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File No. 70-8627
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form U-1
AMENDMENT NO. 1
APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
THE COLUMBIA GAS SYSTEM, INC.
20 Montchanin Road
Wilmington, DE 19807
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(Name of Company or Companies Filing This Statement
and Addresses of the Principal Executive Offices)
THE COLUMBIA GAS SYSTEM, INC.
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(Name of Top Registered Holding Company Parent of
Each Applicant or Declarant)
L. J. BAINTER, TREASURER
The Columbia Gas System, Inc.
20 Montchanin Road
Wilmington, DE 19807
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(Name and Address of Principal Agent for Service)
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Item 1. Description of Proposed Transaction.
(a) Furnish a reasonably detailed and precise description of the
proposed transaction, including a statement of the reasons why it is desired
to consummate the transaction and the anticipated effect thereof. If the
transaction is part of a general program, describe the program and its
relation to the proposed transaction.
The Columbia Gas System, Inc. ("Columbia"), a Delaware corporation and a
public utility holding company registered under the Public Utility Holding
Company Act of 1935 (the "Act"), hereby files this Application-Declaration
seeking Commission approval of the First Amended Plan of Reorganization (the
"Columbia Plan") filed by Columbia with the U.S. Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court") on June 14, 1995 and Columbia's
participation in the plan of reorganization (the "TCO Plan") filed with the
Bankruptcy Court on the same date by Columbia Gas Transmission Corporation
("Columbia Transmission"), a Delaware corporation and a wholly owned
subsidiary of Columbia.
Both Columbia and Columbia Transmission (together, "the Debtors") are
debtors-in-possession under Chapter 11 of the United States Bankruptcy Code
(the "Bankruptcy Code").
I. BACKGROUND
Columbia has operating subsidiaries engaged in various aspects of the oil
and natural gas industry (together with Columbia, the "System"). The
operating companies are engaged in the exploration, production, purchase,
marketing, storage, transmission and distribution of natural gas and other
energy operations such as electric power generation and propane distribution.
Columbia Transmission is one of two interstate pipeline companies owned
by Columbia. Columbia Transmission owns and operates an approximately 19,000
mile natural gas transmission pipeline network and related extensive
underground gas storage fields that serve parts of thirteen states in the
Northeastern, Mid-Atlantic, Midwestern and Southeastern regions of the United
States
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and the District of Columbia. Columbia Transmission's customers are various
affiliated and unaffiliated gas distribution companies, gas marketers,
producers and end users of gas ("Customers"). Its rates, charges, services
and facilities are subject to regulation by the Federal Energy Regulatory
Commission ("FERC"), primarily pursuant to the Natural Gas Act, 15 U.S.C.
Sections 17, et seq. Prior to November 1, 1993, Columbia Transmission
operated principally as a "merchant" of gas, purchasing gas from producers and
other pipeline companies and reselling it to distribution companies and large
industrial users. Since November 1, 1993, following a fundamental change in
the gas industry brought about by FERC under its Order No. 636, Columbia
Transmission no longer conducts any significant gas merchant activities and is
presently almost entirely engaged in the business of transporting and storing
gas for Customers.
Columbia, as a holding company, has provided debt and equity financing
for all its operating subsidiaries, including Columbia Transmission, and has
been the principal vehicle for raising funds in the capital markets for the
System. Columbia has generally reinvested in its operating subsidiaries the
proceeds of its equity and debt issues, as well as cash flows from its
subsidiaries.
Prior to June 1985, Columbia made loans to Columbia Transmission on an
unsecured basis and, at the time of the filing of the Chapter 11 petitions,
Columbia held unsecured obligations of Columbia Transmission aggregating $351
million, including prepetition accrued interest. Loans made by Columbia to
Columbia Transmission after June 1985 were secured by first mortgage liens on
substantially all of Columbia Transmission's assets. At the time of the
filing of the Chapter 11 petitions, Columbia held secured obligations of
Columbia Transmission aggregating approximately $1.34 billion in principal.
Prepetition interest and postpetition interest accrued through December 31,
1995 (the assumed "Effective Date" of the Columbia and TCO Plans and the date
to which all
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estimated calculations have been made in this Application-Declaration) on such
secured obligations are projected to be approximately $644 million. Columbia
has not made additional loans to Columbia Transmission since July 31, 1991,
the filing date of Columbia's and Columbia Transmission's Chapter 11
petitions, and Columbia Transmission has made no payments to Columbia on its
secured or unsecured loans since such date.
Columbia's and Columbia Transmission's Chapter 11 filings were
precipitated by a combination of events that adversely affected Columbia
Transmission's physical operations and financial viability and which, in turn,
caused a liquidity shortfall for Columbia and the System. Most notable of
these events were (i) federal legislative and regulatory actions, instituted
years after Columbia Transmission's gas purchase contracts were entered into,
that significantly impacted Columbia Transmission's ability to sell the gas it
had contracted to buy and to recover its costs from its Customers and (ii)
Columbia Transmission's continuing contractual obligations to purchase gas at
prices above those at which it was able to market gas. These problems were
exacerbated by record-setting warm weather which caused spot market prices for
gas to plunge, created excess transportation capacity and precluded taking
additional gas into storage, thus making an unexpected and persistent
oversupply of bargain-priced gas available to Columbia Transmission's
Customers. As a result, Columbia Transmission's ability to market its gas was
severely undercut, substantially reducing both sales volumes and revenues.
After completing studies in early June 1991 that revealed the magnitude
of Columbia Transmission's gas supply management problems, Columbia announced
on June 19, 1991 that the present value of losses associated with Columbia
Transmission's above-market priced gas purchase contracts could exceed $1
billion, that a substantial portion of that amount would be charged to
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income in the second quarter and that the dividend on Columbia's common stock
("Columbia Common Stock") was being suspended.
Columbia immediately initiated negotiations with its banks in an effort
to reestablish lines of credit that were interrupted by the June 19
announcement, and Columbia Transmission promptly proposed a comprehensive
settlement plan with gas producers ("Producers") that offered to buy out
Producers' contracts and settle other producer-related contractual disputes
for a pro rata share of $600 million of Columbia Transmission debt
obligations. Progress was made in both areas of negotiation. However,
agreements could not be concluded before Columbia Transmission's and
Columbia's available cash resources were substantially exhausted, forcing both
to seek Chapter 11 protection at the end of July 1991.
On July 31, 1991 (the "Petition Date"), both Columbia and Columbia
Transmission filed voluntary petitions for reorganization under Chapter 11 of
the Bankruptcy Code (Bankruptcy Nos. 91-803 and 91-804) in the Bankruptcy
Court. Since that time, the Debtors have continued in the management of
their respective businesses and possession of their respective properties as
debtors-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy
Code. The Commission filed a Notice of Appearance under Section 1109 of the
Bankruptcy Code in each proceeding and, except for the appointment of a fee
examiner to review the reasonableness of fees and expenses incurred by certain
professionals involved in the case, no trustee or examiner has been appointed
by the Bankruptcy Court.
As a result of Columbia Transmission's bankruptcy petition filing and its
rejection of more than 4,800 above-market gas purchase contracts with
Producers, Columbia Transmission recorded liabilities of approximately $1
billion for estimated contract rejection costs. In addition,
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approximately $200 million of take-or-pay and other miscellaneous Producer
claims were recorded. The Producer counterparties to those contracts filed
claims for rejection damages and other pre-petition contractual amounts in
excess of $13 billion.
In 1992, the Bankruptcy Court approved the appointment of a claims
mediator to implement a claims estimation procedure related to the rejected
above-market Producer contracts and other Producer claims. On October 13,
1994, the claims mediator issued his Initial Report and Recommendation of the
Claims Mediator on Generic Issues for Natural Gas Contract Claims (the
"Report"). The Report, which is subject to Bankruptcy Court review and
approval, establishes the parameters within which Producers must initially
recalculate their contract rejection and take-or-pay claims. The recalculated
claims would then be subject to audit and challenge and adjustment based upon
claim specific issues. On February 17, 1995, the claims mediator issued a
supplement to the Report ("Supplement Report"). Among other things, the
Supplement Report incorporated agreed upon comments on the recalculations
forms, corrected typographical errors and discussed and rejected several
objections.
On March 18, 1992, the Official Committee of Unsecured Creditors of
Columbia Transmission (" TCO Creditors' Committee") filed a complaint (the
"Intercompany Complaint") against Columbia and Columbia Natural Resources,
Inc. ("CNR") with the Bankruptcy Court alleging that the $1.7 billion of
Columbia Transmission's secured and unsecured debt securities held by Columbia
should be recharacterized as capital contributions (rather than loans) and
equitably subordinated to the claims of Columbia Transmission's other
creditors. The Intercompany Complaint also challenged interest and dividend
payments made by Columbia Transmission to Columbia of approximately $500
million for the period from 1988 to the Petition Date and a 1990 transfer of
gas
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properties from Columbia Transmission to CNR as an alleged fraudulent
transfer. Based on the SEC standardized measurement procedures, CNR's
properties had a reserve value of approximately $250 million as of December
31, 1994, a significant portion of which is attributable to the transfer from
Columbia Transmission. At the Bankruptcy Court's request, the trial
proceedings for the Intercompany Complaint were transferred to and tried by
the U.S. District Court for the District of Delaware (the "District Court")
and were concluded on October 24, 1994. Post-trial written submissions were
completed in December 1994. The District Court was expected to render a
decision in June 1995, but has agreed to defer issuing its ruling pending
pursuit by the parties of consensual reorganization proceedings.
Columbia Transmission filed a plan of reorganization (the "1994 TCO
Plan") in January, 1994 which proposed comprehensive settlements affecting a
broader constituency of Columbia Transmission creditors. The confirmation
process for the 1994 TCO Plan never commenced due to Columbia Transmission's
intention to conduct further negotiations with the creditors regarding their
treatment under the 1994 TCO Plan. After more than a year of intensive
negotiations with its major creditor groups and individual creditors, on April
17, 1995, Columbia and Columbia Transmission filed proposed plans of
reorganization which were amended by the Columbia and TCO Plans. The Debtors
now seek Commission approval, with respect to Columbia's participation in the
TCO Plan, as well as for the Columbia Plan.
II. COLUMBIA'S SUPPORT OF THE TCO PLAN
The TCO Plan incorporates terms of an agreement reached with its major
Producer creditors (the "Producer Agreement") and a settlement with its
Customers (the "Customer Settlement"). The Producer Agreement, which was
filed with the Bankruptcy Court on April 27, 1995 and approved on
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June 16, 1995, reflects settlements of the allowable amount of the claims
filed against Columbia Transmission by 17 major southwest gas producers and a
large group of Appalachian producers. The settlement also provides for
Columbia Transmission s agreement, backed by Columbia, as to the minimum
distribution to be paid to Producers and other creditors under the TCO Plan.
These producers (the "Initial Accepting Producers") represent in excess of 80
percent of the approximately $1.2 billion that the TCO Plan proposes to
distribute to Producer creditors to resolve all Producer claims. The TCO Plan
offers to all the remaining Producers proposals for settlement of the
allowable amounts of their claims. Remaining Producers who ultimately reject
the settlement offers ("Dissenting Producers") will be free to litigate their
claims before the Bankruptcy Court and will receive the same percentage payout
ultimately allowed by the Bankruptcy Court on their claims as received by the
initial and subsequent settling producers ("Accepting Producers"). The TCO
Plan also incorporates the Customer Settlement between Columbia Transmission
and virtually all its Customers on numerous FERC Order No. 636 transition
cost, rate and other bankruptcy matters. Remaining Customers can accept a
settlement on similar terms as the Customer Settlement or dissent and litigate
the amount and priority of their claims.
To facilitate the TCO Plan and in exchange for settlement of the claims
asserted in the Intercompany Complaint and Columbia s retention of its
ownership of Columbia Transmission, the Columbia Board of Directors authorized
the "Columbia Omnibus Settlement" whereby Columbia will:
(i) Make a capital infusion into Columbia Transmission of approximately
one billion dollars, said capital contribution to have two components:
(A) Columbia will agree to a restructuring of Columbia Transmission's
secured debt and the acceptance of $1.5 billion in new TCO
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Mortgage Bonds (as described below) in settlement of the $2 billion claim
held by Columbia under existing Columbia Transmission first mortgage
bonds, resulting in an approximate $500 million capital contribution of
the balance of the claim. (B) Columbia will agree to provide cash to
Columbia Transmission necessary so that the total amount distributable
under the TCO Plan equals approximately $3.9 billion including the
approximate $2 billion of Columbia's secured claim referred to above.
Columbia Transmission is projecting cash on hand totaling approximately
$1.4 billion as of December 31, 1995. It is anticipated that the
shortfall that Columbia would fund through an additional capital
contribution would be approximately $500 million, of which about $300
million could be met by Columbia's proportionate recovery on the Columbia
Transmission unsecured debt held by it and recovery by CNR on its claims
followed by a dividend out of retained earnings by CNR to Columbia.
(ii) Guarantee (the "TCO Guarantee") a) the settlement reached by
Columbia Transmission with its Customers and payments to dissenting
Customers with respect to the Customer Settlement(1) and b) the
payment of the distribution percentage of ultimately allowed claims of
other unsecured creditors, including Dissenting Producers. In the event
that payments required by the TCO Plan to Dissenting Producers (and
dissenting Customers) increase the total required distributions over the
projected $3.9 billion by an amount which requires external funding,
Columbia will have the option to utilize Columbia Common Stock in lieu of
cash payments (and, of course, the option to sell Columbia Common Stock
in the marketplace
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(1) Columbia Transmission's Customer Settlement has the support of all
of its major customers, affected state commissions and consumer
groups. While the Settlement permits non-supporting parties to
litigate their claims against Columbia Transmission, Columbia
Transmission's financial exposure from such litigation is considered
de minimis.
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and utilize the proceeds for such excess distributions). Under these
possible circumstances, whichever technique is employed, Columbia's
investment in Columbia Transmission will be correspondingly increased.
The aggregate projected distribution to Producers under the TCO Plan
totals approximately $1.2 billion. The Producer Agreement reflects agreements
with Initial Accepting Producers representing approximately 80% of that value
or approximately $960 million, while distributions on settlement values
attributable to all other Producers aggregate approximately $240
million.(2) Initial Accepting Producers have agreed to a 5 percent holdback
from the distributions due to them (currently approximately $48 million at the
80 percent acceptance level but subject to increase as additional Producers
accept) and have agreed that, to the extent that claim values in excess of the
settlement values contained in the TCO Plan are agreed to or allowed, the
holdback will be applied with dollar for dollar matching by Columbia
Transmission (and Columbia under the TCO Guarantee) to pay the ultimate
distributions. Thus, there is a sharing by Accepting Producers of a portion
of the risk of the aggregate distribution to Producers pursuant to the TCO
Plan exceeding $1.2 billion. If the holdback were ever to be used up,
Columbia Transmission would be required to pay the entire amount of the
excess. Based on the history of the estimation proceedings, the Report and
the Supplement Report and an evaluation of the Producer Claims, Columbia
Management does not believe that the Dissenting Producers will be able to
prove to the Bankruptcy Court claim values which would so significantly exceed
settlement values contained in the TCO Plan that the obligation under the TCO
Guarantee would be material to the financial condition of Columbia. By way of
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(2) It is a waivable condition to the Columbia Plan that the settlement
values of Accepting Producers as of the Effective Date equal 90
percent of the total settlement values.
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illustration, if Dissenting Producers establish in post-emergence litigation
in the Bankruptcy Court allowable claims which are as much as 50% higher than
the levels thereof assumed in the settlement offers made to them in the TCO
Plan, given the requirement that Dissenting Producers do not represent more
than 10% of the aggregate of $1.2 billion of distributions provided for
Producers, the excess cost would be approximately $60 million of which $30
million would be borne by Initial Accepting Producers and the additional
burden on Columbia Transmission and Columbia would be $30 million.
To the extent that additional funds are necessary to fund allowed claims
of Dissenting Producers, Columbia or Columbia Transmission may distribute cash
or Columbia may issue Columbia Common Stock to the Dissenting Producers on
behalf of Columbia Transmission in exchange for consideration from Columbia
Transmission equal to the Columbia Common Stock's then current market value.
Columbia may also issue Columbia Common Stock or other securities on the open
market and distribute the proceeds to Columbia Transmission as a capital
contribution. To the extent that the TCO Plan reserves the right to Columbia
Transmission to issue securities other than Columbia Common Stock, the
Commission is asked to reserve jurisdiction over the terms of such securities
issues.
The recapitalization will involve Columbia acquiring from Columbia
Transmission up to $1.5 billion aggregate amount of short-term and long-term
first mortgage bonds (the "TCO Mortgage Bonds") under the Indenture and Deed
of Trust between Columbia Transmission and Wilmington Trust Company, dated
August 30, 1985, as amended ("Wilmington Trust Indenture"), which was
previously authorized by Order of the Commission dated August 30, 1985 (HCAR
35-23813; 70-7106). The previously approved Wilmington Trust Indenture will be
amended to provide for a default
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rate of interest and a prepayment penalty if Columbia Transmission is not a
subsidiary of Columbia at the time of prepayment as described below. A
revised Wilmington Trust Indenture will be filed with the Bankruptcy Court by
amendment to the TCO Plan. The TCO Mortgage Bonds will be secured by a
perfected first security interest in all of Columbia Transmission's property
with certain exceptions pursuant to the Wilmington Trust Indenture.
As shown on the pro forma financial statements contained in this
Application-Declaration, the aggregate capital contribution to Columbia
Transmission by Columbia will be approximately $1.0 billion, resulting in an
approximate 70%-30% debt-equity structure for Columbia Transmission. Columbia
Transmission's debt to equity ratio is projected to become approximately
60%/40% by 1997 upon the repayment of borrowings used to finance certain
contingent assets created as a result of emergence from bankruptcy. The short-
term TCO Mortgage Bonds must be repaid no later than April 30 of the year
following their issuance and will bear interest payable on a monthly basis
which is equivalent to the composite weighted average effective cost incurred
by Columbia on its short-term borrowings.
The short-term TCO Mortgage Bonds may be prepaid or redeemed at any
time without prepayment penalty. The long-term TCO Mortgage Bonds will be
dated the date of their issue and be repaid in equal installments not to exceed
30 years or at maturity. The long-term TCO Mortgage Bonds may be issued in
multiple series with terms similar to the New Indenture Securities (as
described below) issued by Columbia under the Columbia Plan. Interest on the
long-term TCO Mortgage Bonds will accrue from the date of issuance and will be
paid semi-annually on the unpaid principal thereof. The interest rate on the
long-term TCO Mortgage Bonds will be the actual cost of money to Columbia with
respect to the issuance by Columbia of its long-term debt securities. A
default rate equal to
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2 percent per annum in excess of the stated rate on the unpaid principal or
interest amounts of the TCO Mortgage Bonds would be assessed if any interest
or principal becomes past due. The long-term TCO Mortgage Bonds may be
prepaid with, if Columbia Transmission is not a subsidiary of Columbia at the
time of prepayment, a prepayment penalty equal to the interest rate on the
long-term TCO Mortgage Bonds to be prepaid, declining ratably on each
anniversary date over the life of the issue.
In the aggregate, the consideration paid by Columbia for the settlement
of the claims asserted in the Intercompany Complaint and retention of
ownership of Columbia Transmission cannot be collectively expressed as a
precise dollar amount, but reflects substantial additional consideration from
Columbia to the Columbia Transmission estate to facilitate the reorganization
of Columbia and Columbia Transmission.
The Columbia Omnibus Settlement will provide substantial benefits to
Columbia, in addition to the retention of ownership of Columbia Transmission,
by resolving numerous contentious disputes with Customers and Producers
affecting the economic value of the Columbia Transmission estate on terms
Columbia believes to be fair and reasonable, and permitting both Columbia and
Columbia Transmission to emerge from bankruptcy, as promptly as possible, to
pay their creditors, and to pursue ongoing business objectives free of the
burdens and constraints of Chapter 11.
III. THE COLUMBIA PLAN
Under the Columbia Plan, in addition to Columbia Common Stock which might
be issued under contingencies discussed below, Columbia may issue up to $3.65
billion in new securities. The Columbia Plan contemplates the issuance of up
to $2.1 billion in debentures (the "New Indenture Securities") to be issued
under a new indenture (the "New Indenture"), the entering into of bank
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facilities (the "Bank Facilities") totaling up to $1.15 billion (for a maximum
of $3.25 billion in debt) and the issuance of up to $400 million of equity
through the issuance of up to $200 million each of preferred stock ("Preferred
Stock") and of Dividend Enhanced Convertible Stock(TM) ("DECS"). If cash
available through the Bank Facilities or from operations is reduced, the
principal amount of New Indenture Securities to be issued would be increased
proportionately. Under no circumstances would the aggregate of New Indenture
Securities and Bank Facilities under the Columbia Plan exceed $3.25 billion.
Projections of Columbia's post-effective operations and capitalization
are included as Exhibit I-1. The projections assume the issuance of
approximately $2.1 billion of New Indenture Securities, $650 million of
initial borrowings under the Bank Facilities and the issuance of $200 million
each of Preferred Stock and DECS at the Effective Date. As shown in Exhibit
I-1, Columbia's long-term debt to long-term capitalization ratio decreases
from approximately 62 percent at the end of 1995 to approximately 54 percent
by the end of 1999. Total debt to total capitalization declines from
approximately 65 percent at the end of 1995 to approximately 57 percent by the
end of 1999. System capital expenditures are assumed to approximate $500
million per year during the projection period.
The distribution of New Indenture Securities, Preferred Stock and DECS
pursuant to the Columbia Plan will be exempt from the provisions of Section 5
of the Securities Act of 1933 and any state or local laws requiring the
registration for the offer of sale of securities pursuant to Section 1145 of
the Bankruptcy Code. The amount of cash consideration to be distributed to
holders of borrowed money claims pursuant to the Columbia Plan will be
determined by Columbia shortly before the Effective Date, and will be
dependent upon the cash available at that time. The financial projections
contained in the Columbia Disclosure Statement (see Exhibit D-2) project the
distribution of $900
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million of available cash as of the Effective Date (the majority of which is
assumed to be borrowed under the Term Facility described below) in respect of
such claims. The balance of the distribution in respect of such claims will
be in the form of New Indenture Securities, DECs and Preferred Stock. If the
Term Facility is available for borrowing at a cost less than the cost of
issuing New Debentures, Columbia has agreed to borrow $350 million for
distribution to Creditors in lieu of New Indenture Securities, DECs and
Preferred Stock.
As described below, in an effort to accomodate holders of borrowed money
claims against Columbia who would prefer to ultimately receive cash rather
than DECS and Preferred Stock, Columbia may, at its option, on or prior to the
120th day following the Effective Date, redeem in whole or in part the DECS
and Preferred Stock issued pursuant to the Plan. Upon such redemption, each
holder of redeemed DECS and redeemed Preferred Stock will receive cash in an
amount equal to the sum of: (i) the liquidation value of the DECS so redeemed
and (ii) if such redemption occurs after the 90th day following the Effective
Date, all accrued and unpaid dividends. If the Preferred Stock is not
redeemed during the 120 day period following the Effective Date, the interest
rate on the Preferred Stock issued pursuant to the Columbia Plan shall be
reset according to the Preferred Stock Pricing Formula described herein plus
100 basis points per annum. If the DECS are not redeemed during the 120 day
period following the Effective Date, the dividend rate on the DECS issued
pursuant to the Columbia Plan shall be increased by 100 basis points per
annum. For purposes of funding the repurchase, if necessary, Columbia
requests authorization to issue and sell up to 16 million shares of preferred
stock or Columbia Common Stock ("Additional Columbia Equity") subject to a
reservation of jurisdiction over the terms of said issuance and sale.
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For the purpose of financing shorter term requirements under the TCO Plan
and Columbia Plan, Columbia expects to arrange two types of Bank Facilities on
or before the Effective Date. The first type would be a senior, unsecured
term credit facility in an aggregate principal amount of up to $450 million
(the "Term Facility"). Amounts available to be borrowed under the Term
Facility would be applied to payments in respect of claims of Columbia
creditors, to fund obligations of Columbia Transmission and for general
corporate purposes. Amounts borrowed under the Term Facility would rank pari
passu with all other senior, unsecured obligations of Columbia, including the
New Indenture Securities.
Columbia also expects to arrange one or more senior, unsecured revolving
Bank Facilities in an aggregate principal amount of up to $700 million (the
"Revolving Facility") to provide (i) working capital for Columbia and its
subsidiaries and (ii) up to $100 million face amount of letters of credit to
be issued for the account of Columbia and its subsidiaries in the ordinary
course of business. Amounts borrowed under the Revolving Facility and
reimbursement for drawings under letters of credit issued thereunder would
rank pari passu with all other senior, unsecured obligations of Columbia,
including the New Indenture Securities. The Term Facility and Revolving
Facility may be combined in a single facility, or issued in multiple
facilities at the option of Columbia.
Further, Columbia expects to repurchase from the leveraged employee stock
ownership ("LESOP") portion of the Employees' Thrift Plan of Columbia Gas
System (the "Thrift Plan") all shares (the "LESOP Shares") held in the common
stock fund which have not been allocated to employees, to hold the LESOP
Shares as treasury shares and to use the LESOP Shares for one of the following
purposes as deemed appropriate by Columbia: (i) to sell the LESOP Shares on
the open market for cash, (ii) to reissue all or part of the LESOP Shares to
fund additional requirements under
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the TCO Guarantee, (iii) to reissue all or part of the LESOP Shares to fund
the Securities Litigation Settlement Offer as described below, and (iv) to
fund an employee benefit plan.
Columbia proposes the possible issuance of Columbia Common Stock (in
addition to any LESOP Shares) on behalf of Columbia Transmission in connection
with the TCO Guarantee and, as described below, to fund the Securities
Litigation Settlement Offer. The Columbia Plan also proposes certain
amendments to Columbia's Certificate of Incorporation and the assumption by
the Debtors of the Tax Allocation Agreement which provides for the allocation
of tax benefits and liabilities among System affiliates.
A. SECURITIES TO BE ISSUED ON THE EFFECTIVE DATE
Columbia requests Commission authorization to issue, subject to
adjustment as previously described, on the Effective Date, (i) New Indenture
Securities in an aggregate principal amount of up to $3 billion under the New
Indenture to be dated as of the Effective Date and (ii) up to $200 million
aggregate liquidation value each of DECS and Preferred Stock. Columbia also
expects to enter into the Term Facility and the Revolving Facility on or
before the Effective Date.
Set forth below are brief descriptions of the key features of the New
Indenture Securities, the DECS, the Preferred Stock, the Term Facility and the
Revolving Facility. A form of New Indenture is attached as Exhibit B-2.
Draft Certificates of Designation for DECS and Preferred Stock are attached as
Exhibits B-4 and B-5, respectively.
1. NEW INDENTURE SECURITIES
Pursuant to the Columbia Plan, the New Indenture Securities are to be
issued in seven series (each, a "Series") with the approximate respective
maturities as follows:
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<TABLE>
<CAPTION>
Approximate
Series Maturity
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<S> <C>
Series A ("Series A Debentures") 5 years
Series B ("Series B Debentures") 7 years
Series C ("Series C Debentures") 10 years
Series D ("Series D Debentures") 12 years
Series E ("Series E Debentures") 15 years
Series F ("Series F Debentures") 20 years
Series G ("Series G Debentures") 30 years
</TABLE>
The principal amount of each such Series will be substantially the same
as that of each other Series; provided, however, that no Series other than
Series A will have an initial principal amount that is more than 150% of that
of any other Series. Additional Series A Debentures may be issued since
creditors with smaller claims will receive only Series A Debentures. Each New
Indenture Security will bear interest from the Effective Date, or from the
most recent interest payment date to which interest has been paid, payable
semi-annually, on dates to be determined, to the registered holder at the
close of business on the applicable record date. The rate of interest to be
borne by the New Indenture Securities of each Series will be determined prior
to the Effective Date based on market rates for securities of similar
maturities and debt ratings. It is expected that the interest rate on any
series of New Indenture Securities will not exceed 10 percent per annum.
Principal of each Series of New Indenture Securities will be payable on
the applicable maturity date set forth above. The New Indenture Securities
will be issued only in denominations of $1,000 or any integral multiple
thereof. New Indenture Securities will be issued in book-entry form
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only, will not be exchangeable for New Indenture Securities in certificated
form at the option of the holder and, except in certain limited circumstances,
will not otherwise be issuable in definitive form.
It is currently contemplated that Series A Debentures, Series B
Debentures and Series C Debentures may not be redeemed prior to maturity.
Series D Debentures and Series E Debentures may be redeemed at the option of
Columbia after year 10 at par. Series F Debentures may be redeemed at the
option of Columbia after year 10 at a premium of the principal amount equal to
the coupon of such Series F Debentures in year 1 declining ratably to zero in
year 15. Series G Debentures may be redeemed at the option of Columbia after
year 10 at a premium of the principal amount equal to the coupon of such
Series G Debentures in year 1 declining ratably to zero in year 20.
2. DECS
The DECS will constitute shares of convertible preferred stock and rank
on a parity with the Preferred Stock and prior to Columbia Common Stock as to
payment of dividends and distribution of assets upon liquidation. Each DECS
will be issued at a price (the "Issue Price") equal to a weighted average
market price of a share of Columbia Common Stock over a specified period
shortly before the time of issuance.
The holders of DECS will be entitled to receive, when, as and if
dividends on the DECS are declared by the Board of Directors out of funds
legally available therefor, cumulative preferential dividends from the
Effective Date, accruing at the rate per share per annum that is determined in
accordance with the DECS pricing formula (See Exhibit I-5 to this Application-
Declaration), payable in arrears on dates that are on or about the dates that
are 90 days, 180 days, 270 days and 360 days following the Effective Date (and
each anniversary of the foregoing dates); provided further,
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however, that (x) such rate per share per annum (expressed in basis points)
shall be increased by 100 basis points per annum effective as of the 120th day
following the Effective Date and (y) no dividends shall be due and payable on
DECS redeemed on or prior to the 90th day following the Effective Date and (z)
dividends on DECS outstanding after the 90th day after the Effective Date with
respect to the 90-day period immediately following the Effective Date will not
be paid until the 120th day following the Effective Date. With respect to any
dividend period during which a redemption occurs, Columbia may, at its option,
declare accrued dividends to, and pay such dividends to the redemption date,
on the date for redemption, in which case such dividends would be payable in
cash to the holders of DECS as of the record date for such dividend payment
and would not be included in the calculation of the related call price as set
forth below. Dividends on the DECS will begin to accrue on the Effective
Date, and it is currently expected that the dividend rate will not exceed 11
percent per annum. Dividends are payable in cash except in connection with
certain redemptions by Columbia.
Dividends on the DECS will accrue whether or not Columbia has earnings,
whether or not there are funds legally available for the payment of such
dividends and whether or not such dividends are declared. Dividends will
accumulate to the extent they are not paid on the dividend payment date for
the quarter for which they accrue.
On the fifth anniversary of the Effective Date (the "Mandatory Conversion
Date"), each outstanding DECS will convert automatically into shares of
Columbia Common Stock at the
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Common Equivalent Rate(3) in effect on such date and holders shall have the
right to receive an amount in cash equal to all accrued and unpaid dividends
on such DECS to the Mandatory Conversion Date, subject to the right of
Columbia to redeem the DECS as described below. Because the price of Columbia
Common Stock is subject to market fluctuations, the value of Columbia Common
Stock received by a holder of DECS upon mandatory conversion may be more or
less than the Issue Price for the DECS.
The DECS will be redeemable by Columbia, in whole or in part, at any time
and from time to time (i) on or prior to the 120th day following the Effective
Date and (ii) on or after the Regular DECS Redemption Date (either the fourth
anniversary of the Effective Date or one month prior to the fifth anniversary
of the Effective Date as determined by Columbia prior to the Effective Date)
and prior to the Mandatory Conversion Date; provided, however, that Columbia
may not so redeem the DECS on or prior to the 120th day following the
Effective Date if, after giving effect to such redemption, the aggregate
liquidation value of the DECS outstanding would be less than $50 million,
unless after giving effect thereto no DECS would be outstanding. Upon any
such redemption that occurs on or prior to the 120th day following the
Effective Date, each holder of DECS will receive, in exchange for each DECS so
called, cash in an amount equal to the sum of (x) the liquidation value
thereof and (y) if such redemption occurs after the 90th day following the
Effective Date, all accrued and unpaid dividends thereon to the date fixed for
redemption (other than dividends payable to a holder of record as of a prior
date).
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(3) The Common Equivalent Rate will be the product of (i) one and (ii)
the quotient obtained by dividing (x) the Liquidation Value of a
share of DECS by (y) the weighted average of the trading prices of
all trades on the NYSE of shares of Columbia Common Stock for a
specified period prior to the Effective Date, subject to adjustment.
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Upon any such redemption that occurs on or after the Regular DECS
Redemption Date, each holder of DECS will receive, in exchange for each DECS
so called, a number of shares of Columbia Common Stock (the "Optional Call
Number") equal to the lesser of (i) the call price of the DECS in effect on
the date of redemption divided by the current market price of Columbia Common
Stock determined as of the date which is one trading day prior to the public
announcement of the call for redemption and (ii) to assure that holders of
DECS redeemed after the Regular DECS Redemption Date do not receive a greater
number of shares of Columbia Common Stock than they would under mandatory
conversion the sum of (x) the Common Equivalent Rate plus (y) an amount
determined by dividing the Premium-Accrued Dividend Amount (as defined below)
by the current market price of Columbia Common Stock determined as of the date
which is one trading day prior to the public announcement of the call for
redemption. The call price of each DECS will be the sum of (i) the
liquidation value as adjusted, (ii) if the Regular DECS Redemption Date is the
fourth anniversary of the Effective Date, a premium equal to the annual
dividend on the DECS applicable after the 120th day following the Effective
Date, for the first month following the Effective Date, declining ratably to
1/30th of such annual dividend, for the month that is two months prior to the
Mandatory Conversion Date, and zero for the month immediately preceding the
Mandatory Conversion Date, and (iii) all accrued and unpaid dividends thereon
to the date fixed for redemption (other than dividends payable to a holder of
record as of a prior date) (the sum of the amounts referred to in clauses (ii)
and (iii) being referred to as the "Premium-Accrued Dividend Amount").
Dividends will cease to accrue on DECS on the date fixed for their redemption.
In addition, no dividends will be paid with respect to any DECS that are
redeemed on or prior to the 90th day following the Effective Date.
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The DECS will be convertible, in whole or in part, at the option of the
holders thereof, at any time after the 120th day following the Effective Date
and prior to the Mandatory Conversion Date, unless previously redeemed, into
shares of Columbia Common Stock at a rate that will be determined in
accordance with the pricing methodology referred to above, subject to
adjustment.
The liquidation preference of each of the DECS is an amount equal to the
sum of (i) the Issue Price and (ii) all accrued and unpaid dividends thereon
to the date of liquidation, dissolution or winding up.
The holders of DECS shall not have voting rights except as required by
law and except as follows: (i) if dividends on the DECS are in arrears and
unpaid for six quarterly dividend periods, the holders of the DECS (voting
separately as a class with holders of all other series of preferred stock
ranking on a parity with the DECS upon which like voting rights have been
conferred and are exercisable) will be entitled to vote, on the basis of one
vote for each of the DECS, for the election of two Directors of Columbia, such
Directors to be in addition to the number of Directors constituting the Board
of Directors immediately prior to the accrual of such right, and (ii) the
holders of DECS will have voting rights with respect to certain alterations of
Columbia's Certificate of Incorporation.
DECS redeemed for or converted into Columbia Common Stock or otherwise
acquired by Columbia will assume the status of authorized but unissued
preferred stock and may thereafter be reissued in the same manner as other
authorized but unissued preferred stock. Columbia will undertake to list on
The New York Stock Exchange any DECs remaining outstanding after the 120th day
following the Effective Date.
3. PREFERRED STOCK
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The Preferred Stock will have a liquidation value of $25 per share and
rank on a parity with the DECS and prior to Columbia Common Stock as to
payment of dividends and distribution of assets upon liquidation.
The holders of Preferred Stock will be entitled to receive, when, as and
if dividends on the Preferred Stock are declared by the Board of Directors of
Columbia out of funds legally available therefor, cumulative cash dividends
from the Effective Date, payable quarterly in arrears on the dates that are on
or about 90 days, 180 days, 270 days and 360 days following the Effective Date
(and each anniversary of the foregoing dates), accruing at the rate per share
per annum that is determined prior to the Effective Date in accordance with
the Preferred Stock Pricing Formula (See Exhibit I-6 to this Application-
Declaration); provided, however, that (x) effective as of the 120th day
following the Effective Date, such rate per annum (expressed in basis points)
shall be the rate per annum that is determined in accordance with the
Preferred Stock Pricing Formula (and, for this purpose only, a recalculation
of the interest rate on the Series G New Indenture Securities (on which the
original dividend rate for the Preferred Stock will be based) shortly before
the 120th day following the Effective Date plus 100 basis points and (y) no
dividends shall be due and payable on shares of Preferred Stock redeemed on or
prior to the 90th day following the Effective Date and (z) dividends with
respect to the 90-day period immediately following the Effective Date will not
be paid until the 120th day following the Effective Date. Accumulated unpaid
dividends will not bear interest. It is currently expected that the dividend
rate for Preferred Stock will not exceed 11 percent per annum.
The Preferred Stock will be redeemable by Columbia, in whole or in part,
at any time and from time to time on or (i) on or prior to the 120th day
following the Effective Date and (ii) on or after the Initial Preferred
Redemption Date (the fifth anniversary of the Effective Date), provided,
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however, that Columbia may not so redeem any Preferred Stock, on or prior to
the 120th day following the Effective Day, if after giving effect to such
redemption, either (x) the aggregate liquidation value of the Preferred Stock
outstanding would be less than $50 million, unless after giving effect
thereto, no Preferred Stock would be outstanding or (y) any DECS would be
outstanding. Upon any such redemption, each holder of Preferred Stock will
receive, in exchange for each share of Preferred Stock so called, cash in an
amount equal to the sum of (i) the liquidation value therefor and (ii) if such
redemption occurs after the 90th day following the Effective Date, all accrued
and unpaid dividends thereon to the date fixed for redemption.
The Preferred Stock is not subject to mandatory redemption by Columbia
and is not convertible into or exchangeable for any other securities.
The liquidation preference of each share of Preferred Stock is an amount
equal to the sum of (i) the liquidation value and (ii) all accrued and unpaid
dividends thereon to the date of liquidation, dissolution or winding up.
The holders of Preferred Stock shall not have voting rights except as
required by law and except as follows: (i) if dividends on the Preferred
Stock are in arrears and unpaid for six quarterly dividends periods, the
holders of the Preferred Stock (voting separately as a class with holders of
all other series of preferred stock ranking on a parity with the Preferred
Stock upon which like voting rights have been conferred and are exercisable)
will be entitled to vote, on the basis of one vote for each share of Preferred
Stock, for the election of two Directors of Columbia, such Directors to be in
addition to the number of Directors constituting the Board of Directors
immediately prior to the accrual of such right and (ii) the holders of
Preferred Stock will have voting rights with respect to certain alterations of
Columbia's Certificate of Incorporation. Columbia will undertake to list on
The
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New York Stock Exchange any Preferred Stock still outstanding after the 120th
day after the Effective Date.
4. TERM FACILITY
To finance requirements under the TCO Plan and Columbia Plan, Columbia
anticipates entering into the Term Facility on or before the Effective Date.
It is expected that the Term Facility will be repaid from the proceeds of
receivables that result from the Columbia Plan and TCO Plan, such as tax
carryforwards; however, such receivables will not be pledged to the lenders.
It is anticipated that the expiration of the Term Facility will be up to five
years from the Effective Date.
The interest rates on the Term Facility are expected to be based on a
triple option pricing formula as follows:
Option 1: Prime Rate
Option 2: LIBOR + Margin
Option 3: CD + Margin
It is expected that the margin for the LIBOR rate option will not exceed .75
percent per annum and the margin on the CD rate option will not exceed .875
percent per annum. Maturities on loans issued under the LIBOR rate option
are expected to be for 1, 2, 3 or 6 months. Maturities on loans issued under
the CD rate option are expected to be for 30, 60, 90 or 180 days. All such
loans will be evidenced by promissory notes.
It is expected that the Term Facility will contain negative covenants
consistent with those covenants required by bank lenders for comparable bank
facilities. The Term Facility will be senior, unsecured debt of Columbia and
will rank pari passu with debt issued under the New Indenture.
5. REVOLVING FACILITY
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To finance working capital requirements, including seasonal gas inventory
and receivables arising from the sale of such inventory, and to bridge between
issuances of long-term debt by Columbia, Columbia anticipates entering into
the Revolving Facility on or before the Effective Date. Up to $100 million of
the Revolving Facility may be used solely to support letters of credit issued
by Columbia or its subsidiaries in the ordinary course of business (a
substantial portion of such letters of credit may be denominated in Canadian
dollars). It is anticipated that the initial expiration of the Revolving
Facility will not exceed five years from the Effective Date.
The interest rates on the Revolving Facility are expected to be based on
a triple option pricing formula as follows:
Option 1: Prime Rate
Option 2: LIBOR + Margin
Option 3: CD + Margin
It is expected that the margin for the LIBOR rate option will not exceed .75
percent per annum and the margin for the CD rate option will not exceed .875
percent per annum. Maturities on loans issued under the LIBOR rate option are
expected to be for 1, 2, 3 or 6 months. Maturities on loans issued under the
CD rate option are expected to be for 30, 60, 90 or 180 days. All such loans
will be evidenced by promissory notes.
It is expected that the Revolving Facility will contain negative
covenants consistent with those covenants required by bank lenders for
comparable bank facilities. The Revolving Facility will be senior, unsecured
debt of Columbia and will rank pari passu with debt issued under the New
Indenture.
B. COLUMBIA'S NEW INDENTURE
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The New Indenture's provisions reflect the modernization of indenture
provisions generally and will simplify Columbia's corporate housekeeping. For
example, the New Indenture incorporates by reference provisions of the Trust
Indenture Act of 1939, as amended, is expected to result in substantial
savings in printing and trustee administration costs, simplifies the procedure
for authorization and issuance of New Indenture Securities and provides for
both covenant and legal defeasance of one or more series of New Indenture
Securities.
The New Indenture will permit Columbia to issue a wide variety of
unsecured debt securities in one or more Series. Securities issuable can
include, in addition to notes and debentures with terms similar to those
Columbia has issued in the past, medium-term notes, securities having a low or
zero coupon (which may be issued with original issue discount), securities as
to which payments of interest or principal are based on a formula or index,
and securities on which payment of interest or principal are denominated in a
foreign currency or currencies. The terms of a specific issue of New
Indenture Securities will be set under the New Indenture by a supplemental
indenture. The New Indenture contains numerous variable terms, such as the
principal amount, interest rate, redemption terms, denominations, events of
default, etc., which may be included as part of the terms of a new issue, and
permits other terms to be included or excluded in the supplemental indenture
authorizing a particular series of securities.
In theory, any combination of the variable terms could be included in a
single series of securities which, under current practice, would be called
"notes", "debentures" or "medium-term notes". The New Indenture also permits
any series of securities to be issued either in certificated form or in
"global" form (i.e., transferable only by book-entry on the records of a
securities depository such as The Depository Trust Company).
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The New Indenture contains a prohibition on the incurrence of secured
debt by Columbia such that Columbia will not issue any secured debt unless
contemporaneously therewith the New Indenture Securities are equally and
ratably secured for so long as the secured debt is secured by a lien.
However, the New Indenture enumerates the various categories of permissible
lien of a type normally arising in the ordinary course of business or by
operation of law. In addition, the secured debt restriction does not apply
to: (i) debt which is incurred to finance the acquisition, construction or
improvement of assets of Columbia and its subsidiaries after the date of the
New Indenture; provided, however, that such debt shall not be secured by any
assets of Columbia other than assets so acquired, constructed or improved;
(ii) certain debt of Columbia which is secured by assets of person where such
debt was existing at the time such person was merged or consolidated with
Columbia; (iii) debt issued to refinance such debt incurred under clauses (i)
and (ii) provided that the debt so issued is not secured by a lien on assets
other than those which secured the debt being refinanced; (iv) debt which is
secured by inventory, accounts receivable or customers' installment paper,
including by means of asset securitizations; (v) production payment
obligations; and (vi) other secured debt with a principal amount not
exceeding, in the aggregate, at any one time outstanding ten percent (10%) of
the Consolidated Tangible Assets of Columbia and its consolidated
subsidiaries. The term "Consolidated Tangible Assets" of Columbia and its
consolidated subsidiaries means the sum of the Tangible Assets of Columbia and
its consolidated subsidiaries after eliminating intercompany items. The term
"Tangible Assets", as applied to any person on any date shall mean the gross
book value as shown on the books of such person of all its property both real
and personal (exclusive of licenses, patents, patent applications, copyrights,
trademarks, trade names, goodwill, experimental or organizational
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expense and other like intangibles, treasury stock and unamortized debt
discount and expenses, but including regulatory assets properly recorded on
the balance sheet of such person).
The secured debt limitation is based on analyses of market conditions and
the secured debt covenant is drafted with a view to striking a balance between
investors' desire to have some covenant of this type and Columbia's need for
flexibility to impose liens on its property if doing so is reasonable from a
business point of view, or if liens arise by operation of law in circumstances
over which Columbia has no control. In addition, to provide additional
security to Columbia debt holders, a supplement to the New Indenture relating
to the New Indenture Securities will contain a covenant requiring Columbia,
for the four-year period following the Effective Date, to either hold
specified amounts of Columbia Transmission secured debt or retire certain
Columbia funded debt (as described below).
The New Indenture has a limitation on the incurrence of funded debt (debt
by which its terms matures in more than one year) and preferred stock by
Significant Subsidiaries (as defined in the Commission's Regulation S-X) such
that no funded debt or preferred stock may be issued by any such Significant
Subsidiary except (i) funded debt and preferred stock issued and outstanding
on or prior to the date of the New Indenture; (ii) funded debt and preferred
stock issued to and held by Columbia or a subsidiary; provided, however, that
any subsequent issuance or transfer of any common stock which results in any
such subsidiary ceasing to be a subsidiary and any subsequent transfer of such
debt or preferred stock (other than to Columbia or a subsidiary) shall be
deemed the issuance of such debt or preferred stock by the issuer thereof;
(iii) funded debt and preferred stock issued and outstanding on or prior to
the date on which such subsidiary was acquired by Columbia or on which it
became a Significant Subsidiary; (iv) certain funded debt and preferred stock
issued to finance the acquisition
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by such Significant Subsidiary of any assets or capital stock of any person or
the construction or improvement of assets of such Significant Subsidiary; (v)
funded debt and preferred stock issued in exchange for, or the proceeds of
which are used to refund or refinance, debt referred to in the foregoing
clauses (i) through (iv) or to reacquire equity of such Significant Subsidiary
held by Columbia or a subsidiary; (vi) funded debt issued with respect to
certain tax-exempt obligations or other obligations, whether taxable or tax-
exempt, that are issued through any public or governmental authority in
connection with pollution control or other facilities of such Significant
Subsidiary; (vii) funded debt in an aggregate amount not exceeding the sum of
(a) total inventory of the Significant Subsidiary, (b) total accounts
receivable of the Significant Subsidiary and (c) the total amount of
customers' installment paper of such Significant Subsidiary, in accordance
with generally accepted accounting principles; (viii) obligations with respect
to production payments; and (ix) funded debt in an aggregate principal amount
and preferred stock having an aggregate preferential liquidation value in
either case which, when added to the aggregate principal amount of funded debt
of all other Significant Subsidiaries (other than funded debt referred to in
clauses (i) through (viii) above and which when added to the aggregate
preferential liquidation value of preferred stock (other than preferred stock
referred to in clauses (i) through (vi) above does not exceed, at any one time
outstanding, ten percent (10%) of the Tangible Assets of such Significant
Subsidiary and all other Significant Subsidiaries, determined on a
consolidated basis.
The New Indenture has no restriction on the issuance and sale of voting
stock of any subsidiary or on the payment of dividends by Columbia.
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The New Indenture also contains the following event of default
provisions: (i) defaults in payment of the New Indenture Securities; (ii)
failures to comply with covenants; and (iii) certain events of insolvency with
respect to Columbia; subject, as applicable, to customary grace periods.
Columbia may, at any time, terminate (i) all its obligations under the
New Indenture Securities and the New Indenture ("Legal Defeasance Option") or
(ii) its obligations to comply with certain restrictive covenants, provided
that Columbia irrevocably deposits in trust money or U.S. Government
Obligations for the payment of principal of and interest on the New Indenture
Securities to maturity or redemption, as the case may be. Conditions to
defeasance shall be that (i) no default exists or occurs, and (ii) Columbia
obtains a certificate from a firm of nationally recognized independent
accountants that the deposited U.S. Government Obligations will be sufficient
to pay principal when due of and interest on the New Indenture Securities to
be defeased and (iii) in the case of the Legal Defeasance Option, 91 days pass
after the deposit is made and no event of bankruptcy with respect to Columbia
is continuing at the end of the 91-day period.
The New Indenture is similar in content to the indenture authorized by
the Commission on March 6, 1995 (HCAR 26245; 70-8107) for Consolidated Natural
Gas Company. An application on Form T-3 for qualification of the New
Indenture under the Trust Indenture Act of 1939 as amended, will be filed and
become effective by the Effective Date.
C. DISPOSITION OF LESOP SHARES
Columbia established the LESOP pursuant to the Order of the Commission
dated February 28, 1990 (HCAR 35-25047; 70-7672). The LESOP was designed to
pre-fund a portion of the matching obligation under the terms of the Thrift
Plan and to utilize tax advantages afforded under the Internal Revenue Code.
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Columbia proposes, on the Effective Date, that the LESOP be terminated
pursuant to the terms of the Trust Agreement dated as of October 17, 1991
between Columbia and First Fidelity Bank, N.A., as Successor Trustee (the
"LESOP Trust Agreement") and Columbia shall repurchase the LESOP Shares for
cash and at the average price for Columbia Common Stock over a specified
period preceding the Effective Date. The proceeds of the repurchase will be
paid to the LESOP Debenture Trustee and, in turn, to the LESOP
debentureholders as required by the LESOP Trust Agreement. The balance would
be subject to the existing guarantee by Columbia and would be paid under the
Columbia Plan.
It is Columbia's intention to hold the LESOP Shares in its treasury and
to use the LESOP Shares for one of the following purposes as Columbia deems
appropriate: (i) to sell the LESOP Shares for cash in the open market, (ii) to
use all or part of the LESOP Shares to fund the TCO Guarantee, (iii) to use
all or part of the LESOP Shares to fund the Securities Litigation Settlement
Offer and (iv) to fund an employee benefit program.
D. PUBLIC OFFERING OF ADDITIONAL COLUMBIA EQUITY
If Columbia elects to redeem the Preferred Stock and DECS prior to the
120th day after the Effective Date and elects to fund such redemption through
the issuance and sale of up to 16 million shares of common or preferred stock,
authorization is requested for the issuance of such securities subject to a
reservation of jurisdiction over the terms of such issuance and sale.
E. POTENTIAL OFFERING OF COLUMBIA SECURITIES IN CONNECTION WITH
SETTLEMENT OF SECURITIES LITIGATION
The Columbia Plan has proposed a settlement of certain securities class
action claims brought against Columbia and certain former and present Columbia
officers and directors who are defendants
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in the litigation (the "Securities Litigation Settlement Offer"). Under the
Columbia Plan, holders of securities litigation claims that timely file
satisfactory supplemental proofs of claim or questionnaire forms, in each case
as provided by the Bankruptcy Court, and accept the Securities Litigation
Settlement Offer will be paid by Columbia and various non-debtors (together
with Columbia , the "Contributors") a settlement amount of up to $18 million
(the "Proposed Settlement Amount"), subject to certain adjustments. The
Securities Litigation Settlement Offer provides a range of recoveries for
certain claimants who purchased Columbia debt and equity securities between
March 1, 1990 and June 18, 1991. If the Proposed Settlement Amount is not
enough to satisfy the range of recoveries proposed in the Securities
Litigation Settlement Offer, as determined by the filing of supplemental
proofs of claim, then the Proposed Settlement Amount, at Columbia's option,
may be increased through additional cash contributions by the Contributors or
the issuance of Columbia Common Stock or other securities by Columbia with
respect to its contribution. Alternatively, Columbia may choose to withdraw
the Securities Litigation Settlement Offer. The Securities Litigation
Settlement Offer is also conditioned upon acceptance by claimants representing
75 percent of the total amount of claims filed in accordance with the
procedures set forth under the Columbia Plan. However, Columbia may waive
this condition to the Columbia Plan. If the Securities Litigation Settlement
offer is withdrawn, or the 75% condition is not met or waived, Columbia will
seek to estimate or otherwise liquidate the securities claims and will pay
them in full in cash or Columbia Common Stock.
F. RESTATED CERTIFICATE OF INCORPORATION
In order to issue the DECS and Preferred Stock and Additional Columbia
Equity (if issued in the form of preferred stock) pursuant to the Columbia
Plan, the Certificate of Incorporation of
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Columbia would be amended and restated (the "Restated Certificate of
Incorporation"), pursuant to Section 303 of the Delaware General Corporation
Law and Section 1123(a) of the Bankruptcy Code. The Restated Certificate of
Incorporation will become effective upon filing with the Delaware Secretary of
State after the Effective Date. Columbia will remain incorporated under the
laws of the State of Delaware. The Restated Certificate of Incorporation
represents a streamlining and modernization of Columbia's current Certificate
of Incorporation with the additional changes outlined below. A form of the
Restated Certificate of Incorporation is attached as Exhibit A-1.
The Restated Certificate of Incorporation prohibits the issuance of non-
voting equity securities as required by Section 1123(a)(6) of the Bankruptcy
Code, subject to further amendment of the Restated Certificate of
Incorporation as permitted by applicable law.
The Restated Certificate of Incorporation increases the number of
authorized shares of preferred stock to 40 million shares.(4) It is
anticipated that approximately 8 million shares of Preferred Stock and
approximately 8 million shares of DECS having the terms described herein will
be issued on the Effective Date in order to effectuate the Columbia Plan. As
described above up to 16 million shares of additional preferred stock might be
issued to fund a redemption of Preferred Stock and DECS. The remaining shares
of authorized but unissued preferred stock may be issued from time to time
pursuant to resolution adopted by the Columbia Board of Directors, subject to
approval of the Commission under the Act.
The following additional amendments to the current Certificate of
Incorporation were proposed for approval by stockholders at Columbia's annual
meeting on April 28, 1995 for the
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(4) The Certificate of Incorporation filed with Bankruptcy Court will be
revised to reflect authorization for 40 million shares of Preferred
Stock.
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purpose of implementing a shareholder rights plan. Although 64 percent of the
shares present and voting were voted for the amendments, this vote was less
than a majority of outstanding common stock as required under the Delaware law
and the amendments were not adopted. The amendments will nevertheless be
included in the Restated Certificate of Incorporation because they are
necessary to permit the issuance of Preferred Stock and DECS under the
Columbia Plan. No shareholders rights plan may be implemented prior to an
order of this Commission authorizing adoption of such a plan under Section 6
of the Act. The proposed amendments to ARTICLE FOURTH would delete the
restrictions on dividends and amounts of secured debt applicable while any
preferred stock is outstanding. They would also remove from the Certificate
of Incorporation specific provisions regarding preferred stock voting rights,
dividend rights and liquidation rights and permit the Board of Directors to
determine the specific rights, powers and preferences of each series of
preferred stock, and the limitations thereon, at the time of its issuance.
The par value of the preferred stock would also be reduced from fifty dollars
($50) to ten dollars ($10) per share. Conforming amendments to ARTICLE EIGHTH
(i) provide for continuation of a staggered Board for Directors elected by
holders of Columbia Common Stock even if directors are elected by the holders
of preferred stock and (ii) recognize that the terms of the preferred stock
may be set by resolutions adopted by the Board of Directors pursuant to
ARTICLE FOURTH as proposed to be amended.
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IV. SUMMARY OF APPROVALS SOUGHT IN THIS APPLICATION-DECLARATION
Columbia, therefore, requests authorization to:
1) Acquire from Columbia Transmission up to $1.5 billion in aggregate amount
of TCO Mortgage Bonds.
2) Make capital contributions to Columbia Transmission aggregating
approximately $1 billion including cash in an amount equal to the total
values initially distributable under the TCO Plan ($3.9 billion) less the
sum of a) cash available at Columbia Transmission to pay creditors
projected to be (approximately $1.4 billion) and b) the value of the
claim held by Columbia with respect to TCO Mortgage Bonds (approximately
$2.0 billion). To the extent that the Columbia Plan reserves to Columbia
the right to issue and sell securities other than Columbia Common Stock,
the Commission is requested to reserve jurisdiction over the terms of
such issuance.
3) Fund additional amounts to Columbia Transmission, when and as necessary,
to fund payments to claimants whose claims, when and as allowed by the
Bankruptcy Court, cause the value to be distributed under the TCO Plan to
exceed $3.9 billion and, if deemed appropriate, to issue Columbia Common
Stock or other securities to Dissenting Producers on behalf of Columbia
Transmission for cash or TCO Mortgage Bonds equal to the then current
market value or to issue and sell Columbia Common Stock on the market and
distribute the proceeds to Columbia Transmission as a capital
contribution.
4) Enter into the New Indenture and supplements thereto as described herein.
5) Issue up to $3 billion of New Indenture Securities, subject to adjustment
as described herein.
6) Issue up to $200 million aggregate liquidation value each of Preferred
Stock and DECS under the terms and conditions described herein.
<PAGE> 38
PAGE 38
7) Enter into the Bank Facilities in an amount up to $1.15 billion under the
terms and conditions described herein.
8) Reissue all or a part of the LESOP Shares for one of the following
purposes as Columbia deems appropriate: (i) to sell the LESOP Shares for
cash in the open market, (ii) to fund the TCO Guarantee, (iii) to fund
the Securities Litigation Settlement Offer and (iv) to fund an employee
benefit program.
9) Issue and sell preferred stock or Columbia Common Stock to fund the
repurchase by Columbia of DECS and Preferred Stock subject to a
reservation of jurisdiction over the terms of such issue and sale of
preferred stock.
10) Issue shares of Columbia Common Stock to effectuate payment of Columbia's
portion of any payment to claimants under the Securities Litigation
Settlement Offer in excess of the Proposed Settlement Amount or to fund
payments to securities claimants if the Securities Litigation Settlement
Offer is withdrawn.
11) Amend and restate its Certificate of Incorporation as described above.
Columbia also requests the issuance of the Commission's report under
Section 11(g) of the Act.
Item 2. Fees, Commissions and Expenses.
(a) State (1) the fees, commissions and expenses paid or incurred, or to
be paid or incurred, directly or indirectly, in connection with the proposed
transaction by the applicant or declarant or any associate company thereof,
and (2) if the proposed transaction involves the sale of securities at
competitive bidding, the fees and expenses to be paid to counsel selected by
applicant or declarant to act for the successful bidder.
There are set forth below the estimated fees and expenses expected to be
incurred in connection with the preparation of the Plans of Reorganization and
this Application-Declaration. All
<PAGE> 39
PAGE 39
payments for professional services are subject to the approval of the
Bankruptcy Court pursuant to the Code and therefore, pursuant to Rule 63 need
not be approved by this Commission.
<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee . . . . . . . . . . . . . $ 2,000.00
Services of Columbia Gas System Service Corporation . . . . . . . . . . to be filed by
amendment
Services of Cravath Swaine & Moore, special counsel
for Columbia *
Services of Stroock & Stroock & Lavan, bankruptcy *
counsel for Columbia
Miscellaneous, including filing and recording fees, to be filed by
postage, travel, telephone and other incidental expenses amendment
Total . . . . . . . . . . . . . . . . . . . . . . . to be filed by
amendment
</TABLE>
* All payments for professional services are subject to the
approval of the Bankruptcy Court pursuant to the Code and
therefore, pursuant to Rule 63 need not be approved by this
Commission.
(b) If any person to whom fees or commissions have been or are to be
paid in connection with the proposed transaction is an associate company or an
affiliate of the applicant or declarant, or is an affiliate of an associate
company, set forth the facts with respect thereto.
Columbia Gas System Service Corporation, a wholly owned subsidiary of
Columbia will perform certain services customary for a service corporation of
a registered holding company at cost as set forth in Item 2(a) above.
Item 3. Applicable Statutory Provisions.
(a) State the section of the Act and the rules thereunder believed to be
applicable to the proposed transaction. If any section or rule would be
applicable in the absence of a specific exemption, state the basis of
exemption.
Sections 11(f) and 11(g) and Rules 60, 62, 63 and 64 are applicable to
Columbia's Plan of Reorganization. Specifically, Columbia seeks Commission
authorization under Section 11(g) and Rule 62 of the Act to disseminate the
Columbia Disclosure Statement which will include the
<PAGE> 40
PAGE 40
Commission's report approving the Columbia Plan and Disclosure Statement under
Sections 11(f) and 11(g) and the rules promulgated thereunder. Columbia
requests that the Commission waive the filing of a separate Form U-R-1 since
all the requisite information will be included in the Disclosure Statements
filed as exhibits hereto. Under Rule 63, fees and expenses approved by the
Bankruptcy Court need not be approved by the Commission.
Section 9 and 10 of the Act, and Rule 43 promulgated thereunder are
applicable to the acquisition of restructured Columbia Transmission securities
by Columbia and the capital contribution by Columbia to Columbia Transmission.
The issuance of securities and amendment of the Wilmington Trust Indenture by
Columbia Transmission is exempt from Sections 6 and 7 of the Act and Rule 43
thereunder pursuant to Rule 49(c).
The issuance by Columbia of a guarantee of certain possible Columbia
Transmission payments to creditors and the guaranty by Columbia of the
settlement with Columbia Transmission's customers are subject to Section 12(b)
of the Act and Rule 45 thereunder.
The issuance by Columbia of DECS, Preferred Stock, New Indenture
Securities Additional Columbia Equity and Columbia Common Stock are subject to
Sections 6 and 7 of the Act. Columbia's entering into the Bank Facilities is
also subject to Sections 6 and 7 of the Act.
The amendment of Columbia's Charter is subject to Sections 6, 7 and 12(e)
of the Act, and Rules 62 and 65 thereunder.
The repurchase by Columbia of DECS, Preferred Stock and LESOP Shares is
exempt from Section 12(c) of the Act pursuant to Rule 42 thereunder.
Columbia and its subsidiaries do not currently own or operate any Exempt
Wholesale Generators ("EWG") or Foreign Utility Companies ("FUCO") nor will
Columbia and its subsidiary companies own or operate an EWG or FUCO as the
result of the approvals requested herein.
<PAGE> 41
PAGE 41
It is requested that the authority be granted to file certificates under
Rule 24 on a quarterly basis after the Effective Date with respect to the
proposed transactions hereafter consummated pursuant to this Application-
Declaration, not later than 30 days following the end of each quarter. In
addition, certain contemplated transactions may be accomplished over a period
of time after the Order is issued, therefore authorization is requested to
implement the proposed transactions as described in the Application-
Declaration.
To the extent that the transactions which are the subject matter of this
Application-Declaration are considered by the Commission to require
authorization, approval or exemption under any section of the Act or provision
of the rules and regulations other than those specifically referred to herein,
a request for such authorization, approval or exemption is hereby made
pursuant to Rule 64.
(b) If an applicant is not a registered holding company or a subsidiary
thereof, state the name of each public utility company of which it is an
affiliate, or of which it will become an affiliate as a result of the proposed
transaction, and the reasons why it is or will become such an affiliate.
Not applicable.
Item 4. Regulatory Approval.
(a) State the nature and extent of the jurisdiction of any State
commission or any Federal commission (other than the Securities and Exchange
Commission) over the proposed transaction.
Not applicable. The United States Bankruptcy Court for the District of
Delaware has jurisdiction over Columbia Transmission, Columbia and the
reorganization plans of both companies, subject to the jurisdiction of this
Commission under the Act.
(b) Describe the action taken or proposed to be taken before any
commission named in answer to paragraph (a) of this item in connection with
the proposed transaction.
Not applicable.
Item 5. Procedure.
(a) State the date when Commission action is requested. If the date is
less than 40 days from the date of the original filing, set forth the reasons
for acceleration.
<PAGE> 42
PAGE 42
It is respectfully requested that the Commission issue its notice with
respect to the transactions proposed herein no later than June 23, 1995 and
its order as soon as practicable thereafter. The first Bankruptcy Court
hearing on the disclosure statements is expected to be scheduled for July 18,
1995.
(b) State (i) whether there should be a recommended decision by a
hearing officer, (ii) whether there should be a recommended decision by any
other responsible officer of the Commission, (iii) whether the Division of
Investment Management may assist in the preparation of the Commission's
decision, and (iv) whether there should be a 30-day waiting period between the
issuance of the Commission's order and the date on which it is to become
effective.
Applicants hereby (i) waive a recommended decision by a hearing officer,
(ii) waive a recommended decision by any other responsible officer or the
Commission, (iii) specify that the Division of Investment Management may
assist in the preparation of the Commission's decision, and (iv) specify that
there should not be a 30-day waiting period between the issuance of the
Commission's order and the date on which it is to become effective.
Item 6. Exhibits and Financial Statements.
(a) Exhibits
A-1 The Columbia Gas System, Inc. Draft Restated Certificate of
Incorporation
B-1 Indenture and Deed of Trust between Columbia Gas Transmission
Corporation and Wilmington Trust Company, as Trustee Dated
August 30, 1985, as amended filed herewith by incorporation by
reference to Exhibit E to Joint Application-Declaration (File
No. 70-7106)
B-2 Form of The Columbia Gas System, Inc. Indenture
B-3 Form of Supplemental Indenture
B-4 Draft Certificate of Designation for DECS
B-5 Draft Certificate of Designation for Preferred Stock
D-1 Columbia Gas Transmission Corporation Plan of Reorganization and
Disclosure Statement (filed herewith by incorporation by
reference to the Plan of
<PAGE> 43
PAGE 43
Reorganization and Disclosure Statement filed in File No. 1-1098
on June 16, 1995)
D-2 The Columbia Gas System, Inc. Plan of Reorganization and
Disclosure Statement (filed herewith by incorporation by
reference to the Plan of Reorganization and Disclosure Statement
filed in File No. 1-1098 on June 16, 1995)
F Opinion of Counsel (to be filed by amendment)
G Financial Data Schedules
H Proposed Notice
I-1 The Columbia Gas System, Inc. and Subsidiaries projected Income
Statement, Balance Sheet and Cash Flow Statement for the years
1995-1999
I-2 Columbia Gas Transmission Corporation projected Income
Statement, Balance Sheet and Cash Flow Statement for the years
1995-1999
I-3 Analysis of Sources and Uses of Funds for Columbia Plan
I-4 New Indenture Securities Pricing Formula
I-5 DECS Pricing Formula
I-6 Preferred Stock Pricing Formula
(b) Financial Statements
(1) The Columbia Gas System, Inc. and Subsidiaries
(a) Balance Sheets as of February 28, 1995 (actual and pro
forma)
(b) Statements of Capitalization as of February 28, 1995 (actual
and pro forma)
(c) Statements of Income for the twelve months ended February
28, 1995 (actual and pro forma)
(d) Statements of Common Stock Equity as of February 28, 1995
(actual and pro forma)
(e) Pro Forma Entries
(2) The Columbia Gas System, Inc.
<PAGE> 44
PAGE 44
(a) Balance Sheets as of February 28, 1995 (actual and pro
forma)
(b) Statements of Capitalization as of February 28, 1995 (actual
and pro forma)
(c) Statements of Income for the twelve months ended February
28, 1995 (actual and pro forma)
(d) Statements of Common Stock Equity as of February 28, 1995
(actual and pro forma)
(e) Pro Forma Entries
(3) Columbia Gas Transmission Corporation
(a) Balance Sheets as of February 28, 1995 (actual and pro
forma)
(b) Statements of Capitalization as of February 28, 1995 (actual
and pro forma)
(c) Statements of Income for the twelve months ended February
28, 1995 (actual and pro forma)
(d) Statements of Common Stock Equity as of February 28, 1995
(actual and pro forma)
(e) Pro Forma Entries
There have been no material changes, not in the ordinary course of
business, since the date of the financial statements filed herewith.
Item 7. Information as to Environmental Effects.
(a) Describe briefly the environmental effects of the proposed
transaction in terms of the standards set forth in Section 102 (2) (C) of the
National Environmental Policy Act (42 U.S.C. 4232 (2) (C)). If the response
to this term is a negative statement as to the applicability of Section 102
(2)(C) in connection with the proposed transaction, also briefly state the
reasons for that response.
As more fully described in Item 1, the proposed transaction relates only
to the sale and purchase of certain securities and investments and has no
environmental impact in itself.
(b) State whether any other federal agency has prepared or is preparing
an environmental impact statement ("EIS") with respect to the proposed
transaction. If any other federal agency has
<PAGE> 45
PAGE 45
prepared or is preparing an EIS, state which agency or agencies and indicate
the status of that EIS preparation.
No federal agency has prepared or is preparing an EIS with respect to the
proposed transaction.
<PAGE> 46
PAGE 46
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this Application-Declaration to
be signed on its behalf by the undersigned thereunto duly authorized.
THE COLUMBIA GAS SYSTEM, INC.
Date: June 20, 1995 By: /s/ L. J. BAINTER
---------------------------
L. J. Bainter
Treasurer
<PAGE> 47
THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED
6(b)(1)(a)
(1 of 2)
CONSOLIDATED BALANCE SHEET
ACTUAL and PRO FORMA
As of February 28, 1995
($000)
<TABLE>
<CAPTION>
CGS Pro Forma CGS
Actual Entries Pro Forma
--------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS
Property, Plant and Equipment
Gas utility and other plant, at original cost ............ 6,669,512 0 6,669,512
Accumulated depreciation and depletion ................... (3,218,737) 0 (3,218,737)
--------------- --------------- ---------------
Net Gas Utility and Other Plant .......................... 3,450,775 0 3,450,775
--------------- --------------- ---------------
Oil and gas producing properties, full cost method 1,264,954 0 1,264,954
Accumulated depletion .................................... (650,315) 0 (650,315)
--------------- --------------- ---------------
Net Oil and Gas Producing Properties ..................... 614,639 0 614,639
--------------- --------------- ---------------
Net Property, Plant, and Equipment ......................... 4,065,414 0 4,065,414
--------------- --------------- ---------------
Investments and Other Assets
Accounts receivable - noncurrent ......................... 210,240 (25,699) 184,541
Unconsolidated affiliates ................................ 74,174 0 74,174
Other .................................................... 12,985 0 12,985
--------------- --------------- ---------------
Total Investments and Other Assets ......................... 297,399 (25,699) 271,700
--------------- --------------- ---------------
Current Assets
Cash and temporary cash investments ...................... 1,718,111 (1,155,320) 562,791 *
Accounts receivable, net ................................. 678,809 0 678,809
Gas inventories .......................................... 111,161 0 111,161
Other inventories at average cost ........................ 41,865 0 41,865
Prepayments .............................................. 104,339 0 104,339
Other .................................................... 44,438 0 44,438
--------------- --------------- ---------------
Total Current Assets ....................................... 2,698,723 (1,155,320) 1,543,403
--------------- --------------- ---------------
Deferred Charges ........................................... 288,845 0 288,845
--------------- --------------- ---------------
Total Assets ............................................... 7,350,381 (1,181,019) 6,169,362
=============== =============== ===============
</TABLE>
* Excess cash is a result of the full amount of the credit facilities being used
for the pro-forma financial statements in accordance with Commission rules.
<PAGE> 48
THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES (2 of 2)
CONSOLIDATED BALANCE SHEET
ACTUAL and PRO FORMA
As of February 28, 1995
($000)
<TABLE>
<CAPTION>
CGS Pro Forma CGS
Actual Entries Pro Forma
--------------- --------------- ---------------
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization
Stockholder's equity ..................................... 1,564,420 (318,398) 1,246,022
Long-term debt ........................................... 4,138 2,550,000 2,554,138
--------------- --------------- ---------------
Total Capitalization ....................................... 1,568,558 2,231,602 3,800,160
--------------- --------------- ---------------
Current Liabilities
Debt obligations ......................................... 1,287 0 1,287
Working capital facility ................................. 0 600,000 600,000
Accounts and drafts payable .............................. 123,432 0 123,432
Accrued taxes ............................................ 214,414 (85,426) 128,988
Accrued interest ......................................... (2,998) 288,800 285,802
Estimated rate refunds ................................... 68,400 0 68,400
Estimated supplier obligations ........................... 68,059 0 68,059
Other .................................................... 446,446 44,000 490,446
--------------- --------------- ---------------
Total Current Liabilities .................................. 919,040 847,374 1,766,414
--------------- --------------- ---------------
Liabilities Subject to Chapter 11 Proceedings ............. 4,045,106 (4,045,106) 0
--------------- --------------- ---------------
Other Liabilities and Deferred Credits
Deferred income taxes, noncurrent ........................ 358,683 (351,389) 7,294
Deferred investment tax credits .......................... 38,327 0 38,327
Postretirement benefits other than pensions .............. 230,459 0 230,459
Other .................................................... 190,208 136,500 326,708
--------------- --------------- ---------------
Total Other Liabilities and Deferred Credits ............... 817,677 (214,889) 602,788
--------------- --------------- ---------------
Total Capitalization and Liabilities ....................... 7,350,381 (1,181,019) 6,169,362
=============== =============== ===============
</TABLE>
<PAGE> 49
THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED
6(b)(1)(b)
CONSOLIDATED STATEMENT OF CAPITALIZATION
ACTUAL and PRO FORMA
As of February 28, 1995
($000)
<TABLE>
<CAPTION>
CGS Pro Forma CGS
Actual Entries Pro Forma
--------------- --------------- ---------------
<S> <C> <C> <C>
Stockholder's Equity
Common Stock, The Columbia Gas System, Inc.,
$10 par value, authorized 100,000,000 shares,
outstanding 50,563,335 shares ........................... 505,633 0 505,633
Additional paid in capital ............................... 601,827 (16,466) 585,361
Preferred Stock .......................................... 0 400,000 400,000
Retained earnings ........................................ 526,926 (771,898) (244,972)
Unearned employee compensation ........................... (69,966) 69,966 0
--------------- --------------- ---------------
Total Stockholder's Equity ................................. 1,564,420 (318,398) 1,246,022
--------------- --------------- ---------------
Long-Term Debt
Debentures ............................................... 0 2,550,000 2,550,000
Miscellaneous debt of subsidiaries ....................... 2,473
Capitalized lease obligations ............................ 1,665 0 1,665
--------------- --------------- ---------------
Total Long-Term Debt ....................................... 4,138 2,550,000 2,554,138
--------------- --------------- ---------------
Total Capitalization ....................................... 1,568,558 2,231,602 3,800,160
=============== =============== ===============
</TABLE>
<PAGE> 50
THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED
6(b)(1)(c)
STATEMENT OF CONSOLIDATED INCOME
ACTUAL and PRO FORMA
Twelve Months Ended February 28, 1995
($000)
<TABLE>
<CAPTION>
CGS Pro Forma CGS
Actual Adjustments * Entries Pro Forma
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Operating Revenues
Gas sales................................................. 1,980,027 0 0 1,980,027
Transportation ........................................... 574,742 0 0 574,742
Other .................................................... 223,961 0 0 223,961
--------------- --------------- --------------- ---------------
Total Operating Revenues ................................... 2,778,730 0 0 2,778,730
--------------- --------------- --------------- ---------------
Operating Expenses
Products purchased ...................................... 917,717 0 0 917,717
Operation ................................................ 888,608 0 0 888,608
Maintenance .............................................. 134,482 0 0 134,482
Depreciation and depletion ............................... 266,935 0 0 266,935
Other taxes .............................................. 212,300 0 0 212,300
--------------- --------------- --------------- ---------------
Total Operating Expenses ................................... 2,420,042 0 0 2,420,042
--------------- --------------- --------------- ---------------
Operating Income ........................................... 358,688 0 0 358,688
--------------- --------------- --------------- ---------------
Other Income (Deductions)
Interest income and other, net ........................... 48,262 0 0 48,262
Interest expense and related charges...................... (16,828) 0 (289,800) (306,628)
Reorganization items, net ................................ (9,503) 9,503 0 0
--------------- --------------- --------------- ---------------
Total Other Income (Deductions) ............................ 21,931 9,503 (289,800) (258,366)
--------------- --------------- --------------- ---------------
Income before Income Taxes and Cummulative Effect
of Accounting Change ..................................... 380,619 9,503 (289,800) 100,322
Income taxes ............................................... 142,069 1,799 (101,050) 42,818
--------------- --------------- --------------- ---------------
Income before Cummulative Effect of Accounting
Change ................................................... 238,550 7,704 (188,750) 57,504
Cummulative Effect of Change in Accounting for
Postemployment Benefits .................................. 72 0 0 72
--------------- --------------- --------------- ---------------
Net Income ................................................. 238,622 7,704 (188,750) 57,576
--------------- --------------- --------------- ---------------
Preferred Dividends ........................................ 0 0 44,000 44,000
--------------- --------------- --------------- ---------------
Net Income on Common Equity ................................ 238,622 7,704 (232,750) 13,576
=============== =============== =============== ===============
</TABLE>
* To eliminate bankruptcy-related items from the Pro Forma Income Statement.
<PAGE> 51
THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED
6(b)(1)(d)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
ACTUAL and PRO FORMA
Twelve Months Ended February 28, 1995
($000)
<TABLE>
<CAPTION>
CGS Pro Forma CGS
Actual Entries Pro Forma
--------------- --------------- ---------------
<S> <C> <C> <C>
COMMON STOCK
Balance at March 31, 1994 .................................. 505,592 0 505,592
Common stock issued -
Long-term incentive plan ................................. 41 0 41
--------------- --------------- ---------------
Balance at February 28, 1995 ............................... 505,633 0 505,633
--------------- --------------- ---------------
PREFERRED STOCK
Balance at March 31, 1994 .................................. 0 0 0
Preferred stock issued ..................................... 0 400,000 400,000
--------------- --------------- ---------------
Balance at February 28, 1995 ............................... 0 400,000 400,000
--------------- --------------- ---------------
ADDITIONAL PAID IN CAPITAL
Balance at March 31, 1994 .................................. 601,759 0 601,759
Common stock issued -
Long-term incentive plan ................................. 68 0 68
Leveraged employee stock ownership plan (LESOP) ............ 0 (16,466) (16,466)
--------------- --------------- ---------------
Balance at February 28, 1995 ............................... 601,827 (16,466) 585,361
--------------- --------------- ---------------
RETAINED EARNINGS
Balance at March 31, 1994 .................................. 288,304 0 288,304
Net income ................................................. 238,622 (188,750) 49,872
Common stock dividends ..................................... 0 0 0
Preferred stock dividends .................................. 0 (44,000) (44,000)
Other ...................................................... 0 (539,148) (539,148)
--------------- --------------- ---------------
Balance at February 28, 1995 ............................... 526,926 (771,898) (244,972)
--------------- --------------- ---------------
UNEARNED EMPLOYEE COMPENSATION
Balance at March 31, 1994 .................................. (69,966) 69,966 0
--------------- --------------- ---------------
Balance at February 28, 1995 ............................... (69,966) 69,966 0
--------------- --------------- ---------------
TOTAL COMMON STOCK EQUITY .................................. 1,564,420 (318,398) 1,246,022
=============== =============== ===============
</TABLE>
<PAGE> 52
Unaudited
6(b)(1)(e)
(1 of 2)
THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES
PRO FORMA ENTRIES
($000)
<TABLE>
<CAPTION>
DR CR
----------- -----------
<S> <C> <C>
1) Retained earnings 616,148
Deferred taxes 351,389
Accrued taxes 33,724
Liabilities subject to Chapter 11 933,813
To adjust the non-affiliated Chapter 11 liabilities to
reflect the estimated balance at 12/31/95,
the proposed date of emergence.
2) Cash 450,000
Note Payable - Term (long term) 450,000
To record the issuance of the Term Facility
Notes at 7.5%.
3) Cash 600,000
Working capital loan 600,000
To record the issuance of the Revolving Facility
Notes at 7.5% less the portion applicable to
letters of credit.
4) Liabilities subject to Chapter 11 200,000
Preferred stock 200,000
To record the issuance of 11% preferred stock.
5) Liabilities subject to Chapter 11 200,000
DECS 200,000
To record the issuance of 11% DECS.
6) Liabilities subject to Chapter 11 2,100,000
Debentures 2,100,000
To record the issuance of 10% debentures issued.
7) Liabilities subject to Chapter 11 136,500
Other liabilities and deferred credits 136,500
To reflect amounts due to IRS to be paid over
a six year period.
8) Liabilities subject to Chapter 11 2,307,019
Cash 2,307,019
Cash payment for remaining liabilities subject
to Chapter 11.
9) Treasury stock 35,400
Cash 35,400
To record purchase of 1.416 million LESOP shares
at $25 per share.
10) Liabilities subject to Chapter 11 35,400
Paid in capital 16,466
Accrued taxes 18,100
Unearned compensation 69,966
To record the loss on the LESOP loan guarantee.
11) Cash 24,699
Interest expense 1,000
Accounts receivable, noncurrent 25,699
To record the return of Kotaneelee escrow and
establishment of a letter of credit.
</TABLE>
<PAGE> 53
(2 of 2)
<TABLE>
<S> <C> <C>
12) Cash 35,400
Treasury stock 35,400
To record the sale of Treasury stock.
13) Interest expense 33,800
Accrued taxes 11,800
Accrued interest 33,800
Tax expense 11,800
To record interest expense on the Term
Facility ($450.0 @ 7.5%).
14) Interest expense 45,000
Accrued taxes 15,750
Accrued interest 45,000
Tax expense 15,750
To record interest expense on the Revolving
Facility ($600.0 @ 7.5%).
15) Retained earnings (dividends) 22,000
Dividends payable 22,000
To record dividends paid on preferred stock @ 11%.
16) Retained earnings (dividends) 22,000
Dividends payable 22,000
To record dividends paid on DECS @ 11%.
17) Interest expense 210,000
Accrued taxes 73,500
Accrued interest 210,000
Tax expense 73,500
To accrue interest on new debentures @ 10%.
18) Cash 77,000
Retained earnings 77,000
To record the increase in cash between
2/28/95 and 12/31/95.
</TABLE>
<PAGE> 54
THE COLUMBIA GAS SYSTEM, INC. UNAUDITED
6(b)(2)(a)
(1 of 2)
BALANCE SHEET
ACTUAL and PRO FORMA
As of February 28, 1995
($000)
<TABLE>
<CAPTION>
CG Pro Forma CG
Actual Entries Pro Forma
----------- ------------ ------------
<S> <C> <C> <C>
ASSETS
Investments and Other Assets
Accounts receivable - noncurrent .......................... 25,699 (25,699) 0
----------- ------------ ------------
Total Investments and Other Assets .......................... 25,699 (25,699) 0
----------- ------------ ------------
Investments in Subsidiaries
Capital stock ............................................. 1,297,488 1,060,000 2,357,488
Equity in undistributed retained earnings ................. (428,363) (34,176) (462,539)
Installment promissory notes receivable ................... 756,769 1,405,643 2,162,412
Other investments ......................................... 437,833 (437,833) 0
Other receivables - TCO ................................... 1,630,438 (1,630,438) 0
----------- ------------ ------------
Total Investments in Subsidiaries ........................... 3,694,165 363,196 4,057,361
----------- ------------ ------------
Current Assets
Cash and temporary cash investments ....................... 17,543 408,856 426,399 *
Accounts receivable, net
Affiliated .............................................. 420,817 (177,500) 243,317
Other ................................................... 9,689 0 9,689
Prepayments ............................................... 1 0 1
Other ..................................................... 31,833 0 31,833
----------- ------------ ------------
Total Current Assets ........................................ 479,883 231,356 711,239
----------- ------------ ------------
Deferred Charges ............................................ 2,747 0 2,747
----------- ------------ ------------
Total Assets ................................................ 4,202,494 568,853 4,771,347
=========== ============ ============
</TABLE>
* Excess cash is a result of the full amount of the credit facilities being
used for the pro-forma financial statements in accordance with Commission
rules.
<PAGE> 55
THE COLUMBIA GAS SYSTEM, INC. (2 of 2)
BALANCE SHEET
ACTUAL and PRO FORMA
As of February 28, 1995
($000)
<TABLE>
<CAPTION>
CG Pro Forma CG
Actual Entries Pro Forma
----------- ------------ ------------
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization
Stockholder's equity ...................................... 1,564,420 (318,398) 1,246,022
Long-term debt ............................................ 0 2,550,000 2,550,000
----------- ------------ ------------
Total Capitalization ........................................ 1,564,420 2,231,602 3,796,022
----------- ------------ ------------
Current Liabilities
Working capital facility .................................. 0 600,000 600,000
Accounts and drafts payable ............................... 1,107 0 1,107
Affiliated accounts payable ............................... 3,227 27,500 30,727
Accrued taxes ............................................. (507) (25,535) (26,042)
Accrued interest .......................................... 1,291 288,800 290,091
Other ..................................................... 8,644 44,000 52,644
----------- ------------ ------------
Total Current Liabilities ................................... 13,762 934,765 948,527
----------- ------------ ------------
Liabilities Subject to Chapter 11 Proceedings ............... 2,382,625 (2,382,625) 0
----------- ------------ ------------
Other Liabilities and Deferred Credits
Deferred income taxes, noncurrent ......................... 235,658 (351,389) (115,731)
Postretirement benefits other than pensions ............... 5,996 0 5,996
Other ..................................................... 33 136,500 136,533
----------- ------------ ------------
Total Other Liabilities and Deferred Credits ................ 241,687 (214,889) 26,798
----------- ------------ ------------
Total Capitalization and Liabilities ........................ 4,202,494 568,853 4,771,347
=========== ============ ============
</TABLE>
<PAGE> 56
THE COLUMBIA GAS SYSTEM, INC. UNAUDITED
6(b)(2)(b)
STATEMENT OF CAPITALIZATION
ACTUAL and PRO FORMA
As of February 28, 1995
($000)
<TABLE>
<CAPTION>
CG Pro Forma CG
Actual Entries Pro Forma
----------- ------------ ------------
<S> <C> <C> <C>
Stockholder's Equity
Common Stock, $10 par value, authorized
100,000,000 shares, outstanding 50,563,335
shares ................................................... 505,633 0 505,633
Additional paid in capital ................................ 601,827 (16,466) 585,361
Preferred Stock ........................................... 0 400,000 400,000
Retained earnings ......................................... 526,926 (771,898) (244,972)
Unearned employee compensation ............................ (69,966) 69,966 0
----------- ------------ ------------
Total Stockholder's Equity .................................. 1,564,420 (318,398) 1,246,022
----------- ------------ ------------
Long-Term Debt .............................................. 0 2,550,000 2,550,000
----------- ------------ ------------
Total Long-Term Debt ........................................ 0 2,550,000 2,550,000
----------- ------------ ------------
Total Capitalization ........................................ 1,564,420 2,231,602 3,796,022
=========== ============ ============
</TABLE>
<PAGE> 57
THE COLUMBIA GAS SYSTEM, INC. UNAUDITED
6(b)(2)(c)
STATEMENT OF INCOME
ACTUAL and PRO FORMA
Twelve Months Ended February 28, 1995
($000)
<TABLE>
<CAPTION>
CG Pro Forma CG
Actual Adjustments * Entries Pro Forma
----------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Operating Revenues
Gas Sales ........................................ 0 0 0 0
Transportation ................................... 0 0 0 0
Other ............................................ 0 0 0 0
----------- ------------- ------------ ------------
Total Operating Revenues ........................... 0 0 0 0
----------- ------------- ------------ ------------
Operating Expenses
Products purchased ............................... 0 0 0 0
Operation ........................................ 96,161 (88,000) 0 8,161
Maintenance ...................................... 0 0 0 0
Depreciation and depletion ....................... 0 0 0 0
Other taxes ...................................... 161 0 0 161
----------- ------------- ------------ ------------
Total Operating Expenses ........................... 96,322 (88,000) 0 8,322
----------- ------------- ------------ ------------
Operating Income (Loss) ............................ (96,322) 88,000 0 (8,322)
----------- ------------- ------------ ------------
Other Income (Deductions)
Interest income and other, net ................... 391,918 (57,200) 50,890 385,608
Interest expense and related charges ............. (513) 0 (289,800) (290,313)
Reorganization items, net ........................ (2,037) 2,037 0 0
----------- ------------- ------------ ------------
Total Other Income (Deductions) .................... 389,368 (55,163) (238,910) 95,295
----------- ------------- ------------ ------------
Income before Income Taxes and Cummulative Effect
of Accounting Change ............................. 293,046 32,837 (238,910) 86,973
Income taxes ....................................... 54,417 25,133 (50,160) (29,390)
----------- ------------- ------------ ------------
Income before Cummulative Effect of Accounting
Change ........................................... 238,629 7,704 (188,750) 57,583
Cummulative Effect of Accounting for Postemployment
Benefits ......................................... (7) 0 0 (7)
----------- ------------- ------------ ------------
Net Income ......................................... 238,622 7,704 (188,750) 57,576
----------- ------------- ------------ ------------
Preferred Dividends ................................ 0 0 44,000 44,000
----------- ------------- ------------ ------------
Net Income on Common Equity ........................ 238,622 7,704 (232,750) 13,576
=========== ============= ============ ============
</TABLE>
* To eliminate bankruptcy-related items from the Pro Forma Income Statement.
<PAGE> 58
THE COLUMBIA GAS SYSTEM, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY UNAUDITED
ACTUAL and PRO FORMA 6(b)(2)(d)
Twelve Months Ended February 28, 1995
($000)
<TABLE>
<CAPTION>
CG Pro Forma CG
Actual Entries Pro Forma
----------- ------------ ------------
<S> <C> <C> <C>
COMMON STOCK
Balance at March 1, 1994 ........................................ 505,592 0 505,592
Common stock issued -
Long-term incentive plan ...................................... 41 0 41
----------- ------------ ------------
Balance at February 28, 1995 .................................... 505,633 0 505,633
----------- ------------ ------------
PREFERRED STOCK
Balance at March 1, 1994 ........................................ 0 0 0
Preferred stock issued .......................................... 0 400,000 400,000
----------- ------------ ------------
Balance at February 28, 1995 .................................... 0 400,000 400,000
----------- ------------ ------------
ADDITIONAL PAID IN CAPITAL
Balance at March 1, 1994 ........................................ 601,759 0 601,759
Common stock issued -
Long-term incentive plan ...................................... 68 0 68
Leveraged employee stock ownership plan (LESOP) ................. 0 (16,466) (16,466)
----------- ------------ ------------
Balance at February 28, 1995 .................................... 601,827 (16,466) 585,361
----------- ------------ ------------
RETAINED EARNINGS
Balance at March 1, 1994 ........................................ 288,304 0 288,304
Net income ...................................................... 238,622 (188,750) 49,872
Common stock dividends .......................................... 0 0 0
Preferred stock dividends ....................................... 0 (44,000) (44,000)
Other ........................................................... 0 (539,148) (539,148)
----------- ------------ ------------
Balance at February 28, 1995 .................................... 526,926 (771,898) (244,972)
----------- ------------ ------------
UNEARNED EMPLOYEE COMPENSATION
Balance at March 1, 1994 ........................................ (69,966) 69,966 0
----------- ------------ ------------
Balance at February 28, 1995 .................................... (69,966) 69,966 0
----------- ------------ ------------
TOTAL COMMON STOCK EQUITY ....................................... 1,564,420 (318,398) 1,246,022
=========== ============ ============
</TABLE>
<PAGE> 59
Unaudited
6(b)(2)(e)
(1 of 3)
THE COLUMBIA GAS SYSTEM, INC.
PRO FORMA ENTRIES
($000)
<TABLE>
<CAPTION>
DR CR
----------- -----------
<S> <C> <C>
1) Retained earnings 678,778
Deferred taxes 351,389
Liabilities subject to Chapter 11 1,030,167
To adjust the Chapter 11 liabilities to the
estimated balance at 12/31/95, the proposed date of
emergence.
2) Cash 450,000
Note Payable - Term (long term) 450,000
To record the issuance of the Term Facility
Notes at 7.5%.
3) Cash 600,000
Working capital loan 600,000
To record the issuance of the Revolving Facility
Notes at 7.5% less the portion applicable to
letters of credit.
4) Liabilities subject to Chapter 11 200,000
Preferred stock 200,000
To record the issuance of 11% preferred stock.
5) Liabilities subject to Chapter 11 200,000
DECS 200,000
To record the issuance of 11% DECS.
6) Liabilities subject to Chapter 11 2,100,000
Debentures 2,100,000
To record 10% debentures issued.
7) Liabilities subject to Chapter 11 877,392
Accounts receivable - intercompany
(cash investment) 322,900
Cash 554,492
To record the cash payment for remaining
liabilities subject to Chapter 11.
8) Treasury stock 35,400
Cash 35,400
To record purchase of 1.416 million
LESOP shares at $25 per share.
9) Liabilities subject to Chapter 11 35,400
Paid in capital 16,466
Accrued taxes 18,100
Unearned compensation 69,566
To reflect the loss on the LESOP loan guarantee.
10) Other receivables - TCO 130,521
Accrued taxes 45,700
Retained earnings 84,821
To record additional interest receivable from
TCO from 2/28/95 to 12/31/95.
</TABLE>
<PAGE> 60
(2 of 3)
<TABLE>
<S> <C> <C>
11) Secured mortgage bonds 1,454,000
Investment in common stock - TCO 1,060,000
Installment prom. notes - C/M (TCO) 39,857
Other investments (gas inventory loan) 437,833
Other receivables - TCO (debt & interest) 1,760,959
Cash 275,351
To record the recapitalization of TCO
and settlement of CG claims against TCO.
12) Retained earnings 5,525
Accrued taxes 2,975
Note receivable - TCO 8,500
To record the loss on unsecured debt from TCO.
13) Cash 24,699
Interest expense 1,000
Accounts receivable, noncurrent 25,699
To record return of Kotaneelee escrow and
establishment of a letter of credit.
14) Cash 164,000
Affiliated Accounts Payable 27,500
Other liabilities - payable to IRS 136,500
To record receipt of a tax payment from TCO which is
partially payable to the IRS and partially owed to
subsidiaries as a result of the tax allocation agreement.
15) Cash 35,400
Treasury stock 35,400
To reflect the sale of the Treasury stock.
16) Interest expense 33,800
Accrued taxes 11,800
Accrued interest 33,800
Tax expense 11,800
To record interest expense on the Term
Facility ($450.0 @ 7.5%).
17) Interest expense 45,000
Accrued taxes 15,750
Accrued interest 45,000
Tax expense 15,750
To record interest expense on the Revolving
Facility ($600.0 @ 7.5%).
18) Retained earnings (dividends) 22,000
Dividends payable 22,000
To record dividends on preferred stock @ 11%.
19) Retained earnings (dividends) 22,000
Dividends payable 22,000
To record dividends on DECS @ 11%.
</TABLE>
<PAGE> 61
(3 of 3)
<TABLE>
<S> <C> <C>
20) Interest expense 210,000
Accrued taxes 73,500
Accrued interest 210,000
Tax expense 73,500
To accrue interest on new debentures 10%.
21) Accrued interest 145,400
Tax expense 50,890
Interest income 145,400
To accrue interest income at 10% on new debt issued
by TCO to the parent Company.
22) Interest income and other 94,510
Retained earnings 34,176
Equity in undistributed retained earnings 34,176
To record the impact of TCO's retained earnings
adjustments and their equity earnings.
</TABLE>
<PAGE> 62
UNAUDITED
6(b)(3)(a)
COLUMBIA GAS TRANSMISSION CORPORATION (1 of 2)
CONSOLIDATED BALANCE SHEET
ACTUAL and PRO FORMA
As of February 28, 1995
($000)
<TABLE>
<CAPTION>
TCO Pro Forma TCO
Actual Entries Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Property, Plant and Equipment
Gas utility and other plant, at original cost .... 3,269,252 0 3,269,252
Accumulated depreciation and depletion ........... (1,387,969) 0 (1,387,969)
------------ ------------ ------------
Net Property, Plant, and Equipment ................. 1,881,283 0 1,881,283
------------ ------------ ------------
Investments and Other Assets
Accounts receivable - noncurrent ................. 204,817 0 204,817
Other ............................................ 438 0 438
------------ ------------ ------------
Total Investments and Other Assets ................. 205,255 0 205,255
------------ ------------ ------------
Current Assets
Cash and temporary cash investments .............. 1,313,307 (1,291,707) 21,600
Accounts receivable, net
Customers ...................................... 153,988 0 153,988
Affiliated ..................................... 41,323 0 41,323
Other .......................................... 92,011 0 92,011
Other inventories at average cost ................ 19,193 0 19,193
Prepayments ...................................... 24,402 0 24,402
Other ............................................ 4,257 0 4,257
------------ ------------ ------------
Total Current Assets ............................... 1,648,481 (1,291,707) 356,774
------------ ------------ ------------
Deferred Charges ................................... 237,743 0 237,743
------------ ------------ ------------
Total Assets ....................................... 3,972,762 (1,291,707) 2,681,055
============ ============ ============
</TABLE>
<PAGE> 63
COLUMBIA GAS TRANSMISSION CORPORATION (2 of 2)
CONSOLIDATED BALANCE SHEET
ACTUAL and PRO FORMA
As of February 28, 1995
($000)
<TABLE>
<CAPTION>
TCO Pro Forma TCO
Actual Entries Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock equity .............................. (470,701) 1,087,235 616,534
Long-term debt ................................... 0 1,454,000 1,454,000
------------ ------------ ------------
Total Capitalization ............................... (470,701) 2,541,235 2,070,534
------------ ------------ ------------
Current Liabilities
Debt obligations ................................. 663 0 663
Accounts and drafts payable ...................... 19,049 0 19,049
Affiliated accounts payable ...................... 1,322 0 1,322
Accrued taxes .................................... 70,416 (34,658) 35,758
Accrued interest ................................. 1,295 145,400 146,695
Estimated rate refunds ........................... 9,353 0 9,353
Estimated supplier obligations ................... 68,053 0 68,053
Deferred income taxes - current .................. 4,396 0 4,396
Other ............................................ 134,526 0 134,526
------------ ------------ ------------
Total Current Liabilities .......................... 309,073 110,742 419,815
------------ ------------ ------------
Liabilities Subject to Chapter 11 Proceedings ...... 3,943,684 (3,943,684) 0
------------ ------------ ------------
Other Liabilities and Deferred Credits
Postretirement benefits other than pensions ...... 56,044 0 56,044
Other ............................................ 134,662 0 134,662
------------ ------------ ------------
Total Other Liabilities and Deferred Credits ....... 190,706 0 190,706
------------ ------------ ------------
Total Capitalization and Liabilities ............... 3,972,762 (1,291,707) 2,681,055
============ ============ ============
</TABLE>
<PAGE> 64
COLUMBIA GAS TRANSMISSION CORPORATION UNAUDITED
6(b)(3)(b)
CONSOLIDATED STATEMENT OF CAPITALIZATION
ACTUAL and PRO FORMA
As of February 28, 1995
($000)
<TABLE>
<CAPTION>
Pro Forma TCO
Actual Entries Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
Common Stock Equity
Common Stock, The Columbia Gas System, Inc.,
$25 par value, authorized 15,000,000 shares,
outstanding 9,671,354 shares .................... 241,784 0 241,784
Additional paid in capital ....................... 70,289 1,060,000 1,130,289
Retained earnings ................................ (782,774) 27,235 (755,539)
------------ ------------ ------------
Total Common Stock Equity .......................... (470,701) 1,087,235 616,534
------------ ------------ ------------
Long-Term Debt - installment promissory notes ...... 0 1,454,000 1,454,000
------------ ------------ ------------
Total Capitalization ............................... (470,701) 2,541,235 2,070,534
============ ============ ============
</TABLE>
<PAGE> 65
COLUMBIA GAS TRANSMISSION CORPORATION UNAUDITED
6(b)(3)(c)
STATEMENT OF CONSOLIDATED INCOME
ACTUAL and PRO FORMA
Twelve Months Ended February 28, 1995
($000)
<TABLE>
<CAPTION>
TCO Pro Forma TCO
Actual Adjustments * Entries Pro Forma
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operating Revenues
Gas sales......................................... (42,918) 0 0 (42,918)
Transportation ................................... 551,731 0 0 551,731
Other ............................................ 169,015 0 0 169,015
------------ ------------ ------------ ------------
Total Operating Revenues ........................... 677,828 0 0 677,828
------------ ------------ ------------ ------------
Operating Expenses
Products purchased .............................. (18,988) 0 0 (18,988)
Operation ........................................ 364,597 0 0 364,597
Maintenance ...................................... 43,659 0 0 43,659
Depreciation and depletion ....................... 78,350 0 0 78,350
Other taxes ...................................... 45,726 0 0 45,726
------------ ------------ ------------ ------------
Total Operating Expenses ........................... 513,344 0 0 513,344
------------ ------------ ------------ ------------
Operating Income ................................... 164,484 0 0 164,484
------------ ------------ ------------ ------------
Other Income (Deductions)
Interest income and other, net ................... 30,188 0 0 30,188
Interest expense and related charges.............. (154,441) 144,900 (145,400) (154,941)
Reorganization items, net ........................ (7,466) 7,466 0 0
------------ ------------ ------------ ------------
Total Other Income (Deductions) .................... (131,719) 152,366 (145,400) (124,753)
------------ ------------ ------------ ------------
Income before Income Taxes and Cummulative Effect
of Accounting Change ............................. 32,765 152,366 (145,400) 39,731
Income taxes ....................................... 5,473 54,100 (56,000) 3,573
------------ ------------ ------------ ------------
Net Income ......................................... 27,292 98,266 (89,400) 36,158
============ ============ ============ ============
</TABLE>
* To eliminate bankruptcy-related items from the Pro Forma Income Statement.
<PAGE> 66
COLUMBIA GAS TRANSMISSION CORPORATION UNAUDITED
6(b)(3)(d)
CONSOLIDATED STATEMENTS OF COMMON STOCK EQUITY
ACTUAL and PRO FORMA
Twelve Months Ended February 28, 1995
($000)
<TABLE>
<CAPTION>
TCO Pro Forma TCO
Actual Entries Pro Forma
------------ ------------ ------------
COMMON STOCK
<S> <C> <C> <C>
Balance at March 1, 1994 ........................... 241,784 0 241,784
------------ ------------ ------------
Balance at February 28, 1995 ....................... 241,784 0 241,784
------------ ------------ ------------
ADDITIONAL PAID IN CAPITAL
Balance at March 1, 1994 ........................... 70,289 0 70,289
Common stock issued -
Capital Stock .................................... 0 1,060,000 1,060,000
------------ ------------ ------------
Balance at February 28, 1995 ....................... 70,289 1,060,000 1,130,289
------------ ------------ ------------
RETAINED EARNINGS
Balance at March 1, 1994 ........................... (810,066) 0 (810,066)
Net income ......................................... 27,292 (89,400) (62,108)
Common stock dividends ............................. 0 0 0
Other .............................................. 0 116,635 116,635
------------ ------------ ------------
Balance at February 28, 1995 ....................... (782,774) 27,235 (755,539)
------------ ------------ ------------
TOTAL COMMON STOCK EQUITY .......................... (470,701) 1,087,235 616,534
============ ============ ============
</TABLE>
<PAGE> 67
Unaudited
6(b)(3)(e)
COLUMBIA GAS TRANSMISSION CORPORATION
PRO FORMA ENTRIES
($000)
<TABLE>
<CAPTION>
Debit Credit
------- --------
<S> <C> <C>
1) Retained earnings 23,090
Accrued taxes 12,433
Liabilities subject to Chapter 11 35,523
To adjust the Chapter 11 liabilities to reflect
their estimated balance at 12/31/95, the proposed
date of emergence
2) Liabilities subject to Chapter 11 96,500
Accrued taxes 33,775
Retained earnings 62,725
To record the reduction in CG's unsecured debt claim
in accordance with the Plan of Reorganization.
3) Cash 529,851
Liabilities subject to Chapter 11 1,984,149
Stockholder equity 1,060,000
Long-term debt 1,454,000
To record the recapitalization of TCO by CG
and the settlement of CG's secured debt,
including interest.
4) Liabilities subject to Chapter 11 1,898,558
Cash 1,898,558
To record the payment of the remaining
Chapter 11 liabilities.
5) Cash 77,000
Retained earnings 77,000
To record increase in cash between
2/28/95 and 12/31/95.
6) Interest expense 145,400
Accrued taxes 56,000
Accrued interest 145,400
Tax expense 56,000
To accrue interest expense at 10% on new debt.
</TABLE>
<PAGE> 68
PAGE 1
EXHIBIT INDEX
(a) Exhibits
A-1 The Columbia Gas System, Inc. Draft Restated Certificate of
Incorporation
B-1 Indenture and Deed of Trust between Columbia Gas
Transmission Corporation and Wilmington Trust Company, as
Trustee Dated August 30, 1985, as amended filed herewith by
incorporation by reference to Exhibit E to Joint
Application-Declaration (File No. 70-7106)
B-2 Form of The Columbia Gas System, Inc. Indenture
B-3 Form of Supplemental Indenture
B-4 Draft Certificate of Designation for DECS
B-5 Draft Certificate of Designation for Preferred Stock
D-1 Columbia Gas Transmission Corporation Plan of Reorganization
and Disclosure Statement (filed herewith by incorporation by
reference to the Plan of Reorganization and Disclosure
Statement filed in File No. 1-1098 on June 16, 1995)
D-2 The Columbia Gas System, Inc. Plan of Reorganization and
Disclosure Statement (filed herewith by incorporation by
reference to the Plan of Reorganization and Disclosure
Statement filed in File No. 1-1098 on June 16, 1995)
F Opinion of Counsel (to be filed by amendment)
G Financial Data Schedules
H Proposed Notice
I-1 The Columbia Gas System, Inc. and Subsidiaries projected
Income Statement, Balance Sheet and Cash Flow Statement for
the years 1995-1999
I-2 Columbia Gas Transmission Corporation projected Income
Statement, Balance Sheet and Cash Flow Statement for the
years 1995-1999
I-3 Analysis of Sources and Uses of Funds for Columbia Plan
I-4 New Indenture Securities Pricing Formula
I-5 DECS Pricing Formula
<PAGE> 69
PAGE 2
I-6 Preferred Stock Pricing Formula
<PAGE> 1
PAGE 1
EXHIBIT A-1
RESTATED
CERTIFICATE OF INCORPORATION
OF
THE COLUMBIA GAS SYSTEM, INC.
The Columbia Gas System, Inc., a corporation organized and existing
under the laws of the State of Delaware, hereby certifies as follows: The name
of the corporation is The Columbia Gas System, Inc. The Columbia Gas System,
Inc. was originally incorporated under the name Columbia Gas & Electric
Corporation and the original Certificate of Incorporation of the Corporation
was filed with the Secretary of State of the State of Delaware on September 30,
1926. This Restated Certificate of Incorporation was duly adopted pursuant to
Sections 103, 242 and 245 of the General Corporation Law of the State of
Delaware. Upon filing with the Secretary of State, in accordance with Section
103, this Restated Certificate of Incorporation amends and restates and shall
henceforth supersede the original Certificate of Incorporation and shall, as it
may thereafter be amended in accordance with its terms and applicable law, be
the Certificate of Incorporation of the Corporation. The text of the
Certificate of Incorporation as heretofore amended or supplemented is hereby
amended and restated to read in its entirety as follows:
Article I
Name
The name of this Corporation is THE COLUMBIA GAS SYSTEM, INC.
Article II
Registered Office
<PAGE> 2
PAGE 2
The registered office of the Corporation in the State of Delaware is
located at The Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent is The
Corporation Trust Company, and the address of said registered agent is
Corporation Trust Center, 1209 Orange Street, in said city.
Article III
Statement of Purpose
The nature of the business to be conducted and the purposes of the
Corporation are to engage in any lawful act or activity for which corporations
may be organized under the Delaware General Corporation Law, as amended.
Article IV
Classes of Capital Stock
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is One hundred forty million
(140,000,000), of which Forty million (40,000,000) shares of the par value of
Ten dollars ($10.00) each are to be of a class designated Preferred Stock and
One hundred million (100,000,000) shares of the par value of Ten dollars
($10.00) each are to be of a class designated Common Stock.
To the extent required by Section 1123(a)(6) of the U.S. Bankruptcy
Code (11 U.S.C Section 1123(a)(6)) no nonvoting equity securities of the
Corporation shall be issued. This provision shall have no further force and
effect beyond that required by Section 1123(a)(6) and is applicable only for so
long as such Section is in effect and applicable to the Corporation.
A. Common Stock
1. Subject to the powers, preferences and other special rights
afforded Preferred Stock by the provisions of this Article IV or resolutions
adopted pursuant hereto, the holders of the Common Stock shall be entitled to
receive to the extent permitted by Delaware law, such dividends as may from
time to time be declared by the Board of Directors.
2. Except as otherwise required by Delaware law and as otherwise
provided in this Article IV and resolutions adopted pursuant hereto with
respect to Preferred Stock, and subject to the provisions of the Bylaws of the
Corporation, as from time to time amended, with respect to the closing of the
transfer books and the fixing of a record date
<PAGE> 3
PAGE 3
for the determination of stockholders entitled to vote, the holders of the
Common Stock shall exclusively possess voting power for the election of
directors and for all other purposes, and the holders of the Preferred Stock
shall have no voting power and shall not be entitled to any notice of any
meeting of stockholders.
3. At all elections of directors by stockholders of the Corporation,
each holder of Common Stock, and each holder of Preferred Stock, if entitled to
vote at such election, shall be entitled to as many votes as shall equal the
number of his shares of Common Stock or Preferred Stock, as the case may be,
multiplied by the number of directors for whom he as such holder shall then be
entitled to vote, and he may cast all of such votes for one of such directors
or may distribute them among any two or more of them as he may see fit.
4. Any action required or permitted to be taken by the stockholders
of the Corporation must be effected at an annual or special meeting of
stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders. Except as otherwise required by law and subject
to the rights of the holders of any class or any series of Preferred Stock,
special meetings of stockholders of the Corporation may be called only by the
Board of Directors pursuant to a resolution adopted by a majority of the total
number of authorized directors (whether or not there exist any vacancies in
previously authorized directorships at the time any such resolution is
presented to the Board for adoption).
5. In the event of the voluntary or involuntary liquidation,
dissolution, distribution of assets or winding-up of the Corporation, after
distribution in full of the preferential amounts, if any, to be distributed to
the holders of shares of Preferred Stock, as set forth in the resolutions
adopted with respect to such series under this Article IV, holders of Common
Stock shall be entitled to receive all of the remaining assets of the
Corporation of whatever kind available for distribution to the stockholders
ratably and in proportion to the number of shares of Common Stock held by them
respectively. The Board of Directors may distribute in kind to the holders of
Common Stock such remaining assets of the Corporation or may sell, transfer,
otherwise dispose of all or any part of such remaining assets to any other
corporation, trust or other entity and receive payment therefor in cash, stock
or obligations of such other corporation, trust or other entity, or a
combination thereof, and may set all or make any part of the consideration so
received and distributed or any balance thereof in kind to holders of Common
Stock. The merger or consolidation of the Corporation into or with any other
corporation, or the merger of any other corporation into it, or any purchase or
redemption of shares of stock of the Corporation of any class, shall not be
deemed to be a dissolution, liquidation, or winding-up of the Corporation for
the purposes of this Article IV.
<PAGE> 4
PAGE 4
B. Preferred Stock
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, of the classes of stock of
the Corporation which are fixed by the Certificate of Incorporation, and the
express grant of authority to the Board of Directors of the Corporation to fix
by resolution or resolutions the designations and the powers, preferences and
rights, and the qualifications, limitations or restrictions thereof, of the
shares of Preferred Stock, which are not fixed by the Certificate of
Incorporation, are as follows:
1. The Preferred Stock may be issued from time to time in any amount,
not exceeding in the aggregate the total number of shares of Preferred Stock
hereinabove authorized, as Preferred Stock of one or more series, as
hereinafter provided. All shares of any one series of Preferred Stock shall be
alike in every particular, each series thereof shall be distinctively
designated by letter or descriptive words, and all series of Preferred Stock
shall rank equally and be identical in all respects except as permitted by the
provisions of Subsection B.2 of this Article IV.
2. Authority is hereby expressly granted to and vested in the Board
of Directors from time to time to issue the Preferred Stock as Preferred Stock
of any series and in connection with the creation of each such series to fix,
by the resolution or resolutions providing for the issue of shares thereof, the
voting powers, designations, preferences and relative, participating, optional
or other special rights, and the qualifications, limitations or restrictions
thereof, if any, of such series, to the full extent now or hereafter permitted
by the laws of the State of Delaware. Pursuant to the foregoing general
authority vested in the Board of Directors, but not in limitation of the powers
conferred on the Board of Directors thereby and by the laws of the State of
Delaware, the Board of Directors is expressly authorized to determine with
respect to each series of Preferred Stock:
(a) the designation of such series and number of shares
constituting such series;
(b) the dividend rate or amount of such series, the payment
dates for dividends on shares of such series, the status
of such dividends as cumulative or non-cumulative, the
date from which dividends on shares of such series, if
cumulative, shall be cumulative, and the status of such as
participating or non-participating after the payment of
dividends as to which such shares are entitled to any
preference;
(c) the price or prices (which amount may vary under different
conditions or at different dates) at which, and the times,
terms and conditions on
<PAGE> 5
PAGE 5
which, the shares of such series may be redeemed at the
option of the Corporation;
(d) whether or not the shares of such series shall be made
optionally or mandatorily convertible into, or
exchangeable for, shares of any other class or classes or
of any other series of the same or any other class or
classes of stock of the Corporation or other securities
and, if made so convertible or exchangeable, the
conversion price or prices, or the rates of exchange, and
the adjustments thereof, if any, at which such conversion
or exchange may be made and any other terms and conditions
of such conversion or exchange;
(e) whether or not the shares of such series shall be entitled
to the benefit of a retirement or sinking fund to be
applied to the purchase or redemption of shares of such
series, and if so entitled, the amount of such fund and
the manner of its application, including the price or
prices at which shares of such series may be redeemed or
purchased through the application of such fund;
(f) whether or not the issue of any additional shares of such
series or any future series in addition to such series or
of any shares of any other class of stock of the
Corporation shall be subject to restrictions and, if so,
the nature thereof;
(g) the rights and preferences, if any, of the holders of such
series of Preferred Stock upon the voluntary or
involuntary liquidation, dissolution or winding-up of the
Corporation, and the status of the shares of such series
as participating or non-participating after the
satisfaction of any such rights and preferences;
(h) the full or limited voting rights, if any, to be provided
for shares of such series, in addition to the voting
rights provided by law; and
(i) any other relative powers, preferences and participating,
optional or other special rights and the qualifications,
limitations or restrictions thereof, of shares of such
series;
in each case, so far as not inconsistent with the provisions of
this Certificate of Incorporation or the Delaware General
Corporation Law then in effect.
<PAGE> 6
PAGE 6
Article V
Board of Directors
A. Election and Removal of Directors
1. The Board of Directors shall consist of not less than thirteen
(13) or more than eighteen (18) persons, the exact number to be fixed from time
to time exclusively by the Board of Directors pursuant to a resolution adopted
by a majority of the total number of authorized directors (whether or not there
exist any vacancies in previously authorized directorships at the time any such
resolution is presented to the Board for adoption), provided, however, this
provision shall not act to limit Board size in the event a class or classes of
Preferred Stock are entitled to elect directors to the exclusion of holders of
Common Stock. The directors shall be classified, with respect to the time for
which they severally hold office, into three classes, as nearly equal in number
as possible, as may be provided in the manner specified in the Bylaws, Class I
Directors to hold office initially for a term expiring at the annual meeting of
stockholders to be held in 1997, Class II Directors to hold office initially
for a term expiring at the annual meeting of stockholders to be held in 1998,
and Class III Directors to hold office initially for a term expiring at the
annual meeting of stockholders to be held in 1999, with the members of each
class to hold office until their successors are duly elected and qualified. At
each annual meeting of the stockholders of the Corporation, the successors to
the class of directors whose term expires at that meeting shall be elected to
hold office for a term expiring at the annual meeting of stockholders held in
the third year following the year of their election.
2. Notwithstanding the foregoing and except as otherwise provided by
law, whenever the holders of any series of the Preferred Stock shall have the
right (to the exclusion of holders of Common Stock) to elect directors of the
Corporation pursuant to the provisions of Article IV and any resolution adopted
pursuant thereto, the election of such directors of the Corporation shall be
governed by the terms and provisions of said resolutions and such directors so
elected shall not be divided into classes pursuant to this Subsection A.2 of
Article V and shall be elected to hold office for a term expiring at the annual
meeting of stockholders held in the first year following their election or, if
such right of the holders of the Preferred Stock is terminated, for a term
expiring in accordance with the provisions of such resolutions.
3. Newly-created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause may be filled only by a majority vote of the directors
then in office, even though less than a quorum of the Board of Directors,
acting at a regular or special meeting. If any applicable provision of the
Delaware General Corporation Law or any resolution adopted pursuant to Article
IV
<PAGE> 7
PAGE 7
expressly confers power on stockholders to fill such a directorship at a
special meeting of stockholders, such a directorship may be filled at such a
meeting only by the affirmative vote of at least 80 percent of the combined
voting powers of the outstanding shares of stock of the Corporation entitled to
vote generally; provided, however, that when (a) pursuant to the provisions of
Article IV or any resolutions adopted pursuant thereto, the holders of any
series of Preferred Stock have the right (to the exclusion of holder of the
Common Stock), and have exercised such right, to elect directors and (b)
Delaware General Corporation Law or any such resolution expressly confers on
stockholders voting rights as aforesaid, if the directorship to be filled had
been occupied by a director elected by the holders of Common Stock, then such
directorship shall be filled by an 80 percent vote as aforesaid, but if such
directorship to be filled had been elected by holders of Preferred Stock, then
such directorship shall be filled in accordance with the applicable resolutions
adopted under Article IV. Any director elected in accordance with the two
preceding sentences shall hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected and
qualified unless such director was elected by holders of Preferred Stock
(acting to the exclusion of the holders of Common Stock), in which case such
director's term shall expire in accordance with the applicable resolutions
adopted pursuant to Article IV. No decrease in the number of authorized
directors constituting the entire Board of Directors shall shorten the term of
any incumbent director, except, as otherwise provided in the applicable
resolutions adopted pursuant to Article IV, with respect to directorships
created pursuant to one or more series of Preferred Stock.
4. Subject to the rights of the holders of any class or series of
Preferred Stock to elect directors under specified circumstances, any director
or directors, may be removed from office at any time, but only for cause and
only by the affirmative vote of the holders of at least 80 percent of the
combined voting power of all of the then-outstanding shares of stock of the
Corporation entitled to vote generally, voting together as a single class (it
being understood that for all purposes of this Article V, each share of
Preferred Stock shall have the number of votes, if any, granted to it pursuant
to this Certificate of Incorporation or any designation of terms of any class
or series of Preferred Stock made pursuant to this Certificate of
Incorporation).
5. Notwithstanding any other provision of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser
vote or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the stock of the Corporation required by law,
this Certificate of Incorporation or any Preferred Stock certificate of
designation, the affirmative vote of at least 80 percent of the total number of
authorized directors (whether or not there exist any vacancies in previously
authorized
<PAGE> 8
PAGE 8
directorships at the time any such alteration, amendment or repeal is presented
to the Board for adoption), shall be required to alter, amend or repeal this
Article V, or any provision hereof.
B. Liability, Indemnification and Insurance
1. Limitation on Liability. To the fullest extent that the Delaware
General Corporation Law as it exists on the date hereof or as it may hereafter
be amended permits the limitation or elimination of the personal liability of
directors, no director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director. No amendment to or repeal of this Section B.1 shall apply to or have
any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
2. Right to Indemnification. The Corporation shall to the fullest
extent permitted by applicable law as then in effect indemnify any person (the
"Indemnitee") who was or is involved in any manner (including, without
limitation, as a party or a witness) or is threatened to be made so involved in
any threatened, pending or completed investigation, claim, action, suit or
proceeding, whether civil, criminal, administrative or investigative (including
without limitation, any action, suit or proceeding by or in the right of the
Corporation to procure a judgment in its favor) (a "Proceeding") by reason of
the fact that such person is or was a director, officer, employee or agent of
the Corporation, or of the Columbia Gas System Service Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise (including, without limitation, any employee benefit plan) against
all expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such Proceeding. Such indemnification shall be a contract right and shall
include the right to receive payment of any expenses incurred by the Indemnitee
in connection with such Proceeding in advance of its final disposition,
consistent with the provisions of applicable law as then in effect.
3. Insurance, Contracts and Funding. The Corporation may purchase and
maintain insurance to protect itself and any Indemnitee against any expenses,
judgments, fines and amounts paid in settlement as specified in Subsection B.2
of this Section B or incurred by any Indemnitee in connection with any
Proceeding referred to in Subsection B.1 of this Section B, to the fullest
extent permitted by applicable law as then in effect. The Corporation may
enter into contracts with any director, officer, employee or agent of the
Corporation in furtherance of the provisions of this Section B and may create a
trust fund, grant a security interest or use other means (including, without
limitation, a letter of
<PAGE> 9
PAGE 9
credit) to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this Section B.
4. Indemnification; No Exclusive Right. The right of indemnification
provided in this Section B shall not be exclusive of any other rights to which
those seeking indemnification may otherwise be entitled, and the provisions of
this Section B shall inure to the benefit of the heirs and legal
representatives of any person entitled to indemnity under this Section B and
shall be applicable to Proceedings commenced or continuing after the adoption
of this Section B, whether arising from acts or omissions occurring before or
after such adoption.
5. Advancement of Expenses; Procedures; Presumptions and Effect of
Certain Proceedings; Remedies. In furtherance, but not in limitation of the
foregoing provisions, the following procedures, presumptions and remedies shall
apply with respect to advancement of expenses and the right to indemnification
under this Section B:
(a) Advancement of Expenses. All reasonable expenses incurred by
or on behalf of the Indemnitee in connection with any Proceeding shall
be advanced to the Indemnitee by the Corporation within twenty (20) days
after the receipt by the Corporation of a statement or statements from
the Indemnitee requesting such advance or advances from time to time,
whether prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the expenses incurred
by the Indemnitee and, if required by law at the time of such advance,
shall include or be accompanied by an undertaking by or on behalf of the
Indemnitee to repay the amounts advanced if it should ultimately be
determined that the Indemnitee is not entitled to be indemnified against
such expenses pursuant to this Section B .
(b) Procedure for Determination of Entitlement to Indemnification.
(i) To obtain indemnification under this Section B, an
Indemnitee shall submit to the Secretary of the Corporation a
written request, including such documentation and information as is
reasonably available to the Indemnitee and reasonably necessary to
determine whether and to what extent the Indemnitee is entitled to
indemnification (the "Supporting Documentation"). The
determination of the Indemnitee's entitlement to indemnification
shall be made not later than sixty (60) days after receipt by the
Corporation of the written request for indemnification together
with the Supporting Documentation. The Secretary of the
Corporation shall, promptly upon receipt of such a request for
indemnification, advise the Board of Directors in writing that the
Indemnitee has requested indemnification.
<PAGE> 10
PAGE 10
(ii) The Indemnitee's entitlement to indemnification under this
Section B shall be determined in one of the following ways: (A) by
a majority vote of the Disinterested Directors (as hereinafter
defined), even if they constitute less than a quorum of the Board;
(B) by a written opinion of Independent Counsel (as hereinafter
defined) if (x) a Change of Control (as hereinafter defined) shall
have occurred and the Indemnitee so requests or (y) if there are no
Disinterested Directors or a majority of such Disinterested
Directors so directs; (C) by the stockholders of the Corporation
(but only if a majority of the Disinterested Directors, presents
the issue of entitlement to indemnification to the stockholders for
their determination); or (D) as provided in Section B.5(c) .
(iii) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to
Section B.5(b)(ii), a majority of the Disinterested Directors shall
select the Independent Counsel (except that if there are no
Disinterested Directors, the Corporation's Chief Legal Officer
shall select the Independent Counsel), but only an Independent
Counsel to which the Indemnitee does not reasonably object;
provided, however, that if a Change of Control shall have occurred,
the Indemnitee shall select such Independent Counsel, but only an
Independent Counsel to which the Board of Directors does not
reasonably object.
(iv) The only basis upon which a finding of no entitlement to
indemnification may be made is that indemnification is prohibited
by law.
(c) Presumptions and Effect of Certain Proceedings. Except as
otherwise expressly provided in this Section B, if a Change of Control
shall have occurred, the Indemnitee shall be presumed to be entitled to
indemnification under this Section B upon submission of a request for
indemnification together with the Supporting Documentation in accordance
with Section B.5(b)(i), and thereafter the Corporation shall have the
burden of proof to overcome that presumption in reaching a contrary
determination. In any event, if the person or persons empowered under
Section B.5(b) to determine entitlement to indemnification shall not
have been appointed or shall not have made a determination within sixty
(60) days after receipt by the Corporation of the request therefor
together with the Supporting Documentation, the Indemnitee shall be
deemed to be entitled to indemnification and the Indemnitee shall be
entitled to such indemnification unless (A) the Indemnitee
misrepresented or failed to disclose a material fact in making the
request for indemnification or in the Supporting Documentation or (B)
such indemnification is prohibited by law. The termination of any
Proceeding described in Section B.2, or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, adversely
affect the right of the
<PAGE> 11
PAGE 11
Indemnitee to indemnification or create a presumption that the
Indemnitee did not act in good faith and in a manner which the
Indemnitee reasonably believed to be in or not opposed to the best
interests of the Corporation or, with respect to any criminal
Proceeding, that the Indemnitee had reasonable cause to believe that the
Indemnitee's conduct was unlawful.
(d) Remedies of Indemnitee.
(i) In the event that a determination is made, pursuant to
Section B.5(b) that the Indemnitee is not entitled to
indemnification under this Section B, (A) the Indemnitee shall be
entitled to seek an adjudication of his entitlement to such
indemnification either, at the Indemnitee's sole option, in (x) an
appropriate court of the State of Delaware or any other court of
competent jurisdiction or (y) an arbitration to be conducted by a
single arbitrator pursuant to the rules of the American Arbitration
Association; (B) any such judicial Proceeding or arbitration shall
be de novo and the Indemnitee shall not be prejudiced by reason of
such adverse determination; and (C) in any such judicial Proceeding
or arbitration the Corporation shall have the burden of proving
that the Indemnitee is not entitled to indemnification under this
Section B.
(ii) If a determination shall have been made or deemed to have
been made, pursuant to Section B.5(b) or (c), that the Indemnitee
is entitled to indemnification, the Corporation shall be obligated
to pay the amounts constituting such indemnification within five
(5) days after such determination has been made or deemed to have
been made and shall be conclusively bound by such determination
unless (A) the Indemnitee misrepresented or failed to disclose a
material fact in making the request for indemnification or in the
Supporting Documentation or (B) such indemnification is prohibited
by law. In the event that (x) advancement of expenses is not
timely made pursuant to Section B.5(a) or (y) payment of
indemnification is not made within five (5) days after a
determination of entitlement to indemnification has been made or
deemed to have been made pursuant to Section B.5(b) or (c), the
Indemnitee shall be entitled to seek judicial enforcement of the
Corporation's obligation to pay to the Indemnitee such advancement
of expenses or indemnification. Notwithstanding the foregoing, the
Corporation may bring an action, in an appropriate court in the
State of Delaware or any other court of competent jurisdiction,
contesting the right of the Indemnitee to receive indemnification
hereunder due to the occurrence of an event described in subclause
(A) or (B) of this clause (ii) (a "Disqualifying Event"); provided,
however, that in any such action the Corporation shall have the
burden of proving the occurrence of such Disqualifying Event.
<PAGE> 12
PAGE 12
(iii) The Corporation shall be precluded from asserting in any
judicial Proceeding or arbitration commenced pursuant to this
Section B.5(d) that the procedures and presumptions of this Section
B are not valid, binding and enforceable and shall stipulate in any
such court or before any such arbitrator that the Corporation is
bound by all the provisions of this Section B.
(iv) In the event that the Indemnitee, pursuant to this Section
B.5(d), seeks a judicial adjudication of or an award in arbitration
to enforce his rights under, or to recover damages for breach of,
this Section B, the Indemnitee shall be entitled to recover from
the Corporation, and shall be indemnified by the Corporation
against, any expenses actually and reasonably incurred by the
Indemnitee if the Indemnitee prevails in such judicial adjudication
or arbitration. If it shall be determined in such judicial
adjudication or arbitration that the Indemnitee is entitled to
receive part but not all of the indemnification or advancement of
expenses sought, the expenses incurred by the Indemnitee in
connection with such judicial adjudication or arbitration shall be
prorated accordingly.
(e) Definitions. For purposes of this Section B.5:
(i) "Change in Control" means (A) so long as the Public Utility
Holding Company Act of 1935 is in effect, any "company" becoming a
"holding company" in respect to the Corporation or any
determination by the Securities and Exchange Commission that any
"person" should be subject to the obligations, duties, and
liabilities if imposed by said Act by virtue of his, hers or its
influence over the management or policies of the Corporation, or
(B) whether or not said Act is in effect a change in control of the
Corporation of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934 (the "Act"), whether or
not the Corporation is then subject to such reporting requirement;
provided that, without limitation, such a change in control shall
be deemed to have occurred if (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Corporation
representing ten percent or more of the combined voting power of
the Corporation's then outstanding securities without the prior
approval of at least two-thirds of the members of the Board of
Directors in office immediately prior to such acquisition; (ii) the
Corporation is a party to a merger, consolidation, sale of assets
or other reorganization, or a proxy contest, as a consequence of
which members of the Board of Directors in office immediately prior
to such transaction or event constitute less than a majority of the
Board of
<PAGE> 13
PAGE 13
Directors thereafter; or (iii) during any period of two consecutive
years, individuals who at the beginning of such period constituted
the Board of Directors (including for this purpose any new director
whose election or nomination for election by the Corporation's
stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning
of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
(ii) "Disinterested Director" means a director of the
Corporation who is not or was not a party to the Proceeding in
respect of which indemnification is sought by the Indemnitee.
(iii) "Independent Counsel" means a law firm or a member of a
law firm that neither presently is, nor in the past five years has
been, retained to represent: (A) the Corporation or the Indemnitee
in any matter material to either such party or (B) any other party
to the Proceeding giving rise to a claim for indemnification under
this Section B. Notwithstanding the foregoing, the term
"Independent Counsel" shall not include any person who, under the
applicable standards of professional conduct then prevailing under
the Delaware law, would have a conflict of interest in representing
either the Corporation or the Indemnitee is an action to determine
the Indemnitee's rights under this Section B.
6. Severability. If any provision or provisions of this Section B
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (i) the validity, legality and enforceability of the remaining
provision of this Section B (including, without limitation, all portions of any
paragraph of this Section B containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and (ii)
to the fullest extent possible, the provisions of this Section B (including,
without limitation, all portions of any paragraph of this Section B containing
any such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
7. Successor Laws, Regulations and Agencies. Reference herein to laws,
regulations or agencies shall be deemed to include all amendments thereof,
substitutions therefor and successors thereto.
<PAGE> 14
PAGE 14
Article VI
General Powers of the Board of Directors
A. Bylaws
The Board of Directors shall have the power to make, alter, amend and
repeal the Bylaws of the Corporation in such form and with such terms as the
Board may determine, subject to the power granted to stockholders to alter or
repeal the Bylaws provided under Delaware law; provided, however, that,
notwithstanding any other provision of this Certificate of Incorporation or any
provision of law which might otherwise permit a lesser vote or no vote the
affirmative vote of at least 80 percent of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such alteration, amendment or repeal is presented
to the Board for adoption), shall be required to alter, amend or repeal any
provision of the Bylaws which is to the same effect as any one or more sections
of this Article VI.
B. Charter Amendments
Subject to the provisions hereof, the Corporation, through its Board of
Directors, reserves the right at any time, and from time to time, to amend,
alter, repeal or rescind any provision contained in this Restated Certificate
of Incorporation in the manner now or hereinafter prescribed by law, and any
other provisions authorized by Delaware law at the time enforced may be added
or inserted, in the manner now or hereinafter prescribed by law; and any 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 hereinafter
amended are granted subject to the rights reserved in this Article.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been
signed under the Seal of the Corporation this _____ day of ________________ ,
1995.
[SEAL] THE COLUMBIA GAS SYSTEM, INC.
Attest:
BY
- ----------------------------- -----------------------------
Secretary Chairman of the Board,
President and Chief Executive
Officer
<PAGE> 1
PAGE 1
EXHIBIT B-2 DRAFT
================================================================================
THE COLUMBIA GAS SYSTEM, INC.
Senior Debt Securities
------------------------
INDENTURE
Dated as of _________, 19__
------------------------
------------------------------------------
Trustee
================================================================================
<PAGE> 2
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TABLE OF CONTENTS 1/
<TABLE>
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<S> <C> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [1]
ARTICLE 1
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [1]
SECTION 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [8]
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [8]
SECTION 1.04. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [8]
ARTICLE 2
The Securities
--------------
SECTION 2.01. Amount; Issuable in Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . [9]
SECTION 2.02. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [11]
SECTION 2.03. Execution, Authentication and
Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [11]
SECTION 2.04. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [13]
SECTION 2.05. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . [14]
SECTION 2.06. Paying Agent to Hold Money in Trust. . . . . . . . . . . . . . . . . . . . . . . . [14]
SECTION 2.07. Securityholder Lists. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [15]
SECTION 2.08. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [15]
SECTION 2.09. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [17]
SECTION 2.10. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [18]
SECTION 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [18]
SECTION 2.12. Default Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [19]
</TABLE>
____________________
1/ The Table of Contents is included herein for convenience only and is not to
be considered a part of the Indenture.
<PAGE> 3
PAGE 3
<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE 3
Covenants
---------
SECTION 3.01. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [19]
SECTION 3.02. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [19]
SECTION 3.03. Limitation on Secured Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . [19]
SECTION 3.04. Limitation on Funded Debt or Preferred Stock
of Significant Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . [21]
SECTION 3.05. Compliance Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [22]
ARTICLE 4
Successor Company
-----------------
SECTION 4.01. When Company May Merge or Transfer
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [23]
SECTION 4.02. Successor Entity Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . [23]
ARTICLE 5
Defaults and Remedies
---------------------
SECTION 5.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [24]
SECTION 5.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [25]
SECTION 5.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [25]
SECTION 5.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [26]
SECTION 5.05. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [26]
SECTION 5.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [26]
SECTION 5.07. Rights of Holders To Receive Payment . . . . . . . . . . . . . . . . . . . . . . . [27]
SECTION 5.08. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . [27]
SECTION 5.09. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . [27]
SECTION 5.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [27]
SECTION 5.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [28]
SECTION 5.12. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . [28]
</TABLE>
<PAGE> 4
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<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE 6
Trustee
-------
SECTION 6.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [28]
SECTION 6.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [30]
SECTION 6.03. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . [30]
SECTION 6.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [30]
SECTION 6.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [30]
SECTION 6.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . [31]
SECTION 6.07. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . [31]
SECTION 6.08. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [32]
SECTION 6.09. Successor Trustee by Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . [33]
SECTION 6.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . [33]
SECTION 6.11. Preferential Collection of Claims
Against Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [33]
ARTICLE 7
Discharge of Indenture; Defeasance
----------------------------------
SECTION 7.01. Discharge of Liability on
Securities; Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [33]
SECTION 7.02. Conditions to Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [34]
SECTION 7.03. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . [35]
SECTION 7.04. Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [35]
ARTICLE 8
Amendments
----------
SECTION 8.01. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . [35]
SECTION 8.02. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [36]
SECTION 8.03. Compliance with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . . [37]
SECTION 8.04. Revocation and Effect of Consent
and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [37]
SECTION 8.05. Notation on or Exchange of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [38]
SECTION 8.06. Trustee To Sign Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . [38]
</TABLE>
<PAGE> 5
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<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE 9
Redemption
----------
SECTION 9.01. Applicability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [38]
SECTION 9.02. Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [38]
SECTION 9.03. Selection of Securities To Be
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [39]
SECTION 9.04. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [39]
SECTION 9.05. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . [40]
SECTION 9.06. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . [40]
SECTION 9.07. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . [40]
ARTICLE 10
Sinking Funds
-------------
SECTION 10.01. Applicability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [40]
SECTION 10.02. Satisfaction of Sinking
Fund Payment with Securities . . . . . . . . . . . . . . . . . . . . . . . . . . [41]
SECTION 10.03. Redemption of Securities
for Sinking Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [41]
ARTICLE 11
Miscellaneous
-------------
SECTION 11.01. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . [42]
SECTION 11.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [42]
SECTION 11.03. Communication by Holders with Other
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [43]
SECTION 11.04. Certificate and Opinion as to
Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [43]
SECTION 11.05. Statements Required in Certificate
or Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [43]
SECTION 11.06. When Securities Disregarded . . . . . . . . . . . . . . . . . . . . . . . . . . . . [44]
SECTION 11.07. Rules by Trustee, Paying Agent and
Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [44]
SECTION 11.08. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [44]
SECTION 11.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [44]
SECTION 11.10. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . [44]
SECTION 11.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [44]
SECTION 11.12. Multiple Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [45]
SECTION 11.13. Table of Contents; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . [45]
</TABLE>
<PAGE> 6
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<TABLE>
<CAPTION>
Page
----
<S> <C>
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [45]
EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [45]
ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [46]
</TABLE>
<PAGE> 7
PAGE 7
THIS INDENTURE dated ____________________________ between The
Columbia Gas System, Inc., a corporation duly organized and existing under the
laws of the State of Delaware (hereinafter called the "Company"), having its
principal office at 20 Montchanin Road, Wilmington, Delaware 19807-0020, and
____________________________________, a ___________________ corporation
(hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of
its Securities (hereinafter called the "Securities") of substantially the tenor
and amount hereinafter set forth, and to provide therefor the Company has duly
authorized the execution and delivery of this Indenture.
All things necessary to make the Securities, when executed
by the Company and authenticated and delivered by the Trustee hereunder and
duly issued by the Company, the valid obligations of the Company, and to make
this Indenture a valid agreement of the Company, in accordance with their and
its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the holders thereof, it is mutually covenanted and agreed,
for the equal and proportionate benefit of all holders of the Securities as
follows:
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Affiliate" of any specified person means any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this
definition, "control" when used with respect to any specified person means the
power to direct the management and policies of such person directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board
of Directors in respect hereof.
"Board Resolution" means a resolution duly adopted by the
Board of Directors of the Company, a copy of which shall be certified by the
Secretary or an Assistant Secretary, as being in full force and effect on the
date of such certification and delivered to the Trustee.
<PAGE> 8
PAGE 8
"Business Day" means each day which is not a Legal Holiday.
"Bylaws" means the "Bylaws of The Columbia Gas System,
Inc." as amended from time to time.
"Capital Lease Obligations" of a person means any
obligation which is required to be classified and accounted for as a capital
lease obligation on the balance sheet of such person prepared in accordance
with generally accepted accounting principles; the amount of such obligation
shall be the capitalized amount thereof, determined in accordance with
generally accepted accounting principles; and the stated maturity thereof shall
be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
"Capital Stock" means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock, including any Preferred
Stock.
"Company" means The Columbia Gas System, Inc., a Delaware
corporation, unless and until a successor replaces it pursuant to Article 4
and, thereafter, means the successor (or any subsequent successor pursuant to
said Article) and, for purposes of any provision contained herein and required
by the TIA, each other Obligor on the Securities.
"Company Request", "Request of the Company", "Company
Order" or "Order of the Company" means a written request or order signed in the
name of the Company by its Chairman of the Board, its President or a Vice
President, and by its Treasurer, an Assistant Treasurer, its Controller, an
Assistant Controller, its Secretary or an Assistant Secretary, and delivered to
the Trustee.
"Debt" of any person means, without duplication,
(i) the principal of and premium, if applicable, in respect
of (a) indebtedness of such person for money borrowed and (b)
indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such person is
responsible or liable;
(ii) all Capital Lease Obligations of such person;
(iii) all obligations of such person issued or assumed as
the deferred purchase price of property (but excluding trade
accounts payable arising in the ordinary course of business);
(iv) all obligations of such person for the reimbursement
of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations
<PAGE> 9
PAGE 9
with respect to letters of credit securing obligations (other
than obligations described in (i) through (iii) above) entered
into in the ordinary course of business of such person to the
extent such letters of credit are not drawn upon or, if and to
the extent drawn upon, such drawing is reimbursed no later than
the third Business Day following receipt by such person of a
demand for reimbursement following payment on the letter of
credit);
(v) all obligations of the type referred to in clauses (i)
through (iv) of other persons for the payment of which such
person is responsible or liable as obligor or guarantor; and
(vi) all obligations of the type referred to in clauses (i)
through (v) of other persons secured by any Lien on any asset
of such person (whether or not such obligation is assumed by
such person), the amount of any such obligation which is not
assumed being deemed to be the lesser of the amortized cost of
such assets or the amount of the obligation so secured.
"Default" means any event which is, or after notice or
passage of time or both would be, an Event of Default as more fully described
in Section 5.01 of this Indenture.
"Depository" means, with respect to the Securities of any
series issuable or issued in whole or in part in the form of one or more Global
Securities, the person designated as Depository by the Company pursuant to
Section 2.01 until a successor Depository shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Depository" shall
mean or include each person who is then a Depository hereunder, and if at any
time there is more than one such person, "Depository" as used with respect to
the Securities of any such series shall mean the Depository with respect to the
Securities of that series.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Funded Debt" means all Debt created, assumed or guaranteed
by a Significant Subsidiary which matures by its terms, or is renewable at the
option of such Subsidiary to a date, more than one year after the date of the
original creation, assumption or guarantee of such Debt by such Subsidiary.
"Global Security" means with respect to any series of
Securities issued hereunder, a Security which is executed by the Company and
authenticated and delivered by the Trustee to the Depository or pursuant to the
Depository's instruction, all in accordance with this Indenture, an indenture
supplemental hereto, if any, or Board Resolution and pursuant to a Company
Order, which shall be registered in the name of the Depository or its nominee
and which shall represent, and shall be denominated in an amount equal to the
aggregate Principal Amount of, all of the outstanding Securities of such series
or any portion thereof, in either case having the same Terms, including,
without limitation, the same issue date, date or dates on which principal is
due, and interest rate or method of determining interest.
<PAGE> 10
PAGE 10
"Holder" or "Securityholder" means the person in whose name
a Security is registered on the Registrar's books.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Interest Payment Date" means the date specified in the
Securities as the fixed date on which interest is due and payable.
"Issue" or "issue" means, with respect to Debt, issue,
assume, guarantee, incur or otherwise become liable for.
"Lien" means any mortgage, pledge, deposit for security,
security interest or other similar lien, other than the following: (i) liens
for taxes or assessments or other local, state or federal governmental charges
or levies; (ii) any lien to secure obligations under workmen's compensation or
unemployment insurance laws or similar legislation; (iii) any lien to secure
performance in connection with bids, tenders, contracts (other than contracts
for the payment of Debt) or leases (other than Capital Lease Obligations) made
in the ordinary course of business by the Company or any Affiliate thereof;
(iv) liens to secure public or statutory obligations; (v) materialmen's,
mechanics', carriers', workmen's, repairmen's, construction, or other liens or
charges arising in the ordinary course of business; or deposits to obtain the
release of such liens; (vi) any lien to secure indemnity, performance, surety
or similar bonds to which the Company or any Affiliate of the Company is a
party; (vii) liens created by or resulting from court or administrative
proceedings which are currently being contested in good faith by appropriate
actions or proceedings or for the purpose of obtaining a stay or discharge in
the course of any court or legal proceedings for which appropriate accounting
reserves have been made to the extent required by generally accepted
accounting principles; (viii) leases (other than Capital Lease Obligations)
made, or existing on property acquired, constructed or improved, in the
ordinary course of business, together with repairs and additions thereto and
improvements thereof; (ix) landlords' liens; (x) zoning restrictions,
easements, licenses, reservations or restrictions in respect of currently
owned or hereafter acquired, constructed, or improved tangible property or
defects or irregularities (including any terms, conditions, agreements,
covenants, exceptions and reservations expressed or provided in deeds or other
agreements) in title thereto, which do not materially impair the conduct of the
business of the Company; (xi) any of such liens, whether or not delinquent,
whose validity or applicability is at the time being contested in good faith
by appropriate actions or proceedings of the Company or any Subsidiary and
for which appropriate accounting reserves have been made to the extent required
by generally accepted accounting principles; (xii) obligations neither assumed
by the Company or any Subsidiary nor on account of which any of them
customarily pays interest directly or indirectly, existing, either at the
date hereof, or, as to property hereafter acquired, constructed, or improved at
the time of acquisition construction or improvement by the Company or a
Subsidiary; (xiii) any right which any municipal or governmental body or agency
may have by virtue of any franchise, license, contract or statute to purchase,
or designate a purchaser of or order the sale of, any property of the Company
or any Subsidiary upon payment of reasonable compensation therefor, or to
terminate any franchise,
<PAGE> 11
PAGE 11
license or other rights or to regulate the property and business of the Company
or any Subsidiary; (xiv) the lien of judgments covered by insurance, or upon
appeal and covered, if necessary, by the filing of an appeal bond, or if not so
covered, not exceeding at any one time [$10,000,000] in aggregate amount; (xv)
any lien or encumbrance, moneys sufficient for the discharge of which have been
deposited in trust with the Trustee hereunder or with the trustee or mortgagee
under the instrument evidencing such lien or encumbrance, with irrevocable
authority to the Trustee hereunder or to such other trustee or mortgagee to
apply such moneys to the discharge of such lien or encumbrance to the extent
required for such purpose; (xvi) rights reserved to or vested in others to take
or receive any part of the gas, by-products of gas or steam or electricity
generated or produced by or from any properties of the Company or any
Subsidiary or with respect to any other rights concerning supply,
transportation, or storage of a commodity which is used in the ordinary course
of business; and (xvii) liens created or assumed by the Company or a
Subsidiary in connection with the issuance of debt securities, the interest on
which is excludable from the gross income of the holders of such securities
pursuant to Section 103 of the Internal Revenue Code of 1986, or any successor
section.
"Officer" means the Chairman of the Board, the President,
any Vice President, the Treasurer, the Secretary, the Controller, any Assistant
Treasurer, any Assistant Secretary, any Assistant Controller, or any officers
of the Company designated by Board Resolution or the Bylaws.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal
counsel who may be an employee of or counsel to the Company (or any subsidiary
or affiliate) or other counsel acceptable to the Trustee.
"Original Issue Discount Security" means any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the maturity thereof pursuant to
Section 5.02.
"Preferred Stock" as applied to the capital stock of any
corporation, means stock of any class or classes (however designated) (a) which
is preferred as to the payment of dividends, or as to the distribution of
assets on any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of any other stock of any class of such corporation
or (b) which contains provisions requiring the mandatory redemption of such
stock or the mandatory payment of dividends thereon which permit the holders
of such stock to put such stock to the issuer thereof.
<PAGE> 12
PAGE 12
"Principal Amount" of a Debt or other obligation means the
principal amount of the same plus the premium, if applicable, payable on the
same which is due or overdue or is to become due at the relevant time.
"Production Payment" means any economic interest in oil,
gas or mineral reserves which generally entitles the holder thereof to a
specified share of future production from such reserves, free of the costs and
expenses of such production, and terminates when a specified quantity of such
share of future production from such reserves has been delivered or a specified
sum has been realized from the sale of such share of future production from
such reserves or any similar arrangement commonly referred to as a "production
payment".
"SEC" means the United States Securities and Exchange
Commission.
"Secured Debt" means Debt secured by a Lien.
"Securities" means the Securities issued under this
Indenture.
"Significant Subsidiary" means a Subsidiary that meets the
conditions for being classified as a "significant subsidiary" under Regulation
S-X of the SEC.
"Subsidiary" means a corporation or limited liability
company of which a majority of the Capital Stock, having voting power under
ordinary circumstances to elect directors, is owned by the Company and/or one
or more Subsidiaries of the Company.
"Terms" means the maturity date, interest rate or method of
determining the interest rate, interest payment dates, redemption provisions
(optional or mandatory) and any other terms of any Securities established
pursuant to Sections 2.01 and 2.03.
"TIA" means the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (15 U.S.C. Section Section
77aaa-77bbbb), as in effect on the date of this Indenture.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer of the Trustee assigned
by the Trustee to administer its corporate trust matters.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
SECTION 1.02. Other Definitions.
<PAGE> 13
PAGE 13
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Bankruptcy Law" ............................................ 5.01
"Consolidated Tangible Assets" .............................. 3.03
"Covenant Defeasance Option" ................................ 7.01(b)
"Custodian" ................................................. 5.01
"Event of Default" .......................................... 5.01
"Legal Defeasance Option" ................................... 7.01(b)
"Legal Holiday" ............................................. 11.08
"Mandatory Sinking Fund Payment ............................. 10.01
"Notice of Default" ......................................... 5.01
"Optional Sinking Fund Payment .............................. 10.01
</TABLE>
<PAGE> 14
PAGE 14
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Paying Agent" .............................................. 2.05
"Registrar" ................................................. 2.05
"Tangible Assets" ........................................... 3.03
</TABLE>
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act. Whenever this Indenture refers to a provision of the TIA or a
provision of the TIA provides that an indenture to be qualified thereunder
shall be deemed to include such provision, the provision is incorporated by
reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the SEC.
"Obligor" on the Securities means the Company and any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or defined by
Commission rule have the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted
accounting principles as in effect from time to time;
(3) "including" means including, without limitation;
(4) "person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency
or political subdivision thereof or any other entity.
(5) "or" is not exclusive;
(6) words in the singular include the plural and words in
the plural include the singular; and
(7) the principal amount of any noninterest bearing or
other discount security at any date shall be the principal
amount thereof that would be shown on a balance sheet of
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the issuer dated such date prepared in accordance with
generally accepted accounting principles and accretion of
principal on such security shall not be deemed to be the
issuance of Debt.
ARTICLE 2
The Securities
SECTION 2.01. Amount; Issuable in Series. The aggregate
Principal Amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.
The Securities may be issued in one or more series and
Securities of the same series may have different Terms. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series, except as contemplated by the
fourth paragraph of Section 2.03:
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all Securities
of other series);
(2) any limit upon the aggregate Principal Amount of the
Securities of the series which may be authenticated and
delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Securities of the
series pursuant to Sections 2.04, 2.08, 2.09, 8.05 and 9.07;
(3) the date or dates on which the principal and premium,
if applicable, of any of the Securities of the series are
payable or the method of determination thereof;
(4) the rate or rates, or the method of determination
thereof, at which any of the Securities of the series shall
bear interest, if any, the date or dates from which such
interest shall accrue, the Interest Payment Dates on which
such interest shall be payable and the regular record date for
the interest payable on any Interest Payment Date;
(5) the place or places where the principal of and
interest, if any, on any of the Securities of the series shall
be payable and the office or agency for the Securities of the
series maintained by the Company pursuant to Section 2.05;
(6) the period or periods within which, the price or prices
at which and the Terms and conditions upon which any of the
Securities of the series may be redeemed, in whole or in part,
at the option of the Company;
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(7) the Terms of any sinking fund and the obligation, if
any, of the Company to redeem or purchase Securities of the
series pursuant to any sinking fund or analogous provisions or
at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the Terms and
conditions upon which Securities of the series shall be
redeemed or purchased, in whole or in part;
(8) if other than denominations authorized by Section 2.02,
the denominations in which the Securities of the series shall
be issuable;
(9) if other than the Principal Amount thereof, the portion
of the Principal Amount of any of the Securities of the series
which shall be payable upon declaration of acceleration of the
maturity thereof pursuant to Section 5.02;
(10) any deletions or modifications of or additions to the
Events of Default set forth in Section 5.01 or covenants of
the Company set forth in Article 3 pertaining to the
Securities of the series;
(11) Whether the Securities are secured or unsecured
obligations of the Company;
(12) the forms of the Securities of the series;
(13) whether the Securities of the series shall be issued
in whole or in part in the form of one or more Global
Securities and, in such case, the Depository for such Global
Security or Securities;
(14) if Securities of the series are to be convertible into
other securities, the Terms of such conversion; and
(15) any other Terms of any of the Securities of the series.
All Securities of any one series shall be substantially
identical except as to denomination and except as may otherwise be provided in
or pursuant to the Board Resolution referred to above, or the Company Order
contemplated by the fourth paragraph of Section 2.03, and set forth in the
Officers' Certificate referred to above or in any such indenture supplemental
hereto.
At the option of the Company, interest on any series that
bears interest may be paid by mailing a check to the address of, or making a
wire transfer to the account of, any Holder as such address shall appear in the
register maintained pursuant to Section 2.05.
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The Securities may have notations, legends or endorsements
required by law, stock exchange rule, agreements to which the Company is
subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company).
If any of the Terms of the series are established by action
taken pursuant to a Board Resolution, except as to those contemplated by the
fourth paragraph of Section 2.03, a copy of an appropriate record of such
action together with such Board Resolution shall be certified by the Secretary
or an Assistant Secretary of the Company and delivered to the Trustee at or
prior to the delivery of the Officers' Certificate setting forth the Terms of
the series.
SECTION 2.02. Denominations. The Securities of each
series shall be issuable in such denominations as shall be specified as
contemplated by Section 2.01. In the absence of any such provisions with
respect to the Securities of any series, the Securities of such series shall be
issuable in denominations of $1,000 and in any integral multiple thereof.
Securities of each series shall be numbered, lettered or otherwise
distinguished in such manner in accordance with such plan as the Officers of
the Company executing the same may determine with the approval of the Trustee.
SECTION 2.03. Execution, Authentication and Delivery. One
Officer shall sign the Securities for the Company by manual or facsimile
signature. The Company's seal shall be impressed, affixed, imprinted or
reproduced on the Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer
holds that office at the time the Trustee authenticates the Security, the
Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory
of the Trustee manually signs the certificate of authentication on the
Security. The signature shall be conclusive evidence that the Security has
been authenticated under this Indenture.
At any time after the execution and delivery of this
Indenture, the Company may execute and deliver to the Trustee Securities of any
series, together with a Company Order for the authentication and delivery of
such Securities, and the Trustee in accordance with the Company Order shall
authenticate and deliver such Securities; provided that, if all Securities of a
series are not to be originally issued at one time, the Trustee shall
authenticate and deliver Securities of such series for original issue from time
to time in the aggregate Principal Amount established for such series pursuant
to such procedures acceptable to the Trustee and to such recipients as may be
specified from time to time by Company Order. The maturity date, original
issuance date, interest rate and any other Terms of the Securities of such
series shall be determined by or pursuant to such Company Order and procedures.
If provided for in such procedures, such Company Order may authorize
authentication and delivery pursuant to oral or electronic instructions from
the Company or its duly authorized agents, which instructions, if given orally,
shall be promptly confirmed in writing.
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If the forms or Terms of the Securities of the series have
been established by or pursuant to one or more Board Resolutions as permitted
by Section 2.01, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and (subject to Section
6.01) shall be fully protected in relying upon, an Opinion of Counsel stating:
(a) that such forms and/or Terms have been established in
conformity with the provisions of this Indenture; and
(b) that such Securities, when authenticated and delivered
by the Trustee and issued by the Company in the manner and
subject to any conditions specified in such Opinion of
Counsel, will constitute valid and legally binding obligations
of the Company, entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their
terms, subject to such exceptions as counsel may specify.
If such forms or Terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 2.01 and of the
preceding paragraph, if all Securities of a series are not to be originally
issued at one time, it shall not be necessary to deliver the Officers'
Certificate otherwise required pursuant to Section 2.01 or the Company Order
and Opinion of Counsel otherwise required pursuant to such preceding paragraph
at or prior to the time of authentication of each Security of such series if
such documents are delivered at or prior to the authentication upon original
issuance of the first Security of such series to be issued; provided that
paragraph (a) of said Opinion of Counsel shall, in such case, read as follows:
"(a) that such forms have been established in conformity
with the provisions of this Indenture and the procedures for
determining the Terms of such Securities as set forth in the
procedures hereinabove referred to have been established in
conformity with the provisions of this Indenture."
If the Company shall establish pursuant to Section 2.01
that the Securities of a series are to be issued in whole or in part in the
form of a Global Security, then the Company shall execute and the Trustee shall
in accordance with this Section and the Company Order with respect to such
series authenticate and deliver the Global Security that (i) shall represent
and shall be denominated in an aggregate amount equal to the aggregate
principal amount of Outstanding Securities of such series to be represented by
the Global Security, (ii) shall be registered in the name of the Depository or
its nominee, and (iii) shall be delivered by the Trustee to such Depository or
pursuant to such Depository's instruction.
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Each Depository designated pursuant to Section 2.01 for a
Global Security in registered form must, at the time of its designation and at
all times while it serves as Depository, be a clearing agency registered under
the Exchange Act and any other applicable statute or regulation.
SECTION 2.04. Temporary Securities. Pending the
preparation of definitive Securities of any series, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Securities in lieu of which they are issued, in registered
form and with such appropriate insertions, omissions, substitutions and other
variations as the Officers executing such Securities may determine, as
evidenced conclusively by their execution of such Securities. Such temporary
Securities may be in global form.
If temporary Securities of any series are issued, the
Company will cause definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Securities of such
series, the temporary Securities of such series shall be exchangeable for
definitive Securities of such series upon surrender of the temporary Securities
of such series at the office or agency of the Company maintained pursuant to
Section 2.05 for the purpose of exchanges of Securities of such series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like aggregate Principal
Amount of definitive Securities of the same series and of like tenor or
authorized denominations and having the same Terms and conditions.
Until exchanged in full as hereinabove provided, the
temporary Securities of any series shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities of the same series
and of like tenor authenticated and delivered hereunder.
SECTION 2.05. Registrar and Paying Agent. The Company
shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange (the "Registrar") and an office or
agency where Securities may be presented for payment (the "Paying Agent"). The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may have one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional
paying agent.
The Company shall enter into an appropriate agency
agreement with any Registrar, Paying Agent or co-registrar not a party to this
Indenture, which shall incorporate the terms of the TIA. The agreement shall
implement the provisions of this Indenture that relate to such agent. The
Company shall notify the Trustee of the name and address of any such agent. If
the Company fails to maintain a Registrar or Paying Agent, the Trustee shall
act as such and shall be entitled to appropriate compensation therefor pursuant
to Section 6.07. The Company or any
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Subsidiary or Affiliate of the Company may act as Paying Agent, Registrar,
co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.06. Paying Agent To Hold Money in Trust. On or
prior to each due date of the principal and interest on any Security, the
Company shall deposit with the Paying Agent a sum sufficient to pay such
principal and interest when so becoming due. The Company shall require each
Paying Agent (other than the Trustee) to agree in writing that the Paying Agent
shall hold in trust for the benefit of Securityholders or the Trustee all money
held by the Paying Agent for the payment of principal of or interest on the
Securities and shall notify the Trustee of any default by the Company in making
any such payment. If the Company or any Subsidiary or Affiliate of the Company
acts as Paying Agent, it shall segregate the money held by it as Paying Agent
and hold it as a separate trust fund. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee and to account for any
funds disbursed by the Paying Agent. Upon complying with this Section, the
Paying Agent shall have no further liability for the money delivered to the
Trustee.
SECTION 2.07. Securityholder Lists. The Trustee shall
preserve in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Securityholders. If the Trustee
is not the Registrar, the Company shall furnish to the Trustee, in writing at
least five Business Days before each May 15 and November 15 and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Securityholders.
SECTION 2.08. Transfer and Exchange. The Securities shall
be issued in registered form and shall be transferable only upon the surrender
of a Security with similar Terms of the same series for registration of
transfer. When a Security is presented to the Registrar or a co-registrar with
a request to register a transfer, the Registrar shall register the transfer as
requested, subject to compliance with this paragraph. When Securities of a
series are presented to the Registrar or a co-registrar with a request to
exchange them for an equal Principal Amount of Securities of such series with
similar Terms of other denominations, the Registrar shall make the exchange as
requested, subject to such compliance. To permit registration of transfers and
exchanges, the Company shall execute and the Trustee shall authenticate
Securities of the applicable series with similar Terms at the Registrar's or
co-registrar's request. The Company may require payment of a sum sufficient to
pay all taxes, assessments or other governmental charges. Every Security
presented or surrendered for registration of transfer or for exchange shall (if
so required by the Company or the Trustee) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Registrar duly executed, by the Holder thereof or his attorney duly authorized
in writing. The Company shall not be required (i) to Issue, register the
transfer of or exchange Securities of any series during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of
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Securities of that series selected for redemption under Section 9.03 and ending
at the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of any Security being redeemed in part.
Prior to the due presentation for registration of transfer
of any Security, the Company, the Trustee, the Paying Agent, the Registrar or
any co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and interest on such Security and for all other
purposes whatsoever, whether or not such Security is overdue, and none of the
Company, the Trustee, the Paying Agent, the Registrar or any co-registrar shall
be affected by notice to the contrary.
If at any time the Depository for the whole or part of the
Securities of a series notifies the Company that it is unwilling or unable to
continue as Depository for such Securities or if at any time the Depository for
such Securities shall no longer be eligible under Section 2.03, the Company
shall appoint a successor Depository with respect to such Securities. If a
successor Depository for such Securities is not appointed by the Company within
90 days after the Company receives such notice or becomes aware of such
ineligibility, the Company's election pursuant to Section 2.01 shall no longer
be effective with respect to such Securities and the Company will execute, and
the Trustee, upon receipt of a Company Order for the authentication and
delivery of definitive Securities of such series, will authenticate and
deliver, corresponding Securities in definitive form in an aggregate principal
amount equal to the Principal Amount of the Global Security representing such
Securities in exchange for such Global Security.
If specified by the Company pursuant to Section 2.01 with
respect to a series of Securities, the Company may at any time and in its sole
discretion determine that Securities of any series issued in the form of one or
more Global Securities shall no longer be represented by such Global Security
or Securities. In such event the Company will execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of corresponding
definitive Securities, will authenticate and deliver such Securities in
definitive form and in an aggregate Principal Amount equal to the Principal
Amount of such Global Security or Securities in exchange for such Global
Security or Securities.
If specified by the Company pursuant to Section 2.01 with
respect to the whole or part of a series of Securities, the Depository for such
Securities may surrender a Global Security for such Securities with similar
Terms in exchange in whole or in part for Securities of such series with
similar Terms in definitive form on such terms as are acceptable to the Company
and such Depository. Thereupon, the Company shall execute, and the Trustee,
upon receipt of a Company Order for the authentication and delivery of
definitive Securities of such series with similar Terms, shall authenticate and
deliver, without charge to the Holders,
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(i) to each person specified by such Depository a new
Security or Securities of the series with similar Terms of any
authorized denomination as requested by such person in
aggregate Principal Amount equal to and in exchange for such
person's beneficial interest in the Global Security; and
(ii) to such Depository a new Global Security in a
denomination equal to the difference, if any, between the
Principal Amount of the surrendered Global Security and the
aggregate Principal Amount of Securities with similar Terms
delivered to Holders thereof.
In any exchange provided for in any of the preceding three
paragraphs, the Company will execute and the Trustee will authenticate and
deliver Securities in definitive form in authorized denominations.
Upon the exchange of a Global Security for Securities in
definitive form, such Global Security shall be cancelled by the Trustee.
Securities issued in exchange for a Global Security pursuant to this Section
shall be registered in such names and in such authorized denominations as the
Depository for such Global Security, pursuant to instructions from its direct
or indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Securities to the persons in whose names such Securities are
so registered.
Notwithstanding any other provision of this Section to the
contrary, unless and until a Global Security is exchanged in whole for
Securities in definitive form, a Global Security representing all or a portion
of the Securities of a series may not be transferred except as a whole by the
Depository for such series to a nominee of such Depository or by a nominee of
such Depository to such Depository or another nominee of such Depository or by
such Depository or any such nominee to a successor Depository for such series
or a nominee of such successor Depository.
SECTION 2.09. Replacement Securities. If a mutilated
Security is surrendered to the Registrar or if the Holder of a Security claims
that the Security has been lost, destroyed or wrongfully taken, the Company
shall Issue and the Trustee shall authenticate a replacement Security of the
applicable series with similar Terms if the Holder satisfies any other
reasonable requirements of the Trustee. If required by the Trustee or the
Company, such Holder shall furnish evidence to their satisfaction of the
destruction, loss or wrongful taking of any Security so claimed to be lost,
destroyed or wrongfully taken, and an indemnity bond sufficient in the judgment
of the Company and the Trustee to protect the Company, the Trustee, the Paying
Agent, the Registrar and any co-registrar from any loss which any of them may
suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of
the Company.
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SECTION 2.10. Outstanding Securities. Securities
outstanding at any time are all Securities authenticated by the Trustee except
for those cancelled by it, those delivered to it for cancellation and those
described in this Section as not outstanding. A Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security.
If a Security is replaced pursuant to Section 2.09, it
ceases to be outstanding unless the Trustee and the Company receive proof
satisfactory to them that the replaced Security is held by a bona fide
purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal, premium (if applicable) and interest payable
on that date with respect to the Securities to be redeemed or maturing, as the
case may be, and the Paying Agent is not prohibited from paying such money to
the Securityholders on that date pursuant to the terms of this Indenture, then
on and after that date such Securities cease to be outstanding and interest on
them ceases to accrue.
In determining whether the Holders of the requisite
Principal Amount of outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder the Principal
Amount of an Original Issue Discount Security that shall be deemed to be
outstanding for such purposes shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a
declaration of acceleration of the maturity thereof pursuant to Section 5.02.
SECTION 2.11. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the
Paying Agent shall forward to the Trustee any Securities surrendered to them
for registration of transfer, exchange or payment. The Trustee and no one else
shall cancel and destroy (subject to the record retention requirements of the
Exchange Act) all Securities surrendered for registration of transfer,
exchange, payment or cancellation and deliver a certificate of such destruction
to the Company unless the Company directs the Trustee to deliver cancelled
Securities to the Company. The Company may not Issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.12. Default Interest. If the Company defaults
in a payment of interest on the Securities, the Company shall pay defaulted
interest (plus interest on such defaulted interest to the extent lawful at the
rate or rates prescribed therefor in the Securities) in any lawful manner. The
Company may also pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date, which date shall be at
least five Business Days prior to the payment date in which case the Company
shall fix or cause to be fixed any such special record date and payment date,
and, at least 15 days before any such special record date, the Company shall
mail to each Securityholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid.
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ARTICLE 3
Covenants
SECTION 3.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and
in the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee
or the Paying Agent holds in accordance with this Indenture money sufficient to
pay all principal and interest then due and the Trustee or the Paying Agent, as
the case may be, is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture.
SECTION 3.02. SEC Reports. The Company shall file with
the Trustee, within 30 days after it files them with the SEC, copies of its
annual report and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. The Company shall also comply with
the other provisions of TIA Section 314(a)(1),(2) and (3).
SECTION 3.03. Limitation on Secured Debt. The Company
shall not issue any Secured Debt unless contemporaneously therewith effective
provision is made to secure the Securities equally and ratably with such
Secured Debt for so long as such Secured Debt is secured by a Lien. The
preceding sentence shall not require the Company to equally and ratably secure
the Securities upon the incurrence of the following Secured Debt:
(1) Debt of the Company which is incurred to finance the
acquisition, construction or improvement of assets of the
Company and its Subsidiaries, which acquisition is
consummated, or which construction or improvement is
commenced, after the date of this Indenture; provided,
however, that such Debt shall not be secured by any assets of
the Company other than assets so acquired, constructed or
improved (together with (i) to the extent the terms of Secured
Debt so provides, repairs and additions thereto and
improvements thereof, and (ii) with respect to construction
and improvement, any theretofore unimproved real property on
which the property so constructed or improved is located);
(2) Debt of the Company which is secured by assets of a
person where such Debt was existing at the time such person
was merged or consolidated with the Company or at the time of
sale, other disposition, or lease, of the properties of such
person as an entirety (or substantially as an entirety) to the
Company; provided, however, that such Debt shall not be
secured by any assets of the Company other than the assets
subject thereto at the time of the acquisition (together with,
to the extent the terms of Secured Debt so provides, repairs
and additions thereto and improvements thereof);
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(3) Debt of the Company issued to refinance such Debt
incurred under paragraphs (1) and (2) provided that the Debt
so issued is not secured by a Lien on assets other than those
which secure the Debt being refinanced (together with, to the
extent the terms of new Secured Debt so provides, repairs and
additions thereto and improvements thereof);
(4) Debt of the Company which is secured by inventory,
accounts receivable, or customers' installment paper or the
proceeds thereof, including by means of asset securitization;
(5) Obligations arising with respect to Production
Payments; and
(6) Other Debt which does not exceed, in an aggregate
principal amount at any one time outstanding, ten percent
(10%) of the Consolidated Tangible Assets of the Company and
its consolidated subsidiaries, determined as of the end of the
most recent fiscal quarter of the Company ending not less than
45 days from the date of determination.
The term "Consolidated Tangible Assets" means the sum of
the Tangible Assets of the Company and its consolidated
Subsidiaries after eliminating intercompany items.
The term "Tangible Assets", as applied to any person on any
date shall mean the gross book value as shown on the books of
such person of all its property both real and personal
(exclusive of licenses, patents, patent applications,
copyrights, trademarks, trade names, good will, experimental
or organizational expense and other like intangibles, treasury
stock and unamortized debt discount and expense but including
regulatory assets properly recorded on the balance sheet of
such person.)
SECTION 3.04. Limitations on Funded Debt or Preferred
Stock of Significant Subsidiaries. The Company shall not permit any
Significant Subsidiary to issue, directly or indirectly, any Funded Debt
or Preferred Stock except:
(1) Funded Debt and Preferred Stock issued and outstanding
on or prior to the date of this Indenture;
(2) Funded Debt and Preferred Stock issued to and held by
the Company or a Subsidiary; provided, however, that any
subsequent issuance or transfer of any common stock which
results in any such Subsidiary ceasing to be a Subsidiary and
any subsequent transfer of such Debt or Preferred Stock (other
than to the Company or a Subsidiary) shall be deemed the
issuance of such Debt by the issuer thereof;
(3) Funded Debt and Preferred Stock of a Significant
Subsidiary issued and outstanding on or prior to the date on
which such Subsidiary was acquired by the Company or on which
it became a Significant Subsidiary;
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(4) Funded Debt and Preferred Stock issued to finance the
acquisition by such Significant Subsidiary of any assets or
Capital Stock of any person or the construction or improvement
of assets of such Significant Subsidiary, which acquisition is
consummated, or which construction or improvement is
commenced, after the date of this Indenture;
(5) Funded Debt and Preferred Stock issued in exchange for,
or the proceeds of which are used to refund or refinance, Debt
or Preferred Stock, Debt referred to in the foregoing clauses
(1) through (4) or to reacquire equity or debt or to repay
debt of such Significant Subsidiary held by the Company or a
Subsidiary;
(6) Funded Debt issued with respect to (a) obligations that
are tax-exempt pursuant to Section 103 of the Internal Revenue
Code of 1986 as from time to time amended and that are issued
in connection with pollution control or other facilities of
such Significant Subsidiary or (b) other obligations, whether
taxable to tax-exempt, that are issued through any public or
governmental authority in connection with pollution control or
other facilities of such Significant Subsidiary;
(7) Funded Debt in an aggregate amount not exceeding the
sum of (a) total inventory of the Significant Subsidiary; (b)
total accounts receivable of the Significant Subsidiary; and
(c) the total amount of customers' installment paper of such
Significant Subsidiary, determined in accordance with
generally accepted accounting principles, in each case, as of
the end of the most recent fiscal quarter of such Significant
Subsidiary ending not less than 45 days from the date of
determination;
(8) Obligations with respect to Production Payments; and
(9) Funded Debt in an aggregate Principal Amount and
Preferred Stock having an aggregate preferential involuntary
liqudiation value, in either case which, when added to the
aggregate Principal Amount of Funded Debt of all other
Significant Subsidiaries (other than Funded Debt referred to
in clauses (1) through (8) above) and when added to the
aggregate preferential involuntary liquidation value of
Preferred Stock (other than Preferred Stock referred to in
clauses (1) through (5) above), does not exceed, at any one
time outstanding, ten percent (10%) of the sum of the Tangible
Assets of such Significant Subsidiary and all other
Significant Subsidiaries determined on a consolidated basis,
as of the end of the most recent fiscal quarter of each such
Significant Subsidiary ending not less than 45 days from the
date of determination.
SECTION 3.05. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company a certificate from its principal executive officer, a financial officer
or an accounting officer stating that in the course of the performance by such
signer of his duties as an officer of the Company he would normally have
knowledge of any Default by the Company or any noncompliance with the
conditions and covenants under the Indenture and whether or not he knows of any
Default or any such noncompliance that occurred during such period. If such
officer does, the certificate shall describe the Default or non-compliance, its
status and what action the Company is taking or proposes to take with respect
thereto. For purposes of this Section 3.05, such noncompliance
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shall be determined without regard to any period of grace or requirement of
notice provided under this Indenture.
ARTICLE 4
Successor Company
SECTION 4.01. When Company May Merge or Transfer Assets.
The Company shall not consolidate with or merge with or into, or convey or
otherwise transfer, or lease, its assets as an entirety (or substantially as an
entirety) to, any person, unless:
(i) the resulting, surviving or transferee person (if not
the Company) shall be a person organized and existing under
the laws of the United States of America, any State thereof or
the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the
Trustee, in form reasonably satisfactory to the Trustee, all
the obligations of the Company under the Securities and this
Indenture;
(ii) no Default shall have happened and be continuing; and
(iii) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, transfer, or lease and such
supplemental indenture (if any) comply with this Indenture.
SECTION 4.02. Successor Entity Substituted. Upon any
consolidation by the Company with or merger by the Company into any other
entity or any conveyance or other transfer, or lease, of the assets of the
Company as an entirety (or substantially as an entirety) in accordance with
Section 4.01, the successor entity formed by such consolidation or into which
the Company is merged or to which such conveyance or other transfer, or lease,
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture with the same effect as if such
successor entity had been named as the Company herein, and thereafter, except
in the case of a lease, the predecessor entity shall be relieved of all
obligations and covenants under this Indenture and the Securities.
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ARTICLE 5
Defaults and Remedies
SECTION 5.01. Events of Default. An "Event of Default"
occurs if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable and such
default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at its
stated maturity, upon declaration or otherwise;
(3) the Company fails to comply with Section 4.01;
(4) the Company fails to comply with any of its agreements
in the Securities or this Indenture (other than those referred
to in (1), (2), or (3) above) and such failure continues for
60 days after the notice specified below;
(5) the Company has entered against it final,
non-appealable court judgements for the payment of money
exceeding in the aggregate $50,000,000 in uninsured liability
and such judgements are not discharged, paid or adequately
provided for within 60 days after the last of such judgements
to become final and non-appealable;
(6) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors; or
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company in an
involuntary case;
(B) appoints a Custodian of the Company or for any
substantial part of its property; or
(C) orders the winding up or liquidation of the
Company;
and the order or decree remains unstayed and in effect for 60
days.
The term "Bankruptcy Law" means Title 11, United States
Code, or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
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A Default under clause (4) is not an Event of Default until
the Trustee or the Holders of at least 25% in principal amount of the
Securities notify the Company of the Default and the Company does not cure such
Default within the time specified after receipt of such Notice. Such Notice
must specify the Default, demand that it be remedied and state that such notice
is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days
after the occurrence thereof, written notice in the form of an Officers'
Certificate of any event which with the giving of notice and the lapse of time
would become an Event of Default under clause (4), its status and what action
the Company is taking or proposes to take with respect thereto.
SECTION 5.02. Acceleration. If an Event of Default (other
than an Event of Default specified in Section 5.01(5) or (6)) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least
25% in principal amount of the Securities by notice to the Company and the
Trustee, may declare the principal of (or, in connection with Original Issue
Discount Securities, such portion of the principal amount as may be specified
in the terms of such Securities) and accrued interest on all the Securities to
be due and payable. Upon such a declaration, such principal (or portion
thereof) and interest shall be due and payable immediately. If an Event of
Default specified in Section 5.01(5) or (6) occurs and is continuing, the
principal of and interest on all the Securities shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Securityholders. The Holders of a majority in principal
amount of the Securities by notice to the Trustee may rescind an acceleration
and its consequences if the rescission would not conflict with any judgement or
decree and if all existing Events of Default on the Securities have been cured
or waived (except with respect to nonpayment of principal or interest that has
become due solely because of the acceleration). No such rescission shall affect
any subsequent Default or impair any right consequent thereto.
SECTION 5.03. Other Remedies. If an Event of Default
occurs and is continuing, the Trustee may pursue any available remedy to
collect the payment of principal of or interest on the Securities or to enforce
the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
SECTION 5.04. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default and its consequences except (1) a Default in the
payment of the principal of or interest on a Security or (2) a Default in
respect of a provision that under Section 8.02 cannot be amended without the
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consent of each Securityholder affected. When a Default is waived, it is
deemed cured, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right.
SECTION 5.05. Control by Majority. The Holders of a
majority in Principal Amount of the Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
of exercising any trust or power conferred on the Trustee. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Section 6.01, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
SECTION 5.06. Limitation on Suits. A Securityholder may
not pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in Principal Amount of the
Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority of Principal Amount of the
Securities do not give the Trustee a direction inconsistent
with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice
the rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 5.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 5.08. Collection Suit by Trustee. If an Event of
Default in payment of interest or principal specified in Section 5.01(1) or (2)
occurs and is continuing, the Trustee
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may recover judgment in its own name and as trustee of an express trust against
the Company for the whole amount of principal and interest remaining unpaid
(together with interest on such unpaid interest as provided in Section 3.01, to
the extent lawful) and the amounts provided for in Section 6.07.
SECTION 5.09. Trustee May File Proofs of Claim. The
Trustee may file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee and the
Securityholders allowed in any judicial proceedings relative to the Company,
its creditors or its property and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other person performing similar functions, and any Custodian in
any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 6.07.
SECTION 5.10. Priorities. If the Trustee collects any
money pursuant to this Article 5, it shall pay out the money in the following
order:
FIRST: to the Trustee for amounts due under Section 6.07;
SECOND: to Securityholders for amounts due and unpaid on
the Securities for principal and interest, ratably, without
preference or priority of any kind, according to the amounts
due and payable on the Securities for principal and interest,
respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 5.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 5.07 or a suit
by Holders of more than 10% in Principal Amount of the Securities.
SECTION 5.12. Waiver of Stay or Extension Laws. The
Company (to the extent it may lawfully do so) shall not at any time insist
upon, or plead, or in any manner whatsoever
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claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and shall not hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE 6
Trustee
SECTION 6.01. Duties of Trustee. (a) If an Event of
Default has occurred and is continuing, the Trustee shall exercise the rights
and powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture
and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph
(b) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 5.05.
(d) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b) and (c) of this
Section.
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(e) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company.
(f) Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(h) Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
SECTION 6.02. Rights of Trustee. (a) The Trustee may
rely on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on the Officers' Certificate or Opinion of Counsel, subject to Section
6.02(e).
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers.
(e) The Trustee may consult with counsel, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
SECTION 6.03. Individual Rights of Trustee. The Trustee
in its individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company or its affiliates with the
same rights it would have if it were not Trustee. Any Paying Agent, Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 6.10 and 6.11.
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SECTION 6.04. Trustee's Disclaimer. The Trustee shall not
be responsible for and makes no representation as to the validity or adequacy
of this Indenture or the Securities, it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement of the Company in the Indenture or in any
document issued in connection with the sale of the Securities or in the
Securities other than the Trustee's certificate of authentication.
SECTION 6.05. Notice of Defaults. If a Default occurs and
is continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security), the Trustee may withhold the notice if and so long as a committee of
its Trust Officers in good faith determines that withholding the notice is in
the interests of Securityholders.
SECTION 6.06. Reports by Trustee to Holders. Prior to
November 1 in each year, the Trustee shall mail to each Securityholder a brief
report dated as of the preceding September 1 that complies with TIA Section
313(a), if so required by such Section of the TIA. The Trustee also shall
comply with TIA Section 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange on which
the Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 6.07. Compensation and Indemnity. The Company
shall pay to the Trustee from time to time reasonable compensation for its
services. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred or made
by it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. The Company shall indemnify the Trustee against any
and all loss, liability or expense (including attorneys' fees) incurred by it
in connection with the administration of this trust and the performance of its
duties hereunder. The Trustee shall notify the Company promptly of any claim
for which it believes it may seek indemnity. Failure by the Trustee to so
notify the Company shall not relieve the Company of its obligations hereunder.
The Company shall defend the claim and the Trustee may have separate counsel
and the Company shall pay the reasonable fees and expenses of such counsel.
The Company need not reimburse any expense or indemnify against any loss,
liability or expense to the extent incurred by the Trustee through the
Trustee's own willful misconduct, negligence or bad faith.
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To secure the Company's payment obligations in this
Section, the Trustee shall have a Lien prior to the Securities on all money or
property held or collected by the Trustee, except that held in trust to pay
principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture.
For purposes of this Section, the term "Trustee" shall
include any predecessor Trustee, provided that any Trustee hereunder shall not
be liable for the willful misconduct, negligence or bad faith of any other
Trustee hereunder.
SECTION 6.08. Replacement of Trustee. The Trustee may
resign at any time by so notifying the Company. The Holders of a majority in
Principal Amount of the Securities may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Company shall remove the
Trustee if:
(1) the Trustee fails to comply with Section 6.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Company shall promptly appoint
a successor Trustee.
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, subject to the
Lien provided for in Section 6.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in Principal Amount of the Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
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If the Trustee fails to comply with Section 6.10, any
Securityholder (subject to compliance with TIA Section 310(b)(iii)) may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 6.07 shall continue for
the benefit of the retiring Trustee.
SECTION 6.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
the successor to the Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Securities or in this Indenture
provided that the certificate of the Trustee shall have.
SECTION 6.10. Eligibility; Disqualification. The Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The
Trustee shall have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report. The Trustee shall comply
with TIA Section 310(b).
SECTION 6.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE 7
Discharge of Indenture; Defeasance
SECTION 7.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.09) for
cancellation or (ii) all outstanding Securities have become due and payable and
the Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity all outstanding Securities, including interest thereon (other than
Securities replaced pursuant to Section 2.09), and if in either case the
Company pays all other sums payable hereunder by the
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Company, then this Indenture shall, subject to Section 7.01(c), cease to be of
further effect. The Trustee shall acknowledge satisfaction and discharge of
this Indenture on demand of the Company accompanied by an Officers' Certificate
and an Opinion of Counsel.
(b) Subject to Sections 7.01(c) and 7.02, the Company at
any time may terminate (i) all its obligations under this Indenture with
respect to the Securities of a series ("Legal Defeasance Option") or (ii) its
obligations under Sections 3.03 and 3.04 and the operation of Section 5.01(4)
("Covenant Defeasance Option") with respect to a series of Securities. The
Company may exercise its Legal Defeasance Option notwithstanding its prior
exercise of its Covenant Defeasance Option.
If the Company exercises its Legal Defeasance Option,
payment of the Securities of such series may not be accelerated because of an
Event of Default. If the Company exercises its Covenant Defeasance Option,
payment of the Securities of such series may not be accelerated because of an
Event of Default specified in Section 5.01(4).
Upon satisfaction of the conditions set forth herein and
upon request of the Company, the Trustee shall acknowledge in writing the
discharge of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the
Company's obligations with respect to such series in Sections 2.05, 2.06, 2.07,
2.08, 2.09, 6.07, 6.08, 7.03 and 7.04 shall survive until the Securities of
such series have been paid in full. Thereafter, the Company's obligations in
Sections 6.07 and 7.04 with respect to such series shall survive.
SECTION 7.02. Conditions to Defeasance. The Company may
exercise its Legal Defeasance Option or its Covenant Defeasance Option only if:
(1) the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations for the payment
of principal and interest on the Securities of the series to
be defeased to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from
a nationally recognized firm of independent accountants
expressing their opinion that the payments of principal and
interest when due and without reinvestment on the deposited
U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts
(but, in the case of the Legal Defeasance Option only, not
more than such amounts) as will be sufficient to pay principal
and interest when due on all the Securities of such series to
maturity or redemption, as the case may be;
(3) in the case of the Legal Defeasance Option, 91 days
pass after the deposit is made and during the 91-day period
no Default specified in Section 5.01(5) or (6) occurs which is
continuing at the end of the period;
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(4) no Default has occurred and is continuing on the date
of such deposit and after giving effect thereto; and
(5) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance and discharge of the
Securities of such series as contemplated by this Article 7
have been complied with.
Before or after a deposit, the Company may make
arrangements satisfactory to the Trustee for the redemption of Securities at a
future date in accordance with Article 9.
SECTION 7.03. Application of Trust Money. The Trustee
shall hold in trust money or U.S. Government Obligations deposited with it
pursuant to this Article 7. It shall apply the deposited money and the money
from U.S. Government Obligations through the Paying Agent and in accordance
with this Indenture to the payment of principal of and interest on the relevant
Securities.
SECTION 7.04. Repayment to Company. The Trustee and the
Paying Agent shall promptly turn over to the Company upon request any excess
money or securities held by them at any time not required for the payment of
the Securities.
With respect to the money or securities held under Sections
7.01 and 7.02, in determining whether such money or securities are excess, the
Trustee may rely on the certificate provided to it under Section 7.02(2).
Subject to any applicable abandoned property law, the
Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of principal or interest that remains unclaimed
for two years, and, thereafter, Securityholders entitled to the money must look
to the Company for payment as general creditors.
ARTICLE 8
Amendments
SECTION 8.01. Without Consent of Holders. The Company and
the Trustee may amend this Indenture or the Securities without notice to or
consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or
inconsistency;
(2) to comply with Article 4;
(3) to provide for uncertificated Securities in addition to
or in place of certificated Securities; provided, however,
that the uncertificated Securities are issued in registered
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form for purposes of Section 163(f) of the Internal Revenue
Code of 1986, as amended, or in a manner such that the
uncertificated Securities are described in Section
163(f)(2)(B) of the Internal Revenue Code of 1986, as amended;
(4) to add guarantees with respect to the Securities;
(5) to add to the covenants of the Company for the benefit
of the Holders or to surrender any right or power herein
conferred upon the Company;
(6) to comply with any requirements of the SEC in
connection with qualifying this Indenture under the TIA; or
(7) to make any change that does not adversely affect the
rights of any Securityholder in any material respect.
After an amendment under this Section becomes effective,
the Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
SECTION 8.02. With Consent of Holders. The Company and
the Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities. However, without the consent
of each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must
consent to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the fixed maturity of
any Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may or shall
be redeemed;
(5) make any Security payable in money other than that
stated in the Security; or
(6) make any change in Section 5.04 or this Section;
and, provided further, that in case more than one series of Securities (or
Securities of a single series which have different Terms) shall be outstanding
under this Indenture, and any such proposed amendment shall affect the rights
of Holders of the Securities of one or more series (or Securities of a single
series which have different Terms) and shall not affect the rights of Holders
of the Securities of one or more of the other series (or Securities of a
single series which have
<PAGE> 40
PAGE 40
different Terms), then only Holders of Securities to be affected shall have
authority or be required to consent to or approve such amendment. Any waiver
of a default provided for in Section 5.04 shall be deemed to affect the
Securities of all series, and, subject to the foregoing, any modification of
the provisions of any sinking fund or covenant established in respect of
Securities of a particular series (or Securities of a single series having the
same Terms) shall be deemed to affect only such Securities.
It shall not be necessary for the consent of the Holders
under this Section 8.02 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment under this Section becomes effective,
the Company shall mail to Holders of the affected Securities a notice briefly
describing such amendment. The failure to give such notice to all
Securityholders (or all Holders of the affected Securities), or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 8.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 8.04. Revocation and Effect of Consents and
Waivers. A consent to an amendment or any other action hereunder or a waiver
by a Holder of a Security shall bind the Holder and every subsequent Holder of
that Security or portion of the Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent or waiver is not
made on the Security. However, any such Holder or subsequent Holder may revoke
the consent or waiver as to such Holder's Security or portion of the Security
if the Trustee receives the notice of revocation before the date the amendment
or waiver becomes effective. After an amendment or waiver becomes effective,
it shall bind every Securityholder.
The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Securityholders entitled to take
any action under this Indenture by vote or consent. Such record date shall be
the later of 30 days prior to the first solicitation of such consent or vote or
the date of the most recent list of Holders of the affected Securities
furnished to the Trustee pursuant to Section 2.07 prior to such solicitation.
If a record date is fixed, those persons who were Securityholders at such
record date (or their duly designated proxies), and only those persons, shall
be entitled to take such action by vote or consent or to revoke any vote or
consent previously given, whether or not such persons continue to be
Securityholders after such record date.
SECTION 8.05. Notation on or Exchange of Securities. If
an amendment changes the terms of a Security, the Trustee may require the
Holder of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new
<PAGE> 41
PAGE 41
Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 8.06. Trustee To Sign Amendments. The Trustee
shall sign any amendment authorized pursuant to this Article 8 if the amendment
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 6.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
ARTICLE 9
Redemption
SECTION 9.01. Applicability. Securities of any series
which are redeemable before their final maturity shall be redeemable in
accordance with their Terms and (except as otherwise specified as contemplated
by Section 2.01 for Securities of any series) in accordance with this Article.
SECTION 9.02. Notice to Trustee. The Company may, with
respect to any series of Securities (or Securities of a series having the same
Terms), reserve the right to redeem and pay such Securities or any part
thereof, or may covenant to redeem and pay the series of Securities (or
Securities of a series having the same Terms) or any part thereof, before
maturity at such time and on such terms as provided for in such Securities. If
a series of Securities (or Securities of a series having the same Terms) is
redeemable and the Company wants or is obligated to redeem all or part of the
series of Securities (or Securities of a series having the same Terms) pursuant
to the Terms of such Securities, the Company shall notify the Trustee of the
redemption date and the Principal Amount of the series of Securities (or
Securities of a series having the same Terms) to be redeemed. The Company
shall give such notice at least 60 days before the redemption date (or such
shorter notice as may be acceptable to the Trustee in its sole discretion).
SECTION 9.03. Selection of Securities To Be Redeemed. If
less than all the Securities of a series (or Securities of a series having the
same Terms) are to be redeemed, the Trustee, not more than 60 days prior to the
redemption date, shall select the Securities of the series (or Securities of a
series having the same Terms) to be redeemed pro rata or by lot or by such
other method as the Trustee shall deem fair and appropriate. The Trustee shall
make the selection from Securities that are outstanding and that have not
previously been called for redemption. Securities of the series (or Securities
of a series having the same Terms) and portions of them selected by the Trustee
shall be in amounts of $1,000 or integral multiples of $1,000 or with respect
to Securities of any Series issuable in other denominations pursuant to Section
2.01(8), in amounts equal to the minimum principal denomination for each such
series
<PAGE> 42
PAGE 42
and in integral multiples thereof. Provisions of this Indenture that apply to
Securities of that series (or Securities of a series having the same Terms)
called for redemption also apply to portions of Securities of that series (or
Securities of a series having the same Terms) called for redemption. The
Trustee shall promptly notify the Company in writing of the Securities selected
for redemption and, in the case of any Securities selected for partial
redemption, the Principal Amount thereof to be redeemed.
SECTION 9.04. Notice of Redemption. (a) At least 30 days
but not more than 60 days before a redemption date, unless a shorter period is
specified in the Terms of the Securities to be redeemed, the Company shall mail
a notice of redemption by first-class mail to each Holder of Securities that
are to be redeemed.
(b) All notices of redemption shall identify the
Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price and interest, if any, payable upon
such redemption;
(3) if less than all the outstanding Securities of a series
(or Securities of a series having the same Terms) are to be
redeemed, the identification (and, in the case of partial
redemption, the Principal Amounts) of the particular
Securities to be redeemed;
(4) the name and address of the Paying Agent;
(5) that the Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption
price; and
(6) that interest on Securities called for redemption
ceases to accrue on and after the redemption date.
At the Company's request, the Trustee shall give the notice
of redemption in the Company's name and at the Company's expense.
SECTION 9.05. Effect of Notice of Redemption. Once notice
of redemption is mailed, Securities called for redemption become due and
payable on the redemption date at the redemption price. Any failure to mail
notice of redemption or any defect therein shall not affect the redemption of
any other Securities called for redemption. Upon surrender to the Paying Agent
of such Securities, such Securities shall be paid at the redemption price plus
accrued interest to the redemption date, but installments of interest due on or
prior to the redemption date will be payable to the Holders of such Securities
of record at the close of business on the relevant record dates, unless
otherwise specified in the Terms of such Securities.
<PAGE> 43
PAGE 43
SECTION 9.06. Deposit of Redemption Price. On or before
the redemption date, the Company shall deposit with the Paying Agent money
sufficient to pay the redemption price of and interest accrued to the
redemption date on all Securities to be redeemed on that date.
SECTION 9.07. Securities Redeemed in Part. Upon surrender
of a Security that is redeemed in part, the Company shall issue and the Trustee
shall authenticate for the Holder of that Security a new Security or Securities
of the same series and terms in authorized denominations equal in aggregate
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 10
Sinking Funds
SECTION 10.01. Applicability. The provisions of this
Article shall be applicable to any sinking fund for the retirement of
Securities, except as otherwise specified as contemplated by Section 2.01 for
Securities of any series.
The minimum amount of any sinking fund payment provided for
by the Terms of any Securities is herein referred to as a "Mandatory Sinking
Fund Payment", and any payment in excess of such minimum amount provided for by
the terms of such Securities is herein referred to as an "Optional Sinking Fund
Payment". If provided for by the Terms of Securities, the cash amount of any
sinking fund payment may be subject to reduction as provided in Section 10.02.
Each sinking fund payment shall be applied to the redemption of Securities of
any series (or Securities of a series having the same Terms) as provided for by
the Terms of such Securities.
SECTION 10.02. Satisfaction of Sinking Fund Payments with
Securities. The Company may, in satisfaction of all or any part of any sinking
fund payment with respect to the Securities to be made pursuant to the Terms of
such Securities as provided for by such Terms, (1) deliver outstanding
Securities of such series having the same Terms (other than any of such
Securities previously called for redemption) and (2) apply as credit Securities
of such series having the same Terms which have been redeemed either at the
election of the Company pursuant to the Terms of such Securities or through the
application of permitted Optional Sinking Fund Payments pursuant to the Terms
of such Securities, provided that such Securities have not been previously so
credited. Such Securities shall be received and credited for such purpose by
the Trustee at the price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly. If as a result of the delivery or credit of Securities
in lieu of cash payments pursuant to this Section 10.02, the Principal Amount
of Securities to be redeemed in order to exhaust the aforesaid cash payment
shall be less than $100,000, the Trustee need not call Securities for
redemption, except upon receipt of a Company Order that such action be taken,
and such cash payment shall be held by the Trustee or a Paying Agent and
applied to the next succeeding sinking fund payment with
<PAGE> 44
PAGE 44
respect to such series of Securities (or Securities of such series having the
same Terms), provided, however, that the Trustee or such Paying Agent shall at
the request of the Company from time to time pay over and deliver to the
Company any cash payment so being held by the Trustee or such Paying Agent upon
delivery by the Company to the Trustee of Securities of that series having the
same Terms purchased by the Company having an unpaid Principal Amount equal to
the cash payment required to be released to the Company.
SECTION 10.03. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any series of
Securities (or Securities of such series having the same Terms), the Company
will deliver to the Trustee an Officers' Certificate specifying the amount of
the next ensuing Mandatory Sinking Fund Payment for that series (or Securities
of such series having the same Terms) pursuant to the Terms of that series, the
portion thereof, if any, which is to be satisfied by payment of cash and the
portion thereof, if any, which is to be satisfied by delivering and crediting
of Securities of that series (or Securities of such series having the same
Terms) pursuant to Section 10.02, and the optional amount, if any, to be added
in cash to the next ensuing Mandatory Sinking Fund Payment, and the Company
shall thereupon be obligated to pay the amount therein specified. Not less
than 30 days before each such sinking fund payment date the Trustee shall
select the Securities to be redeemed upon such sinking fund payment date in the
manner specified in Section 9.03 and cause notice of the redemption thereof to
be given in the name of and at the expense of the Company in the manner
provided in Section 9.04. Such notice having been duly given, the redemption
of such Securities shall be made upon the terms and in the manner stated in
Sections 9.05, 9.06 and 9.07.
<PAGE> 45
PAGE 45
ARTICLE 11
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls. If any
provision of this Indenture limits, qualifies or conflicts with the duties
imposed by operation of TIA Section 318(c), the imposed duties shall control.
SECTION 11.02. Notices. Any notice or communication shall
be in writing and delivered in person or mailed by first-class mail addressed
as follows:
if to the Company: The Columbia Gas System, Inc.
20 Montchanin Road
Wilmington, DE 19807
Attention: Corporate Secretary
if to the Trustee:
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder
shall be mailed to the Securityholder at the Securityholder's address as it
appears on the registration books of the Registrar and shall be sufficiently
given if so mailed within the time prescribed.
Failure to mail a notice or communication to a
Securityholder or any defect in it shall not affect its sufficiency with
respect to other Securityholders. If a notice or communication is mailed in
the manner provided above, it is duly given, whether or not the addressee
receives it.
SECTION 11.03. Communication by Holders with Other
Holders. Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to
take or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
<PAGE> 46
PAGE 46
(1) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee stating that, in the
opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed action
have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of
such counsel, all such conditions precedent have been complied
with.
SECTION 11.05. Statements Required in Certificate or
Opinion. Each certificate or opinion with respect to compliance with a
covenant or condition provided for in this Indenture shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of
such person, such covenant or condition has been complied
with.
SECTION 11.06. When Securities Disregarded. In
determining whether the Holders of the required principal amount of Securities
have concurred in any direction, waiver or consent, Securities owned by the
Company or by any person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company shall be disregarded
and deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at
the time shall be considered in any such determination.
SECTION 11.07. Rules by Trustee, Paying Agent and
Registrar. The Trustee may make reasonable rules for action by or a meeting of
Securityholders or for evidencing the due execution of consents or waivers by
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 11.08. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to
be open in the State of New York. If a payment date is a Legal Holiday,
payment shall be made on the next succeeding day that is not
<PAGE> 47
PAGE 47
a Legal Holiday, and no interest shall accrue for the intervening period. If a
regular record date is a Legal Holiday, the record date shall not be affected.
SECTION 11.09. Governing Law. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of Delaware but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
SECTION 11.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities of this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be
part of the consideration for the issue of the Securities.
SECTION 11.11. Successors. All agreements of the Company
in this Indenture and the Securities shall bind its successors. All agreements
of the Trustee in this Indenture shall bind its successors.
SECTION 11.12. Multiple Originals. The parties may sign
any number of copies of this Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement. One signed copy is
enough to prove this Indenture.
SECTION 11.13 Table of Contents; Headings. The table of
contents and headings of the Articles and Sections of this Indenture have been
inserted for convenience of reference only, are not intended to be considered a
part hereof and shall not modify or restrict any of the terms or provisions
hereof.
<PAGE> 48
PAGE 48
IN WITNESS WHEREOF, the parties have caused this Indenture
to be duly executed as of the date first written above.
THE COLUMBIA GAS SYSTEM, INC.,
Attest:
by
- ------------------------- ---------------------------
Title: Title:
(Trustee)
Attest:
by
- ------------------------- ---------------------------
Title: Title:
<PAGE> 49
PAGE 49
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE )
On this ____ day of ______, 199_, before me personally came
_________________, to me known, who, being by me duly sworn, did depose and
say that he resides at Wilmington, Delaware 19807; that he is Executive Vice
President of THE COLUMBIA GAS SYSTEM, INC., one of the corporations described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument bearing the corporate
name of said corporation is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation; and that he signed his
name thereto by like order.
----------------------------
Notary Public
STATE OF ___________ )
) ss.:
COUNTY OF ___________ )
On the ____ day of ________, 199_, before me personally came
______________________, to me known, who, being by me duly sworn, did depose
and say that he resides at __________________________, and that he is an
____________________________________________ of _______________________________
, one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed
to said instrument bearing the corporate name of said corporation 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
<PAGE> 1
PAGE 1
EXHIBIT B-3
[FORM OF SUPPLEMENTAL INDENTURE]
===============================================================================
THE COLUMBIA GAS SYSTEM, INC.
and
, as Trustee
----------------------
--------------
_____________ SUPPLEMENTAL INDENTURE
Dated as of ________________
Supplementing Indenture Dated as of ______, ____
-------------
_____% Debentures, Series Due _____________
===============================================================================
<PAGE> 2
PAGE 2 TABLE OF CONTENTS 1/
------------
<TABLE>
<CAPTION>
Page
<S> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE ONE
Definitions
-----------
ARTICLE TWO
% Debentures Due
-------------------------------------
Sec. 2.01. Creation of Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sec. 2.02. Date of issue, maturity, interest rate,
place of payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sec. 2.03. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sec. 2.04. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sec. 2.05. Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sec. 2.06. Global Certificate Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sec. 2.07. Covenant with respect to Columbia Gas Transmission
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE THREE
Miscellaneous Provisions
Sec. 3.01. Execution in counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sec. 3.02. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sec. 3.03. Company Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXHIBIT A - Form of ____% Debenture, Series Due _____ . . . . . . . . . . . . . . . . . . . . . . . . . .
- -----------------
</TABLE>
1/The Table of Contents is included herein for convenience only and is not
to be considered a part of the Supplemental
Indenture.
_____________ SUPPLEMENTAL INDENTURE dated as of
<PAGE> 3
PAGE 3
________________, between THE COLUMBIA GAS SYSTEM, INC., a Delaware corporation
(hereinafter called the Company), and
___________________________________________, a __________corporation (the
"Supplemental Indenture").
RECITALS
WHEREAS the Company has heretofore executed and delivered to the
Trustee a certain indenture dated as of ______, ____ (hereinafter called the
Original Indenture), providing for the issuance of senior debt securities of
the Company, unlimited in aggregate principal amount (hereinafter called the
Securities); and
WHEREAS ARTICLE TWO of the Original Indenture provides, among other
things, that the Securities may be issued in one or more series, the Securities
of each series maturing on such dates and bearing interest at such rates and
having such other terms and provisions as the Board of Directors of the Company
may determine prior to the authentication thereof; and
WHEREAS ARTICLES TWO and EIGHT of the Original Indenture provide,
among other things, that the Company and the Trustee may from time to time
enter into indentures supplemental thereto for the purpose of setting forth the
terms and provisions of any one or more series of Securities and for any
purpose not inconsistent with the terms of the Original Indenture, including
such additional covenants not inconsistent with the provisions of the Original
Indenture as may be agreed upon by the Company and the Trustee, or for the
purpose of curing any ambiguity or of curing, correcting or supplementing any
defective or inconsistent provision of the Original Indenture; and
WHEREAS the Company, pursuant to resolutions duly adopted by its
Board of Directors at a meeting of said Board duly called and held, has
determined, under and in accordance with the provisions of the Original
Indenture, to create a new series of Securities to be known as "_____%
Securities, Series Due _____________" (hereinafter called the Securities Due
_____________) limited to $___________ in aggregate principal amount, the
further terms and provisions of which are hereinafter set forth; and
<PAGE> 4
PAGE 4
WHEREAS the Company, pursuant to resolutions duly adopted by its
Board of Directors at a meeting of said Board duly called and held, has
determined that it is advisable to amend and supplement the Original Indenture
by providing for a record date in connection with the payment of interest to
the holders of Securities Due _____________, and
WHEREAS at or pursuant to resolutions adopted at said meeting of
the Board of Directors of the Company the form, terms and provisions of this
Supplemental Indenture were duly approved and the execution and delivery by the
Company of a supplemental indenture in the form approved and having the terms
and provisions so approved were duly authorized and directed, and there was
established for the Securities Due _____________ a form substantially as in
Exhibit A and all things necessary to make the Securities Due _____________,
when executed by the Company and authenticated by the Trustee and issued under
the Original Indenture, as supplemented by this Supplemental Indenture, the
valid, binding and legal obligations of the Company in accordance with their
terms and to make this Supplemental Indenture a valid, binding and legal
agreement, have been done and performed;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH that, in
order to set forth the terms and provisions of the Securities Due _____________
and for and in consideration of the premises and of the acceptance or purchase
of the Securities Due _____________ by the holders thereof, the Company
covenants and agrees with the Trustee as follows:
ARTICLE ONE
Definitions
All terms defined in the Original Indenture referred to in the
Recitals hereto or in any of the supplements thereto referred to in such
Recitals are, unless the context otherwise requires, used herein with the same
meanings therein set forth.
ARTICLE TWO
Securities Due
SECTION 2.01. There shall be a series of Securities designated as
"_____% Debentures, Series Due _____________," the aggregate principal amount
of which that may be outstanding being limited to $___________, except as
provided in Section 2.10 of the Original Indenture.
The Securities Due _____________ shall be substantially in the form
recited in
<PAGE> 5
PAGE 5
Exhibit A.
SECTION 2.02. The Securities Due _____________ shall be dated as
provided in Section 2.05 of this Article One; shall mature ________________;
shall bear interest at the rate of ____% per annum until paid or redeemed as
herein and in the Original Indenture provided, payable semiannually on each
_____ and __________ to the Securityholders in whose names such Securities Due
_____________ are registered at the close of business on ________ or
__________, as the case may be, next preceding such _____ or __________ or, if
such date shall not be a business day, then the next preceding business day
(unless such Security has been called for redemption on a date fixed for such
redemption which is prior to such interest payment date), except that if the
Company shall default in the payment of any installment of interest on any
Securities Due _____________ , such interest in default shall be paid to the
Securityholders in whose names the Securities Due _____________ are registered
at the close of business on a record date established for the payment of such
defaulted interest, and interest thereon, by the Company in any lawful manner
not inconsistent with the requirements of any securities exchange on which the
Securities Due _____________ may be listed (such record date to be not less
than five days prior to the date for the payment of such defaulted interest);
and shall be payable as to both principal and interest in such coin or currency
of the United States of America as at the time of payment is legal tender for
the payment of public and private debts, at the corporate trust office of the
Trustee in the Borough of Manhattan, the City of New York. Any such defaulted
installment of interest on any Securities Due _________________ that is not
paid when due shall bear interest, to the extent lawful, at the rate per annum
(expressed in basis points) borne by such Securities plus 100 basis points.
SECTION 2.03. The Securities Due _____________ shall be issued in
registered form without coupons in the denominations of $1,000 and any integral
multiple of $1,000. Temporary Securities Due _____________ may be issued in
denominations as provided in Section 2.04 of the Original Indenture and shall
be exchangeable as provided in such temporary Securities.
SECTION 2.04. [FOR SECURITIES WITH NO REDEMPTION OPTION]. The
Securities Due _________________________ are not subject to redemption prior to
maturity.
SECTION 2.04. [FOR SECURITIES WITH REDEMPTION OPTION]. The
Securities Due _____________ may be redeemed prior to maturity, at the election
of the Company, as a whole at any time or in part from time to time, at the
applicable redemption price or prices (expressed in percentages of principal
amount) set forth in the tabulation under the heading "Regular Redemption
Prices" in the form of Securities Due ___________ contained in Exhibit A to
this Supplemental Indenture, with accrued interest to the date fixed for
redemption.
SECTION 2.05. Each Securities Due _____________ shall be dated the
date of
<PAGE> 6
PAGE 6
authentication, and shall bear interest from the interest payment date to which
interest has been paid last preceding the date thereof (unless the date thereof
is an interest payment date to which interest has been paid, in which case from
the date thereof, or unless the date thereof is prior to ___________ in which
case from _________________). Notwithstanding the foregoing, if the date of a
Securities Due _____________ is after ________ or __________, as the case may
be, and before the following _____ or __________, as the case may be, such
Securities shall bear interest from such _____ or __________; provided,
however, that if and to the extent that the Company shall default in the
payment of interest due on such _____ or __________, such Securities shall bear
interest from the next preceding _____ or __________ to which interest has been
paid or, if no interest has been paid, from _________________.
SECTION 2.06. The Securities Due __________ will be issued in
fully registered form and will be represented by a global certificate or
certificates (the "Global Security") registered in the name of a nominee of The
Depository Trust Company ("DTC" or the "Depositary"). The Global Security
representing the Securities Due __________ will be deposited with, or on behalf
of, the Depositary. The Securities Due __________ will not be exchangeable for
certificates issued in definitive, registered form at the option of the holder
and, except as set forth below, will not otherwise be issuable in definitive
form.
So long as the Depositary for the Global Security, or its nominee,
is the registered owner of the Global Security, the Depositary or its nominee,
as the case may be, will be considered the sole owner or holder of the
Securities Due __________ for all purposes under the Indenture. Except as
provided below, beneficial owners of the Securities Due __________ will not be
entitled to have the Securities Due __________ registered in their names, will
not receive or be entitled to receive physical delivery of Securities Due
__________ in definitive form and will not be considered the owners or holders
thereof under the Indenture. Unless and until it is exchanged in whole or in
part for individual certificates evidencing the Securities Due __________
represented thereby, the Global Security may not be transferred except as a
whole by the Depositary for the Global Security to a nominee of such Depositary
or by a nominee of such Depositary to such Depositary or another nominee of
such Depositary or by the Depositary or any nominee to a successor Depositary
or any nominee of such successor.
If the Depositary with respect to the Global Security is at any
time unwilling or unable to continue as Depositary and a successor Depositary
is not appointed by the Company within 90 days, the Company will issue
definitive certificates in exchange for the Securities Due __________
represented by such Global Security. In addition, the Company may at any time
and in its sole discretion determine not to use the Depositary's book-entry
system, and, in such event, will issue definitive certificates in exchange for
the Securities Due __________ represented by such Global Security.
SECTION 2.07. Until the earlier of (i) the date on which none of
Columbia Gas
<PAGE> 7
PAGE 7
Transmission Corporation, any successor thereto and any transferee of the
assets of Columbia Gas Transmission Corporation as an entirety (or
substantially as an entirety) (collectively "TCO"), is a Significant Subsidiary
of the Company, and (ii) the fourth anniversary of the date on which any of the
New Indenture Securities are first issued (each such date in (i) and (ii), a
"Covenant Expiration Date"), the Company shall, subject to applicable law and
regulation, hold not less than $600 million of First Mortgage Bonds of TCO (the
"First Mortgage Bonds") issued pursuant to and entitled to the benefits of the
TCO Indenture of Mortgage and Deed of Trust (the "TCO Mortgage"). Until the
Covenant Expiration Date, the lien in favor of the Company under the TCO
Mortgage securing the First Mortgage Bonds shall at all times (i) cover all
property and assets of TCO intended to be subject to the TCO Mortgage as in
effect on the date of this Supplemental Indenture, and (ii) be a first priority
perfected lien subject only to those exceptions that are contained in the TCO
Mortgage as in effect on the date of this Supplemental Indenture, and the
Company shall not release, or consent to any release of, any property or assets
from that lien, other than (x) as provided in the TCO Mortgage as in effect on
the date of this Supplemental Indenture and (y) releases of property and assets
in the normal course of TCO's business in connection with the sale, other
transfer or abandonment of such property or assets. Until the Covenant
Expiration Date, no other Debt of any Person shall be secured by any lien on
any property or assets of TCO except as permitted under the TCO Mortgage as in
effect on the date of this Supplemental Indenture.
Notwithstanding the foregoing, the Company shall not be in breach
of this Section 2.07 (A) if the amount of the Company's holdings of First
Mortgage Bonds is less than $600 million for not more than an aggregate of 30
days prior to the Covenant Expiration Date (the first day, subsequent to such
30th day, on which the amount of such holdings is below $600 million being
hereafter referred to as the "Trigger Date") or (B) if on or before the
sixtieth day after the Trigger Date, the Company retires (as described below)
or has previously retired Company Funded Debt in an amount equal to 150% of the
amount by which $600 million exceeds the amount of the Company's holdings of
First Mortgage Bonds on the Trigger Date, or (C) if subsequent to the Trigger
Date, the amount of the Company's holdings of First Mortgage Bonds falls below
the amount of such holdings as of the Trigger Date or below the lowest previous
amount of such holdings subsequent to the Trigger Date (any such date, a
"Further Trigger Date") and the Company retires (as described below) or has
previously retired Company Funded Debt in an amount equal to 150% of the amount
by which $600 million exceeds the amount of such holding on the Further Trigger
Date, the amount of such retirement with respect to any Further Trigger Date to
be measured for purposes of determining compliance with this provision as of
the sixtieth day after such Further Trigger Date. The Company may "retire"
Company Funded Debt by any one or more of the following methods: (1) by
cancellation of Company Funded Debt which it acquires or reacquires, (2) by
defeasance of Company Funded Debt in accordance with the terms of such Company
Funded Debt, (3) by a bona fide tender offer for Company Funded Debt which, to
the extent such tender offer is for New Indenture Securities, is for principal
amounts of each series of New Indenture Securities that are proportionate to
the
<PAGE> 8
PAGE 8
relative principal amount of such issues outstanding on the relevant Trigger
Date or Further Trigger Date (a tender offer for any of the New Indenture
Securities at par will be deemed to retire an equivalent amount of Company
Funded Debt, irrespective of the amount of New Indenture Securities or the
amount of any series thereof actually tendered), or (4) by repayment or
prepayment of Company Funded Debt in accordance with its terms; provided,
however, that repayment or prepayment of Company Funded Debt under a term loan
facility in effect on the date of this Supplemental Indenture shall not
constitute retirement of such Debt unless the Company shall have waived any
entitlement it may have thereunder to reborrow the amounts so repaid or
prepaid. In connection with any such "retirement" of Company Funded Debt, the
Company (i) shall "retire" New Indenture Securities (treating the New Indenture
Securities as a single class) and other Company Funded Debt (treating all such
other Company Funded Debt as a single class) pro rata based on their respective
outstanding principal amounts on the relevant Trigger Date or Further Trigger
Date or (ii) may, at its option, "retire" a greater principal amount of New
Indenture Securities than is determined in accordance with the foregoing clause
(i). The foregoing covenant shall not represent a limit on the amount of
Company Funded Debt or Funded Debt of TCO that may be outstanding from time to
time.
"Company Funded Debt" means all Debt (other than debt under a bank
loan commonly referred to as a "revolving credit facility") created, assumed or
guaranteed by the Company which matures by its terms, or is renewable at the
option of the Company to a date, more than one year after the date of the
original creation, assumption or guarantee of such Debt by the Company.
"New Indenture Securities" means (i) the Securities Due
______________, and (ii) the Company's _____% Debentures, Series Due
___________, ____% Debentures, Series Due ______________, ____% Debentures,
Series Due ______________, ___% Debentures, Series Due __________, __%
Debentures, Series Due and _____% Debentures, Series Due _____________, each
issued under the Original Indenture
"TCO Indenture of Mortgage and Deed of Trust" means the Indenture
of Mortgage and Deed of Trust, dated August 30, 1985, between Columbia Gas
Transmission Corporation and Wilmington Trust, as amended or restated from time
to time.
<PAGE> 9
PAGE 9
ARTICLE THREE
Miscellaneous Provisions
SECTION 3.01. This Supplemental Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 3.02. This Supplemental Indenture and each of the
Securities Due _____________ shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be construed in
accordance with and governed by the laws of said State.
SECTION 3.03. The recitals contained herein shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representation as to the validity or
sufficiency of this Supplemental Indenture.
IN WITNESS WHEREOF, The Columbia Gas System, Inc. has caused this
Supplemental Indenture to be executed in its corporate name by its Chairman of
the Board or its President or one of its Vice Presidents or its Treasurer, and
its corporate seal to be hereunto affixed and to be attested by its Secretary
or one of its Assistant Secretaries, and [TRUSTEE] has caused this Supplemental
Indenture to be executed in its corporate name and its corporate seal to be
hereunto affixed by one of its Trust Officers and to be attested by one of its
Assistant Secretaries, all as of ________________.
THE COLUMBIA GAS SYSTEM, INC.
By
---------------------------------
Attest:
------------------------
[CORPORATE SEAL] [TRUSTEE]
------------------------------
By
---------------------------------
<PAGE> 10
PAGE 10
Attest:
------------------------
[CORPORATE SEAL]
<PAGE> 11
PAGE 11
STATE OF DELAWARE
New Castle County .:
On the ____ of ____ in the year ____ before me personally came
________________, to me known, who, being by me duly sworn, did depose and say
that he resides at Wilmington, Delaware 19807; that he is
_____________________________ of THE COLUMBIA GAS SYSTEM, INC., one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument
bearing the corporate name of said corporation is such corporate seal; that it
was so affixed by order of the Board of Directors of said corporation; and that
he signed his name thereto by like order.
- ----------------------------------
(NOTARIAL SEAL)
STATE OF NEW YORK
County of New York .:
On the ____ of ____, in the year ____, before me personally came
_________________ to me known, who, being by me duly sworn, did depose and say
that he resides at __________, ______________; that she is a Trust Officer of
_________________, one of the corporations described in and which executed the
foregoing instrument; that she knows the seal of said corporation; that the
seal affixed to said instrument bearing the corporate name of said corporation
is such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that she signed her name thereto by like
authority.
- -----------------------------------
(NOTARIAL SEAL)
<PAGE> 12
PAGE 12
Exhibit A
FORM OF DEBENTURE
(FACE)
Unless this certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the issuer of
its agent for registration of transfer, exchange or payment, and any
certificate 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 is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered
owner hereof, Cede & Co., has an interest herein.
THE COLUMBIA GAS SYSTEM, INC.
_____% DEBENTURE, SERIES DUE _____________
DUE _______________
No. ..... $ .....
THE COLUMBIA GAS SYSTEM, INC., a Delaware corporation (hereinafter
called the Company), for value received, hereby promises to pay to ______ or
registered assigns, the sum of $__________ on the [ ] day of _____________,
at the corporate trust office of ___________________, Trustee under the
Indenture referred to on the reverse hereof, or its successor as such Trustee,
in the Borough of Manhattan, the City of New York, in such coin or currency of
the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts, and to pay interest thereon at the
rate of _____% per annum in like coin or currency, payable at said office
semiannually on the [ ] day of ___ and the [ ] day of ________ in each
year, from the interest payment date to which interest has been paid last
preceding the date hereof (unless the date hereof is an interest payment date
to which interest has been paid, in which case from the date hereof, or unless
the date hereof is prior to ___________, in which case from _________________)
until the Company's obligation with respect to the payment of such principal
shall have been discharged, such interest to be paid to the person who shall
have been the registered owner hereof at the close of business on ________ or
__________, as the case may be, next preceding an interest payment date, except
as otherwise provided in the Indenture referred to on the reverse hereof.
Notwithstanding, if the date of this Debenture is after ________ or __________,
as the case may be, and before the immediately following _____ or __________,
as the case may be, this Debenture shall bear interest from such _____ or
__________; provided, however, that if and to the extent that the Company shall
default in the payment of interest due on such _____ or __________, this
Debenture shall bear interest from the next preceding _____ or __________ to
which interest has been paid or, if no interest has been paid, from
_________________. Any installment of interest on this Debenture that is not
paid when due shall bear interest at the rate borne by this Debenture plus 1%
per annum.
Additional provisions of this Debenture are contained on the reverse
hereof and such provisions shall for all purposes have the same effect as
though fully set forth at this place.
<PAGE> 13
PAGE 13
This Debenture shall not be valid or become obligatory for any purpose
until it shall have been authenticated by the certificate, hereon endorsed, of
the Trustee under the Indenture.
IN WITNESS WHEREOF, The Columbia Gas System, Inc., has caused this
Debenture to be executed in its name by the facsimile signature of its Chairman
of the Board or its President or one of its Vice Presidents or its Treasurer,
and its corporate seal to be hereunto affixed, or a facsimile thereof to be
printed or engraved hereon, and to be attested by the facsimile signature of
its Secretary or one of its Assistant Secretaries.
THE COLUMBIA GAS SYSTEM, INC.
Dated:
----------------
By
--------------------------
Attest:
- --------------------------------
(FORM OF TRUSTEE'S CERTIFICATE ON DEBENTURES)
This is one of the Debentures, of the series designated
therein, described in the within-mentioned Indenture.
, as Trustee,
----------------------
By
------------------------------
Authorized Officer
(REVERSE)
THE COLUMBIA GAS SYSTEM, INC.
_____% DEBENTURE, SERIES DUE _____________
DUE ________________
This Debenture is one of a duly authorized issue of Debentures of
the Company issuable in series, and is one of a series known as its _____%
Debentures, Series Due _____________ (herein called Debentures Due
_____________), all issued and to be issued under an Indenture dated as of
________________, ________ in which the Debentures Due _____________ are
created and described, all executed between the Company and
_______________________(herein called the Trustee), Trustee, to which Indenture
(herein called the Indenture) reference is hereby made for a statement of the
rights thereunder of the Trustee and of the holders of the Debentures, and of
the duties thereunder of the Trustee and of the Company.
<PAGE> 14
PAGE 14
The rights and obligations of the Company and of the holders of
Debentures may be changed and modified at the request of the Company by an
indenture or indentures supplemental to the Indenture, executed pursuant to the
consent in writing of the holders of at least a majority in principal amount of
the Debentures then outstanding affected by such change or modification, all in
the manner and subject to the limitations set forth in the Indenture, provided
that no such change or modification by such supplemental indenture shall extend
the maturity of, or reduce the rate of interest on, or otherwise modify the
terms of payment of the principal of, or the premium, if any, or the interest
on, this Debenture, or reduce the percentage of Debentures the holders of which
are required to consent to any such supplemental indenture, or modify the
provision as to the holders of any series of Debentures authorized or required
to consent to any such supplemental indenture, without the express consent of
the holder hereof. Any such consent by the holder of this Debenture (unless
effectively revoked as provided in the Indenture) shall be conclusive and
binding upon such holder and upon all future holders and owners of this
Debenture, whether or not any notation of such consent is made upon this
Debenture.
[THE DEBENTURES DUE __________ MAY NOT BE REDEEMED PRIOR TO MATURITY.]
[ THE DEBENTURES DUE _____________ MAY BE REDEEMED, PRIOR TO MATURITY,
AT THE ELECTION OF THE COMPANY, AS A WHOLE AT ANY TIME, OR IN PART FROM TIME TO
TIME, AS PROVIDED IN THE INDENTURE, AT THE REDEMPTION PRICES (EXPRESSED IN
PERCENTAGES OF PRINCIPAL AMOUNT) SET FORTH IN THE TABULATION BELOW UNDER THE
HEADING "REGULAR REDEMPTION PRICES":]
If Redeemed During Regular
12 Months' Period Redemption
Commencing ____ Prices
------------------------ -----------
<PAGE> 15
PAGE 15
In case a default, as defined in the Indenture, shall occur, the
principal of all the Debentures then outstanding may become or be declared due
and payable in the manner and with the effect provided in the Indenture. The
Indenture provides that in certain events such declaration and certain defaults
under the Indenture may be waived by the holders of a majority in principal
amount of all Debentures outstanding.
This Debenture is transferable and exchangeable as prescribed in
the Indenture by the registered holder hereof in person, or by his duly
authorized attorney, at the corporate trust office of the Trustee in said
Borough of Manhattan, upon surrender and cancellation of this Debenture, and,
thereupon, a new fully registered Debenture or Debentures Due _____________ of
the same aggregate principal amount shall be issued in exchange therefor as
provided in the Indenture. The Company and the Trustee may deem and treat the
person in whose name this Debenture is registered as the absolute owner hereof
for the purpose of receiving payment of or on account of the principal,
premium, if any, and interest (except as stated in the first paragraph on the
face hereof) due hereon and for all other purposes.
No recourse shall be had for the payment of the principal of, or
the premium, if any, or the interest on, this Debenture, or any part hereof, or
for any claim based hereon or otherwise in respect hereof, or of the
indebtedness represented hereby, or upon any obligation, covenant or agreement
of the Indenture, against any incorporator, stockholder, officer or director,
as such, past, present or future, of the Company or of any successor
corporation (either directly or through the Company or any such successor
corporation), whether by virtue of any constitutional provision, statute or
rule of law, or by the enforcement of any assessment or penalty or otherwise,
all liability, if any, of that character against every such incorporator,
stockholder, officer and director being by the acceptance hereof, and as part
of the consideration for the issue hereof, expressly waived and released.
This Debenture shall be deemed to be a contract made under the laws
of the State of New York and for all purposes shall be construed in accordance
with and governed by the laws of said State.
<PAGE> 1
PAGE 1
Exhibit B.4
THE COLUMBIA GAS SYSTEM, INC.
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
[$ ] CONVERTIBLE PREFERRED STOCK
PAR VALUE $10.00 PER SHARE
LIQUIDATION VALUE [$ ] PER SHARE
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, the [ ] of The Columbia Gas
System, Inc., a Delaware corporation (the "Company"), DOES HEREBY CERTIFY that
the following resolution has been duly adopted by the Board of Directors of the
Company:
RESOLVED that, pursuant to the authority expressly granted
to and vested in the Board of Directors of the Company by the provisions of the
Restated Certificate of Incorporation of the Company, this Board of Directors
hereby authorizes the issuance of a series (this "Series") of the Preferred
Stock of the Company (the "Preferred Stock") which shall consist of [ ]
shares, and this Board of Directors hereby fixes the powers, designations,
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, of the shares of this
Series (in addition to the powers, 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 Company which are applicable to the Preferred Stock) as
follows:
1. Designation. The designation of this Series of
Preferred Stock shall be [$ ] Convertible Preferred Stock. The number of
shares of this Series shall be [ ]. The "Liquidation Price" of shares
of this Series shall be [$ ] per share.
2. Dividends. (a) The holders of shares of this Series
shall be entitled to receive, when, as and if declared by the Board of
Directors of the Company out of funds legally available therefor, cumulative
preferential dividends from the issue date of such shares (the "Issue Date"),
payable in arrears on the [ ] day of each [ ], [ ], [ ] and
[ ], respectively (each a "Dividend Payment Date") or, if any Dividend
<PAGE> 2
PAGE 2
Payment Date is not a business day, then the Dividend Payment Date shall be the
next succeeding business day, at the rate per share of [ ]% per annum, and
no more; provided, however, that (i) effective as of [ ] (the "Deferred
Dividend Payment Date") and thereafter such rate per share per annum shall be
the rate set forth above (expressed in basis points) plus 100 basis points and
no more and (ii) the initial dividend payment shall be for the period from the
Issue Date to and including [ ], and shall be payable on [ ] (the
"Deferred Dividend Payment Date"). With respect to any dividend period during
which a redemption occurs, the Company may, at its option, declare accrued
dividends to, and pay such dividends on, the redemption date, in which case
such dividends would be payable on the redemption date in cash to the holders
of the shares of this Series as of the record date for such dividend payment
and such accrued dividends would not be included in the calculation of the
related Call Price (as hereinafter defined). Each dividend on the shares of
this Series shall be payable to holders of record as they appear on the stock
books of the Company on such record dates, not less than 10 nor more than 60
days preceding the payment dates thereof, as shall be fixed by the Board of
Directors. Dividends (or amounts equal to accrued and unpaid dividends)
payable on shares of this Series for any period shorter than a quarterly
dividend period shall be computed on the basis of a 360-day year of twelve
30-day months.
Dividends on the shares of this Series shall accrue
(whether or not the Company has earnings, whether or not there are funds
legally available for the payment of such dividends and whether or not such
dividends are declared) on a daily basis from the previous Dividend Payment
Date, except that the first dividend shall accrue from the Issue Date. For
purposes of the immediately preceding sentence, the Dividend Payment Date for
the dividend payable on the Deferred Dividend Payment Date shall be deemed to
be [ ]. Dividends accumulate to the extent they are not paid on the
Dividend Payment Date for the quarter for which they accrue. Accumulated
unpaid dividends shall not bear interest.
The foregoing notwithstanding, no dividend shall accrue or
be payable with respect to shares of this Series that are redeemed on or prior
to [ ] (the "Threshold Date")
(b) Unless full cumulative dividends, if any, accrued on
the shares of this Series that are payable in cash have been paid or
contemporaneously are declared and paid and a sum set aside sufficient for such
payment through the most recent Dividend Payment Date, then, whether or not the
Mandatory Conversion Date (as hereinafter defined) has occurred:
(i) no full cash dividend shall be declared by the Board of
Directors or paid or set aside for payment by the Company or
other distribution declared or made on any shares of the
Company ranking on a parity with the shares of this Series as
to dividends;
(ii) no dividend (other than a dividend or distribution
paid in shares of, or warrants, rights or options exercisable
for or convertible into shares of, Common Stock or in any
other shares of the Company ranking junior to the shares of
this Series as to dividends and upon liquidation) shall be
declared or paid or set aside for payment or other
distribution declared or made upon the Common Stock or upon
any other shares of the Company ranking junior to the shares
of this Series as to dividends; and
(iii) no Common Stock or any other shares of the Company
ranking junior to or on a parity with the shares of this
Series as to dividends or upon liquidation shall be redeemed,
purchased or otherwise acquired for any consideration (or any
moneys be paid to or made
<PAGE> 3
PAGE 3
available for a sinking fund for the redemption of any shares
of any such series or class) by the Company, except by
conversion into or exchange for shares of the Company ranking
junior to the shares of this Series as to dividends and upon
liquidation.
When dividends which are payable in cash have not been paid or set aside in
full with respect to the shares of this Series and any other shares of the
Company ranking on a parity with the shares of this Series as to dividends, all
dividends declared with respect to the shares of this Series and any other
shares of the Company ranking on a parity with the shares of this Series as to
dividends shall be declared pro rata so that the amount of dividends declared
per share on this Series and such other shares shall in all cases bear to each
other the same ratio that, at the time of declaration, accrued and payable but
unpaid dividends per share on the shares of this Series and such other shares
bear to each other. Holders of the shares of this Series shall not be entitled
to any dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends, as herein described.
(c) Subject to the foregoing provisions of this paragraph
2 and paragraph 4(a), the Board of Directors may declare and the Company may
pay or set aside for payment dividends and other distributions on any shares of
the Company ranking on a parity with or junior to the shares of this Series as
to dividends or upon liquidation, and may redeem, purchase or otherwise acquire
any shares of the Company ranking on a parity with or junior to the shares of
this Series as to dividends or upon liquidation, and the holders of the shares
of this Series shall not be entitled to share therein.
(d) Any dividend payment made on the shares of this Series
shall first be credited against the earliest accrued but unpaid dividend due
with respect to the shares of this Series.
(e) All dividends paid with respect to the shares of this
Series shall be paid pro rata to the holders entitled thereto.
(f) Holders of the shares of this Series shall be entitled
to receive dividends in preference to and in priority over any dividends upon
any shares of the Company ranking junior to the shares of this Series as to
dividends, but subject to the rights of holders of shares of the Company having
a preference and a priority over the payment of dividends on the shares of this
Series.
3. Redemptions and Conversions. (a) Mandatory
Conversion. On the fifth anniversary of the Issue Date or, if such fifth
anniversary is not a business day, the next succeeding business day (the
"Mandatory Conversion Date"), each outstanding share of this Series shall
convert automatically (the "Mandatory Conversion") into a number of shares of
Common Stock at the Common Equivalent Rate (as hereinafter defined) in effect
on the Mandatory Conversion Date and the right to receive an amount in cash
equal to all accrued and unpaid dividends on such share of this Series (other
than dividends payable to a holder of record on a prior date) to the Mandatory
<PAGE> 4
PAGE 4
Conversion Date, whether or not declared, out of funds legally available for
the payment of dividends, subject to the right of the Company to redeem the
shares of this Series (i) on or prior to the Deferred Dividend Payment Date and
(ii) on or after the Regular Redemption Date (as hereinafter defined) and prior
to the Mandatory Conversion Date, as described below, and subject to the
conversion of the shares of this Series at the option of the holder at any time
after the Deferred Payment Date and prior to the Mandatory Conversion Date.
The Common Equivalent Rate is equal to the product of (i) one and (ii) the
Special Factor, and is subject to adjustment as set forth below. Dividends on
the shares of this Series shall cease to accrue and such shares shall cease to
be outstanding on the Mandatory Conversion Date. The Company shall make such
arrangements as it deems appropriate for the issuance of certificates
representing shares of Common Stock and for the payment of cash in respect of
such accrued and unpaid dividends, if any, or cash in lieu of fractional
shares, if any, in exchange for and contingent upon surrender of certificates
representing the shares of this Series, and the Company may defer the payment
of dividends on such shares of Common Stock and the voting thereof until, and
make such payment and voting contingent upon, the surrender of such
certificates representing the shares of this Series; provided, however that the
Company shall give the holders of the shares of this Series such notice of any
such actions as the Company deems appropriate and upon such surrender such
holders shall be entitled to receive such dividends declared and paid on such
shares of Common Stock subsequent to the Mandatory Conversion Date. Amounts
payable in cash in respect of the shares of this Series or in respect of such
shares of Common Stock shall not bear interest.
(b) Redemption by the Company.
(i) Right To Redeem. Shares of this Series are not
redeemable by the Company prior to [ ] (the
"Regular Redemption Date"), except that shares in this
Series are redeemable by the Company on or prior to the
Deferred Dividend Payment Date; provided however, that no such
redemption may be made on or prior to the Deferred Dividend
Payment Date if, after giving effect thereto, less than
$50,000,000 (as calculated by Liquidation Price) of shares of
this Series would remain outstanding; provided further,
however, that the Company may effect any such redemption if,
after giving effect thereto, no shares of the Series would
remain outstanding. At any time and from time to time (i) on
or prior to the "Deferred Dividend Payment Date and (ii) on
or after the Regular Redemption Date and prior to the
Mandatory Conversion Date, the Company, subject to the
limitation set forth in the preceding sentence, shall, in the
case of a redemption that occurs on or prior to the Deferred
Payment Date, have the right to redeem, in whole or in part,
the outstanding shares of this Series. Upon any such
redemption that occurs on or prior to the Deferred Dividend
Payment Date, the Company shall deliver to holders of shares
of this Series, in accordance with the provisions of this
Certificate, in exchange for each share so redeemed, cash in an
amount equal to this sum of (i) the Liquidation Price
therefor set forth in paragraph 1 above plus (ii) if such
redemption occurs after the Threshold Date, all accured and
unpaid dividends thereon to the date of redemption. Upon any
such redemption that occurs on or after the Regular
Redemption Date, the Company shall deliver to the holders of
shares of this Series, in accordance with the provisions of
this Certificate, in exchange for each share so redeemed, a
number of shares of Common Stock (the "Optional Call Number")
equal the lesser of (i) the (A) the Call Price (as
hereinafter defined) in effect on the redemption date, divided
by (B) the Current Market Price (as hereinafter defined) of
the Common Stock determined as of the date which is one
trading day (as hereinafter defined) prior to the public
announcement of the redemption, and (ii) the sum of (x) the
Common Equivalent Rate and (y) an amount determined by
dividing the [premium] Accured Dividend Amount (as hereinafter
defined) by the Current Market Price determined as of the
date which is one trading day prior to the public announcement
of the redemption. The Call Price of each share of this Series
is the sum of (x) The Base Call Price, (y) [for each period set
forth in the table below, the amount shown in such table for
such period and (z)] all accrued and unpaid dividends thereon
to the redemption date (other than dividends payable to a
holder of record as of a prior date), subject to the right of
the Company pursuant to paragraph 2 to pay such accrued and
unpaid dividends in cash (the [sum of the] amount[s]
referred to in (y) [and (z)] [are] [is] referred to as the
"[Premium-] Accured Dividend Amount"). The Base Call Price is
equal to the product of the Liquidation Price and the Special
Factor. The public announcement of any call for redemption
that will occur on or after the Regular Redemption Date shall
be made prior to the mailing of the notice of such call to
holders of shares of this Series as described below. If fewer
than all the outstanding
<PAGE> 5
PAGE 5
shares of this Series are to be redeemed, shares to be
redeemed shall be selected by the Company from outstanding
shares of this Series not previously redeemed by lot or pro
rata (as nearly as may be practicable) or by any other method
determined by the Board of Directors of the Company in its
sole discretion to be equitable.
(ii) Current Market Price. As used in this subparagraph
(b), the term "Current Market Price" per share of the Common
Stock on any date of determination means the lesser of (x) the
average of the Closing Prices (as hereinafter defined) of the
Common Stock for the 15 consecutive trading days ending on and
including such date of determination, and (y) the Closing
Price of the Common Stock for such date of determination;
provided, however, that, with respect to any redemption of
shares of this Series, if any event that results in an
adjustment of the Common Equivalent Rate occurs during the
period beginning on the first day of such 15 day period and
ending on the applicable redemption date, the Current Market
Price as determined pursuant to the foregoing shall be
appropriately adjusted to reflect the occurrence of such
event.
(iii) Notice of Redemption. The Company shall provide
notice of any redemption of the shares of this Series to
holders of record of this Series to be called for redemption
not less than 15 nor more than 60 days prior to the date fixed
for such redemption. Such notice shall be provided by mailing
notice of such redemption first class postage prepaid, to each
holder of record of shares of this Series to be redeemed, at
such holder's address as it appears on the stock register of
the Company; provided, however, that neither failure to give
such notice nor any defect therein shall affect the validity
of the proceeding for the redemption of any shares of this
Series to be redeemed.
Each such notice shall state, as appropriate, the following
and may contain such other information as the Company deems advisable:
(A) the redemption date;
(B) that all outstanding shares of this Series are to
be redeemed or, in the case of a call for redemption of
fewer than all outstanding shares of this Series, the
number of such shares held by such holder to be redeemed;
(C) the redemption price, in the case of a redemption
that will occur on or prior to the Deferred Dividend
Payment Date, or the number of shares of Common Stock
deliverable upon redemption of each share of this Series to
be redeemed and the Current Market Price used to calculate
such number of shares of Common Stock in the case of a
redemption that will occur on or after the Regular
Redemption Date.
(D) the place or places where certificates for such
shares are to be surrendered for redemption; and
<PAGE> 6
PAGE 6
(E) that dividends on the shares of this Series to be
redeemed shall cease to accrue on such redemption date
(except as otherwise provided herein).
(iv) Deposit of Shares and Funds. The Company's
obligation to deliver shares of Common Stock and provide funds
upon redemption in accordance with this paragraph 3 shall be
deemed fulfilled if, on or before a redemption date, the
Company shall irrevocably deposit, with a bank or trust
company, or an affiliate of a bank or trust company, having an
office or agency in New York City and having a capital and
surplus of at least $50,000,000, or shall set aside or make
other reasonable provisions for the issuance of such number of
shares of Common Stock as are required to be delivered by the
Company pursuant to this paragraph 3 upon the occurrence of
the related redemption (and for the payment of cash, if any,
payable in respect of the redemption price of shares of this
Series, in lieu of the issuance of fractional share amounts
and in respect of accrued and unpaid dividends payable in cash
on the shares to be redeemed as and to the extent provided by
this paragraph 3). Any interest accrued on such funds shall
be paid to the Company from time to time. Any shares of
Common Stock or funds so deposited and unclaimed at the end of
two years from such redemption date shall be repaid and
released to the Company, after which the holder or holders of
such shares of this Series so called for redemption shall look
only to the Company for delivery of such shares of Common
Stock or funds.
(v) Surrender of Certificates; Status. Each holder of
shares of this Series to be redeemed shall surrender the
certificates evidencing any shares (properly endorsed or
assigned for transfer, if the Board of Directors of the
Company shall so require and the notice shall so state) to the
Company at the place designated in the notice of such
redemption and shall thereupon be entitled to receive
certificates evidencing any shares of Common Stock and to
receive any funds payable pursuant to this paragraph 3
following such surrender and following the date of such
redemption. In case fewer than all the shares represented by
any such surrendered certificate are called for redemption, a
new certificate shall be issued at the expense of the Company
representing the unredeemed shares. If such notice of
redemption shall have been given, and if on the date fixed for
redemption shares of Common Stock and any funds necessary for
the redemption shall have been irrevocably either set aside by
the Company separate and apart from its other funds or assets
in trust for the account of the holders of the shares to be
redeemed or converted (and so as to be and continue to be
available therefor) or deposited with a bank or a trust
company or an affiliate thereof as provided herein or the
Company shall have made other reasonable provision therefor,
then, notwithstanding that the certificates evidencing any
shares of this Series so called for redemption or subject to
conversion shall not have been surrendered, the shares
represented thereby so called for redemption shall be deemed
no longer outstanding, dividends with respect to the shares so
called for redemption shall cease to accrue on the date fixed
for redemption (except that holders of shares of this Series
at the close of business on a record date for any payment of
<PAGE> 7
PAGE 7
dividends shall be entitled to receive the dividend payable on
such shares on the corresponding Dividend Payment Date
notwithstanding the redemption of such shares following such
record date and prior to such Dividend Payment Date) and all
rights with respect to the shares so called for redemption
shall forthwith after such date cease and terminate, except
for the rights of the holders to receive the shares of Common
Stock, if any, and funds, if any, payable pursuant to this
paragraph 3 without interest upon surrender of their
certificates therefor. Holders of shares of this Series
that are redeemed shall not be entitled to receive dividends
declared and paid on such shares of Common Stock, and such
shares of Common Stock shall not be entitled to vote, until
such shares of Common Stock are issued upon the surrender of
the certificates representing such shares of this Series and
upon such surrender such holders shall be entitled to receive
such dividends declared and paid on such shares of Common
Stock subsequent to such redemption date.
(c) Conversion at Option of Holder. Each share of this
Series is convertible, in whole or in part, at the option of the holder
thereof, at any time after the Deferred Dividend Payment Date and prior to the
Mandatory Conversion Date, unless previously redeemed, into a number of shares
of Common Stock determined by multiplying .8333 by the Special Factor (the
"Optional Conversion Rate"), subject to adjustment as set forth below. The
right to convert shares of this Series called for redemption shall terminate
at the close of business on the redemption date.
Conversion of shares of this Series may be effected by
delivering certificates evidencing such shares, together with written notice of
conversion and a proper assignment of such certificates to the Company or in
blank, to the office or agency to be maintained by the Company for that purpose
(and, if applicable, payment of an amount equal to the dividend payable on such
shares), and otherwise in accordance with conversion procedures established by
the Company. Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the foregoing requirements
shall have been satisfied. The conversion shall be at the Optional Conversion
Rate in effect at such time and on such date.
Holders of shares of this Series at the close of business
on a record date for any payment of dividends shall be entitled to receive the
dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion of such shares following such record date and
prior to such Dividend Payment Date. However, shares of this Series
surrendered for conversion after the close of business on a record date for any
payment of dividends and before the opening of business on the next succeeding
Dividend Payment Date must be accompanied by payment in cash of an amount equal
to the dividend thereon which is to be paid on such Dividend Payment Date
(unless such shares are subject to redemption on a redemption date in that
period). Except as provided above, the Company shall make no payment or
allowance for unpaid dividends whether or not in arrears, on converted shares
of this Series or for dividends or distributions on the shares of Common Stock
issued upon such conversion.
<PAGE> 8
PAGE 8
(d) Adjustments. The Common Equivalent Rate and the
Optional Conversion Rate shall be subject to adjustment from time to time as
provided below in this paragraph.
(i) If the Company shall, after the date hereof,:
(A) pay a dividend or make a distribution with
respect to its Common Stock in shares of such stock;
(B) subdivide or split its outstanding Common Stock
into a greater number of shares;
(C) combine its outstanding shares of Common Stock
into a smaller number of shares; or
(D) issue by reclassification of its shares of Common
Stock any shares of Common Stock of the Company;
then, in any such event, the Common Equivalent Rate and the
Optional Conversion Rate in effect immediately prior to such
event shall each be adjusted so that the holder of any shares
of this Series shall thereafter be entitled to receive, upon
Mandatory Conversion or upon conversion at the option of the
holder, the number of shares of Common Stock of the Company
which such holder would have owned or been entitled to receive
immediately following any event described above had such
shares of this Series been converted immediately prior to such
event or any record date with respect thereto. Such
adjustment shall become effective at the opening of business
on the business day next following the record date for
determination of stockholders entitled to receive such
dividend or distribution in the case of a dividend or
distribution and shall become effective immediately after the
effective date in the case of a subdivision, split,
combination or reclassification. Such adjustment shall be
made successively.
(ii) If the Company shall, after the date hereof, issue
rights or warrants to all holders of its Common Stock
entitling them (for a period not exceeding 45 days from the
date of such issuance) to subscribe for or purchase shares of
Common Stock at a price per share less than the current market
price of the Common Stock, then in each case the Common
Equivalent Rate and Optional Conversion Rate shall each be
adjusted by multiplying the Common Equivalent Rate and the
Optional Conversion Rate, in effect immediately prior to the
date of issuance of such rights or warrants, by a fraction, of
which the numerator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights or
warrants, immediately prior to such issuance, plus the number
of additional shares of Common Stock offered for subscription
or purchase
<PAGE> 9
PAGE 9
pursuant to such rights or warrants, and of which the
denominator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or
warrants, immediately prior to such issuance, plus the number
of additional shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock
so offered for subscription or purchase pursuant to such
rights or warrants would purchase at such current market price
(determined by multiplying such total number of shares by the
exercise price of such rights or warrants and dividing the
product so obtained by such current market price). Such
adjustment shall become effective at the opening of business
on the business day next following the record date for the
determination of stockholders entitled to receive such rights
or warrants. To the extent that shares of Common Stock are
not delivered after the expiration of such rights or warrants,
the Common Equivalent Rate shall be readjusted to the Common
Equivalent Rate which would then be in effect had the
adjustments been made upon the issuance of such rights or
warrants been made upon the basis of delivery of only the
number of shares of Common Stock actually delivered. Such
adjustment shall be made successively.
(iii) If the Company shall pay a dividend or make a
distribution to all holders of its Common Stock of evidences
of its indebtedness or other assets (excluding any dividends
or distributions referred to in subparagraph (i) above or any
cash dividends) or shall issue to all holders of its Common
Stock rights or warrants to subscribe for or purchase any of
its securities (other than those referred to in subparagraph
(ii) above), then in each such case, the Common Equivalent
Rate and the Optional Conversion Rate shall each be adjusted
by multiplying the Common Equivalent Rate and the Optional
Conversion Rate in effect on the record date mentioned below,
by a fraction of which the numerator shall be the current
market price per share of the Common Stock on the record date
for the determination of stockholders entitled to receive such
dividend or distribution, and of which the denominator shall
be such current market price per share of Common Stock less
the fair market value (as determined by the Board of Directors
of the Company, whose determination shall be conclusive, and
described in a resolution adopted with respect thereto) as of
such record date of the portion of the assets or evidences of
indebtedness so distributed or of such subscription rights or
warrants applicable to one share of Common Stock. Such
adjustment shall become effective on the opening of business
on the business day next following the record date for the
determination of stockholders entitled to receive such
dividend or distribution. Such adjustment shall be made
successively.
(iv) Any shares of Common Stock issuable in payment of a
dividend shall be deemed to have been issued immediately prior
to the close of business on the record date for such dividend
for purposes of calculating the number of outstanding shares
of Common Stock under subparagraph (ii) above. For purposes
of any computation under
<PAGE> 10
PAGE 10
subparagraphs (ii) and (iii) above, the current market price
per share of Common Stock at any date shall be deemed to be
the average of the daily Closing Prices for the 30 consecutive
trading dates preceding the date in question; provided,
however, if any event that results in an adjustment of the
Common Equivalent Rate occurs during such 30-day period, the
current market price as determined pursuant to the foregoing
shall be appropriately adjusted to reflect the occurrence of
such event.
(v) The Company shall also be entitled to make upward
adjustments in the Common Equivalent Rate, the Optional
Conversion Rate and the Optional Call Number, as it in its
discretion shall determine to be advisable, in order that any
stock dividends, subdivisions of shares, distribution of
rights to purchase stock or securities, or distribution of
securities convertible into or exchangeable for stock (or any
transaction which could be treated as any of the foregoing
transactions pursuant to Section 305 of the Internal Revenue
Code of 1986, as amended) hereafter made by the Company to its
stockholders shall not be taxable.
(vi) In any case in which this subparagraph 3(d) shall
require that an adjustment as a result of any event become
effective at the opening of business on the business day next
following a record date and the date fixed for conversion
pursuant to subparagraph 3(a) or redemption pursuant to
subparagraph 3(b) occurs after such record date, but before
the occurrence of such event, the Company may in its sole
discretion, elect to defer the following until after the
occurrence of such event: (A) issuing to the holder of any
converted or redeemed shares of this Series the additional
shares of Common Stock issuable upon such conversion or
redemption over the shares of Common Stock issuable before
giving effect to such adjustment and (B) paying to such holder
any amount in cash in lieu of a fractional share of Common
Stock pursuant to subparagraph 3(i).
(vii) All adjustments to the Common Equivalent Rate and
the Optional Conversion Rate shall be calculated to the
nearest 1/1000th of a share of Common Stock (or if there is
not a nearest 1/1000th of a share to the next lower 1/1000th
of a share). No adjustment in the Common Equivalent Rate or
the Optional Conversion Rate shall be required unless such
adjustment would require an increase or decrease of at least
one percent therein; provided, however, that any adjustments
which by reason of this subparagraph are not required to be
made shall be carried forward and taken into account in any
subsequent adjustment.
(e) Adjustment for Consolidation or Merger. In case of
any consolidation or merger to which the Company is a party (other than a
merger or consolidation in which the Company is the continuing corporation and
in which the Common Stock outstanding immediately prior to the merger or
consolidation remains unchanged), or in case of any sale or transfer to another
corporation of the property of the Company as an entirety or substantially as
<PAGE> 11
PAGE 11
an entirety, or in case of any statutory exchange of securities with another
corporation (other than in connection with a merger or acquisition), proper
provision shall be made so that each share of this Series shall, after
consummation of such transaction, be subject to (i) conversion at the option of
the holder into the kind and amount of securities, cash or other property
receivable upon consummation of such transaction by a holder of the number of
shares of Common Stock into which such share of this Series might have been
converted immediately prior to consummation of such transaction, (ii)
conversion on the Mandatory Conversion Date into the kind and amount of
securities, cash or other property receivable upon consummation of such
transaction by a holder of the number of shares of Common Stock into which such
share of this Series would have converted if the conversion on the Mandatory
Conversion Date had occurred immediately prior to the date of consummation of
such transaction, and (iii) redemption on any redemption date that occurs on or
after the Regular Redemption Date in exchange for the kind and amount of
securities, cash or other property receivable upon consummation of such
transaction by a holder of a number of shares of Common Stock equal to the
Optional Call Number in effect immediately prior to consummation of such
transaction, assuming that the public announcement of such redemption had been
made on the last possible date permitted by the terms of this Series and
applicable law; assuming in each case that such holder of Common Stock failed
to exercise rights of election, if any, as to the kind or amount of securities,
cash or other property receivable upon consummation of such transaction
(provided, however, that if the kind or amount of securities, cash or other
property receivable upon consummation of such transaction is not the same for
each non-electing share, then the kind and amount of securities, cash or other
property receivable upon consummation of such transaction for each nonelecting
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the nonelecting shares). The kind and amount of securities into
which the shares of this Series shall be convertible after consummation of such
transaction shall be subject to adjustment as described in the immediately
preceding paragraph following the date of consummation of such transaction.
The Company may not become a party to any such transaction unless the terms
thereof are consistent with the foregoing.
(f) Notice of Adjustments. Whenever the Common Equivalent
Rate and the Optional Conversion Rate are adjusted as herein provided, the
Company shall:
(i) forthwith compute the adjusted Common Equivalent Rate
and Optional Conversion Rate in accordance herewith and
prepare a certificate signed by an officer of the Company
setting forth the adjusted Common Equivalent Rate and the
Optional Conversion Rate, the method of calculation thereof in
reasonable detail and the facts requiring such adjustment and
upon which such adjustment is based, which certificate shall
be conclusive, final and binding evidence of the correctness
of the adjustment, and file such certificate forthwith with
the transfer agent for the shares of this Series and the
Common Stock; and
<PAGE> 12
PAGE 12
(ii) mail a notice to the holders of the outstanding shares
of this Series stating that the Common Equivalent Rate and the
Optional Conversion Rate have been adjusted, the facts
requiring such adjustment and upon which such adjustment is
based and setting forth the adjusted Common Equivalent Rate
and Optional Conversion Rate, such notice to be mailed at or
prior to the time the Company mails an interim statement to
its stockholders covering the fiscal quarter during which the
facts requiring such adjustment occurred, but in any event
within 45 days of the end of such fiscal quarter.
(g) Notices. In case, at any time while any of the shares
of this Series are outstanding:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock, excluding any cash
dividends; or
(ii) the Company shall authorize the issuance to all
holders of its Common Stock of rights or warrants to subscribe
for or purchase shares of its Common Stock or of any other
subscription rights or warrants; or
(iii) of any reclassification of Common Stock of the
Company (other than a subdivision or combination thereof) or
of any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is
required (except for a merger of the Company into one of its
subsidiaries solely for the purpose of changing the corporate
domicile of the Company to another state of the United States
and in connection with which there is no substantive change in
the rights or privileges of any securities of the Company
other than changes resulting from differences in the corporate
statutes of the then existing and the new state of domicile),
or of the sale or transfer of all or substantially all of the
assets of the Company; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be filed at each office or
agency maintained for the purpose of conversion of the shares
of this Series, and shall cause to be mailed to the holders of
shares of this Series at their last addresses as they shall
appear on the stock register, at least 10 days before the date
hereinafter specified (or the earlier of the dates hereinafter
specified, in the event that more than one date is specified),
a notice stating (A) the date on which a record is to be taken
for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to
such dividend, distribution, rights or warrants are to be
determined, or (B) the date on which any such
reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to
<PAGE> 13
PAGE 13
become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to
exchange their Common Stock for securities or other property
(including cash), if any, deliverable upon such
reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. The failure to give
or receive the notice required by this subparagraph 3(g) or
any defect therein shall not affect the legality or validity
of any such dividend, distribution, right or warrant or other
action.
(h) Effect of Conversions and Redemptions. The person or
persons in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon any conversion or redemption shall be
deemed to have become on the date of any such conversion or redemption the
holder or holders of record of the shares represented thereby; provided,
however, that any such surrender on any date when the stock transfer books of
the Company shall be closed shall constitute the person or persons in whose
name or names the certificate or certificates for such shares are to be issued
as the record holder or holders thereof for all purposes at the opening of
business on the next succeeding day on which such stock transfer books are
open.
(i) No Fractional Shares. No fractional shares or script
representing fractional shares of Common Stock shall be issued upon the
redemption or conversion of any shares of this Series. In lieu of any
fractional share otherwise issuable in respect of all the shares of this Series
of any holder which are redeemed or converted on any redemption date or upon
Mandatory Conversion or any optional conversion, such holder shall be entitled
to receive an amount in cash (computed to the nearest cent) equal to the same
fraction of the (i) Current Market Price in the case of redemption, or (ii)
Closing Price of the Common Stock determined (A) as of the fifth trading day
immediately preceding the Mandatory Conversion Date, in the case of Mandatory
Conversion, or (B) as of the second trading day immediately preceding the
effective date of conversion, in the case of an optional conversion by a
holder. If more than one share shall be surrendered for conversion or
redemption at one time by or for the same holder, the number of full shares of
Common Stock issuable upon conversion thereof shall be computed on the basis of
the aggregate number of shares of this Series so surrendered or redeemed.
(j) Reissuance. Shares of this Series that have been
issued and reacquired in any manner, including shares purchased, exchanged,
redeemed or converted, shall not be reissued as part of this Series and shall
(upon compliance with any applicable provisions of the laws of the State of
Delaware) have the status of authorized and unissued shares of the Preferred
Stock undesignated as to series and may be redesignated and reissued as part of
any series of Preferred Stock.
<PAGE> 14
PAGE 14
(k) Definitions. As used in this Certificate:
(i) the term "business day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in
the State of New York or the State of Delaware are authorized
or obligated by law or executive order to close or are closed
because of a banking moratorium or otherwise;
(ii) the term "Closing Price" on any day shall mean the
closing sale price regular way on such day or, in case no such
sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in each case on the
New York Stock Exchange or, if the Common Stock is not listed
or admitted to trading on such Exchange, then on the principal
national securities exchange on which the Common Stock is
listed or admitted to trading (which shall be the national
securities exchange on which the greatest number of shares of
Common Stock has been traded during the five consecutive
trading days ending on and including the date of
determination), or, if not quoted or listed or admitted to
trading on any national securities exchange or quotation
system, the average of the closing bid and asked prices of the
Common Stock on the over-the-counter market on the day in
question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting
service, or if not so available as determined in good faith by
the Board of Directors, on the basis of such relevant factors
as it in good faith considers appropriate;
(iii) the term "trading days" shall mean a date on which
the New York Stock Exchange (or any successor thereto) is open
for the transaction of business; and
(iv) the term "Common Stock" shall mean any stock of any
class of the Company which has no preference in respect of
dividends or of amounts payable in the event of any voluntary
or involuntary liquidation, dissolution or winding up of the
Company and which is not subject to redemption by the Company.
However, shares of Common Stock issuable upon conversion of
shares of this Series shall include only shares of the class
designated as Common Stock as of the original date of issuance
of shares of this Series, or shares of the Company of any
class or classes resulting from any reclassification or
reclassification thereof and which have no preference in
respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding
up of the Company and which are not subject to redemption by
the Company; provided that if at any time there shall be more
than one such resulting class, the shares of each such class
then so issuable shall be substantially in the proportion
which the total number of shares of such class resulting from
such reclassification bears to the total number of shares of
all classes resulting from all such reclassification.
(v) The term "Special Factor" means the quotient obtained
by dividing (x) the Liquidation Price per share of this Series
by (y) the weighted average of the trading prices of all
trades on the New York Stock Exchange of shares of Common
Stock for the five trading day period which ends on the fifth
trading day prior to the Deferred Dividend Payment Date;
provided, however, that if any event that results in an
adjustment of the Common Equivalent Rate occurs during the
period beginning on the Issue Date and ending on the last day
of such five trading day period, the Special Factor as
determined pursuant to the foregoing shall be appropriately
adjusted to reflect the occurrence of such event.
<PAGE> 15
PAGE 15
(l) Payment of Taxes. The Company shall pay any and all
documentary, stamp or similar issue or transfer taxes payable in respect of the
issue or deliver of shares of Common Stock on the redemption or conversion of
shares of this Series pursuant to this paragraph 3; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any registration of transfer involved in the issue or delivery of shares of
Common Stock in a name other than that of the registered holder of shares of
this Series redeemed or converted or to be redeemed or converted, and no such
issue or delivery shall be made unless and until the person requesting such
issue has paid to the Company the amount of any such tax or has established, to
the satisfaction of the Company, that such tax has been paid.
(m) Reservation of Common Stock. The Company shall at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock and/or its issued Common
Stock held in its treasury, for the purpose of effecting any Mandatory
Conversion of the shares of this Series or any conversion of the shares of this
Series at the option of the holder, the full number of shares of Common Stock
then deliverable upon any such conversion of all outstanding shares of this
Series.
4. Liquidation Rights. (a) In the event of the
liquidation, dissolution, or winding up of the business of the Company, whether
voluntary or involuntary, the holders of shares of this Series then
outstanding, after payment or provision for payment of the debts and other
liabilities of the Company and the payment or provision for payment of any
distribution on any shares of the Company having a preference and a priority
over the shares of this Series on liquidation, and before any distribution to
the holders of the Common Stock or any other stock ranking junior to the shares
of this Series with respect to distribution upon liquidation, dissolution or
winding up, shall be entitled to be paid out of the assets of the Company
available for distribution to its stockholders, an amount per share of this
Series in cash equal to the sum of (i) the Liquidation Price, plus (ii) all
accrued and unpaid dividends thereon to the date of liquidation, dissolution or
winding up, before any payment shall be made or any assets distributed to the
holders of any of shares of the Company ranking junior to the shares of this
Series upon liquidation. In the event the assets of the Company available for
distribution to the holders of the shares of this Series upon any dissolution,
liquidation or winding up of the Company shall be insufficient to pay in full
the liquidation payments payable to the holders of outstanding shares of this
Series and any shares of the Company ranking on a parity with the shares of
this Series upon liquidation, then the holders of all such shares shall share
ratably in such distribution of assets in accordance with the amount which
would be payable on such distribution if the amounts to which the holders of
outstanding shares of this Series and the holders of outstanding shares of such
shares of the Company ranking on a parity with the shares of this Series upon
liquidation are entitled were paid in full. Except as provided in this
paragraph 4, holders of this Series shall not be entitled to any distribution
in the event of liquidation, dissolution or winding up of the affairs of the
Company.
<PAGE> 16
PAGE 16
(b) For the purposes of this paragraph 4, none of the
following shall be deemed to be a voluntary or involuntary liquidation,
dissolution or winding up of the Company:
(i) the voluntary sale, conveyance, lease, exchange or
transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or
assets of the Company;
(ii) the consolidation or merger of the Company with or
into one or more other corporations, or other associations;
(iii) the consolidation or merger of one or more
corporations or other associations with or into the Company;
or
(iv) the participation by the Company in a share exchange.
5. Parity. Shares of Preferred Stock of this Series may
be on a parity with any class or series of shares of the Company at the time
outstanding which by its terms states that such series or class is on a parity
with this Series both as to payment of dividends and as to the distribution of
assets on any voluntary or involuntary liquidation, dissolution or winding-up
of the Company. This Series is on a parity with the Company's series of [
]% Preferred Stock.
6. No Preemptive Rights. The holders of shares of this
Series shall have no preemptive rights, including preemptive rights with
respect to any shares of capital stock or other securities of the Company
convertible into or carrying rights or options to purchase any such shares.
7. Voting Rights. (a) Except as otherwise provided in
this paragraph 7 or as otherwise provided by law or the Restated Certificate of
Incorporation of the Company the holders of shares of this Series shall have no
voting rights.
(b) If at any time dividends payable on the shares of this
Series are in arrears and unpaid in an aggregate amount equal to or exceeding
the aggregate amount of dividends payable thereon for six quarterly dividend
periods, the holders of the shares of this Series, together with the holders of
any other series of Preferred Stock ranking on a parity with the shares of this
Series then having a right to elect directors as a result of a dividend
arrearage, shall have the exclusive right, voting separately as a class with
any such other series, to elect two directors of the Company, such directors to
be in addition to the number of directors constituting the Board of Directors
of the Company immediately prior to the accrual of such right. Such right of
the holders of shares of this Series to elect two directors shall, when vested,
continue until all dividends in default on the shares of this Series shall have
been paid in full and, when so paid, such right of the holders of shares of
this Series to elect two directors separately as a class shall
<PAGE> 17
PAGE 17
cease, subject, always, to the same provisions for the vesting of such right of
the holders of the shares of this Series to elect two directors in the case of
future dividend defaults. At any time when such right to elect such directors
separately as a class shall have so vested, the Company may, and upon the
written request of the holders of record of not less than 25 percent of the
total number of shares of this Series and such other series of Preferred Stock
then outstanding shall, call a special meeting of the holders of such shares
for the election of directors to fill such newly created directorships. In the
case of such a written request, such special meeting shall be held within 90
days after the delivery of such request and, in either case, at the place and
upon the notice provided by law and in the By-laws of the Company; provided
that the Company shall not be required to call such a special meeting if such
request is received less than 120 days before the date fixed for the next
ensuing annual meeting of stockholders of the Company, in which case such newly
created directorships shall be filled by the holders of such shares of this
Series and such other series of Preferred Stock at such meeting.
The term of office of each director elected pursuant to the
preceding paragraph shall terminate on the earlier of (i) the next annual
meeting of stockholders at which a successor shall have been elected and
qualified or (ii) the termination of the right of the holders of shares of this
Series and such other series of Preferred Stock to vote for directors pursuant
to the preceding paragraph. If, prior to the end of the term of any director
elected as aforesaid, a vacancy in the office of such director shall occur,
such vacancy shall be filled for the unexpired term by the appointment by the
remaining director elected as aforesaid of a new director for the unexpired
term of such former director. If both directors so elected by the holders of
shares of this Series and such other series of Preferred Stock shall cease to
serve as directors before their terms shall expire, the holders of the shares
of this Series, together with the holders of such other series of Preferred
Stock may, at a special meeting of the holders called as provided above, elect
successors to hold office for the unexpired terms of such directors whose
places shall be vacant.
(c) So long as any shares of this Series remain
outstanding, the consent of the holders of at least two- thirds thereof (voting
separately as a class) given in person or by proxy, at any annual meeting or
special meeting called for such purpose, shall be necessary to amend, alter or
repeal any of the provisions of the Restated Certificate of Incorporation of
the Company which would materially and adversely affect any right, preference,
privilege or voting power of the shares of this Series; provided, however, that
any such amendment, alteration or repeal, that would authorize, create or issue
any additional shares of Preferred Stock or any other shares of stock (whether
or not already authorized) ranking senior to, on a parity with or junior to the
shares of this Series as to dividends or on the distribution of assets upon
liquidation, dissolution or winding up of the affairs of the Company, shall be
deemed not to materially and adversely affect such right, preference, privilege
or voting power and shall not be subject to approval by the holders of shares
of this Series.
<PAGE> 18
PAGE 18
THE COLUMBIA GAS SYSTEM, INC.,
by
----------------------------------
Name:
Title:
Attest:
- -------------------------------
Name:
Title:
<PAGE> 1
PAGE 1
Exhibit B.5
THE COLUMBIA GAS SYSTEM, INC.
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
[ ]% PREFERRED STOCK
PAR VALUE $10.00 PER SHARE
LIQUIDATION VALUE $25.00 PER SHARE
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, the [ ] of The Columbia Gas
System, Inc., a Delaware corporation (the "Company"), DOES HEREBY CERTIFY that
the following resolution has been duly adopted by the Board of Directors of the
Company:
RESOLVED that, pursuant to the authority expressly granted
to and vested in the Board of Directors of the Company by the provisions of the
Restated Certificate of Incorporation of the Company, this Board of Directors
hereby authorizes the issuance of a series (this "Series") of the Preferred
Stock of the Company (the "Preferred Stock") which shall consist of [ ]
shares, and this Board of Directors hereby fixes the powers, designations,
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, of the shares of this
Series (in addition to the powers, 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 Company which are applicable to the Preferred Stock) as
follows:
1. Designation. The designation of this Series of
Preferred Stock shall be [ %] Preferred Stock. The number of shares of this
Series shall be [ ]. The liquidation value of shares of this Series
shall be $25.00 per share.
2. Dividends. (a) The holders of shares of this Series
shall be entitled to receive, when, as and if declared by the Board of
Directors of the Company out of funds legally available therefor, cumulative
preferential dividends from the issue date of such shares (the "Issue Date"),
payable in arrears on the [ ] day of each
<PAGE> 2
PAGE 2
[ ], [ ], [ ] and [ ], (each a "Dividend Payment Date")
or, if any Dividend Payment Date is not a business day, then the Dividend
Payment Date shall be the next succeeding business day. At the rate per share
per annum or [ ]% and no more; provided however, that (i) effective as of
[ ] (the "Deferred Dividend Payment Date" and thereafter, such rate per
share per annum shall be the rate (expressed in basis points) that is determined
in accordance with the pricing methodology attached hereto as Exhibit A on [ ]
plus 100 basis points and no more and (ii) the initial Dividend Payment shall
be for the period from the Issue Date to and including [ ] and shall be
payable on the Deferred Dividend Payment Date. Each dividend on the shares of
this Series shall be payable to holders of record as they appear on the stock
books of the Company on such record dates, not less than 10 nor more than 60
days preceding the payment dates thereof, as shall be fixed by the Board of
Directors. Dividends (or amounts equal to accrued and unpaid dividends)
payable on shares of this Series for any period shorter than a quarterly
dividend period shall be computed on the basis of a 360-day year of twelve
30-day months.
Dividends on the shares of this Series shall accrue (whether
or not the Company has earnings, whether or not there are funds legally
available for the payment of such dividends and whether or not such dividends
are declared) on a daily basis from the previous Dividend Payment Date, except
that the first dividend shall accrue from the Issue Date. For purposes of the
immediately preceding sentence, the Dividend Payment Date for the dividend
payable on the Deferred Dividend Payment Date shall be deemed to be [ ].
Dividends accumulate to the extent they are not paid on the Dividend Payment
Date for the quarter for which they accrue. Accumulated unpaid dividends shall
not bear interest.
The foregoing notwithstanding, no dividends shall accrue or
be payable with respect to shares of this Series that are redeemed on or prior
to [ ] (the "Threshold Date").
(b) Unless full cumulative dividends, if any, accrued on
the shares of this Series that are payable in cash have been paid or
contemporaneously are declared and paid and a sum set aside sufficient for such
payment through the most recent Dividend Payment Date:
(i) no full cash dividend shall be declared by the Board of
Directors or paid or set aside for payment by the Company or other
distribution declared or made on any shares of the Company ranking
on a parity with the shares of this Series as to dividends;
(ii) no dividend (other than a dividend or distribution paid
in shares of, or warrants, rights or options exercisable for or
convertible into shares of, Common Stock or in any other shares of
the Company ranking junior to the shares of this Series as to
dividends and upon liquidation) shall be declared or paid or set
aside for payment or other distribution declared or made upon the
Common Stock or upon any other shares of the Company ranking
junior to the shares of this Series as to dividends; and
(iii) no Common Stock or any other shares of the Company
ranking junior to or on a parity with the shares of this Series as
to dividends or upon liquidation shall be redeemed, purchased or
otherwise acquired for any con-
<PAGE> 3
PAGE 3
sideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such series
or class) by the Company, except by conversion into or exchange
for shares of the Company ranking junior to the shares of this
Series as to dividends and upon liquidation.
When dividends which are payable in cash have not been paid or set aside in
full with respect to the shares of this Series and any other shares of the
Company ranking on a parity with the shares of this Series as to dividends, all
dividends declared with respect to the shares of this Series and any other
shares of the Company ranking on a parity with the shares of this Series as to
dividends shall be declared pro rata so that the amount of dividends declared
per share on this Series and such other shares shall in all cases bear to each
other the same ratio that, at the time of declaration, accrued and payable but
unpaid dividends per share on the shares of this Series and such other shares
bear to each other. Holders of the shares of this Series shall not be entitled
to any dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends, as herein described.
(c) Subject to the foregoing provisions of this paragraph 2
and paragraph 4(a), the Board of Directors may declare and the Company may pay
or set aside for payment dividends and other distributions on any shares of the
Company ranking on a parity with or junior to the shares of this Series as
to payment of dividends or preference upon liquidation, and may redeem,
purchase or otherwise acquire any shares of the Company ranking on a parity
with or junior to the shares of this Series as to dividends or upon
liquidation, and the holders of the shares of this Series shall not be entitled
to share therein.
(d) Any dividend payment made on the shares of this Series
shall first be credited against the earliest accrued but unpaid dividend due
with respect to the shares of this Series.
(e) All dividends paid with respect to the shares of this
Series shall be paid pro rata to the holders entitled thereto.
(f) Holders of the shares of this Series shall be entitled
to receive dividends in preference to and in priority over any dividends upon
any shares of the Company ranking junior to the shares of this Series as
to payment of dividends, but subject to the rights of holders of shares of the
Company having a preference and a priority over the payment of dividends on the
shares of this Series.
<PAGE> 4
PAGE 4
3. Redemptions.
(a) Optional Redemptions for Cash. (i) Shares of this
Series shall not be redeemable prior to the fifth anniversary of
the Issue Date. Except that shares of the series are redeemable
by the Company on or prior to the Deferred Dividend Payment Date.
On or prior to the Deferred Dividend Payment Date and on or after
the fifth annuiversary of the Issue Date, shares of this Series
shall be redeemable at the option of the Company in whole or from
time to time in part in cash at (i) $25.00 per share, plus, (ii)
if such redemption occurs after the Threshold Date, an amount
equal to the dividends accrued and unpaid thereon to the
redemption date (the sum of (i) and (ii) being the "Call Price");
provided however, that no such redemption may be made on or prior
to the Deferred Dividend Payment Date if, after giving effect
thereto, either (x) one or more but fewer than 2,000,000 shares of
this Series would remain outstanding, or (y) any shares of the
Company's Series of $[ ] Convertible Preferred Stock would
remain outstanding.
(ii) The outstanding shares of this Series are to be
redeemed, shares to be redeemed shall be selected by the
Company from outstanding shares of this Series not previously
redeemed by lot or pro rata (as nearly as may be practicable) or
by any other method determined by the Board Directors of the
Company in its sole discretion to be equitable.
(iii) Shares of this Series are not mandatorily redeemable
and are not subject to exchange for or conversion into any other
securities.
(b) Notice of Redemption. The Company shall provide notice
of any redemption of the shares of this Series to holders of record of this
Series to be called for redemption not less than 15 nor more than 60 days prior
to the date fixed for such redemption. Such notice shall be provided by
mailing notice of such redemption first class postage prepaid, to each holder
of record of shares of this Series to be redeemed, at such holder's address as
it appears on the stock register of the Company; provided, however, that
neither failure to give such notice nor any defect therein shall affect the
validity of the proceeding for the redemption of any shares of this Series to
be redeemed.
Each such notice shall state, as appropriate, the following
and may contain such other information as the Company deems advisable:
(i) the redemption date;
(ii) that all outstanding shares of this Series are to be
redeemed or, in the case of a call for redemption of fewer than
all outstanding shares of this Series, the number of such shares
held by such holder to be redeemed;
(iii) the Call Price;
(iv) the place or places where certificates for such shares
are to be surrendered for redemption; and
<PAGE> 5
PAGE 5
(v) that dividends on the shares of this Series to be
redeemed shall cease to accrue on such redemption date (except as
otherwise provided herein).
(c) Deposit of Shares and Funds. The Company's obligation
to provide funds upon redemption in accordance with this paragraph 3 shall be
deemed fulfilled if, on or before a redemption date, the Company shall
irrevocably deposit such funds with a bank or trust company, or an affiliate of
a bank or trust company, having an office or agency in New York City and having
a capital and surplus of at least $50,000,000, or shall set aside or make other
reasonable provision for the payment of such funds. Any interest accrued on
such funds shall be paid to the Company from time to time. Any funds so
deposited and unclaimed at the end of two years from such redemption date
shall be repaid and released to the Company, after which the holder or holders
of such shares of this Series so called for redemption shall look only to the
Company for delivery of such funds.
(d) Surrender of Certificates; Status. Each holder of
shares of this Series to be redeemed shall surrender the certificates
evidencing such shares (properly endorsed or assigned for transfer, if the
Board of Directors of the Company shall so require and the notice shall so
state) to the Company at the place designated in the notice of such redemption
and shall thereupon be entitled to receive any funds payable pursuant to this
paragraph 3 following such surrender and following the date of such redemption.
In case fewer than all the shares represented by any such surrendered
certificate are called for redemption, a new certificate shall be issued at the
expense of the Company representing the unredeemed shares. If such notice of
redemption shall have been given, and if on the date fixed for redemption funds
necessary for the redemption shall have been irrevocably either set aside by
the Company separate and apart from its other funds or assets in trust for the
account of the holders of the shares to be redeemed (and so as to be and
continue to be available therefor) or deposited with a bank or a trust company
or an affiliate thereof as provided herein or the Company shall have made other
reasonable provision therefor, then, notwithstanding that the certificates
evidencing any shares of this Series so called for redemption shall not have
been surrendered, the shares represented thereby so called for redemption shall
be deemed no longer outstanding, dividends with respect to the shares so called
for redemption shall cease to accrue on the date fixed for redemption (except
that holders of shares of this Series at the close of business on a record date
for any payment of dividends shall be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
redemption of such shares following such record date and prior to such Dividend
Payment Date) and all rights with respect to the shares so called for
redemption shall forthwith after such date cease and terminate, except for the
rights of the holders to receive funds payable pursuant to this paragraph 3
without interest upon surrender of their certificates therefor.
<PAGE> 6
PAGE 6
(e) Reissuance. Shares of this Series that have been
issued and reacquired in any manner, including shares purchased, exchanged or
redeemed, shall not be reissued as part of this Series and shall (upon
compliance with any applicable provisions of the laws of the State of Delaware)
have the status of authorized and unissued shares of the Preferred Stock
undesignated as to series and may be redesignated and reissued as part of any
series of Preferred Stock.
(f) Definitions. As used in this Certificate:
(i) the term "business day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the
State of New York or the State of Delaware are authorized or
obligated by law or executive order to close or are closed because
of a banking moratorium or otherwise; and
(ii) the term "Common Stock" shall mean any stock of any
class of the Company which has no preference in respect of
dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company.
4. Liquidation Rights. (a) In the event of the
liquidation, dissolution, or winding up of the business of the Company, whether
voluntary or involuntary, the holders of shares of this Series then
outstanding, after payment or provision for payment of the debts and other
liabilities of the Company and the payment or provision for payment of any
distribution on any shares of the Company having a preference and a priority
over the shares of this Series on liquidation, and before any distribution to
the holders of the Common Stock or any other stock ranking junior to the shares
of this Series with respect to distribution upon liquidation, dissolution or
winding up, shall be entitled to be paid out of the assets of the Company
available for distribution to its stockholders, an amount per share of this
Series in cash equal to the sum of (i) $25.00 per share plus (ii) all accrued
and unpaid dividends thereon to the date of liquidation, dissolution or winding
up, before any payment shall be made or any assets distributed to the holders
of any of shares of the Company ranking junior to the shares of this Series
upon liquidation. In the event the assets of the Company available for
distribution to the holders of the shares of this Series upon any dissolution,
liquidation or winding up of the Company shall be insufficient to pay in full
the liquidation payments payable to the outstanding shares of this Series and
any shares of the Company ranking on a parity with the shares of this Series
upon liquidation, then the holders of all such shares shall share ratably in
such distribution of assets in accordance with the amount which would be
payable on such distribution if the amounts to which the holders of outstanding
shares of this Series and the holders of holders of
<PAGE> 7
PAGE 7
outstanding shares of such shares of the Company ranking on a parity with the
shares of this Series upon liquidation are entitled were paid in full. Except
as provided in this paragraph 4, holders of this Series shall not be entitled
to any distribution in the event of liquidation, dissolution or winding up of
the affairs of the Company.
(b) For the purposes of this paragraph 4, none of the
following shall be deemed to be a voluntary involuntary liquidation,
dissolution or winding up of the Company:
(i) the voluntary sale, conveyance, lease, exchange or
transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or
assets of the Company;
(ii) the consolidation or merger of the Company with or into
one or more other corporations, or other associations;
(iii) the consolidation or merger of one or more
corporations or other associations with or into the Company; or
(iv) the participation by the Company in a share exchange.
5. Parity. Shares of Preferred Stock of this Series may be
on a parity with any class or series of shares of the Company at the time
outstanding which by its terms states that such series or class is on a parity
with this Series both as to payment of dividends and as to the distribution of
assets on any voluntary or involuntary liquidation, dissolution or winding-up
of the Company. This Series is on a parity with the Company's series of [$
] Convertible Preferred Stock.
6. No Preemptive Rights. The holders of shares of this
Series shall have no preemptive rights, including preemptive rights with
respect to any shares of capital stock or other securities of the Company
convertible into or carrying rights or options to purchase any such shares.
7. Voting Rights. (a) Except as otherwise provided in
this paragraph 7 or as otherwise provided by law or the Restated Certificate of
Incorporation of the Company the holders of shares of this Series shall have no
voting rights.
(b) If at any time dividends payable on the shares of this
Series are in arrears and unpaid in an aggregate amount equal to or exceeding
the aggregate amount of dividends payable thereon for six quarterly dividend
periods, the holders of the shares of this Series, together with the holders of
any other series of Preferred Stock ranking on a
<PAGE> 8
PAGE 8
parity with the shares of this Series then having a right to elect directors as
a result of a dividend arrearage, shall have the exclusive right, voting
separately as a class with any such other series, to elect two directors of the
Company, such directors to be in addition to the number of Directors
constituting the Board of Directors of the Company immediately prior to the
accrual of such right. Such right of the holders of shares of this Series to
elect two directors shall, when vested, continue until all dividends in default
on the shares of this Series shall have been paid in full and, when so paid,
such right of the holders of shares of this Series to elect two directors
separately as a class shall cease, subject, always, to the same provisions for
the vesting of such right of the holders of the shares of this Series to elect
two directors in the case of future dividend defaults. At any time when such
right to elect such directors separately as a class shall have so vested, the
Company may, and upon the written request of the holders of record of not less
than 25 percent of the total number of shares of this Series and such other
series of Preferred Stock then outstanding shall, call a special meeting of the
holders of such shares for the election of directors to fill such newly created
directorships. In the case of such a written request, such special meeting
shall be held within 90 days after the delivery of such request and, in either
case, at the place and upon the notice provided by law and in the By-laws of
the Company; provided that the Company shall not be required to call such a
special meeting if such request is received less than 120 days before the date
fixed for the next ensuing annual meeting of stockholders of the Company, in
which case such newly created directorships shall be filled by the holders of
such shares of this Series and such other series of Preferred Stock at such
meeting.
The term of office of each director elected pursuant to the
preceding paragraph shall terminate on the earlier of (i) the next annual
meeting of stockholders at which a successor shall have been elected and
qualified or (ii) the termination of the right of the holders of shares of this
Series and such other series of Preferred Stock to vote for directors pursuant
to the preceding paragraph. If, prior to the end of the term of any director
elected as aforesaid, a vacancy in the office of such director shall occur,
such vacancy shall be filled for the unexpired term by the appointment by the
remaining director elected as aforesaid of a new director for the unexpired
term of such former director. If both directors so elected by the holders of
shares of this Series and such other series of Preferred Stock shall cease to
serve as directors before their terms shall expire, the holders of the shares
of this Series, together with the holders of such other series of Preferred
Stock may, at a special meeting of the holders called as provided above, elect
successors to hold office for the unexpired terms of such directors whose
places shall be vacant.
(c) So long as any shares of this Series remain
outstanding, the consent of the holders of at least two-thirds thereof (voting
separately as a class) given in person or by proxy, at any annual meeting or
special meeting called for such purpose, shall be
<PAGE> 9
PAGE 9
necessary to amend, alter or repeal any of the provisions of the Restated
Certificate of Incorporation of the Company which would materially and
adversely affect any right, preference, privilege or voting power of the shares
of this Series; provided, however, that any such amendment, alteration or
repeal, that would authorize, create or issue any additional shares of
Preferred Stock or any other shares of stock (whether or not already
authorized) ranking senior to, on a parity with or junior to the shares of this
Series as to dividends or on the distribution of assets upon liquidation,
dissolution or winding up of the affairs of the Company, shall be deemed not to
materially and adversely affect such right, preference, privilege or voting
power and shall not be subject to approval by the holders of shares of this
Series.
THE COLUMBIA GAS SYSTEM, INC.,
by
----------------------------------
Name:
Title:
Attest:
- ---------------------------------
Name:
Title:
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<SUBSIDIARY>
<NUMBER> 1
<NAME> CGS
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-START> MAR-01-1994 MAR-01-1994
<PERIOD-END> FEB-28-1995 FEB-28-1995
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 3,450,775 3,450,775
<OTHER-PROPERTY-AND-INVEST> 912,038 886,339
<TOTAL-CURRENT-ASSETS> 2,698,723 1,543,403
<TOTAL-DEFERRED-CHARGES> 288,845 288,845
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 7,350,381 6,168,362
<COMMON> 505,633 505,633
<CAPITAL-SURPLUS-PAID-IN> 601,827 585,361
<RETAINED-EARNINGS> 526,926 (244,972)
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,564,420 1,246,022
0 0
0 400,000
<LONG-TERM-DEBT-NET> 4,138 2,554,138
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 1,287 1,287
0 0
<CAPITAL-LEASE-OBLIGATIONS> 1,665 1,665
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 5,781,823 2,369,202
<TOT-CAPITALIZATION-AND-LIAB> 7,350,381 6,169,362
<GROSS-OPERATING-REVENUE> 2,778,730 2,776,730
<INCOME-TAX-EXPENSE> 142,069 42,818
<OTHER-OPERATING-EXPENSES> 2,420,042 2,420,042
<TOTAL-OPERATING-EXPENSES> 2,420,042 2,420,042
<OPERATING-INCOME-LOSS> 358,688 358,688
<OTHER-INCOME-NET> 38,759 48,262
<INCOME-BEFORE-INTEREST-EXPEN> 397,447 406,950
<TOTAL-INTEREST-EXPENSE> 16,828 306,628
<NET-INCOME> 238,622 57,576
0 44,000
<EARNINGS-AVAILABLE-FOR-COMM> 238,622 13,576
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 4.72 0.27
<EPS-DILUTED> 4.72 0.27
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<SUBSIDIARY>
<NUMBER> 2
<NAME> CG
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-START> MAR-01-1994 MAR-01-1994
<PERIOD-END> FEB-28-1995 FEB-28-1995
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 0 0
<OTHER-PROPERTY-AND-INVEST> 3,719,864 4,057,381
<TOTAL-CURRENT-ASSETS> 479,633 711,239
<TOTAL-DEFERRED-CHARGES> 2,747 2,747
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 4,202,494 4,771,347
<COMMON> 505,633 505,633
<CAPITAL-SURPLUS-PAID-IN> 601,827 585,361
<RETAINED-EARNINGS> 526,926 (244,972)
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,564,420 1,246,022
0 0
0 400,000
<LONG-TERM-DEBT-NET> 0 2,550,000
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,638,074 975,325
<TOT-CAPITALIZATION-AND-LIAB> 4,202,494 4,771,347
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> 54,417 29,390
<OTHER-OPERATING-EXPENSES> 96,322 8,322
<TOTAL-OPERATING-EXPENSES> 96,322 8,322
<OPERATING-INCOME-LOSS> (96,322) (8,322)
<OTHER-INCOME-NET> 389,881 385,608
<INCOME-BEFORE-INTEREST-EXPEN> 293,559 377,286
<TOTAL-INTEREST-EXPENSE> 513 290,313
<NET-INCOME> 238,622 57,576
0 44,000
<EARNINGS-AVAILABLE-FOR-COMM> 238,622 13,576
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 4.72 0.27
<EPS-DILUTED> 4.72 0.27
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<SUBSIDIARY>
<NUMBER> 3
<NAME> TCO
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-START> MAR-01-1994 MAR-01-1994
<PERIOD-END> FEB-28-1995 FEB-28-1995
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 1,881,283 1,881,283
<OTHER-PROPERTY-AND-INVEST> 205,255 205,255
<TOTAL-CURRENT-ASSETS> 1,648,481 356,774
<TOTAL-DEFERRED-CHARGES> 237,743 237,743
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 3,972,762 2,681,055
<COMMON> 241,784 241,784
<CAPITAL-SURPLUS-PAID-IN> 70,289 1,130,289
<RETAINED-EARNINGS> (782,774) (755,539)
<TOTAL-COMMON-STOCKHOLDERS-EQ> (470,701) 616,534
0 0
0 0
<LONG-TERM-DEBT-NET> 0 0
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 1,454,000
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,443,463 610,521
<TOT-CAPITALIZATION-AND-LIAB> 3,972,762 2,881,055
<GROSS-OPERATING-REVENUE> 677,828 677,828
<INCOME-TAX-EXPENSE> 5,473 3,573
<OTHER-OPERATING-EXPENSES> 513,344 513,344
<TOTAL-OPERATING-EXPENSES> 513,344 513,344
<OPERATING-INCOME-LOSS> 164,484 164,484
<OTHER-INCOME-NET> 22,722 30,188
<INCOME-BEFORE-INTEREST-EXPEN> 187,206 194,672
<TOTAL-INTEREST-EXPENSE> 154,441 154,941
<NET-INCOME> 27,292 36,158
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 27,292 36,158
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0.00 0.00
<EPS-DILUTED> 0.00 0.00
</TABLE>
<PAGE> 1
PAGE 1
EXHIBIT H
SECURITIES AND EXCHANGE COMMISSION
Release No. _________
June 23, 1995
Notice is hereby given that the following filing has been made
with the Commission pursuant to provisions of the Public Utility Holding
Company Act of 1935, as amended (the "Act") and rules promulgated thereunder.
All interested persons are referred to the Application-Declaration for a
complete statement of the proposed transactions summarized below. The
Application-Declaration and any amendments thereto are available for public
inspection through the Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing on the
Application-Declaration should submit their views in writing by July 18, 1995
to the Secretary, U.S. Securities and Exchange Commission, Washington, D.C.
20549, and serve a copy on the Applicant-Declarant at the address specified
below. Proof of service (by affidavit or, in the case of an attorney-at-law,
by certificate) should be filed with the request. Any request for hearing
shall identify specifically the issues of fact or law that are disputed. A
person who so requests will be notified of any hearing, if ordered, and will
receive a copy of any notice or order issued in the matter. After said date,
the Application-Declaration, as filed or amended, may be granted and/or
permitted to become effective.
<PAGE> 2
PAGE 2
***************************
The Columbia Gas System, Inc. ("Columbia"), 20 Montchanin Road,
Wilmington, Delaware 19807, a Delaware corporation, has filed an Application-
Declaration under sections 6, 7, 9, 10, 11(f), 11(g), 12(b), 12(c) and 12(e)
of the Act and rules 42, 43, 45, 60, 62, 63, 64 and 65 thereunder. The
Application-Declaration includes (i) an amended plan of reorganization and
disclosure statement for Columbia (the "Columbia Plan" and "Columbia
Disclosure Statement," respectively) and (ii) an amended plan of
reorganization and disclosure statement for Columbia Gas Transmission
Corporation ("Columbia Transmission"), a Delaware corporation and wholly-owned
subsidiary of Columbia (the "TCO Plan" and "TCO Disclosure Statement,"
respectively), which were filed on June 14, 1995 with the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court")
pursuant to the provisions of Chapter 11 of the United States Bankruptcy Code
(the "Bankruptcy Code").(1) Columbia requests the Commission to issue (i)
an order pursuant to section 11(f) approving the Columbia Plan(2) and
certain related transactions under the TCO Plan and (ii) a report on the
Columbia Plan pursuant to section 11(g) that may accompany a solicitation of
creditors and any other interest holders for approval of the Columbia Plan in
Columbia's bankruptcy
- --------------------
(1) The Columbia Plan and the TCO Plan are collectively referred to
herein as the "Plans." Columbia and Columbia Transmission are
sometimes collectively referred to herein as the "Debtors"
(2) Section 11(f) of the Act provides, in relevant part, that "a
reorganization plan for a registered holding company ... shall not
become effective unless such plan shall have been approved by the
Commission after opportunity for hearing prior to its submission to
the court."
<PAGE> 3
PAGE 3
proceedings.(3)
Columbia, a registered holding company under the Act, and
Columbia Transmission, a wholly-owned nonutility subsidiary thereof, filed
voluntary petitions in the Bankruptcy Court for protection under Chapter 11 of
the Bankruptcy Code on July 31, 1991 (the "Petition Date"). Since that time,
the Debtors have continued in the management of their respective businesses
and possession of their respective properties as debtors-in-possession
pursuant to sections 1107 and 1108 of the Bankruptcy Code. The Commission has
filed a notice of appearance under section 1109 of the Bankruptcy Code in each
Debtor's bankruptcy proceeding. Except for the appointment of a fee examiner
to review the reasonableness of fees and expenses incurred by certain
professionals involved in each of the Debtors' cases, no trustee or examiner
has been appointed by the Bankruptcy Court.
Columbia believes that it is in the best interests of both
Columbia's and Columbia Transmission's estates -- in that values will be
maximized and the reorganization process expedited after nearly four years
under Chapter 11 -- for Columbia to retain ownership of Columbia Transmission
as a wholly-owned subsidiary, to recapitalize Columbia Transmission and to
fund payments to Columbia Transmission's creditors pursuant to the provisions
of the TCO Plan. The Debtors contemplate concurrent implementation of the
Columbia Plan and the TCO Plan.
- --------------------
(3) Section 11(g)(2) of the Act provides, in relevant part, that any
solicitation for consents to or authorization of any reorganization
plan of a registered holding company or any subsidiary company
thereof shall be "accompanied or preceded by a copy of a report on
the plan which shall be made by the Commission after an opportunity
for a hearing on the plan and other plans submitted to it, or by an
abstract of such report made or approved by the Commission."
<PAGE> 4
PAGE 4
Certain transactions contemplated by the Columbia Plan and
Columbia's sponsorship of the TCO Plan require the Commission's approval under
the Act. The proposed issuance by Columbia Transmission of securities
pursuant to the TCO Plan, however, is exempt from approval pursuant to rule
49(c) under the Act. The jurisdictional aspects of the Plans are summarized
below.
I. The Columbia Plan
A. Overview
As described in the Columbia Disclosure Statement, the Columbia Plan
is intended to provide for payment on the Plan's effective date (the
"Effective Date")(4) of substantially all liquidated allowed claims of
Columbia's creditors. Holders of claims for borrowed money generally will
receive a combination of (i) cash, to the extent available (as determined by
Columbia), (ii) new debentures of Columbia ("New Indenture Securities") to be
issued under a new form of indenture (the "New Indenture") and (iii) equity
securities of Columbia. The equity securities proposed under the Columbia
Plan will be preferred stock (the "Preferred Stock") and Dividend Enhanced
Convertible Stock ("DECS"). Under certain circumstances provided in the
Columbia Plan, Columbia may redeem the Preferred Stock and DECS for cash.
Under the Columbia Plan, Columbia may issue up to an aggregate of
$3.65 billion in new securities, consisting of up to $3.25 billion in debt and
up to $400 million in equity. With respect to the debt, Columbia requests
authorization to issue up to $3 billion of New Indenture Securities but
contemplates issuing up to $2.1 billion of New Indenture
- --------------------
(4) Both the CG Plan and the TCO Plan assume that the Effective Date
will occur by December 31, 1995 for purposes of financial
projections. The Plans allow for the Effective Date to occur as
late as June 28, 1996.
<PAGE> 5
PAGE 5
Securities and entering into bank credit facilities (the "Bank Facilities")
aggregating up to $1.15 billion. With respect to equity, Columbia
contemplates issuing up to $200 million in aggregate value each of the
Preferred Stock and DECS. Columbia also contemplates that if cash available
from the Bank Facilities or operations is reduced from currently projected
levels, the principal amount of New Indenture Securities to be issued pursuant
to the Columbia Plan would be proportionately increased, provided that the
aggregate of the debt to be issued thereunder would not exceed $3.25 billion.
Columbia also proposes to repurchase and possibly reissue common
stock of Columbia (the "Common Stock") in connection with the termination of
the leveraged employee stock ownership feature (the "LESOP") of the Employees'
Thrift Plan of Columbia Gas System (the "Thrift Plan") and, if allowed claims
of certain Columbia Transmission creditors exceed the values estimated under
the TCO Plan, to issue Common Stock to fund distributions pursuant to the TCO
Plan. In addition, the Columbia Plan gives Columbia the flexibility to, under
certain conditions, offer Common Stock with respect to claims relating to
litigation against Columbia, certain of its current and former directors and
officers and other non-debtor defendants currently pending before the United
States District Court for the District of Delaware (the "Securities Action").
Finally, holders (collectively, the "Stockholders") of the Common Stock will
retain their equity interests in Columbia pursuant to the Columbia Plan and
are asked to approve certain amendments to Columbia's certificate of
incorporation.
B. New Indenture Securities
The New Indenture Securities will be general, unsecured senior
obligations of Columbia. They will be issued in seven series with maturities
of approximately five, seven,
<PAGE> 6
PAGE 6
ten, twelve, fifteen, twenty and thirty years. Each New Indenture Security
will bear interest from the Effective Date (or from the most recent interest
payment date to which interest has been paid) which will be payable semi-
annually. The interest rates for each series of New Indenture Securities will
be based on market rates for comparable securities. It is expected that the
interest rate on any series of New Indenture Securities will not exceed 10
percent per annum. The principal amounts of each series of New Indenture
Securities will be payable on their respective maturity dates.(5)
The Application-Declaration states that the proposed New Indenture,
pursuant to which the New Indenture Securities will be issued, will contain
customary affirmative covenants and limitations consistent with market
practice for similarly rated companies. The New Indenture also contains
limitations on the ability of Columbia's significant subsidiaries (as defined
under Regulation S-X) to incur long-term debt with or issue preferred stock to
third parties and a negative pledge with respect to Columbia, subject to
specified exceptions.
C. Preferred Stock
The Preferred Stock proposed under the Columbia Plan will have a
liquidation value of $25 per share and, as to dividend and liquidation rights,
will rank equally with the DECS but prior to the Common Stock. Holders of
Preferred Stock will be entitled to receive, when, as and if declared by
Columbia's board of directors, cumulative preferential cash dividends accruing
from the Effective Date at a rate per share that is to be determined in
accordance with a pricing formula. It is currently expected that the dividend
rate for Preferred Stock will not exceed 11 percent per annum. The Preferred
Stock may be redeemable, in
- --------------------
(5) It is contemplated that certain series of the New Indenture
Securities may be redeemable, at a premium, at the option of
Columbia, as more specifically described in the Application-
Declaration.
<PAGE> 7
PAGE 7
whole or in part, by Columbia, at its option, on or prior to the 120th day
following the Effective Date, so long as at least $50 million in Preferred
Stock or none remain outstanding or if all Preferred Stock is to be redeemed
no DECs are outstanding. If the Preferred Stock is not so redeemed the
dividend rate will be reset and increased by 100 basis points per share per
year effective as of the 120th day after the Effective Date. Columbia may
also redeem the Preferred Stock in whole or in part on or after the fifth
anniversary of the Effective Date. Upon any such redemption by Columbia, a
holder of Preferred Stock will receive, in exchange for each share so
redeemed, cash in an amount equal to the sum of the liquidation value thereof
and all accrued and unpaid dividends thereon to the date fixed for redemption.
The holders of Preferred Stock shall not have voting rights except
as required by law and as follows: (i) if dividends on the Preferred Stock
are in arrears and unpaid for six quarterly dividend periods, the holders of
the Preferred Stock will be entitled to vote, on the basis of one vote for
each share, for the election of two directors of Columbia, such directors to
be in addition to the number of directors constituting the board of directors
immediately prior to the accrual of such right; and (ii) the holders of
Preferred Stock will have voting rights with respect to certain modifications
of Columbia's certificate of incorporation.
D. DECS
The proposed DECS will be shares of convertible preferred stock of
Columbia and have dividend, liquidation and voting rights similar to the
Preferred Stock described above. The dividend rate will be determined to make
the market value of the DECS comparable to the market value of the Common
Stock and the liquidation value will be based on the market value of the
Common Stock as of a specified date. It is currently expected that the
dividend rate on the DECS will not exceed 11 percent per annum. The DECS will
be
<PAGE> 8
PAGE 8
mandatorily convertible into Common Stock. Columbia will have the right on or
prior to the 120th day after the Effective Date to redeem the DECS, so long as
at least $50 million DECS or none remain outstanding. If Columbia fails to
redeem the DECs, the dividend rate will increase by 100 basis points per share
per year effective as of the 120th day after the Effective Date.
Until the fifth anniversary of the Effective Date (the "Mandatory
Conversion Date"), a holder of DECS may, at its option, convert its DECS into
shares of Common Stock at the applicable conversion rate. On or after the
fourth anniversary of the Effective Date or the month before the fifth
anniversary after the Effective Date (as determined by Columbia prior to the
Effective Date) and prior to the Mandatory Conversion Date, Columbia may
redeem the outstanding DECS in whole or in part. Upon any such redemption by
Columbia, each holder of DECS will receive, in exchange for the redeemed
shares, a certain number of shares of Common Stock equal to the call price of
the DECS in effect on the date of redemption divided by the current market
price of Common Stock on the trading day prior to the public announcement of
Columbia's call for redemption. If the DECS have not already been converted
by the holder or redeemed by Columbia, as described above, then all then
outstanding DECS will convert automatically on the Mandatory Conversion Date
into shares of Common Stock at the applicable conversion rate in effect on
such date. The Columbia Plan proposes that the conversion rate initially will
be subject to adjustment.
E. Bank Facilities
As described above, Columbia proposes to enter into the Bank
Facilities on or before the Effective Date. Columbia states in its
Application-Declaration that it will seek to arrange a senior unsecured term
credit facility (the "Term Facility") and one or more senior
<PAGE> 9
PAGE 9
unsecured revolving credit facilities (collectively, the "Revolving Facility")
in an aggregate principal amount of up to $1.15 billion. The facilities may
be combined in a single facility.
The Term Facility would be used to fund payments to Columbia's
creditors pursuant to the Columbia Plan, obligations of Columbia Transmission
pursuant to the TCO Plan and for general corporate purposes. It is
anticipated that the initial term of the Term Facility will be two years.
Interest rates on borrowings under the Term Facility will be, depending on the
nature of the borrowing, the prime rate or the applicable LIBOR rate plus no
more than .75% or the applicable certificate of deposit rate plus no more than
.875%. Amounts borrowed under the Term Facility will be senior unsecured debt
of Columbia.
Columbia proposes to enter into the Revolving Facility on or before
the Effective Date. It is contemplated that the Revolving Facility will be
used to provide working capital for Columbia and its subsidiaries. It is
anticipated that the initial term of the Revolving Facility will not exceed
five years. Up to $100 million of the Revolving Facility is expected to be
used solely for letters of credit to be issued for the account of Columbia (a
portion of which may be denominated in Canadian dollars) in the ordinary
course of its business.
Interest rates on borrowings under the Revolving Facility will be,
depending on the nature of the borrowing, the prime rate or specified margins
over the applicable LIBOR rate or applicable certificate of deposit rate on
the same or similar margin and maturity terms as the Term Faciity. Amounts
borrowed under the Revolving Facility will be senior unsecured debt of
Columbia. The specific terms of the Revolving Facility, including, without
limitation, interest rates, repayment terms, conditions to borrowings,
representations and
<PAGE> 10
PAGE 10
warranties, covenants and events of default will be negotiated by Columbia and
prospective providers of the Revolving Facility.
F. Disposition of LESOP Shares
Columbia established the LESOP in 1990 to pre-fund, on a tax-
advantaged basis, a portion of the employer-matching obligation under the
terms of the Thrift Plan. The Columbia Plan proposes that the LESOP will be
terminated on the Effective Date in accordance with the provisions of the
LESOP trust and that Columbia will concurrently repurchase the Common Stock
currently held by the LESOP trust (the "LESOP Shares"). It is Columbia's
intention to initially hold the LESOP Shares in treasury and later reissue or
otherwise utilize them in such amounts and to use the LESOP Shares for one of
the following puposes deemed appropriate by Columbia: (i) selling LESOP
Shares on the market over time, (ii) utilizing them to fund distributions to
Columbia Transmission's creditors pursuant to the Guarantee, (iii) utilizing
them in connection with funding approved employee benefit programs and/or (iv)
using them to fund the settlement of the Securities Action pursuant to the
Columbia Plan.
G. Public Offering of Additional Columbia Equity
If Columbia elects to redeem the Preferred Stock and DECS on or prior to
the 120th day after the Effective Date and elects to fund such redemption
through the issuance and sale of up to 16 million shares of Common or
preferred stock, authorization is requested over the issuance of such
securities subject to a reservation of jurisdiction over the terms of any such
issuance and sale of Common and preferred stock.
<PAGE> 11
PAGE 11
H. Potential Offering of Columbia Securities in Connection with
Settlement of Securities Action
The Columbia Plan proposes the payment by Columbia and other
non-debtor defendants of up to $18 million to settle the claims in connection
with the Securities Action. Under the Columbia Plan, Columbia has the option
to increase this settlement amount if, based on the filing of supplemental
proofs of claim or questionnaires, as authorized by the Bankruptcy Court, it
is insufficient to meet the range of recoveries provided for in the Columbia
Plan. In that event, the Columbia Plan provides that Columbia may elect to
pay its portion of the settlement amount exceeding $18 million in the form of
Common Stock or may withdraw the Settlement Offer and elect to pay securities
claims, when and if allowed by the Bankruptcy Court, in Columbia Common Stock
or cash.
I. Restated Certificate of Incorporation
The Columbia Plan provides that Columbia's certificate of
incorporation will be amended and restated (the "Restated Certificate of
Incorporation") in accordance with applicable provisions of the Delaware
General Corporation Law and the Bankruptcy Code. The Restated Certificate of
Incorporation, as more specifically described in the Application-Declaration,
would, among other things, prohibit the issuance of non-voting equity
securities as required by the Bankruptcy Code, increase the number of
authorized shares of Preferred Stock (some of which may be issued on and after
the Effective Date in order to effectuate the Columbia Plan as described
above).
The Restated Certificate of Incorporation also includes various
provisions that are necessary to permit the issuance of Preferred Stock and
DECS under the Columbia Plan. These provisions differ from the similar
provisions in the current Certificate of Incorporation
<PAGE> 12
PAGE 12
in that they (i) decrease the par value of Preferred Stock from fifty dollars
($50) to ten dollars ($10), (ii) delete the restriction on Common Stock
dividends and amounts of secured debt, (iii) remove and conform specific
provisions regarding preferred voting rights, dividend rights and liquidation
rights and (iv) permit the Board of Directors to determine the specific
rights, powers and preferences of each series of Preferred Stock, and the
limitations thereon, at the time of issuance.
II. The Columbia Omnibus Settlement Under the TCO Plan
To facilitate the TCO Plan and in exchange for settlement of the
litigation challenging Columbia's claims against Columbia Transmission and
certain transfers made by Columbia Transmission to Columbia and another
affiliate prior to the Petition Date and retention of its ownership of
Columbia Transmission, the Columbia Board of Directors authorized the
"Columbia Omnibus Settlement" whereby Columbia will:
(i) Make a capital infusion into Columbia Transmission of approximately
one billion dollars, said capital contribution to have two components:
(A) Columbia will agree to a restructuring of Columbia Transmission
secured debt and the acceptance of $1.5 billion in new secured debt in
settlement of the $2 billion claim held by Columbia under existing the
secured debt, resulting in an approximate $500 million capital
contribution of the balance of the claim. (B) Columbia will agree to
provide cash to Columbia Transmission necessary so that the total amount
distributable under the TCO Plan equals approximately $3.9 billion
including the approximate $2 billion of Columbia's secured claim referred
to above. Columbia Transmission is projecting cash on hand totaling
approximately $1.4 billion as of December 31, 1995. Therefore, the
shortfall that Columbia would fund through an additional capital
contribution
<PAGE> 13
PAGE 13
would be approximately $500 million, of which about $300 million could be
met by Columbia's proportionate recovery on the Columbia Transmission
unsecured debt held by it and recovery by another subsidiary on its
claims followed by a dividend out of retained earnings by that subsidiary
to Columbia.
(ii) Guarantee (the "TCO Guarantee") a) the settlement reached by
Columbia Transmission with its customers and payments to dissenting
customers with respect to ultimately allowed claims(6) (the "Customer
Settlement") and b) the payment of the same distribution percentage of
ultimately allowed claims of claimants who do not accept the TCO Plan,
including producers that ultimately do not accept the Columbia
Transmission Producer Settlement ("Dissenting Producers"). In the event
that payments required by the TCO Plan to Dissenting Producers (and
dissenting customers) increase the total required distributions over the
projected $3.9 billion by an amount which requires external funding,
Columbia will have the option to utilize Common Stock(7) in lieu of
cash payments (and, of course, the option to sell Common Stock in the
marketplace and utilize the proceeds for such excess distributions).
Under these possible circumstances, whichever technique is employed
Columbia's investment in Columbia Transmission will be correspondingly
increased.
- --------------------
(6) Columbia Transmission's Customer Settlement has the support of all
of its major customers, affected state commissions and consumer
groups. While the Settlement permits non-supporting parties to
litigate their claims against Columbia Transmission, Columbia
Transmission's financial exposure from such litigation is considered
de minimis.
(7) To the extent that the TCO Plan reserves to Columbia the right to
issue securities other than Common Stock, the Commission is
requested to reserve jurisdiction over the issuance of said
securities.
<PAGE> 14
PAGE 14
Accepting Producers have agreed to a 5 percent (5%) holdback from
the distributions due to them and have agreed that, to the extent that claim
values in excess of the settlement values contained in the TCO Plan are agreed
to or proven, the holdback will be applied with dollar for dollar matching by
Columbia Transmission (and Columbia under the TCO Guarantee) to pay the
ultimate distributions to Dissenting Producers. Thus, there is a sharing by
Accepting Producers of a portion of the risk of the aggregate distribution to
producers pursuant to the TCO Plan to exceed settlement amount contained in
the Plan. If the holdback were ever to be used up, Columbia Transmission
would be required to pay the entire amount of the excess. Based on the
history of the estimation proceedings, Columbia Management does not believe
that the Dissenting Producers will be able to prove to the Bankruptcy Court
claim values which would so significantly exceed settlement values contained
in the TCO Plan that the obligation under the TCO Guarantee would be material
to the financial condition of Columbia.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
<PAGE> 1
EXHIBIT I-1
PAGE 1 OF 3
COLUMBIA GAS SYSTEM
FIVE-YEAR BUSINESS PLAN
PROJECTED CONDENSED INCOME STATEMENTS
($ MILLIONS)
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues 2,833.4 2,957.8 3,255.5 3,571.9 3,745.1 3,933.5
Operating Expenses:
Products Purchased 976.7 1,088.4 1,223.0 1,409.6 1,477.4 1,560.2
Operation and Maintenance 1,012.8 1,082.2 1,086.6 1,128.9 1,171.5 1,216.0
Depreciation and Depletion 261.7 275.7 295.5 315.0 326.0 339.4
Taxes Other than Income 209.0 220.0 229.3 245.3 259.0 273.7
-------- --------- ------- --------- --------- ---------
Total Operating Expenses 2,460.2 2,666.3 2,834.4 3,098.8 3,233.9 3,389.3
-------- --------- -------- --------- --------- ---------
Operating Income 373.2 291.5 421.1 473.1 511.2 544.2
Other Income (Deductions):
Interest Income and Other, Net 46.1 22.3 23.0 18.5 14.7 17.1
Interest Expense and Related Charges (14.8) (978.3) (205.4) (195.8) (196.2) (200.2)
Reorganization Items, Net (12.3) (374.4) -- -- -- --
-------- --------- --------- --------- --------- ---------
Total Other Income (Deducts) 19.0 (1,330.4) (182.4) (177.3) (181.5) (183.1)
-------- --------- --------- --------- --------- ---------
Income before Income Taxes 392.2 (1,038.9) 238.7 295.8 329.7 361.1
Income Taxes 146.0 (356.8) 89.6 110.8 121.2 133.7
-------- --------- --------- --------- --------- ---------
Income before Extraordinary Charges 246.2 (682.1) 149.1 185.0 208.5 227.4
Extraordinary Items (net) -- 288.1 -- -- -- --
Change in Accounting (5.6) -- -- -- -- --
-------- --------- --------- --------- --------- ---------
Net Income 240.6 (394.0) 149.1 185.0 208.5 227.4
Preferred Dividend Payments -- -- 35.0 35.0 35.0 35.0
-------- --------- --------- --------- --------- ---------
Earnings on Common Stock 240.6 (394.0) 114.1 150.0 173.5 192.4
======== ========= ========= ========= ========= =========
Primary Earnings per Share $ 4.76 $ (7.79) $ 2.30 $ 2.93 $ 3.34 $ 3.67
(DECS converted at $30/share)
Fully Diluted Earnings per Share
(DECS converted at $25/share) $ 4.76 $ (7.79) $ 2.25 $ 2.86 $ 3.26 $ 3.58
</TABLE>
<PAGE> 2
EXHIBIT I-1
PAGE 2 OF 3
COLUMBIA GAS SYSTEM
FIVE-YEAR BUSINESS PLAN
PROJECTED CONDENSED BALANCE SHEETS
($ MILLIONS)
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Property, Plant, and Equipment 4,081.0 4,329.7 4,466.9 4,707.4 4,926.9 5,133.1
Investments and Other Assets 306.4 208.9 176.7 103.5 113.4 123.2
Current Assets:
Cash 1,481.8 1.0 1.0 1.0 1.0 1.0
Accounts Receivable 561.4 516.6 479.0 449.8 475.5 469.7
Gas Inventory 230.3 225.8 225.3 223.8 222.9 223.1
Other Current Assets 211.6 446.1 437.0 403.7 380.4 354.2
--------- -------- --------- --------- --------- ---------
Total Current Assets 2,485.1 1,189.5 1,142.3 1,078.3 1,079.8 1,048.0
Deferred Charges 292.4 298.7 292.1 288.7 289.5 287.5
--------- -------- --------- --------- --------- ---------
Total Assets 7,164.9 6,026.8 6,078.0 6,177.9 6,409.6 6,591.8
========= ======== ========= ========= ========= =========
Capitalization:
Equity 1,468.0 1,474.0 1,598.3 1,717.8 1,855.8 2,008.0
Long Term Debt 4.3 2,432.3 2,265.4 2,232.8 2,308.6 2,326.7
--------- -------- --------- --------- --------- ---------
Total Capitalization 1,472.3 3,906.3 3,863.7 3,950.6 4,164.4 4,334.7
Current Liabilities:
Short-Term Debt 1.2 300.0 300.0 300.0 300.0 300.0
Rate Refunds Payable 92.2 76.6 39.3 45.5 45.6 46.2
Other Current Liabilities 766.5 621.2 742.5 759.1 775.4 785.4
--------- -------- --------- --------- --------- ---------
Total Current Liabilities 859.9 997.8 1,081.8 1,104.6 1,121.0 1,131.6
Liabilities Subject to Chapter 11 Proceedings 3,988.9 -- -- -- -- --
Other Non-Current Liabilities 843.8 1,122.7 1,132.5 1,122.7 1,124.2 1,125.5
--------- -------- --------- --------- --------- ---------
Total Capitalization and Liabilities 7,164.9 6,026.8 6,078.0 6,177.9 6,409.6 6,591.8
========= ======== ========= ========= ========= =========
</TABLE>
<PAGE> 3
EXHIBIT I-1
PAGE 3 OF 3
COLUMBIA GAS SYSTEM
FIVE-YEAR BUSINESS PLAN
PROJECTED CONDENSED CASH FLOW SHEETS
($ MILLIONS)
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Cash from Operations:
Net Income 240.6 (394.0) 149.1 185.0 208.5 227.4
Depreciation and Depletion 261.7 275.7 295.5 315.0 326.0 339.4
Deferred Income Taxes (non-current) 72.2 274.7 19.3 (2.1) 9.8 10.0
Reorganization Items, Net 16.9 (1,515.6) -- -- -- --
Other (net) (41.9) 47.3 (2.9) (4.3) (9.1) (6.7)
Change in Working Capital 23.3 (343.0) 144.4 118.1 (29.8) (0.7)
-------- --------- -------- --------- --------- ---------
Net Cash from Operations 572.8 (1,654.9) 605.4 611.7 505.4 569.4
Investment Activities:
Capital Expenditures 433.6 465.7 428.7 515.0 512.0 513.6
Other 1.3 (25.2) -- -- -- --
-------- --------- -------- --------- --------- ---------
Net Investment Activities 434.9 440.5 428.7 515.0 512.0 513.6
-------- --------- -------- --------- --------- ---------
Net Cash before Financing Activities 137.9 (2,095.4) 176.7 96.7 (6.6) 55.8
Financing Activities:
Debt Financing 3.5 650.0 (167.0) (32.4) 75.8 18.1
Equity Financing -- (35.4) 35.5 -- -- --
Dividend Payments -- -- (45.2) (64.3) (69.2) (73.9)
-------- --------- -------- --------- --------- ---------
Net Financing Activities 3.5 614.6 (176.7) (96.7) 6.6 (55.8)
-------- --------- -------- --------- --------- ---------
Change in Cash and Equivalents 141.4 (1,480.8) -- -- -- --
======== ========= ======== ========= ========= =========
Supplemental Cash Flow Disclosures:
- ----------------------------------
Interest Paid 0.8 995.8 208.3 198.0 199.6 203.2
Income Taxes Paid 38.8 77.2 (102.1) 43.6 88.8 102.3
Supplemental Schedule of 1995 Noncash Financing
- -----------------------------------------------
Activity:
- --------
Extinguishment/Retirement of Historical (2,382.0)
Indebtedness
Interest Expense not Paid in Cash (96.1)
Issuance of New Long-Term Debt 2,078.1
Issuance of DECS 200.0
Issuance of Preferred Stock 200.0
---------
Total --
=========
</TABLE>
<PAGE> 1
EXHIBIT I-2
PAGE 1 OF 3
COLUMBIA GAS TRANSMISSION
FIVE YEAR BUSINESS PLAN
PROJECTED CONDENSED INCOME STATEMENTS
($ MILLIONS)
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
-------- ---------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues 705.0 655.4 726.9 762.4 810.9 858.4
Operating Expenses:
Operation and Maintenance 407.0 427.3 389.4 404.7 418.7 433.0
Depreciation and Depletion 76.7 83.8 90.9 96.4 104.0 112.2
Taxes Other Than Income 45.6 48.9 52.3 54.8 57.9 60.7
------ ------ ------ ------ ------ ------
Total Operating Expenses 529.3 560.0 532.6 555.9 580.6 605.9
------ ------ ------ ------ ------ ------
Operating Income 175.7 95.4 194.3 206.5 230.3 252.5
Other Income (Deductions):
Interest Income and Other, Net 26.5 11.9 15.8 12.3 9.4 9.0
Interest Expense and Related Charges -149.9 -171.9 -110.6 -95.9 -97.3 -104.9
Reorganization Items, Net -11.8 -347.1 - - - -
------ ------ ------ ------ ------ ------
Total Other Income (Deducts) -135.2 -507.1 -94.8 -83.6 -87.9 -95.9
------ ------ ------ ------ ------ ------
Income before Income Taxes 40.5 -411.7 99.5 122.9 142.4 156.6
Income Taxes 9.2 127.2 36.6 44.7 47.3 53.7
------ ------ ------ ------ ------ ------
Income before Extraordinary Charges 31.3 -284.5 62.9 78.2 95.1 102.9
Extraordinary Items (net) - 350.8 - - - -
Change in Accounting -3.1 - - - - -
------ ------ ------ ------ ------ ------
Net Income 28.2 66.3 62.9 78.2 95.1 102.9
Preferred Dividend Payments - - - - - -
Earnings on Common Stock 28.2 66.3 62.9 78.2 95.1 102.9
====== ====== ====== ====== ====== ======
</TABLE>
<PAGE> 2
EXHIBIT I-2
PAGE 2 OF 3
COLUMBIA GAS TRANSMISSION
FIVE YEAR BUSINESS PLAN
PROJECTED CONDENSED BALANCE SHEETS
($ MILLIONS)
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Property, Plant, and Equipment 1,877.5 1,969.0 1,984.9 2,132.9 2,271.4 2,402.0
Investments and Other Assets 206.5 127.8 85.7 2.0 1.7 1.7
Current Assets:
Cash 1,253.5 1.5 10.0 1.5 1.5 1.5
Accounts Receivable 310.1 394.9 113.9 108.3 111.0 114.2
Other Current Assets 50.1 281.3 247.8 188.9 150.8 133.3
-------- ------- ------- ------- ------- -------
Total Current Assets 1,613.7 677.7 371.7 298.7 263.3 249.0
Deferred Charges 237.5 6.8 6.8 6.8 6.9 6.9
-------- ------- ------- ------- ------- -------
Total Assets 3,935.2 2,781.3 2,449.1 2,440.4 2,543.3 2,659.6
======== ======= ======= ======= ======= =======
Capitalization:
Equity -489.1 637.2 662.4 693.7 731.7 772.9
Long-Term Debt - 1,454.2 1,109.9 1,044.8 1,108.1 1,198.2
-------- ------- ------- ------- ------- -------
Total Capitalization -489.1 2,091.4 1,772.3 1,738.5 1,839.8 1,971.1
Current Liabilities:
Short-Term Debt - 1.5 - 28.0 40.0 40.0
Rate Refunds Payable 8.8 2.2 38.4 38.4 38.5 38.5
Other Current Liabilities 321.2 247.6 204.6 215.9 216.5 211.4
-------- ------- ------- ------- ------- -------
Total Current Liabilities 330.0 251.3 243.0 282.3 295.0 289.9
Liabilities Subject to Chapter 11 Proceedings 3,862.3 - - - - -
Other Non-Current Liabilities 232.0 438.6 433.8 419.6 408.5 398.6
-------- ------- ------- ------- ------- -------
Total Capitalization and Liabilities 3,935.2 2,781.3 2,449.1 2,440.4 2,543.3 2,659.6
======== ======= ======= ======= ======= =======
</TABLE>
<PAGE> 3
EXHIBIT I-2
PAGE 3 OF 3
COLUMBIA GAS TRANSMISSION
FIVE YEAR BUSINESS PLAN
PROJECTED CONDENSED CASH FLOW STATEMENTS
($ MILLIONS)
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Cash from Operations:
Net Income 28.2 66.3 62.9 78.2 95.1 102.9
Depreciation and Depletion 76.7 83.8 90.8 96.5 104.0 112.2
Deferred Income Taxes (non-current) 17.4 454.6 10.2 0.8 4.9 6.7
Reorganization Items, Net 212.9 -1,878.3 - - - -
Other (net) -39.9 61.5 27.1 68.7 -15.8 -16.7
Change in Working Capital -124.0 -396.2 307.7 75.8 36.0 9.2
------ -------- ------- -------- ------ -------
Net Cash from Operations 171.3 -1,608.3 498.7 320.0 224.2 214.3
Investment Activities:
Capital Expenditures -138.0 -175.4 -106.7 -244.5 -242.5 -242.7
------ -------- ------- -------- ------ -------
Net Investment Activities -138.0 -175.4 -106.7 -244.5 -242.5 -242.7
------ -------- ------- -------- ------ -------
Net Cash before Financing Activities 33.3 -1,783.7 392.0 75.5 -18.3 -28.4
Financing Activities:
Debt Discharge - -1,984.0 - - - -
Debt Financing - 1,455.7 -345.8 -37.1 75.3 90.2
Equity Financing - 1,060.0 - - - -
Dividend Payments - - -37.7 -46.9 -57.0 -61.8
Other Financing Activities 11.0 - - - -
------ -------- ------- -------- ------ -------
-
-
Net Financing Activities 11.0 531.7 -383.5 -84.0 18.3 28.4
------ -------- ------- -------- ------ -------
Change in Cash and Equivalents 44.3 -1,252.0 8.5 -8.5 - -
====== ======== ======= ======== ====== =======
</TABLE>
<PAGE> 1
Exhibit I-3
Columbia Plan
Source and Use of Funds
($ Millions)
<TABLE>
<CAPTION>
Sources Uses
------- ----
<S> <C> <C> <C>
External Financing CG Creditor Recovery
New Indenture Securities 2,078 Borrowed Money Claims 3,378
Preferred Stock 200 Other 39
DECS 200 -------
Term Facility 350 Total 3,417
Revolving Facility 300 =======
-------
Total 3,128
=======
TCO CG CASH CONTRIBUTION TO TCO
CG Unsecured 254
CNR Recovery 63 Total 527
Other 149
-------
Total 466
=======
SYSTEM
Cash on Hand 266
Other 84
-------
Total 350
=======
Total Sources 3,944 Total Uses 3,944
======= =======
</TABLE>
<PAGE> 1
PAGE 1
EXHIBIT I-4
NEW INDENTURE SECURITIES PRICING FORMULA
a.GENERAL
Purpose: To establish an appropriate methodology for pricing
Columbia's New Indenture Securities by application of the criteria
designated below, subject to limited adjustments to reflect market
conditions during the period commencing some 15 days before the first
date set for confirmation hearing. Columbia, its Creditors' and
Equity Committees have agreed to the following procedures for this
pricing methodology.
In general, the interest rates for each Issue of New Indenture
Securities will be calculated based on (1) U.S. Treasury rates and (2)
yields to maturity for market Baskets of debt securities having
comparable maturities, ratings, and call protection and issued by
comparable companies, as described below.
b. CRITERIA FOR DEBT SECURITIES IN THE BASKETS
Purpose: To establish three Baskets that contain debt securities
which will be comparable to the New Indenture Securities.
All debt issues which have the following characteristics shall be
included in the Baskets:
i. Issuers' assets shall be principally in regulated
interstate natural gas pipelines and/or natural gas
distribution in the United States.
ii. Debt issues shall be rated Baa1, Baa2 or Baa3 by
Moody's Investors' Service Inc. and BBB+, BBB or BBB-
by Standard & Poor's Ratings Group, respectively.
iii. Debt Issues in the 5 Year Basket shall mature in
4 to 6 years.
Debt Issues in the 10 Year Basket shall mature in 8
to 12 years.
Debt Issues in the 30 Year Basket shall mature in
greater than 24 years.
iv. Debt Issues in the 5 Year Basket shall be
non-callable.
Debt Issues in the 10 Year Basket shall be
non-callable.
Debt Issues in the 30 Year Basket shall be
non-callable for at least 5 years from the date such
debt issue is considered for inclusion in the 30 Year
Basket.
v. Each included series of debt shall have $100 million
or more in principal amount outstanding.
vi. Only fixed coupon debt shall be included.
<PAGE> 2
PAGE 2
vii. Only fully taxable debt shall be included.
viii. Mortgage bonds, privately-placed debt, 144A debt,
convertible debt, lease obligation debt, putable debt
and debt issues which are subject to sinking funds
shall be excluded. In addition, debt issues which
are defeased, or are being called or tendered for,
shall be excluded. If debt issues cease to be rated
within, or are placed under review for removal from,
the broad Baa/BBB categories, they shall be excluded
from the Baskets.
There shall be no limit on the number of debt issues eligible for
inclusion in each Basket. A minimum of five issues shall be included
in each Basket throughout the pricing period, however, and, if the
minimum number of issues cannot be reached within the current criteria
parameters, then the maturity parameter shall be broadened to enlarge
the Basket to allow for inclusion of at least the minimum five issues.
Notwithstanding all of the above, if Salomon Brothers and Barr Devlin
jointly agree to add or delete one or more debt issues from any Basket
it shall be done.
c. BASKET PRICING METHODOLOGY
Purpose: The Baskets will be used to determine the spread over the
U.S. Treasury curve for pricing of the 5, 10 and 30 year maturities.
Additional Adjustment Amounts may be added or subtracted to the three
Basket spreads to determine the appropriate spreads over the Treasury
curve for the pricing of the 7, 12, 15 and 20 year maturities as
identified below.
COUPON SETTING MECHANICS
<TABLE>
<CAPTION>
NEW INDENTURE ADDITIONAL
SECURITIES ADJUSTMENT
MATURITY TREASURY + SPREAD + AMOUNT
<S> <C> <C>
A. 5 5 Year + 5 year Basket
B. 7 7 Year + 5 year Basket + 5 bpts
C. 10 10 Year + 10 year Basket
D. 12 10 Year + 10 year Basket + 10 bpts
E. 15 10 Year + 10 year Basket + 25 bpts
F. 20 30 Year + 30 year Basket - 10 bpts
G. 30 30 Year + 30 year Basket
</TABLE>
Pricing each of the three Basket spreads will be determined by
calculation of the average (as determined by the median) spread above
the respective 5, 10 or 30 year on the run Treasury issue for the debt
issues in each Basket for each of the five business (trading) days
(ending five business (trading) days prior to the Effective Date) and
then calculating the mean of the five day average spreads.
Each Issue of New Indenture Securities shall be priced on the day that
is 5 business (trading)
<PAGE> 3
PAGE 3
days prior to the Effective Date utilizing on the run Treasury prices
at 4 PM Eastern time. To price the seven year tranche, an actual
Treasury bond will be selected (based on the criteria of (i) remaining
life close to seven years and (ii) coupon close to the interpolated
seven year Treasury yield) and used in the absence of an on the run
seven year Treasury.
The Additional Adjustment Amounts (referred to in the table above)
reflect the following pricing factors. (1) Interpolation of the
Treasury Yield curve in the case of pricing the 12, 15 and 20 year New
Indenture Securities. (2) Differentials between the nominal
maturities (5, 10 and 30 years) of the Baskets and the maturities of
certain New Indenture Securities as well as the presence or absence of
call protection on such New Indenture Securities during those
differential periods as identified and limited to the information
included in the table below.
<TABLE>
<CAPTION>
NEW INDENTURE MATURITY DIFFERENTIAL DIFFERENTIAL
SECURITIES VERSUS PERIOD
MATURITY RESPECTIVE BASKET CALL DATA
------------- --------------------- ------------
<S> <C> <C>
7 Year + 2 years Non callable
12 Year + 2 years Callable
15 Year + 5 years Callable
20 Year - 10 years Callable
</TABLE>
d. BASKET PRICING ADJUSTMENTS
1. BOND RATINGS
Purpose: To adjust by a number of basis points the Basket's daily
spread over the Treasury curve for differences between the expected
ratings of the New Indenture Securities and the average rating of debt
issues in each Basket. This mechanism is designed solely to reflect
credit quality spreads in the market for the debt of issuers having
assets principally in regulated interstate natural gas pipelines
and/or natural gas distribution in the United States.
If the average (mean) debt rating for securities within each Basket
differs from the expected ratings (as publicly indicated by both
Standard & Poor's Rating Group and Moody's Investor's Service Inc.)
for the New Indenture Securities, then each Basket's daily spread in
basis points over the Treasury curve shall be adjusted by identifying
and averaging the applicable number of basis points from Chart A and
Chart B.
<PAGE> 4
PAGE 4
CHART A
(Based on Standard & Poor's Ratings Group)
<TABLE>
<CAPTION>
New Indenture Basket Average Rating
Securities Rating BBB+ BBB BBB-
----------------- -------------------------------------------------
<S> <C> <C> <C>
BBB+ 0 (10) (20)
BBB 10 0 (10)
BBB- 20 10 0
</TABLE>
CHART B
(Based on Moody's Investor's Service Inc.)
<TABLE>
<CAPTION>
New Indenture Basket Average Rating
Securities Rating Baa1 Baa2 Baa3
----------------- ---- ---- ----
<S> <C> <C> <C>
Baa1 0 (10) (20)
Baa2 10 0 (10)
Baa3 20 10 0
</TABLE>
i. MATURITIES
Purpose: To adjust each Basket spread by a number of basis points for
differences between the average maturity of the debt issues in each
Basket and the maturity of the related New Indenture Security.
If the average (mean) debt maturity for each Basket differs from the
related New Indenture Security maturities by one or more years as
rounded to the nearest full year, then the following adjustments shall
be made to that Basket's daily spread (making an addition of basis
points for a shorter Basket maturity, and a subtraction of basis
points for a longer Basket maturity):
a. 5 Year Basket: 5 basis points per year of difference.
b. 10 Year Basket: 3 basis points per year of difference.
c. 30 Year Basket: 1 basis point per year of difference.
ii. CALL PROTECTION
Purpose: To adjust the 30 Year Basket spread by a number of basis
points for differences between the number of years of call protection
of debt issues in the 30 Year Basket and the number of years of call
protection of the New Indenture Securities.
a. No pricing adjustments relative to call protection are
contemplated for the Five and 10 Year Basket spreads; these
baskets include only non-callable debt.
b. Spread pricing for the 30 Year Basket shall be increased by
the following amount: add or
<PAGE> 5
PAGE 5
subtract, as appropriate, one basis point for each year
(rounded to nearest full year) that each debt issue in the
Basket has longer (plus) or shorter (minus) call protection
than 10 years and divide by the number of bond issues in the
Basket.
E. ALTERATIONS IN THE BONDS IN THE BASKETS, BASKET PRICING METHODOLOGY
AND BASKET PRICING ADJUSTMENTS
Columbia believes that its Creditors' and Equity Committees agree that
this pricing methodology and the data contained herein would
appropriately price the New Indenture Securities as of June 13, 1995,
and that the following procedures for possible alterations to pricing
the New Indenture Securities, limited to the resolution of issues
identified below in this Section E, will do so as of the Effective
Date. Fifteen days prior to the first date set for the Confirmation
hearing, the financial advisor to the Creditors' Committee, Barr
Devlin, and the financial advisor to the Company, Salomon Brothers in
consultation with the financial advisor to the Equity Committee, shall
each identify to the other party proposed changes, if any, (and basing
such proposal solely on the criteria in Section B hereof) to the debt
issues in the Baskets reviewed and selected by Salomon Brothers and
Barr Devlin as of June 13, 1995. If Salomon and Barr Devlin agree on
such changes, then such changes to the contents of the Baskets will be
final and binding. If Salomon and Barr Devlin are unable to agree on
such change, then 10 days prior to the first date set for the
Confirmation hearing, the party proposing such change may request
arbitration pursuant to Section F hereof.
Fifteen days prior to the first date set for the Confirmation hearing,
Salomon and Barr Devlin shall each identify to the other party
proposed changes, if any, (and basing such proposed changes solely on
changes in market conditions from June 1995 and the criteria and
purposes found in this Pricing Formula) to the number of basis points
found (a) under the column titled Additional Adjustment Amount in
Section C, lines, B, D, E and F only; (b) in Chart A and Chart B of
Section D.1; (c) in the maturity adjustments found in Section D.2.a,
D.2.b, and D.2.c; and (d) in the call protection adjustment found in
Section D.3.b. No other changes may be proposed. If Salomon and Barr
Devlin agree on such change, then the change will be final and
binding. If Salomon and Barr Devlin are unable to agree on such
change, then 10 days prior to the first date set for the Confirmation
hearing, the party proposing such change may request arbitration
pursuant to Section F hereof.
Other than the changes allowed in accordance with this Section E, this
Pricing Formula may not be changed.
F. ARBITRATION
In accordance with Section E hereof, if Salomon and Barr Devlin are
unable to agree on proposed changes, then the party proposing such
change may request arbitration on the date that is 10 days prior to
the first date set for the confirmation hearing. Arbitration may not
be requested at any other time. Any arbitration so requested shall be
conducted in accordance with this Section, and shall be conducted
without reference to rules of any arbitration association. Each party
must participate in an arbitration properly requested under Section E,
and no party may "opt out" of such properly requested arbitration. In
the event of arbitration, the position advocated by Salomon Brothers
shall be advanced only after consultation with Smith Barney in its
role as
<PAGE> 6
PAGE 6
advisor to the Equity Committee.
Upon a request for arbitration of any proposed change allowed under
Section E, each party shall submit to the Arbitrator, within 2
business days, its position on the item or items for which arbitration
has been requested, along with a short statement of rationale for its
position. Within 2 business days of receipt of the parties'
submission, on the bases of (x) this Pricing Formula (and
particularly, the statements of purpose found herein) and (y) the
Arbitrator's review of market changes between June 1995 and the date
that is 15 days prior to the first date set for the confirmation
hearing, the Arbitrator shall for each item subject to arbitration
choose either (a) the position of Salomon Brothers or (b) the position
of Barr Devlin; no compromise or other provision shall be selected by
the Arbitrator, provided, however, that if one party fails to submit a
position or statement of rationale, the position of the party which
does not fail to so submit must be chosen.
The decision of the Arbitrator shall be final and binding and shall
not be subject to further review.
The Arbitrator shall be agreed to by Columbia and its Creditors'
Committee.
G. PRICING
Pricing of the New Indenture Securities shall be administered by
Salomon Brothers. Barr Devlin retains the right to timely review all
data inputs and calculations as these pertain to the pricing of the
New Indenture Securities. Salomon Brothers, Smith Barney, J.P. Morgan
Securities and Merrill Lynch (if the latter two parties are willing to
do so), and one additional company as agreed to by Columbia and its
Creditors' Committee (the "Pricing Agents") shall provide market
pricing on individual debt issues.
The specific debt issues in each Basket shall be identified to the
Pricing Agents no later than 10 business days before the commencement
of Basket pricing. Prices of each Issue shall be the average (mean)
of prices provided by the agents after the highest price and the
lowest price are excluded.
Each Pricing Agent shall price according to the institutional/
wholesale market each Basket of debt instruments as well as the on the
run 5, 10 and 30 year U.S. Treasury issues at 4 PM daily. All pricing
is to be on a yield to maturity basis, and, if necessary, averaging
the bid-ask quotes.
<PAGE> 1
PAGE 1
EXHIBIT I-5
DECS PRICING FORMULA
DECS ISSUE PRICE: The Liquidation Value of each share of DECS shall be the
weighted average of the trading prices of all trades on the New York Stock
Exchange of shares of Columbia Common Stock for the five trading day period
which ends on the fifth trading day prior to the Effective Date (the
"Average").
DECS DIVIDEND RATE: If the anticipated Common Dividend rate (calculated by
dividing the Average into Columbia's anticipated initial annual dividend per
Common Share following the Effective Date, and expressing such result in basis
points), (the "ACDY") equals 300 basis points or less, then the DECS dividend
rate shall be the ACDY plus either (a) 450 basis points, if the DECS are
redeemable at Columbia's option beginning on the date that is four years after
the Effective Date, or (b) 400 basis points, if the DECS are redeemable at
Columbia's option beginning on the date that is four years and eleven months
after the Effective Date. If the ACDY is greater than 300 basis points, then
the DECS dividend rate shall be the ACDY plus either (x) 425 basis points, if
the DECS are redeemable at Columbia's option beginning on the date that is four
years after Effective Date, or (y) 375 basis points, if the DECS are redeemable
at Columbia's option beginning on the date that is four years and eleven months
after the Effective Date.
In addition to the foregoing, (a) for each 100 basis point increase in
the rate on the [benchmark treasury (either a four year or a five year Treasury
depending on the selected redemption period)] that occurs after the date of the
entry of the order of the Bankruptcy Court approving the Disclosure Statement,
an additional 25 basis points shall be added to the DECS dividend rate (as
determined
<PAGE> 2
PAGE 2
above), and (b) for each 100 basis point decline in the rate on the [benchmark
treasury] that occurs after the date of the entry of the order of the
Bankruptcy Court approving the Disclosure Statement, 25 basis points shall be
subtracted from the DECS dividend rate (as determined above).
<PAGE> 1
PAGE 1
EXHIBIT I-6
NEW PREFERRED STOCK
PRICING FORMULA
The annual percentage dividend rate on the New Preferred Stock shall
be equal to the sum of (a) the interest rate on Columbia's Issue G New
Indenture Securities (expressed in basis points), plus (b) the "Rating
Differential Factor" (as defined below), divided by 100.
The "Rating Differential Factor" is calculated by averaging the
applicable number from Chart A below and Chart B below.
CHART A
(Based on Standard & Poor's Ratings Group Ratings)
<TABLE>
<CAPTION>
New Preferred New Indenture Security Rating
Stock Rating BBB+ BBB BBB-
-------------- -------------------------------
<S> <C> <C>
BBB+ 5 N/A
N/A
BBB 10 5
N/A
BBB- 25 20
10
BB+ 50 45
35
BB 55 50
40
</TABLE>
CHART B
(Based on Moody's Investors' Service Inc. Ratings)
<TABLE>
<CAPTION>
New Preferred New Indenture Security Rating
Stock Rating Baa1 Baa2 Baa3
----------------- --------------------------------
<S> <C> <C>
baa1 5 N/A
N/A
baa2 10 5
N/A
baa3 25 20
10
ba1 50 45
35
ba2 55 50
40
</TABLE>
