EXHIBIT 5.1
August 30, 2000
The Coastal Corporation
Coastal Tower
Nine Greenway Plaza
Houston, TX 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 $35 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 "Subordinated Debt
Securities"), which may be convertible into shares of Common Stock of the
Company (the "Common Stock"), (ii) unsecured subordinated debt securities (the
"Subordinated Debt Securities", and, together with the Senior Debt Securities,
the "Debt Securities"), (iii) shares of Preferred Stock (the "Preferred Stock"),
which may be convertible into shares of Common Stock or exchangeable for Debt
Securities, (iv) shares of Common Stock, (v) warrants to purchase shares of
Common Stock (the "Common Stock Warrants"), (vi) unsecured subordinated deferred
interest debentures (the "Subordinated Deferrable Interest Debentures") and
(vii) stock purchase contracts and/or stock purchase units (the "Stock Purchase
Contract" and/or "Stock Purchase Units"), and/or (viii) Trust Preferred
Securities and the related Trust Preferred Securities Guarantee, (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 Common Stock, the Preferred Stock, the Subordinated
Deferrable Interest Debentures, the Trust Preferred Securities, the Trust
Preferred Securities Guarantees, the Stock Purchase Contracts, the Stock
Purchase Units 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") executed between the Company and a trustee 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
<PAGE>
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 Agreement to be selected by the Company. The Stock Purchase Contracts
and/or Stock Purchase Units are proposed to be issued under a stock purchase
agreement (the "Stock Purchase Agreement") to be executed between the Company
and holders of the contracts pursuant to which such holders are obligated to
purchase from the Company and the Company is obligated to Sell to the holders a
specified number of shares of Common Stock. The Stock Purchase Contracts may be
issued separately or as part of Stock Purchase Units consisting of a Stock
Purchase Contract and Senior Debt Securities, Trust Preferred Securities or debt
obligations of third parties, including U.S. treasury securities.
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 dully organized and is validly existing
under the laws of the State of Delaware.
2. With respect to shares of Common Stock, when certificates
representing the shares of Common Stock have been duly
executed, countersigned, registered and delivered either (a)
in accordance with the applicable purchase, underwriting or
similar agreement upon payment of the consideration therefor
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 or exercise, the shares of
Common Stock will be duly authorized validly issued, fully
paid and non-assessable.
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 purchase, underwriting or
similar agreement upon payment of the consideration thereof
(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, the shares of
Preferred Stock will be duly authorized, validly issued, fully
paid and non-assessable.
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 and (ii) 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 purchase, underwriting or
similar agreement 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.
<PAGE>
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 and (ii) 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 purchase, underwriting or similar agreement upon
payment of the consideration thereof provided for therein,
such Subordinated Debt Securities will be legally issued and
will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with
their terms, except as such enforcement is subject to any
applicable bankruptcy, insolvency, reorganization,
fraudulent transfer or other law relating to or affecting
creditors' rights generally and general principles of equity
and will be entitled to the benefits of the Subordinated
Indenture and except that the waiver as to usury in the
Subordinated Indenture may be unenforceable.
6. With respect to the 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 and (ii) 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
purchase, underwriting or similar agreement 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 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 purchase, underwriting
or similar agreement, if any, 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 Stock Purchase Contracts and the Stock
Purchase Units, when (i) the Stock Purchase Agreement has
been duly executed by the Company and the holders of the
Stock Purchase Contract or the Stock Purchase Units; and
(ii) such Stock Purchase Contracts and/or Stock Purchase
Units have been duly executed, authenticated, issued and
delivered in accordance with the provisions of the Stock
Purchase Agreement and in accordance with the applicable
purchase, underwriting or similar agreement, such Stock
Purchase Contracts or Stock Purchase Units 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 Stock Purchase
Agreement.
9. 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
<PAGE>
duly qualified under the Trust Indenture Act of
1939, as amended; and (ii) 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,
