voting
Period.
(c) In case at any time the equivalent of four or more full
quarterly dividends (whether consecutive or not) on the Series H Preferred
Stock shall be in arrears, then during the period (hereinafter in this
paragraph (c) called the "Special Series Voting Period") commencing with
such time and ending with the time when all arrears in dividends shall have
been paid and the full dividends on the Series H Preferred Stock 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 Corporation
held for the election of directors during the Special Series Voting Period,
the holders of Series H Preferred Stock 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 or series of capital stock of the Corporation, to elect
one director of the Corporation, each share of Series H Preferred Stock
entitling the holder thereof to one vote.
Any director who shall have been elected by holders of Series H
Preferred Stock, or by any director so elected as herein contemplated, may
be removed at any time during a Special Series 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 Series H Preferred Stock
given at a special meeting of such stockholders called for the purpose, and
any vacancy thereby created may be filled during such Special Series Voting
Period by the holders of Series H Preferred Stock, present in person or
represented by proxy at such meeting. Any director elected by holders of
Series H Preferred Stock who dies, resigns, or otherwise ceases to be a
director shall be replaced by the affirmative vote of the holder of record
of a majority of the outstanding shares of Series H Preferred Stock at a
special meeting of holders of Series H Preferred Stock called for that
purpose. At the end of the Special Series Voting Period the holders of
Series H Preferred Stock shall be automatically divested of all voting power
vested in them under this paragraph (c) but subject always to the subsequent
vesting hereunder of voting power in the holders of Series H Preferred Stock
in the event of any similar cumulated arrearage in payment of quarterly
dividends occurring thereafter. The term of any director elected pursuant to
the provision of this paragraph (c) shall in all events expire at the end of
the Special Series Voting Period.
The voting rights of holders of Series H Preferred Stock pursuant to
this paragraph (c) shall be separate from and in addition to the voting
rights granted to all holders of Preferred Stock pursuant to paragraph (b)
of this Article IV.
V. PRIORITY OF SERIES H PREFERRED
STOCK IN EVENT OF DISSOLUTION
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<PAGE> 31
In the event of any liquidation, dissolution, or winding up of the
affairs of the Corporation, whether voluntary or otherwise, after payment or
provision for payment of the debts and other liabilities of the Corporation,
the holders of the Series H Preferred Stock shall be entitled to receive,
out of the remaining net assets of the Corporation, the amount of
twenty-five dollars ($25) in cash for each share of Series H Preferred
Stock, plus an amount equal to all dividends accrued and unpaid on each such
share up to the date fixed for distribution, before any distribution shall
be made to the holders of the Common Stock, the Class A Common Stock or any
other capital stock of the Corporation ranking junior to the Series H Pre-
ferred Stock with regard to such distribution. If upon any liquidation,
dissolution or winding up of the Corporation, the assets distributable among
the holders of any series of Preferred Stock ranking (as to any such
distribution) on a parity with the Series H Preferred Stock shall be
insufficient to permit the payment in full to the holders of all such series
of Preferred Stock of all preferential amounts payable to all such holders,
then the entire assets of the Corporation thus distributable shall be
distributed ratably among the holders of all series of the Preferred Stock
ranking (as to any such distribution) on a parity with the Series H
Preferred Stock in proportion to the respective amounts that would be
payable per share if such assets were sufficient to permit payment in full.
For purposes of this Article V, a distribution of assets in any
dissolution, winding up or liquidation shall not include (i) any
consolidation or merger of the Corporation with or into any other
corporation, (ii) any dissolution, liquidation, winding up, or
reorganization of the Corporation immediately followed by reincorporating of
another corporation or (iii) a sale or other disposition of all or
substantially all of the Corporation's assets to another corporation;
provided that in each case, effective provision is made in the certificate
of incorporation of the resulting and surviving corporation or otherwise for
the protection of the rights of the holders of Series H Preferred Stock.
VI. CONVERSION OF SERIES H PREFERRED STOCK
The Series H Preferred Stock shall not be convertible into any other
capital stock of the Corporation.
VII. RANKING OF SERIES H PREFERRED STOCK
With regard to rights to receive dividends and distributions upon
dissolution of the Corporation, the Series H Preferred Stock shall rank pari
passu with any other Preferred Stock of the Corporation, other than
Preferred Stock of a series which by its terms ranks junior in right of
dividends or distributions on dissolution to the Series H Preferred Stock,
and shall rank prior to all other capital stock of the Corporation
outstanding at the time of issuance of the Series H Preferred Stock.
VIII. LIMITATIONS
So long as any shares of Series H Preferred Stock are outstanding,
the Corporation shall not, without the affirmative vote or the written
consent as provided by law, of the holders of at least two-thirds (2/3) of
the outstanding shares of Series H Preferred Stock, voting as a class,
(a) create, authorize or issue any class or series of stock
ranking either as to payment of dividends or distribution of assets prior to
the Series H Preferred Stock; or
(b) change the preferences, rights or powers with respect to the
Series H Preferred Stock so as to affect such stock adversely;
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<PAGE> 32
but nothing herein contained shall require such a class vote or consent (i)
in connection with any increase in the total number of authorized shares of
Preferred Stock, Common Stock or Class A Common Stock, or (ii) in connection
with authorization or increase of any other class or series of stock ranking
junior to or on a parity with the Series H Preferred Stock; provided,
however, that no such vote or written consent of the holders of the Series H
Preferred Stock shall be required under clause (a) or (b) above if, at or
prior to the time when the issuance of any such prior stock is to be made or
any such change is to take effect, as the case may be, provision is made for
the redemption of all shares of Series H Preferred Stock at the time
outstanding, and further provided, that the provisions of this Article VIII
shall not in any way limit the right and power of the Corporation to issue
the presently authorized but unissued shares of stock, or bonds, notes,
mortgages, debentures, and other obligations, and to incur indebtedness to
banks and to other lenders.
FIFTH: A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which the director
derived any improper personal benefit. If the Delaware General Corporation
Law is amended after approval by the stockholders of this article to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the
Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or pro-
tection of a director of the Corporation existing at the time of such repeal
or modification.
SIXTH: The business and affairs of the Corporation shall be managed
by or under the direction of a Board of Directors consisting of not less
than three nor more than eighteen directors, the exact number of directors
to be determined from time to time by resolution adopted by affirmative vote
of a majority of the entire Board of Directors. The directors shall be
divided into three classes, designated Class I, Class II and Class III.
Each class shall consist, as nearly as may be possible, of one-third of the
total number of directors constituting the entire Board of Directors. At
the special meeting of stockholders at which this Article is adopted, Class
I, II and III directors shall be elected to serve until the 1984, 1985 and
1986 annual meetings of stockholders, respectively.
At each annual meeting of stockholders beginning with 1984,
successors to the class of directors whose term expires at that annual
meeting shall be elected for a three-year term. If the number of directors
is changed, any increase or decrease shall be apportioned among the classes
so as to maintain the number of directors in each class as nearly equal as
possible, and any additional director of any class elected to fill a vacancy
resulting from an increase in such class shall hold office for a term that
shall coincide with the remaining term of that class, but in no case will a
decrease in the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual meeting for the
year in which his term expires and until his successor shall be elected and
shall qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. Any vacancy on the Board of
Directors that results from an increase in the number of directors may be
filled by a majority of the Board of Directors then in office, and any other
-31-<PAGE>
<PAGE> 33
vacancy occurring in the Board of Directors may be filled by a majority of
the directors then in office, although less than a quorum, or by a sole
remaining director. Any director elected to fill a vacancy not resulting
from an increase in the number of directors shall have the same remaining
term as that of his predecessor.
Notwithstanding the foregoing, whenever the holders of any one or
more classes or series of preferred stock issued by the Corporation shall
have the right, voting separately by class or series, to elect directors at
an annual or special meeting of stockholders, the election, term of office,
filling of vacancies and other features of such directorships shall be
governed by the terms of this Certificate of Incorporation applicable
thereto, and such directors so elected shall not be divided into classes
pursuant to this Article SIXTH unless expressly provided by such terms.
No person (other than a person nominated by or on behalf of the Board
of Directors) shall be eligible for election as a director at any annual or
special meeting of stockholders unless a written request that his or her
name be placed in nomination is received from a stockholder of record by the
Secretary of the Corporation 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.
The Board of Directors is expressly authorized and empowered to make,
alter and repeal the By-Laws of the Corporation, subject to the power of the
stockholders of the Corporation to alter or repeal any By-Law adopted by the
Board of Directors.
Except to the extent prohibited by law, the Board of Directors shall
have the right (which, to the extent exercised, shall be exclusive) to
establish the rights, powers, duties, rules and procedures that from time to
time shall govern the Board of Directors and each of its members, including
without limitation the vote required for any action by the Board of
Directors, and that from time to time shall affect the directors' power to
manage the business and affairs of the Corporation; and, notwithstanding any
other provision of this Certificate of Incorporation to the contrary, no
By-Law shall be adopted by stockholders which shall impair or impede the
implementation of the foregoing.
SEVENTH: No action shall be taken by stockholders of the Corporation
except at an annual or special meeting of stockholders of the Corporation.
EIGHTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of the Corporation or of any creditor or stockholder of the
Corporation or on the application of any receiver or receivers appointed for
the Corporation under the provisions of Section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for the Corporation under the provisions of
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors
or class of creditors and/or of the stockholders or class of stockholders of
the Corporation, as the case may be, to be summoned in such manner as the
said court directs. If a majority in number representing three-fourths in
value of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the Corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of the Corporation as
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or
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<PAGE> 34
class of creditors, and/or on all the stockholders or class of stockholders,
of the Corporation, as the case may be, and also on the Corporation.
NINTH: The names and mailing addresses of the persons who are to
serve as directors of the Corporation until their successors are elected and
qualify are as follows:
Name Mailing Address
---- ---------------
Oscar S. Wyatt, Jr. . . . . . . . Post Office Drawer 521
Corpus Christi, Texas 78403
Harry G. Fair . . . . . . . . . . Post Office Drawer 521
Corpus Christi, Texas 78403
Norman S. Davis . . . . . . . . . 1515 National Bank of
Commerce Building
San Antonio, Texas 78205
H. T. Capelle . . . . . . . . . . Post Office Drawer 521
Corpus Christi, Texas 78403
Tracy N. DuBose . . . . . . . . . Lincoln Liberty Life Building
Houston, Texas 77002
Roy L. Gates . . . . . . . . . . Post Office Drawer 521
Corpus Christi, Texas 78403
Leon Jaworski . . . . . . . . . . Fulbright, Crooker & Jaworski
Bank of the Southwest Building
Houston, Texas 77002
Will E. Odom . . . . . . . . . . Post Office Box 595
Austin, Texas 78767
Harold Vance . . . . . . . . . . 1429 Bank of the
Southwest Building
Houston, Texas 77002
Jack Ware . . . . . . . . . . . . Post Office Drawer 1827
Uvalde, Texas 78801
TENTH: The Corporation reserves the right at any time and from time
to time to amend, alter, change or repeal any provision contained in this
Restated Certificate of Incorporation, and other provisions authorized by
the laws of the State of Delaware at the time in force may be added or
inserted, in the manner now or hereafter prescribed by law; and all rights,
preferences and privileges of whatsoever nature conferred upon stockholders,
directors or any other persons whomsoever by and pursuant to this Restated
Certificate of Incorporation in its present form or as hereafter amended are
granted subject to the right reserved in this Article.
ELEVENTH: 1. The affirmative vote or consent of the holders of
eighty-five per cent (85%) of the voting power of all shares of stock of the
Corporation entitled to vote in elections of directors, considered for the
purposes of this Article ELEVENTH as one class, shall be required for the
adoption or authorization of a business combination (as hereinafter defined)
with any other entity (as hereinafter defined) if, as of the record date for
the determination of stockholders entitled to notice thereof and to vote
thereon or consent thereto, such other entity is the beneficial owner,
directly or indirectly, of more than twenty, per cent (20%) of the voting
power of all shares of stock of the Corporation entitled to vote in
elections of directors considered for the purposes of this Article ELEVENTH,
as one class; provided that such eighty-five per cent (85%) voting
requirement shall not be applicable if:
(a) The cash, or fair market value of
other consideration, to be received per share
by holders of shares of any class of capital
stock of the Corporation in such business
combination bears the same or a greater
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<PAGE> 35
percentage relationship to the market price of
such shares of capital stock immediately prior
to the announcement of such business
combination as the highest per share price
(including brokerage commissions and/or
soliciting dealers' fees) which such other
entity has theretofore paid for any of such
shares of capital stock already owned by it
bears to the market price of such shares of
capital stock immediately prior to the
commencement of acquisition of such shares of
capital stock by such other entity;
(b) The cash or fair market value of
other consideration, to be received per share
by holders of shares of any class of capital
stock of the Corporation in such business
combination (i) is not less than the highest
per share price (including brokerage
commissions and/or soliciting dealers' fees)
paid by such other entity in acquiring any of
its holdings of such shares of capital stock,
and (ii) is not less than the earnings per
share of Common Stock of the Corporation for
the four full consecutive fiscal quarters
immediately preceding the record date for
solicitation of votes on such business
combination, multiplied by the then
price/earnings multiple (if any) of such other
entity as customarily computed and reported in
the financial community;
(c) After such other entity has
acquired twenty per cent (20%) voting interest
and prior to the consummation of such business
combination: (i) such other entity shall have
taken steps to ensure that the Corporation's
Board of Directors included at all times
representation by continuing director(s) (as
hereinafter defined) proportionate to the
stockholdings of the Corporation's public
capital stockholders not affiliated with such
other entity (with a continuing director to
occupy any resulting fractional board
position); (ii) there shall have been no
reduction in the rate of dividends payable on
the Corporation's Capital Stock except as
necessary to ensure that a quarterly dividend
payment does not exceed 12.5% of the net income
of the Corporation for the four full
consecutive fiscal quarters immediately
preceding the declaration date of such
dividend, or except as may have been approved
by a unanimous vote of the directors; (iii)
such other entity shall not have acquired any
newly issued shares of Capital Stock, directly
or indirectly, from the Corporation (except
upon conversion of securities acquired by it
prior to obtaining twenty per cent (20%) voting
interest or as a result of a pro rata stock
dividend or stock split); and (iv) such other
entity shall not have acquired any additional
-34-<PAGE>
<PAGE> 36
shares of the Corporation's outstanding Capital
Stock or securities convertible into Capital
Stock except as a part of the transaction which
results in such other entity acquiring twenty
per cent (20%) voting interest;
(d) Such other entity shall not have
(i) received the benefit, directly or
indirectly (except proportionately as a
stockholder) of any loans, advances,
guarantees, pledges or other financial
assistance or tax credits provided by the
Corporation, or (ii) made any major change in
the Corporation's business or equity capital
structure without the unanimous approval of the
directors in either case prior to the
consummation of such business combination; and
(e) A proxy statement responsive to the
requirements of the Securities Exchange Act of
1934 shall be mailed to public stockholders of
the Corporation for the purpose of soliciting
stockholder approval of such business
combination and shall contain at the front
thereof, in a prominent place, any
recommendations as to the advisability (or
inadvisability) of the business combination
which the continuing directors, or any of them,
may choose to state and, if deemed advisable by
a majority of the continuing directors, an
opinion of a reputable investment banking firm
as to the fairness (or not) of the terms of
such business combination, from the point of
view of the remaining public stockholders of
the Corporation (such investment banking firm
to be selected by a majority of the continuing
directors and to be paid a reasonable fee for
their services by the Corporation upon receipt
of such opinion).
The provisions of this Article ELEVENTH
shall also apply to a business combination with
any other entity which at any time has been the
beneficial owner, directly or indirectly, of
more than twenty per cent (20%) of the voting
power of all shares of stock of the Corporation
entitled to vote in elections of directors
considered for the purpose of this Article
ELEVENTH as one class, notwithstanding the fact
that such other entity has reduced its voting
interest to below twenty per cent (20%) of the
voting power of all of the Corporation's stock
if, as of the record date for the determination
of stockholders entitled to notice of and to
vote on or consent to the business combination,
such other entity is an "affiliate" of the
Corporation (as hereinafter defined).
2. As used in this Article ELEVENTH, (a) the term "other entity"
shall include any corporation, person or other entity and any other entity
with which it or its "affiliate" or "associate" (as defined below) has any
agreement, arrangement or understanding, directly or indirectly, for the
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<PAGE> 37
pure of acquiring, holding, voting or disposing of stock of the Corporation,
or which is its "affiliate" or "associate" as those terms defined in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act
of 1934 as in effect on May 27, 1982, together with the successors and
assigns of such persons in any transaction or series of transactions not
involving a public offering of the corporation's stock within the meaning of
the Securities Act of 1933; (b) another entity shall be deemed to be the
beneficial owner of any shares of stock of the Corporation which the other
entity (as defined above) has the right to acquire pursuant to any
agreement, or upon exercise of conversion rights, warrants or options, or
otherwise; (c) the outstanding shares of any class of stock of the
Corporation shall include shares deemed owned through application of clause
(b) above but shall not include any other shares which may be issuable
pursuant to any agreement, or upon exercise of conversion rights, warrants
or options, or otherwise; (d) the term "business combination" shall include
any merger or consolidation of the Corporation with or into any other
corporation, or the sale or lease of all or any substantial part of the
assets of the Corporation to, or any sale or lease to the Corporation or any
subsidiary thereof in exchange for securities of the Corporation of any
assets (except assets having an aggregate fair market value of less than
$5,000,000) of any other entity; (e) the term "continuing director" shall
mean a person who was a member of the Board of Directors of the Corporation
elected by the public stockholders prior to the time that such other entity
acquired in excess of ten percent (10%) of the voting power of all
outstanding shares of stock of the Corporation entitled to vote in the
election of directors, or a person recommended to succeed a continuing
director by a majority of continuing directors; (f) for the purposes of
sub-paragraphs l(a) and (b) of this article ELEVENTH the term "other
consideration to be received" shall mean Capital Stock of the Corporation
retained by its existing public stockholders in the event of a business
combination with such other entity in which the Corporation is the surviving
corporation and (g) the determination of "market price" shall give effect to
any stock dividend, stock split, subdivision or reclassification with
respect to any shares of capital stock of the Corporation involved in such
business combination.
3. A majority of the continuing directors shall have the power
and duty to determine for the purposes of this Article ELEVENTH on the basis
of information known to them whether (a) such other entity beneficially owns
more than twenty per cent (20%) of the voting power of all shares of stock
of the Corporation entitled to vote in election of directors, (b) an other
entity is an "affiliate" or "associate" (as defined above) of another, (c)
an other entity as an agreement, arrangement or understanding with another,
or (d) the assets being acquired by the Corporation, or any subsidiary
thereof, have an aggregate fair market value of less than $5,000,000.
4. No amendment to the Certificate of Incorporation shall amend,
alter, change or repeal any of the provisions of this Article ELEVENTH,
unless the amendment effecting such amendment, alteration, change or repeal
shall receive the affirmative vote or consent of eighty-five per cent (85%)
of the voting power of all shares of stock of the Corporation entitled to
vote in election of directors, considered for the purposes of this Article
ELEVENTH as one class; provided that this paragraph 4 shall not apply to,
and such eighty-five per cent (85%) vote or consent shall not be required
for, any amendment, alteration, change or repeal unanimously recommended to
the stockholders by the Board of Directors of the Corporation if all of such
directors are persons who would be eligible to serve as "continuing
directors" within the meaning of paragraph 2 of this Article ELEVENTH.
5. Nothing contained in this Article ELEVENTH shall be construed
to relieve any other entity, from any fiduciary obligation imposed by law.
-36-<PAGE>
<PAGE> 38
6. The provisions of this Article ELEVENTH shall not apply to any
transaction described in Section I of this Article ELEVENTH:
(a) If the Board of Directors of the
Corporation shall have approved by resolution a
memorandum of understanding with the other
corporation, person or entity with whom the
transaction is proposed prior to the time that
such other corporation, person or entity shall
have become a beneficial owner of five percent
(5%) or more of the outstanding shares of any
class of capital stock of the Corporation
entitled to vote in elections of directors; or
(b) If the transaction is approved
prior to its consummation by a resolution
adopted at a meeting of the Board of Directors
at which at least two-thirds of such members of
the Board of Directors who are not involved
with and/or representing the corporation,
person or entity with whom the transaction is
proposed approve the same; or
(c) If the transaction involves only
the Corporation, or any of its subsidiaries,
and a corporation of which a majority of the
outstanding shares of each class of capital
stock entitled to vote in elections of
directors is owned of record or beneficially by
the Corporation or any of its subsidiaries.
This Restated Certificate of Incorporation was duly adopted
by the Board of Directors of the Corporation in accordance with Section 245
of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, THE COASTAL CORPORATION has caused this
Certificate to be signed by DAVID A. ARLEDGE its President, and attested by
AUSTIN M. O'TOOLE, its Senior Vice President and Secretary, this 21st day of
March, 1994.
THE COASTAL CORPORATION
By: ----------------------------------
[CORPORATE SEAL] DAVID A. ARLEDGE
President
ATTEST:
- ----------------------------------
AUSTIN M. O'TOOLE
Senior Vice President and Secretary
STATE OF TEXAS ^U
^U
COUNTY OF HARRIS ^U
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<PAGE> 39
On the 21st day of March, 1994, personally appeared before me,
DAVID A. ARLEDGE, President of The Coastal Corporation, known to me
personally to be such, and acknowledged that he signed said Restated
Certificate of Incorporation and he acknowledged that said Restated
Certificate of Incorporation was his act and deed and the act and deed
of The Coastal Corporation and that the facts stated therein are true.
----------------------------------
MARTA I. RAMIREZ, Notary Public
[NOTARIAL SEAL] Expiration Date: August 19, 1997
----------------
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<PAGE> 40
<PAGE>
EXHIBIT 4.7
================================================================================
THE COASTAL CORPORATION
AND
THE BANK OF NEW YORK
Trustee
____________________
THIRD SUPPLEMENTAL
INDENTURE
TO
INDENTURE
Dated as of ,
____________________
% Subordinated Deferrable Interest Notes
due ,
================================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
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
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
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
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 THIRD SUPPLEMENTAL INDENTURE, dated as of , (this
"Third 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 Third
Supplemental Indenture; and
WHEREAS, Coastal Finance III, 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 the Notes; and
WHEREAS, the Company has requested the Trustee to execute and deliver
this Third Supplemental Indenture, and all requirements necessary to make this
Third 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
<PAGE>
-2-
this Third 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 Third Supplemental Indenture, (b) a term defined anywhere in this Third
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
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 III, a Delaware statutory business trust, dated as of ,
.
<PAGE>
-3-
"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 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 Third
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
<PAGE>
-4-
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 Third Supplemental Indenture as
a whole. References to Articles and Sections are to the Articles and Sections of
this Third Supplemental Indenture. The headings to the Articles and Sections are
for convenience of reference and shall not affect the meaning or interpretation
of this Third Supplemental Indenture.
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
<PAGE>
-5-
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:
(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 Third
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
<PAGE>
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stated liquidation amount of the Preferred Security Certificate canceled,
will be executed by the Company and delivered to the Trustee for
authentication and delivery in accordance with the Indenture and this Third
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 of days
elapsed in such a 90-day quarter.
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(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 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
<PAGE>
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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
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,
<PAGE>
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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.
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
<PAGE>
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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 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
<PAGE>
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of the Trustee under the Indenture in accordance with the provisions of Section
7.07 of the Indenture;
(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.
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
<PAGE>
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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 Third 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 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
<PAGE>
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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 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
<PAGE>
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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 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
<PAGE>
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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 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 Third
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 Third 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
<PAGE>
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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 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
Third 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
<PAGE>
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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 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 Third 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 any holder
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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 Third
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 Indenture).
<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 , 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
<PAGE>
-21-
[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 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 III, 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 III.
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 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
<PAGE>
-22-
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>
-23-
(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>
-24-
(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 Third 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 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
<PAGE>
-25-
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) 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
<PAGE>
-26-
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 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
<PAGE>
-27-
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 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>
-28-
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 Third 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.
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
<PAGE>
-29-
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,
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.
<PAGE>
-30-
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.
ARTICLE XII
MISCELLANEOUS
Section 12.1. Supplemental Indenture Incorporated Into Indenture.
This Third 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 Third
<PAGE>
-31-
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 Third 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 Third
Supplemental Indenture.
Section 12.3. Governing Law. This Third 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 Third 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 Third Supplemental Indenture or of the Notes, but this Third
Supplemental Indenture and the Notes shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.
Section 12.5. Counterparts. This Third 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
<PAGE>
-32-
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>
-33-
IN WITNESS WHEREOF, the parties hereto have caused this Third
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>
-34-
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 4.10
CERTIFICATE OF TRUST
OF
COASTAL FINANCE III
THIS CERTIFICATE OF TRUST of COASTAL FINANCE III (the "Trust"), dated
July 10, 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 III.
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.
-----------------------------------------
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: Mary Jane Morrissey
Title: Authorized Signatory
<PAGE>
EXHIBIT 4.12
DECLARATION OF TRUST
OF
COASTAL FINANCE III
THIS DECLARATION OF TRUST (this "Declaration"), dated and effective as
of July 10, 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.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
<PAGE>
2
"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.
"Indemnified Person" means (a) any Trustee; (b) any Affiliate of any
Trustee; (c) any officers, directors, shareholders, members, partners,
employees, representatives or
<PAGE>
3
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
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
<PAGE>
4
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 III." 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.
SECTION 2.5. Title to Property of the Trust. Legal title to all
assets of the Trust shall be vested in the Trust.
<PAGE>
5
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;
(c) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers,
<PAGE>
6
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.
The initial Regular Trustees shall be:
<PAGE>
7
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.
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
<PAGE>
8
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
(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
<PAGE>
9
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.
(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,
<PAGE>
10
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:
(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.
<PAGE>
11
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 III to be executed as of the day and year first above
written.
TRUSTEES:
--------------------------------------------
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: Mary Jane Morrissey
Title: Authorized Signatory
SPONSOR:
THE COASTAL CORPORATION
By:
----------------------------------------
Name: Austin M. O'Toole
Title: Senior Vice President
and Secretary
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST
OF
COASTAL FINANCE III
This Certificate of Trust of Coastal Finance III (the "Trust") dated
July 10, 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 III."
(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.
Dated:
_______________________________
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 4.14
================================================================================
AMENDED AND RESTATED DECLARATION OF TRUST
COASTAL FINANCE III
Dated as of ,
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
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<S> <C> <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........................................................... 27
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.......................................................... 30
ARTICLE V TRUSTEES.......................................................... 30
SECTION 5.1. Number of Trustees................................................ 30
</TABLE>
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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.......................................... 35
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.................................................... 45
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........................................ 48
SECTION 11.3. Banking........................................................... 48
</TABLE>
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SECTION 11.4. Withholding....................................................... 49
ARTICLE XII AMENDMENTS AND MEETINGS........................................... 49
SECTION 12.1. Amendments........................................................ 49
SECTION 12.2. Meetings of the Holders; Action by Written Consent................ 52
ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE.......... 54
SECTION 13.1. Representations and Warranties of Property Trustee................ 54
SECTION 13.2. Representations and Warranties of Delaware Trustee................ 55
ARTICLE XIV MISCELLANEOUS..................................................... 56
SECTION 14.1. Notices........................................................... 56
SECTION 14.2. Governing Law..................................................... 57
SECTION 14.3. Intention of the Parties.......................................... 57
SECTION 14.4. Headings.......................................................... 57
SECTION 14.5. Successors and Assigns............................................ 57
SECTION 14.6. Partial Enforceability............................................ 57
SECTION 14.7. Counterparts...................................................... 58
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>
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<PAGE>
CROSS-REFERENCE TABLE*
----------------------
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
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)
- -------------------
* 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>
AMENDED AND RESTATED DECLARATION OF TRUST
OF
COASTAL FINANCE III
,
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 III (the
"Trust") as a business trust under the Delaware Business Trust Act pursuant to a
Declaration of Trust dated as of July , 1998 (the "Original Declaration") and
a Certificate of Trust filed with the Secretary of State of the State of
Delaware on July , 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 , . "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 ____________, 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 in-
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formed 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 ____________, ____, 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.
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"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
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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.
"Underwriting Agreement" means the underwriting agreement among the
Trust, the Subordinated Note Issuer and the
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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.
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 re-
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ceives 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.
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 conse-
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quences, 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 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 III," 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;
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(k) to incur expenses that are necessary or 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
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(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.
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
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(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
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
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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 provisions of this Declaration and
the Property Trus-
<PAGE>
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tee 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 risk or liability is not reasonably assured to it;
<PAGE>
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(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 Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced by a
Direction or an Officers' Certificate;
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(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 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
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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 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
<PAGE>
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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.
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.
<PAGE>
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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 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, prefer-
<PAGE>
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ences 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 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.
<PAGE>
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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.
<PAGE>
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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 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:
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(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.
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
<PAGE>
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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 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:
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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 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
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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 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 Sponsor) 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.
<PAGE>
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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.
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
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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 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.
<PAGE>
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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 Security Certificate for original issue.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to
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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.
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 re-
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demption 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.
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:
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(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.
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,
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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.
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
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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
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
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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.
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:
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(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.
(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.
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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, 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
obliga-
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tion 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 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
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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.
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.
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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.
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
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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.
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
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(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:
(A) 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);
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);
(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
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(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 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
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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:
(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.
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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 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.
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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 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.
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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 first class 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 III
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 notice of to the Trust):
<PAGE>
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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.
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.
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 appli-
<PAGE>
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cation 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:
<PAGE>
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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.
<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 _____________, _____________, 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
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<PAGE>
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 __________, ____ (the "Prospectus
Supplement"), to the Prospectus, dated _______________, 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
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<PAGE>
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.
(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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<PAGE>
(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
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<PAGE>
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 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 interpreta-
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<PAGE>
tion 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 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
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<PAGE>
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 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
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<PAGE>
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
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
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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 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
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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
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<PAGE>
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 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
I-12
<PAGE>
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 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
I-13
<PAGE>
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 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
I-14
<PAGE>
Securities held by the 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 III
% Trust Preferred Securities
(liquidation amount $25 per Preferred Security)
Coastal Finance III, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"),
A1-1
<PAGE>
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 ______________, ____, 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
A1-2
<PAGE>
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 III
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 III
% Common Securities
(liquidation amount $25 per Common Security)
Coastal Finance III, 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 III
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 identification 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
B-1
<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
-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 , , 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
<PAGE>
-2-
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.
"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.
<PAGE>
-3-
"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 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
<PAGE>
-4-
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:
(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
<PAGE>
-5-
(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 (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 exercise
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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 referred
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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.
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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,
losses, or any other facts
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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
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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>
-23-
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>
-24-
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 4.20
____________________________________
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 III, 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>
2
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
<PAGE>
3
amount and all accrued and 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.
"Preferred Securities" shall mean the securities representing
preferred undivided beneficial interests in the assets of the Issuer.
"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.
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>
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>
6
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>
7
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.
<PAGE>
8
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:
(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 III
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.
<PAGE>
9
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.
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>
July 13, 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 II and Coastal Finance III (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
$600,000,000 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 5.3
July 13, 1998
Coastal Finance III
c/o The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, Texas 77046
Re: Coastal Finance III
Ladies and Gentlemen:
We have acted as special Delaware counsel for The Coastal Corporation,
a Delaware corporation (the "Company"), and Coastal Finance III, 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 July 10, 1998 (the
"Certificate"), as filed in the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on July 10, 1998;
(b) The Declaration of Trust of the Trust, dated as of July 10, 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 July 13, 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 July 13,
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
July 13, 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 II and Coastal Finance III, 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
$600,000,000 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
1
<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 II and Coastal Finance III, dated as of April 8, 1998
and July 10, 1998 respectively, and (ii) the form of Amended and Restated
Declaration of Trust for each of Coastal Finance II and Coastal Finance III
(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 (the
"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 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
<PAGE>
-3-
laws of the United States or any state thereof or the District 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 the Service, and a court or the Service 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
July 13, 1998
<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 III
(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 7th day of July, 1998.
THE BANK OF NEW YORK
By: /s/MARY JANE SCHMALZEL
-------------------------------
Name: MARY JANE SCHMALZEL
Title: VICE PRESIDENT
4
<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 7th day of July, 1998.
THE BANK OF NEW YORK
By: /s/ MARY JANE SCHMALZEL
--------------------------------
Name: Mary Jane Schmalzel
Title: 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 March 31, 1998,
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 depository
institutions:
Noninterest-bearing balances and
currency and coin..................... $ 6,397,993
Interest-bearing balances.............. 1,138,362
Securities:
Held-to-maturity securities............ 1,062,074
Available-for-sale securities.......... 4,167,240
Federal funds sold and Securities pur-
chased under agreements to resell...... 391,650
Loans and lease financing receivables:
Loans and leases, net of unearned
income .................36,538,242
LESS: Allowance for loan and
lease losses ..............631,725
LESS: Allocated transfer risk
reserve..........................0
Loans and leases, net of unearned
income, allowance, and reserve 35,906,517
Assets held in trading accounts.......... 2,145,149
Premises and fixed assets (including
capitalized leases).................... 663,928
Other real estate owned.................. 10,895
Investments in unconsolidated
subsidiaries and associated
companies.............................. 237,991
Customers' liability to this bank on
acceptances outstanding................ 992,747
Intangible assets........................ 1,072,517
Other assets............................. 1,643,173
-----------
Total assets............................. $55,830,236
===========
LIABILITIES
Deposits:
In domestic offices.................... $24,849,054
Noninterest-bearing ......10,011,422
Interest-bearing .........14,837,632
In foreign offices, Edge and
Agreement subsidiaries, and IBFs....... 15,319,002
Noninterest-bearing .........707,820
Interest-bearing .........14,611,182
Federal funds purchased and Securities
sold under agreements to repurchase.... 1,906,066
Demand notes issued to the U.S. Treasury. 215,985
Trading liabilities...................... 1,591,288
Other borrowed money:
With remaining maturity of one year
or less.............................. 1,991,119
With remaining maturity of more than
one year through three years......... 0
With remaining maturity of more than
three years.......................... 25,574
Bank's liability on acceptances exe-
cuted and outstanding.................. 998,145
Subordinated notes and debentures........ 1,314,000
Other liabilities........................ 2,421,281
-----------
Total liabilities........................ 50,631,514
-----------
EQUITY CAPITAL
Common stock............................. 1,135,284
Surplus.................................. 731,319
Undivided profits and capital reserves... 3,328,050
Net unrealized holding gains
(losses) on available-for-sale
securities............................. 40,198
Cumulative foreign currency translation
adjustments............................ (36,129)
-----------
Total equity capital..................... 5,198,722
-----------
Total liabilities and equity
capital ............................... $55,830,236
===========
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.
Thomas A. Renyi )
Alan R. Griffith ) Directors
J. Carter Bacot )
- --------------------------------------------------------------------------------
<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 III
(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 7th day of July, 1998.
THE BANK OF NEW YORK
By: /s/MARY JANE SCHMALZEL
---------------------------
Name: MARY JANE SCHMALZEL
Title: VICE PRESIDENT
4
<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 7th day of July, 1998.
THE BANK OF NEW YORK
By: /s/ MARY JANE SCHMALZEL
--------------------------------
Name: Mary Jane Schmalzel
Title: 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 March 31, 1998,
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 depository
institutions:
Noninterest-bearing balances and
currency and coin..................... $ 6,397,993
Interest-bearing balances.............. 1,138,362
Securities:
Held-to-maturity securities............ 1,062,074
Available-for-sale securities.......... 4,167,240
Federal funds sold and Securities pur-
chased under agreements to resell...... 391,650
Loans and lease financing receivables:
Loans and leases, net of unearned
income .................36,538,242
LESS: Allowance for loan and
lease losses ..............631,725
LESS: Allocated transfer risk
reserve..........................0
Loans and leases, net of unearned
income, allowance, and reserve 35,906,517
Assets held in trading accounts.......... 2,145,149
Premises and fixed assets (including
capitalized leases).................... 663,928
Other real estate owned.................. 10,895
Investments in unconsolidated
subsidiaries and associated
companies.............................. 237,991
Customers' liability to this bank on
acceptances outstanding................ 992,747
Intangible assets........................ 1,072,517
Other assets............................. 1,643,173
-----------
Total assets............................. $55,830,236
===========
LIABILITIES
Deposits:
In domestic offices.................... $24,849,054
Noninterest-bearing ......10,011,422
Interest-bearing .........14,837,632
In foreign offices, Edge and
Agreement subsidiaries, and IBFs....... 15,319,002
Noninterest-bearing .........707,820
Interest-bearing .........14,611,182
Federal funds purchased and Securities
sold under agreements to repurchase.... 1,906,066
Demand notes issued to the U.S. Treasury. 215,985
Trading liabilities...................... 1,591,288
Other borrowed money:
With remaining maturity of one year
or less.............................. 1,991,119
With remaining maturity of more than
one year through three years......... 0
With remaining maturity of more than
three years.......................... 25,574
Bank's liability on acceptances exe-
cuted and outstanding.................. 998,145
Subordinated notes and debentures........ 1,314,000
Other liabilities........................ 2,421,281
-----------
Total liabilities........................ 50,631,514
-----------
EQUITY CAPITAL
Common stock............................. 1,135,284
Surplus.................................. 731,319
Undivided profits and capital reserves... 3,328,050
Net unrealized holding gains
(losses) on available-for-sale
securities............................. 40,198
Cumulative foreign currency translation
adjustments............................ (36,129)
-----------
Total equity capital..................... 5,198,722
-----------
Total liabilities and equity
capital ............................... $55,830,236
===========
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.
Thomas A. Renyi )
Alan R. Griffith ) Directors
J. Carter Bacot )
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