<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
COMMISSION FILE NUMBER 1-1204
--------------------------------
AMERADA HESS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
13-4921002
(I.R.S. employer identification number)
1185 AVENUE OF THE AMERICAS, NEW YORK, N.Y.
(Address of principal executive offices)
10036
(Zip Code)
(Registrant's telephone number, including area code is (212) 997-8500)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) and has been subject to
such filing requirements for the past 90 days. Yes X No
----- -----
At September 30, 1999, 90,694,905 shares of Common Stock were outstanding.
================================================================================
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CONSOLIDATED INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------------------ ------------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES
Sales (excluding excise taxes) and
other operating revenues $ 1,801,651 $ 1,528,484 $ 4,770,301 $ 4,962,732
Non-operating revenues
Gain on asset sales 165,378 -- 273,441 80,321
Equity in income of HOVENSA L.L.C 7,001 -- 24,032 --
Other 209 23,578 86,418 67,426
----------- ----------- ----------- -----------
Total revenues 1,974,239 1,552,062 5,154,192 5,110,479
----------- ----------- ----------- -----------
COSTS AND EXPENSES
Cost of products sold 1,071,241 968,825 2,935,105 3,257,082
Production expenses 109,213 132,672 318,402 370,651
Marketing expenses 108,016 89,516 287,694 269,631
Other operating expenses 52,029 42,560 168,305 155,753
Exploration expenses, including dry holes
and lease impairment 45,446 57,668 186,333 261,483
General and administrative expenses 70,068 66,442 184,056 195,707
Interest expense 38,743 41,709 115,984 109,026
Depreciation, depletion and amortization 159,531 159,536 434,032 485,956
----------- ----------- ----------- -----------
Total costs and expenses 1,654,287 1,558,928 4,629,911 5,105,289
----------- ----------- ----------- -----------
Income (loss) before income taxes 319,952 (6,866) 524,281 5,190
Provision (benefit) for income taxes 161,467 (547) 217,760 45,822
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 158,485 $ (6,319) $ 306,521 $ (40,632)
=========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE -
BASIC $ 1.77 $ (.07) $ 3.42 $ (.45)
=========== =========== =========== ===========
DILUTED $ 1.75 $ (.07) $ 3.40 $ (.45)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING - DILUTED 90,531 89,268 90,169 89,732
COMMON STOCK DIVIDENDS PER SHARE $ .15 $ .15 $ .45 $ .45
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 3
PART I - FINANCIAL INFORMATION (CONT'D.)
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF DOLLARS)
A S S E T S
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 25,589 $ 73,791
Accounts receivable 1,342,107 1,013,184
Inventories 466,983 482,182
Other current assets 219,183 317,549
------------ ------------
Total current assets 2,053,862 1,886,706
------------ ------------
INVESTMENTS AND ADVANCES
HOVENSA L.L.C 726,613 702,581
Other 219,296 232,826
------------ ------------
Total investments and advances 945,909 935,407
------------ ------------
PROPERTY, PLANT AND EQUIPMENT
Total - at cost 11,239,319 11,027,239
Less reserves for depreciation, depletion,
amortization and lease impairment 7,011,485 6,835,301
------------ ------------
Property, plant and equipment - net 4,227,834 4,191,938
------------ ------------
NOTE RECEIVABLE 490,500 538,500
------------ ------------
DEFERRED INCOME TAXES AND OTHER ASSETS 220,859 330,432
------------ ------------
TOTAL ASSETS $ 7,938,964 $ 7,882,983
============ ============
L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y
CURRENT LIABILITIES
Accounts payable - trade $ 896,123 $ 713,831
Accrued liabilities 644,983 554,632
Deferred revenue 86,839 251,328
Taxes payable 173,579 100,686
Notes payable 33,771 3,500
Current maturities of long-term debt 31,637 172,820
------------ ------------
Total current liabilities 1,866,932 1,796,797
------------ ------------
LONG-TERM DEBT 2,335,848 2,476,145
------------ ------------
DEFERRED LIABILITIES AND CREDITS
Deferred income taxes 406,102 483,843
Other 403,259 482,786
------------ ------------
Total deferred liabilities and credits 809,361 966,629
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00
Authorized - 20,000,000 shares for issuance in series -- --
Common stock, par value $1.00
Authorized - 200,000,000 shares
Issued - 90,694,905 shares at September 30, 1999;
90,356,705 shares at December 31, 1998 90,695 90,357
Capital in excess of par value 782,036 764,412
Retained earnings 2,169,843 1,904,066
Accumulated other comprehensive income (115,751) (115,423)
------------ ------------
Total stockholders' equity 2,926,823 2,643,412
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,938,964 $ 7,882,983
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 4
PART I - FINANCIAL INFORMATION (CONT'D.)
AMERADA HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30
(IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 306,521 $ (40,632)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation, depletion and amortization 434,032 485,956
Exploratory dry hole costs 34,374 125,207
Lease impairment 23,074 24,211
Gain on asset sales (273,441) (80,321)
Provision (benefit) for deferred income taxes 44,938 (9,838)
Changes in operating assets and liabilities and other (125,269) 12,088
----------- -----------
Net cash provided by operating activities 444,229 516,671
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (617,258) (1,120,360)
Proceeds from asset sales and other 413,055 119,288
----------- -----------
Net cash used in investing activities (204,203) (1,001,072)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in notes payable 30,271 19,158
Long-term borrowings 621,075 644,000
Repayment of long-term debt (902,664) (86,228)
Cash dividends paid (54,299) (54,668)
Stock options exercised 17,093 --
Common stock acquired -- (58,667)
----------- -----------
Net cash provided by (used in) financing activities (288,524) 463,595
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 296 (3,167)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (48,202) (23,973)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 73,791 91,154
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 25,589 $ 67,181
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
PART I - FINANCIAL INFORMATION (CONT'D.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Note 1 - The financial statements included in this report reflect all
normal and recurring adjustments which, in the opinion of
management, are necessary for a fair presentation of the Company's
consolidated financial position at September 30, 1999 and December
31, 1998, and the consolidated results of operations for the three
and nine-month periods ended September 30, 1999 and 1998 and the
consolidated cash flows for the nine-month periods ended September
30, 1999 and 1998. The unaudited results of operations for the
interim periods reported are not necessarily indicative of results
to be expected for the full year.
Certain notes and other information have been condensed or omitted
from these interim financial statements. Such statements,
therefore, should be read in conjunction with the consolidated
financial statements and related notes included in the 1998 Annual
Report to Stockholders, which have been incorporated by reference
in the Corporation's Form 10-K for the year ended December 31,
1998. The 1998 income statement classification of certain accounts
has been restated to conform with current period presentation.
The Corporation's annual report includes a Summary of Significant
Accounting Policies. The Corporation's accounting policies that
follow are presented to supplement the accounting policies
previously disclosed.
Revenue Recognition: The Corporation recognizes revenues from the
sale of crude oil, natural gas, petroleum products and other
merchandise when title passes to the customer.
The Corporation recognizes revenues from the production of natural
gas properties in which the Corporation has interests based on
sales to customers. Differences between sales and the
Corporation's share of production are not material.
Exploration and Development Costs: Oil and gas exploration and
production activities are accounted for using the successful
efforts method. Costs of acquiring undeveloped oil and gas
leasehold acreage, including lease bonuses, brokers' fees and
other related costs, are capitalized.
Annual lease rentals and exploration expenses, including
geological and geophysical expenses and exploratory dry hole
costs, are charged against income as incurred.
Costs of drilling and equipping productive wells, including
development dry holes, and related production facilities are
capitalized.
The Corporation does not carry the capitalized costs of
exploratory wells as an asset for more than one year, unless oil
and gas reserves are found and classified as proved, or additional
exploration is under-way or planned. If exploratory wells do not
meet these conditions, the costs are charged to expense.
4
<PAGE> 6
PART I - FINANCIAL INFORMATION (CONT'D.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Impairment of Long-Lived Assets: The Corporation reviews
long-lived assets including oil and gas properties for impairment
whenever events or changes in circumstances indicate that the
carrying amounts may not be recovered. If the carrying amounts are
not expected to be recovered by undiscounted future cash flow, the
assets are impaired and an impairment loss is recorded. The amount
of the impairment is based on the estimated fair value of the
assets determined by discounting anticipated future net cash
flows. The net present value of future cash flows is based on the
Corporation's estimates, including future oil and gas prices
applied to projected production profiles, discounted at a rate
commensurate with the risks involved. Oil and gas prices used for
determining asset impairments may differ from those used at
year-end in the standardized measure of discounted future net cash
flows under FAS No. 69. The impact of forward sales on asset
impairments is not material.
Provisions for impairment of undeveloped oil and gas leases are
based on periodic evaluations and other factors.
Note 2 - Effective January 1, 1999, the Corporation adopted the last-in,
first-out (LIFO) inventory method for valuing its refining and
marketing inventories. The Corporation believes that the LIFO
method more closely matches current costs and revenues and will
improve comparability with other oil companies.
The change to LIFO decreased net income $46,000 during the three
months ended September 30, 1999 ($.51 per share basic and
diluted). LIFO decreased net income $76,900 for the nine months
ended September 30, 1999 ($.86 per share). There is no cumulative
effect adjustment as of the beginning of the year for this type of
accounting change.
Note 3 - Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
Crude oil and other charge stocks $ 116,512 $ 35,818
Refined and other finished products 388,038 386,917
Less: LIFO adjustment (118,347) - -
Materials and supplies 80,780 59,447
--------- ---------
Total inventories $ 466,983 $ 482,182
========= =========
</TABLE>
At September 30, 1999, inventory costs were determined using LIFO
for approximately 70% of the Corporation's petroleum inventory.
5
<PAGE> 7
PART I - FINANCIAL INFORMATION (CONT'D.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Note 4 - The Corporation accounts for its investment in HOVENSA, L.L.C.
using the equity method. Summarized financial information for
HOVENSA follows:
Summarized Balance Sheet Information
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
Current assets $ 441,241 $ 352,171
Net fixed assets 1,315,509 1,343,712
Other assets 25,288 27,711
Current liabilities (245,829) (133,454)
Long-term debt (140,000) (250,000)
Deferred liabilities and credits (32,721) (27,718)
----------- -----------
Partners' equity $ 1,363,488 $ 1,312,422
=========== ===========
</TABLE>
Summarized Income Statement Information
<TABLE>
<CAPTION>
For the three For the nine
months ended months ended
September 30,1999 September 30, 1999
----------------- ------------------
<S> <C> <C>
Total revenues $ 866,720 $ 2,125,027
Costs and expenses (851,780) (2,105,961)
Inventory market value changes -- 31,999
----------- -----------
Net income $ 14,940* $ 51,065*
=========== ===========
</TABLE>
* The Corporation's share of HOVENSA's net income was $7,001 and
$24,032 for the three and nine-month periods ended September 30,
1999, respectively.
Note 5 - The provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
Three months Nine months
ended September 30 ended September 30
-------------------------- --------------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Current $ 83,981 $ 8,694 $172,822 $ 55,660
Deferred 77,486 (9,241) 44,938 (9,838)
-------- -------- -------- --------
Total $161,467 $ (547) $217,760 $ 45,822
======== ======== ======== ========
</TABLE>
6
<PAGE> 8
PART I - FINANCIAL INFORMATION (CONT'D.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Note 6 - Worldwide currency losses amounted to $23,840 (including $15,737
of income tax expense) for the three-month period ended September
30, 1999. Currency gains amounted to $11,536 (including $2,392 of
income tax benefits) for the nine-month period ended September 30,
1999. Net foreign currency gains for the corresponding periods of
1998 amounted to $1,357 and $1,672.
Effective January 1, 1999, the Corporation changed the functional
currency of its United Kingdom operations from the British pound
sterling to the U.S. dollar. During the nine-months ended
September 30, 1999, the U.S. dollar strengthened in relation to
the pound sterling, which resulted in gains arising from the
translation of net sterling liability balances for financial
reporting purposes. However, during the three month period ended
September 30, 1999, the U.S. dollar weakened in relation to the
pound sterling, resulting in losses.
Note 7 - The weighted average number of common shares used in the basic and
diluted earnings per share computations are as follows:
<TABLE>
<CAPTION>
Three months Nine months
ended September 30 ended September 30
---------------------- ----------------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Common shares - basic 89,799 89,268 89,629 89,732
Effect of dilutive securities
(equivalent shares)
Nonvested common stock 469 -- 422 --
Stock options 263 -- 118 --
------ ------ ------ ------
Common shares - diluted 90,531 89,268 90,169 89,732
====== ====== ====== ======
</TABLE>
The antidilutive effects of 695 nonvested common shares and 40
stock options and 648 common shares and 90 stock options are
excluded in the three months and nine months ended September 30,
1998, respectively.
Note 8 - The Corporation uses futures, forwards, options and swaps,
individually or in combination, to reduce the effects of
fluctuations in crude oil, natural gas and refined product prices.
These contracts correlate to movements in the value of inventory
and the prices of crude oil and natural gas, and as hedges, any
resulting gains or losses are recorded as part of the hedged
transaction. Net deferred losses resulting from the Corporation's
petroleum hedging activities were $37,100 at September 30, 1999,
including $25,700 of unrealized losses, of which approximately 70%
relates to contracts that will mature in 2000.
7
<PAGE> 9
PART I - FINANCIAL INFORMATION (CONT'D.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Note 9 - Interest costs related to certain long-term construction projects
have been capitalized in accordance with FAS No. 34. During the
three and nine-month periods ended September 30, 1999, interest
costs of $3,604 and $14,404, respectively, were capitalized
compared to $5,897 and $19,093 for the corresponding periods of
1998.
Note 10 - Comprehensive income, which includes net income and the effects of
foreign currency translation recorded directly in stockholders'
equity, is as follows:
<TABLE>
<CAPTION>
Three months Nine months
ended September 30 ended September 30
------------------------- -------------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Comprehensive income (loss) $164,861 $ 18,399 $306,193 $(11,748)
======== ======== ======== ========
</TABLE>
Note 11 - The Corporation's results by operating segment were as follows:
<TABLE>
<CAPTION>
Three months Nine months
ended September 30 ended September 30
-------------------------------- --------------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating revenues
Exploration and production(1) $ 688,600 $441,400 $ 1,810,800 $ 1,427,200
Refining, marketing and
shipping 1,166,600 1,120,200 3,089,200 3,633,600
----------- ----------- ----------- -----------
Total $ 1,855,200 $ 1,561,600 $ 4,900,000 $ 5,060,800
=========== =========== =========== ===========
Net income (loss)
Exploration and production(2) $ 71,200 $ 5,600 $ 179,200 $ 63,800
Refining, marketing and
shipping(3) 128,100 33,400 240,000 18,100
Corporate (including interest) (40,800) (45,300) (112,700) (122,500)
----------- ----------- ----------- -----------
Total $ 158,500 $ (6,300) $ 306,500 $ (40,600)
=========== =========== =========== ===========
</TABLE>
(1) Includes transfers to affiliates of $53,500 and $129,700 during
the three and nine-months ended September 30, 1999, respectively,
compared to $33,200 and $98,100 for the corresponding periods of
1998.
(2) Includes gains on asset sales of $30,100 and $56,200 during the
nine-months ended September 30, 1999 and 1998, respectively.
(3) Includes gains on asset sales of $105,800 and $145,900 during the
three and nine-month periods ended September 30, 1999,
respectively.
8
<PAGE> 10
PART I - FINANCIAL INFORMATION (CONT'D.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Note 12 - At the end of 1998, the Corporation recorded a charge of $90,000
($77,000 after income taxes) for the decline in market value of
fixed-price, drilling-service contracts due to low crude oil
prices. Because of the uncertainties in estimating the future
market value of the drilling rig contracts, it is possible that
the Corporation's excess costs could be up to $30,000 greater than
accrued.
Note 13 - On October 1, 1999, the Corporation issued $1,000,000 of public
debentures. Of the $1,000,000, $300,000 bears interest at 7 3/8%
(effective interest rate of 7.44%) and is due in 2009 and $700,000
bears interest at 7 7/8% (effective interest rate of 7.99%) and is
due in 2029.
9
<PAGE> 11
PART I - FINANCIAL INFORMATION (CONT'D.)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
RESULTS OF OPERATIONS
Income excluding asset sales for the third quarter of 1999
amounted to $52 million compared with a loss of $6 million in the
third quarter of 1998. Income excluding asset sales for the first
nine months of 1999 was $131 million compared with a loss of $97
million in the first nine months of 1998. Including gains on asset
sales, net income amounted to $158 million in the third quarter of
1999 and $307 million in the first nine months of 1999, compared
with losses of $6 million and $41 million in the corresponding
periods of 1998.
The after-tax results by major operating activity for the
three and nine-month periods ended September 30, 1999 and 1998
were as follows (in millions, except per share data):
<TABLE>
<CAPTION>
Three months Nine months
ended September 30 ended September 30
-------------------- --------------------
1999 1998 1999 1998
----- ----- ----- -----
<S> <C> <C> <C> <C>
Exploration and production $ 71 $ 6 $ 149 $ 8
Refining, marketing and shipping 22 33 94 18
Corporate (11) (12) (26) (33)
Interest expense (30) (33) (86) (90)
----- ----- ----- -----
Income (loss) excluding asset sales 52 (6) 131 (97)
Gains on asset sales 106 - 176 56
----- ----- ----- -----
Net income (loss) $ 158 $ (6) $ 307 $ (41)
===== ===== ===== =====
Net income (loss)
per share (diluted) $1.75 $(.07) $3.40 $(.45)
===== ===== ===== =====
</TABLE>
The net gain from asset sales in the third quarter of 1999
reflects the sale of the Corporation's Gulf Coast terminals and
certain retail sites. The net gain from asset sales in the first
nine months of 1999 also includes the sale of the southeast
pipeline terminals, additional retail sites and natural gas
properties in California. The 1998 asset sales reflect the sales
of three oil and gas properties in the United States and Norway.
Exploration and Production
Excluding gains on asset sales, earnings from exploration
and production activities increased by $65 million in the third
quarter of 1999 and $141 million in the
10
<PAGE> 12
PART I - FINANCIAL INFORMATION (CONT'D.)
RESULTS OF OPERATIONS (CONTINUED)
first nine months of 1999, compared with the corresponding periods
of 1998. Exploration and production earnings in the third quarter
of 1999 include net nonrecurring expense of $29 million,
principally from foreign currency translation adjustments. Net
nonrecurring expense for the first nine months of 1999 amounted to
$12 million. The increases in exploration and production earnings
were primarily due to higher average crude oil selling prices,
increased worldwide crude oil production volumes, higher United
States natural gas volumes and lower exploration expenses. These
variances are more fully described below.
The Corporation's average selling prices, including the
effects of hedging, were as follows:
<TABLE>
<CAPTION>
Three months Nine months
ended September 30 ended September 30
------------------------- -------------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Crude oil and natural gas liquids
(per barrel)
United States $ 18.15 $ 11.26 $ 14.62 $ 12.33
Foreign 20.32 12.55 15.48 13.64
Natural gas (per Mcf)
United States 2.39 1.93 2.07 2.08
Foreign 1.60 2.14 1.79 2.26
</TABLE>
The Corporation's net daily worldwide production was as
follows:
<TABLE>
<CAPTION>
Three months Nine months
ended September 30 ended September 30
---------------------- ----------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Crude oil and natural gas liquids
(barrels per day)
United States 69,239 43,404 61,661 44,141
United Kingdom 114,901 106,199 113,624 111,412
Norway 27,594 23,617 27,019 29,056
Denmark 6,765 - - 2,280 - -
Gabon 9,977 15,428 10,583 14,173
Indonesia, Azerbaijan
and Thailand 5,079 3,140 4,527 2,605
------- ------- ------- -------
Total 233,555 191,788 219,694 201,387
======= ======= ======= =======
Natural gas (Mcf per day)
United States 346,164 280,807 337,993 288,979
United Kingdom 218,778 223,881 241,600 253,200
Norway 31,193 23,256 30,800 28,440
Indonesia and Thailand 12,005 3,754 6,300 3,900
------- ------- ------- -------
Total 608,140 531,698 616,693 574,519
======= ======= ======= =======
Barrels of oil equivalent (per day) 334,912 280,404 322,476 297,140
======= ======= ======= =======
</TABLE>
11
<PAGE> 13
PART I - FINANCIAL INFORMATION (CONT'D.)
RESULTS OF OPERATIONS (CONTINUED)
The increase in United States crude oil and natural gas
production principally reflects new fields which came onstream in
late 1998. Higher United Kingdom crude oil production in the third
quarter of 1999 is also largely due to new fields. Production
resumed in the third quarter of 1999 from a United Kingdom field
which had been shut-in earlier in the year due to damage to a
floating production vessel. New production commenced in July from
the South Arne Field in Denmark. Net crude oil production from
this field is expected to reach 30,000 barrels per day in 2000.
In 1999, depreciation, depletion and amortization charges
relating to exploration and production activities were higher than
the 1998 amounts, reflecting the increased production volumes
shown above. On a per barrel-produced basis, depreciation and
related charges for the first nine months of 1999 were lower than
in 1998 due to the impact of new lower-cost fields and the effect
of positive oil and gas reserve revisions at the end of 1998. In
the third quarter of 1999, per barrel depreciation and related
charges increased somewhat reflecting mid-year reserve revisions.
Production expenses were lower in 1999 as a result of lower
operating costs of new fields and shut-in production from the
vessel damage noted above. Exploration expenses were also lower in
1999 due to a reduced exploration budget. General and
administrative expenses were comparable in the third quarter but
lower in the first nine months of 1999, primarily due to cost
reduction initiatives in the United States and United Kingdom.
The following items are included in 1999 exploration and
production income (in millions):
<TABLE>
<CAPTION>
1999
-------------------
Three Nine
months months
------ ------
<S> <C> <C>
United Kingdom foreign currency translation $ (7) $ 13
United Kingdom tax on foreign currency translation (14) 2
Litigation settlement (8) (8)
State income tax refund - 6
Loss on renegotiation of drilling rig contracts - (17)
Marine service vessel contract termination charge - (8)
---- ----
$(29) $(12)
==== ====
</TABLE>
In 1999, the Corporation changed the functional currency of
its United Kingdom operations from the British pound sterling to
the U.S. dollar. During the third quarter of 1999, the U.S. dollar
weakened in relation to the pound sterling resulting in the
currency loss and tax effect shown above. During the nine month
period, the U.S. dollar strengthened in relation to the pound
sterling. The United Kingdom income tax calculation will continue
to be Sterling based until December 31 when it will also be
changed to the U.S. dollar functional currency. The Corporation's
hedging program and the change to the U.S. dollar functional
currency for income taxes will mitigate U.K. currency translation
gains or losses in the future.
12
<PAGE> 14
PART I - FINANCIAL INFORMATION (CONT'D.)
RESULTS OF OPERATIONS (CONTINUED)
In the third quarter of 1999, a deductible allowance against
the Petroleum Revenue Tax (PRT) in the United Kingdom expired,
increasing the effective income tax rate on exploration and
production earnings. In the first nine months of 1999, the
effective income tax rate was lower than in 1998 reflecting the
relative significance of nondeductible exploration drilling and
other costs at the low levels of income in 1998. The effective
income tax rate in 1999 also included the deductible allowance
which reduced the United Kingdom PRT tax.
The selling price of crude oil has increased from the low
levels experienced in late 1998 and early 1999. However, the
Corporation anticipates continued volatility.
Refining, Marketing and Shipping
Excluding asset sales, refining, marketing and shipping
operations had income of $22 million in the third quarter of 1999
compared with $33 million in the third quarter of 1998. Results
for the first nine months of 1999 amounted to income of $94
million compared with $18 million in the first nine months of
1998. The Corporation's downstream operations include HOVENSA, a
50% owned refining joint venture, and retail, energy marketing and
other activities as discussed below.
HOVENSA
The Corporation recorded equity income of $7 million from
HOVENSA in the third quarter of 1999 compared with $33 million in
the third quarter of 1998 when the refinery was wholly-owned.
Margins for all refined products continued to be weak during the
third quarter of 1999. HOVENSA accounts for inventory on the LIFO
method which has a negative impact on margins during periods of
rising crude oil costs. In 1999, LIFO accounting reduced the
Corporation's share of HOVENSA's earnings by approximately $40
million.
In the first nine months of 1999, the Corporation's equity
income from HOVENSA was $24 million compared with $37 million in
1998 when the refinery was wholly-owned. Both periods include the
benefit of the reversal of inventory writedowns that had been
recorded at the prior year-ends, with $28 million additional
benefit recorded in 1998. Income taxes are not recorded on HOVENSA
results due to available loss carryforwards.
Refining, marketing and shipping results also include
interest income of $12 million in the third quarter and $35
million in the first nine months of 1999 on the note received in
connection with the formation of the joint venture.
13
<PAGE> 15
PART I - FINANCIAL INFORMATION (CONT'D.)
RESULTS OF OPERATIONS (CONTINUED)
As a result of equity accounting for HOVENSA, the Company's
share of HOVENSA income is recorded in the line item "Equity in
income of HOVENSA L.L.C." Prior to the formation of HOVENSA,
refinery results were fully consolidated. In 1998, the amounts
shown below were reflected in the captions indicated (in
millions):
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, 1998 September 30, 1998
------------------ ------------------
<S> <C> <C>
Sales and other operating revenues $166 $552
Cost of products sold 99 388
Other operating expenses 21 72
Depreciation and amortization 20 63
</TABLE>
The Corporation's share of refinery runs amounted to 214,000
barrels per day in the first nine months of 1999 compared with
423,000 barrels per day in 1998 when the refinery was
wholly-owned.
Retail, energy marketing and other
Retail and energy marketing results declined in the third
quarter of 1999 compared with the corresponding period of 1998,
reflecting the inability to pass along higher product costs
through selling prices. Results in the first nine months of 1999
improved somewhat from 1998 in spite of the adoption of LIFO
effective January 1. Marketing sales volumes decreased to 93
million barrels in the first nine months of 1999 compared with 110
million barrels in the first nine months of 1998, reflecting lower
spot sales. Operating expenses, excluding amounts related to the
refinery in 1998 as indicated above, increased due to third party
shipping activities. Revenue from shipping operations is included
in operating revenue in the income statement.
In the third quarter of 1999, refining and marketing results
included after-tax charges of $6 million (of which $2 million was
the Corporation's share of HOVENSA's expense) relating to the
termination of participation in an environmental oil spill
response organization. The Corporation is now participating in
another spill response organization with lower ongoing operating
expenses.
The Corporation has a 50% interest in a consolidated
partnership which trades energy commodities. The Corporation also
periodically takes forward positions on energy contracts outside
of its hedging program. The combined results of these activities
were gains of $9 million and $28 million in the third quarter and
nine months of 1999, compared with losses of $2 million and $5
million in the corresponding periods of 1998. Expenses of the
trading partnership are included in marketing expenses in the
income statement.
14
<PAGE> 16
PART I - FINANCIAL INFORMATION (CONT'D.)
RESULTS OF OPERATIONS (CONTINUED)
Corporate
Net corporate expenses were comparable in the third quarters
of 1999 and 1998. In the first nine months of 1999, net corporate
expenses were $7 million lower than in 1998. The net expenses for
both periods were offset by dividend income from insurers, with
approximately $5 million more received in 1999.
Sales and Other Operating Revenues
Sales and other operating revenues increased by 18% in the
third quarter of 1999 and decreased by 4% in the first nine months
of 1999 compared with the corresponding periods of 1998. Revenues
in 1999 exclude third party sales of HOVENSA due to equity
accounting, as discussed above. Excluding the impact of HOVENSA,
revenues in the third quarter and nine months increased reflecting
higher crude oil and refined product selling prices and increased
crude oil and natural gas sales volumes, partially offset by lower
refined product sales volumes.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities, including changes
in operating assets and liabilities, amounted to $444 million in
the first nine months of 1999 compared with $517 million in the
first nine months of 1998. The decrease was primarily due to
changes in working capital components, mainly accounts receivable
from trading operations. The sales of the southeast pipeline and
Gulf Coast terminals, certain retail sites and natural gas
properties in California, generated proceeds of $394 million in
the first nine months of 1999. In 1998, the sales of oil and gas
properties in the United States and Norway generated proceeds of
$98 million.
Total debt was $2,401 million at September 30, 1999 compared
with $2,652 million at December 31, 1998. The debt to
capitalization ratio was 45.1% at September 30, compared with
50.1% at year-end. At September 30, 1999, floating rate debt
amounted to 46.5% of total debt. At September 30, 1999, the
Corporation had $941 million of additional borrowing capacity
available under its revolving credit agreements and additional
unused lines of credit under uncommitted arrangements with banks
of $345 million.
On October 1, 1999, the Corporation issued $1 billion of
public debentures. The proceeds of the issuance were used to repay
bank debt. Of the $1 billion, $300 million bears interest at 7
3/8% (effective interest rate of 7.44%) and is due in 2009 and
$700 million bears interest at 7 7/8% (effective interest rate of
7.99%) and is due in 2029.
15
<PAGE> 17
PART I - FINANCIAL INFORMATION (CONT'D.)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
At the end of 1998, the Corporation recorded a charge of $90
million (before income taxes) for the decline in market value of
fixed-price drilling service contracts. During the first nine
months of 1999, the Corporation accrued an additional $5 million
for a drilling rig that was subcontracted at an amount less than
previously estimated. The Corporation reduced the reserve by $57
million for contract payments. The balance of the reserve at
September 30, 1999 was $38 million. While the Corporation
currently anticipates work for all but one of the drilling rigs,
it is unable to determine with any certainty its ability to
continue to subcontract rigs, or the value of possible
subcontracts, and therefore, is unable to reasonably estimate the
adequacy of its reserve. It is possible that future income could
be reduced by as much as an additional $30 million related to the
rig contracts.
At the beginning of 1999, the Corporation had a reserve for
severance costs of $21 million and for exit costs (accrued office
lease costs) of $8 million. During the first nine months of 1999,
the Corporation charged $19 million in payments against the
severance reserve. All employees included in the 1998 severance
program have been terminated and the remaining severance liability
of $2 million will be paid during the fourth quarter of the year.
Futures, forwards, options and swaps are used to reduce the
effects of changes in the selling prices of crude oil, natural gas
and refined products. These instruments fix the selling prices of
a portion of the Corporation's products and the related gains or
losses are an integral part of the Corporation's selling prices.
At September 30, 1999, the Corporation had open hedge positions
equal to 18% of its estimated worldwide crude oil production over
the next twelve months and approximately 5% of its production for
the succeeding twelve months. The Corporation also had hedges
covering 8% of its marketing inventories. As market conditions
change, the Corporation will adjust its hedge positions.
The Corporation reduces its exposure to fluctuating foreign
exchange rates by using forward contracts to fix the exchange rate
on a portion of the currency required in its North Sea operations.
At September 30, 1999, the Corporation had $563 million of foreign
currency exchange contracts outstanding. In addition, the
Corporation uses interest-rate conversion agreements to adjust the
ratio of fixed and floating interest rate debt. At September 30,
there were no interest-rate conversion agreements outstanding;
however, on October 1, 1999, the Corporation entered into $300
million of interest-rate conversion agreements in connection with
the issuance of public debentures, as discussed above.
16
<PAGE> 18
PART I - FINANCIAL INFORMATION (CONT'D.)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
Capital expenditures in the first nine months of 1999
amounted to $617 million compared with $1,120 million in the first
nine months of 1998. Capital expenditures for exploration and
production activities were $560 million in the first nine months
of 1999 compared with $1,034 million in the first nine months of
1998. Capital expenditures for the remainder of 1999 are expected
to be approximately $250 million and will be financed by
internally generated funds.
YEAR 2000
Some older computer software and embedded computer systems
use two digits rather than four to define dates used in performing
calculations. Because these computer programs and embedded systems
may not properly recognize the Year 2000, errors may result
causing potentially serious disruptions. In addition, third
parties with which the Corporation does business face the same
problems.
The Corporation has a worldwide program to identify software and
hardware that is not Year 2000 compliant. The Corporation is also
determining the Year 2000 status of major vendors and customers
and is working on contingency plans.
The Corporation's Chief Information Officer and its Vice President
of Internal Audit jointly manage the Year 2000 project.
Status of Year 2000 Project
Since 1995, the Corporation has installed new financial and
business systems as part of its reengineering project. Although
the primary purpose of this project was to increase efficiency and
effectiveness, the new software is Year 2000 compliant. These new
systems have replaced approximately 70% of noncompliant software.
The Corporation has assessed its remaining software.
Remediation and testing of the remaining software are complete.
Several vendor supplied software packages are scheduled for
implementation during the fourth quarter of 1999. The Corporation
has completed approximately 98% of this portion of the project at
September 30. The Corporation principally uses external
consultants on this phase of the project.
There are embedded computer systems used throughout the
Corporation's operations. The Corporation has hired consultants to
evaluate embedded systems. The inventory and assessment phases are
complete and remediation of critical systems is finished.
Remediation of a few non-critical systems, where required, will be
completed in the fourth quarter. At September 30, assessment and
remediation of embedded computer systems is approximately 99%
complete.
17
<PAGE> 19
PART I - FINANCIAL INFORMATION (CONT'D.)
YEAR 2000 (CONTINUED)
The Corporation has also undertaken a supplier and customer
analysis of Year 2000 readiness. The identification process is
complete. Approximately 99% of critical suppliers have indicated
that they expect to be able to function properly in 2000.
Communication with third parties to assess their progress in
addressing Year 2000 problems will continue through the remainder
of the year. The third party analysis is approximately 93%
complete at September 30.
Costs
The new systems that replaced approximately 70% of
noncompliant software cost approximately $50 million. In addition,
the Corporation has spent $12 million for remediation of remaining
systems, primarily for outside consultants. This amount, which was
expensed as incurred, represents substantially all of the expected
remediation costs.
The Corporation has not deferred ongoing information
technology projects because of Year 2000 efforts.
Risks
There are uncertainties inherent in the Year 2000 problem,
partially resulting from the readiness of customers and suppliers.
The failure to correct material Year 2000 problems could interrupt
business and operations. Uncorrected, these interruptions could
have a material effect on the Corporation's results of operations.
However, the objective of the Corporation's Year 2000 project is
to reduce these risks.
The Corporation believes that the most reasonably likely
worst case scenario would be business disruptions at various
locations that could adversely affect the Corporation's results of
operations. However, the Corporation does not believe that these
disruptions will be severe or long-term.
Contingency Planning
The final portion of the Corporation's Year 2000 program is
contingency planning. Contingency plans are necessary to ensure
that risks associated with Year 2000 are mitigated. In the normal
course of business, the Corporation develops contingency plans to
ensure that it has alternate suppliers for critical materials and
equipment and that production of crude oil, natural gas and
refined products can be sold. The Corporation has completed risk
assessments and has substantially finished developing contingency
plans. The Corporation will update and enhance the contingency
plans as required by changing internal and external conditions.
18
<PAGE> 20
YEAR 2000 (CONTINUED)
In addition, the Corporation has engaged external
consultants to review and benchmark the progress of its Year 2000
project.
Safe Harbor
Certain information in this section on Year 2000 is forward
looking. This includes projected timetables and costs to complete
projects, and possible effects. These disclosures are based on the
Corporation's current understanding and assessment of the Year
2000 problem. Assumptions used, such as availability of resources,
and the status of its Year 2000 assessment and remediation
projects may change. In addition, suppliers and customers may fail
to be ready for the Year 2000. Consequently, actual results may
differ from these disclosures.
19
<PAGE> 21
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
4(1) Indenture dated as of October 1, 1999 between Registrant
and The Chase Manhattan Bank, as Trustee.
4(2) First Supplemental Indenture dated as of October 1, 1999
between Registrant and The Chase Manhattan Bank, as
Trustee, relating to Registrant's 7 3/8% Notes due 2009 and
7 7/8% Notes due 2029.
10(1) Change of Control Termination Benefits Agreement dated as
of September 1, 1999 between Registrant and John B. Hess.
Substantially identical agreements (differing only in the
signatories thereto) were entered into between Registrant
and W. S. H. Laidlaw, J. Barclay Collins and John Y.
Schreyer.
10(2) Change of Control Termination Benefits Agreement dated as
of September 1, 1999 between Registrant and Francis R.
Gugen. Substantially identical agreements (differing only
in the signatories thereto) were entered into between
Registrant and other executive officers (other than the
named executive officers referred to in Exhibit 10(1)).
(b) Reports on Form 8-K
The Registrant filed no report on Form 8-K during the three
months ended September 30, 1999.
20
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERADA HESS CORPORATION
(REGISTRANT)
By s/s John B. Hess
---------------------------------
JOHN B. HESS
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
By s/s John Y. Schreyer
---------------------------------
JOHN Y. SCHREYER
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Date: November 12, 1999
21
<PAGE> 1
EXHIBIT 4.1
================================================================================
AMERADA HESS CORPORATION
AS THE COMPANY
AND
THE CHASE MANHATTAN BANK
AS TRUSTEE
INDENTURE
DATED AS OF OCTOBER 1, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE 1DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
SECTION 1.01. Definitions..........................................................................................1
SECTION 1.02. Other Definitions....................................................................................7
SECTION 1.03. Incorporation by Reference of Trust Indenture Act....................................................8
SECTION 1.04. Rules of Construction................................................................................8
ARTICLE 2THE SECURITIES
SECTION 2.01. Form and Dating......................................................................................9
SECTION 2.02. Execution and Authentication.........................................................................9
SECTION 2.03. Amount Unlimited; Issuable in Series................................................................11
SECTION 2.04. Denomination and Date of Securities; Payments of Interest...........................................14
SECTION 2.05. Registrar and Paying Agent; Agents Generally........................................................15
SECTION 2.06. Paying Agent to Hold Money in Trust.................................................................15
SECTION 2.07. Transfer and Exchange...............................................................................16
SECTION 2.08. Replacement Securities..............................................................................19
SECTION 2.09. Outstanding Securities..............................................................................20
SECTION 2.10. Temporary Securities................................................................................20
SECTION 2.11. Cancellation........................................................................................21
SECTION 2.12. CUSIP Numbers.......................................................................................21
SECTION 2.13. Defaulted Interest..................................................................................21
SECTION 2.14. Series May Include Tranches.........................................................................22
ARTICLE 3REDEMPTION
SECTION 3.01. Applicability of Article............................................................................22
SECTION 3.02. Notice of Redemption Partial Redemptions............................................................22
SECTION 3.03. Payment of Securities Called for Redemption.........................................................24
SECTION 3.04. Exclusion of Certain Securities from Eligibility for Selection for Redemption.......................25
SECTION 3.05. Mandatory and Optional Sinking Funds................................................................26
</TABLE>
ARTICLE 4COVENANTS
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 4.01. Payment of Securities...............................................................................28
SECTION 4.02. Maintenance of Office or Agency.....................................................................29
SECTION 4.03. Negative Pledge.....................................................................................30
SECTION 4.04. Certain Sale and Lease-back Transactions............................................................33
SECTION 4.05. Certificate to Trustee..............................................................................35
SECTION 4.06. Reports by the Company..............................................................................35
ARTICLE 5SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, etc.........................................................................35
SECTION 5.02. Successor Substituted...............................................................................36
ARTICLE 6DEFAULT AND REMEDIES
SECTION 6.01. Events of Default...................................................................................36
SECTION 6.02. Acceleration........................................................................................38
SECTION 6.03. Other Remedies......................................................................................39
SECTION 6.04. Waiver of Past Defaults.............................................................................40
SECTION 6.05. Control by Majority.................................................................................40
SECTION 6.06. Limitation on Suits.................................................................................40
SECTION 6.07. Rights of Holders to Receive Payment................................................................41
SECTION 6.08. Collection Suit by Trustee..........................................................................41
SECTION 6.09. Trustee May File Proofs of Claim....................................................................42
SECTION 6.10. Application of Proceeds.............................................................................42
SECTION 6.11. Restoration of Rights and Remedies..................................................................43
SECTION 6.12. Undertaking of Costs................................................................................43
SECTION 6.13. Rights and Remedies Cumulative......................................................................43
SECTION 6.14. Delay or Omission Not Waiver........................................................................44
ARTICLE 7TRUSTEE
SECTION 7.01. General.............................................................................................44
SECTION 7.02. Certain Rights of Trustee...........................................................................44
SECTION 7.03. Individual Rights of Trustee........................................................................46
SECTION 7.04. Trustee's Disclaimer................................................................................47
SECTION 7.05. Notice of Default...................................................................................47
SECTION 7.06. Reports by Trustee to Holders.......................................................................47
SECTION 7.07. Compensation and Indemnity..........................................................................47
SECTION 7.08. Replacement of Trustee..............................................................................48
SECTION 7.09. Success Trustee by Merger, Etc......................................................................50
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 7.10. Eligibility.........................................................................................50
SECTION 7.11. Money Held in Trust.................................................................................50
ARTICLE 8DISCHARGE OF INDENTURE
SECTION 8.01. Defeasance Within One Year of Payment...............................................................50
SECTION 8.02. Defeasance..........................................................................................51
SECTION 8.03. Covenant Defeasance.................................................................................52
SECTION 8.04. Application of Trust Money..........................................................................53
SECTION 8.05. Repayment to Company................................................................................54
SECTION 8.06. Reinstatement.......................................................................................54
ARTICLE 9AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders..........................................................................55
SECTION 9.02. With Consent of Holders.............................................................................55
SECTION 9.03. Revocation and Effect of Consent....................................................................57
SECTION 9.04. Notation on or Exchange of Securities...............................................................57
SECTION 9.05. Trustee to Sign Amendments, Etc.....................................................................58
SECTION 9.06. Conformity with Trust Indenture Act.................................................................58
ARTICLE 10MISCELLANEOUS
SECTION 10.01. Trust Indenture Act of 1939........................................................................58
SECTION 10.02. Notices............................................................................................58
SECTION 10.03. Certificate and Opinion as to Conditions Precedent.................................................60
SECTION 10.04. Statements Required in Certificate or Opinion......................................................60
SECTION 10.05. Evidence of Ownership..............................................................................60
SECTION 10.06. Rules by Trustee, Paying Agent or Registrar........................................................61
SECTION 10.07. Payment Date Other than a Business Day.............................................................61
SECTION 10.08. Governing Law......................................................................................61
SECTION 10.09. No Adverse Interpretation of Other Agreements......................................................62
SECTION 10.10. Successors.........................................................................................62
SECTION 10.11. Duplicate Originals................................................................................62
SECTION 10.12. Separability.......................................................................................62
SECTION 10.13. Table of Contents, Headings, Etc...................................................................62
SECTION 10.14. Incorporators, Stockholders, Officers and Directors of Company Exempt from Individual Liability....62
SECTION 10.15. Judgment Currency..................................................................................62
</TABLE>
<PAGE> 5
PAGE
----
iv
<PAGE> 6
PAGE
----
v
<PAGE> 7
INDENTURE, dated as of October 1, 1999, between AMERADA HESS
CORPORATION, a Delaware corporation, as the Company, and THE CHASE MANHATTAN
BANK, a New York banking corporation, as Trustee.
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the issue from time to
time of its debentures, notes or other evidences of indebtedness to be issued in
one or more series (the "SECURITIES") up to such principal amount or amounts as
may from time to time be authorized in accordance with the terms of this
Indenture and to provide, among other things, for the authentication, delivery
and administration thereof, the Company has duly authorized the execution and
delivery of this Indenture; and
WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the
Securities by the Holders thereof, the Company and the Trustee mutually covenant
and agree for the equal and proportionate benefit of the respective Holders from
time to time of the Securities or of any and all series thereof and of the
coupons, if any, appertaining thereto as follows:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"AGENT" means any Registrar, Paying Agent, transfer agent or
Authenticating Agent.
"ATTRIBUTABLE DEBT" means, when used in connection with a sale
and lease-back transaction referred to in Section 4.04, on any date as of which
the amount thereof is to be determined, the product of (a) the net proceeds from
such sale and lease-back transaction multiplied by (b) a fraction, the numerator
of which is the number of full years of the term of the lease relating to the
property involved in such sale and lease-back transaction (without regard to any
options to renew or extend such term) remaining on the date of the making of
such
<PAGE> 8
computation and the denominator of which is the number of full years of the term
of such lease measured from the first day of such term.
"AUTHORIZED NEWSPAPER" means a newspaper (which, in the case of
The City of New York, will, if practicable, be The Wall Street Journal (Eastern
Edition) and in the case of London, will, if practicable, be the Financial Times
(London Edition)) published in an official language of the country of
publication customarily published at least once a day for at least five days in
each calendar week and of general circulation in The City of New York or London,
as applicable. If it shall be impractical in the opinion of the Trustee to make
any publication of any notice required hereby in an Authorized Newspaper, any
publication or other notice in lieu thereof which is made or given with the
approval of the Trustee shall constitute a sufficient publication of such
notice.
"BOARD RESOLUTION" means one or more resolutions of the board of
directors of the Company or any authorized committee thereof, certified by the
secretary or an assistant secretary to have been duly adopted and to be in full
force and effect on the date of certification, and delivered to the Trustee.
"BUSINESS DAY" means, with respect to any Security, a day, other
than a Saturday or a Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to close, in the city (or in any of
the cities, if more than one) unless otherwise specified, in which amounts are
payable, as specified in the form of such Security or the city in which the
Corporate Trust Office is located.
"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's capital stock or equity,
including, without limitation, all Common Stock and Preferred Stock.
"COMMISSION" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"COMMON STOCK" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of this Indenture, including, without
limitation, all series and classes of such common stock.
2
<PAGE> 9
"COMPANY" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to Article 5 of this
Indenture and thereafter means the successor.
"CONSOLIDATED CURRENT LIABILITIES" means, with respect to any
Person on any date, all amounts which, in conformity with GAAP, would be
classified as current liabilities on a consolidated balance sheet of such Person
and its consolidated subsidiaries as at such date.
"CONSOLIDATED INTANGIBLES" means, with respect to any Person on
any date, all assets of such Person and its consolidated subsidiaries,
determined on a consolidated basis, that would, in conformity with GAAP, be
classified as intangible assets on a consolidated balance sheet of such Person
and its consolidated subsidiaries as at such date, including, without
limitation, unamortized debt discount and expense, unamortized organization and
reorganization expense, costs in excess of the fair market value of acquired
companies, patents, trade or service marks, franchises, trade names, goodwill
and the amount of all write-ups in the book value of assets resulting from any
revaluation thereof.
"CONSOLIDATED NET TANGIBLE ASSETS" means, with respect to any
Person on any date, the amount equal to (a) the amount that would, in conformity
with GAAP, be included as assets on the consolidated balance sheet of such
Person and its consolidated subsidiaries as at such date minus (b) the sum of
(i) Consolidated Intangibles of such Person at such date and (ii) Consolidated
Current Liabilities of such Person at such date.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which
the corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at 450 West 33rd Street, New York, New York 10001.
"DEFAULT" means any Event of Default and any event that is, or
after notice or passage of time or both would be, an Event of Default.
"DEPOSITARY" means, with respect to the Securities of any series
issuable or issued in the form of one or more Registered Global Securities, the
Person designated as Depositary by the Company pursuant to Section 2.03 until a
successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "DEPOSITARY" shall mean or include
each Person who is then a Depositary hereunder, and if at any time there is more
than one such Person, "DEPOSITARY" as used with respect to the
3
<PAGE> 10
Securities of any such series shall mean the Depositary with respect to the
Registered Global Securities of that series.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in the
United States of America at the date of this instrument.
"HOLDER" or "SECURITYHOLDER" means the registered holder of any
Security with respect to Registered Securities and the bearer of any
Unregistered Security or any coupon appertaining thereto, as the case may be.
"INDENTURE" means this Indenture as originally executed or as it
may be amended or supplemented from time to time by one or more indentures
supplemental to this Indenture entered into pursuant to the applicable
provisions of this Indenture and shall include the forms and terms of the
Securities of each series established as contemplated pursuant to Sections 2.01
and 2.03.
"NON-U.S. PERSON" means a non-U.S. person for purposes of the
United States Internal Revenue Code.
"OFFICER" means, with respect to the Company, the chairman of the
board of directors, the president or chief executive officer, any vice
president, the chief financial officer, the treasurer or any assistant
treasurer, or the secretary or any assistant secretary.
"OFFICERS' CERTIFICATE" means a certificate signed in the name of
the Company (i) by the chairman of the board of directors, the president or
chief executive officer or a vice president and (ii) by the chief financial
officer, the treasurer or any assistant treasurer, or the secretary or any
assistant secretary, complying with Section 10.04 and delivered to the Trustee.
Each such certificate shall comply with Section 314 of the Trust Indenture Act
and include (except as otherwise expressly provided in this Indenture) the
statements provided in Section 10.04.
"OPINION OF COUNSEL" means a written opinion signed by legal
counsel, who may be an employee of or counsel to the Company, satisfactory to
the Trustee and complying with Section 10.04. Each such opinion shall comply
with Section 314 of the Trust Indenture Act and include the statements provided
in Section 10.04, if and to the extent required thereby.
"ORIGINAL ISSUE DATE" of any Security (or portion thereof) means
the earlier of (a) the date of authentication of such Security or (b) the date
of any
4
<PAGE> 11
Security (or portion thereof) for which such Security was issued (directly or
indirectly) on registration of transfer, exchange or substitution.
"ORIGINAL ISSUE DISCOUNT SECURITY" means any Security that
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 6.02.
"PERIODIC OFFERING" means an offering of Securities of a series
from time to time, the specific terms of which Securities, including, without
limitation, the rate or rates of interest, if any, thereon, the stated maturity
or maturities thereof and the redemption provisions, if any, with respect
thereto, are to be determined by the Company or its agents upon the issuance of
such Securities.
"PERSON" means an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"PREFERRED STOCK" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference stock,
whether now outstanding or issued after the date of the Indenture, including,
without limitation, all series and classes of such preferred or preference
stock.
"PRINCIPAL" of a Security means the principal amount of, and,
unless the context indicates otherwise, includes any premium payable on, the
Security.
"PRINCIPAL PROPERTY" means any oil or gas producing property,
onshore or offshore, or any refining or manufacturing plant owned or leased
pursuant to a capital lease by the Company or any Subsidiary, but shall not
include any such property that has been determined by Board Resolution not to be
of material importance to the business conducted by the Company and its
subsidiaries, taken as a whole, effective as of the date such Board Resolution
is adopted.
"REGISTERED GLOBAL SECURITY" means a Security evidencing all or a
part of a series of Registered Securities, issued to the Depositary for such
series in accordance with Section 2.02, and bearing the legend prescribed in
Section 2.02.
"REGISTERED SECURITY" means any Security registered on the
Security Register.
"RESPONSIBLE OFFICER" means, when used with respect to the
Trustee, any officer of the Trustee with direct responsibility for the
administration of this
5
<PAGE> 12
Indenture, or any other officer of the Trustee to whom any corporate trust
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
"RESTRICTED SUBSIDIARY" means any Subsidiary which owns or is a
lessee pursuant to a capital lease of any Principal Property.
"SECURITIES" means any of the securities, as defined in the first
paragraph of the recitals hereof, that are authenticated and delivered under
this Indenture and, unless the context indicates otherwise, shall include any
coupon appertaining thereto.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUBSIDIARY" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the outstanding
Voting Stock is owned, directly or indirectly, by such Person and one or more
other Subsidiaries of such Person.
"TRUSTEE" means the party named as such in the first paragraph of
this Indenture until a successor replaces it in accordance with the provisions
of Article 7 and thereafter means such successor.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended, as it may be amended from time to time.
"UCC" means the Uniform Commercial Code, as in effect in each
applicable jurisdiction.
"UNITED STATES BANKRUPTCY CODE" means the Bankruptcy Reform Act
of 1978, as amended and as codified in Title 11 of the United States Code, as
amended from time to time hereafter, or any successor federal bankruptcy law.
"UNREGISTERED SECURITY" means any Security other than a
Registered Security.
"U.S. GOVERNMENT OBLIGATIONS" means securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, and shall also include a depository receipt issued by a bank
or trust company as custodian with respect to any such U.S. Government
Obligation or a specific payment of interest
6
<PAGE> 13
on or principal of any such U.S. Government Obligation held by such custodian
for the account of the holder of a depository receipt; provided that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount received
by the custodian in respect of the U.S. Government Obligation or the specific
payment of interest on or principal of the U.S. Government Obligation evidenced
by such depository receipt.
"VOTING STOCK" means with respect to any Person, Capital Stock of
any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"YIELD TO MATURITY" means, as the context may require, the yield
to maturity (i) on a series of Securities or (ii) if the Securities of a series
are issuable from time to time, on a Security of such series, calculated at the
time of issuance of such series in the case of clause (i) or at the time of
issuance of such Security of such series in the case of clause (ii), or, if
applicable, at the most recent redetermination of interest on such series or on
such Security, and calculated in accordance with the constant interest method or
such other accepted financial practice as is specified in the terms of such
Security.
SECTION 1.2. Other Definitions. Each of the following terms is
defined in the section set forth opposite such term:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TERM SECTION
- --------------------------------------------------------------------------------
<S> <C>
Authenticating Agent 2.02
- --------------------------------------------------------------------------------
cash transaction 7.03
- --------------------------------------------------------------------------------
Dollars 4.02
- --------------------------------------------------------------------------------
Event of Default 6.01
- --------------------------------------------------------------------------------
Judgment Currency 10.15
- --------------------------------------------------------------------------------
mandatory sinking fund payment 3.05
- --------------------------------------------------------------------------------
optional sinking fund payment 3.05
- --------------------------------------------------------------------------------
Paying Agent 2.05
- --------------------------------------------------------------------------------
record date 2.04
- --------------------------------------------------------------------------------
Registrar 2.05
- --------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 14
<TABLE>
- --------------------------------------------------------------------------------
TERM SECTION
- --------------------------------------------------------------------------------
<S> <C>
Required Currency 10.15
- --------------------------------------------------------------------------------
Security Register 2.05
- --------------------------------------------------------------------------------
self-liquidating paper 7.03
- --------------------------------------------------------------------------------
sinking fund payment date 3.05
- --------------------------------------------------------------------------------
Tranche 2.14
- --------------------------------------------------------------------------------
</TABLE>
SECTION 1.3. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture Act, the
provision is incorporated by reference in and made a part of this Indenture. The
following terms used in this Indenture that are defined by the Trust Indenture
Act have the following meanings:
"INDENTURE SECURITIES" means the Securities;
"INDENTURE SECURITY HOLDER" means a Holder or a Security holder;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
and
"OBLIGOR" on the indenture securities means the Company or any
other obligor on the Securities.
All other terms used in this Indenture that are defined by the
Trust Indenture Act, defined by reference in the Trust Indenture Act to another
statute or defined by a rule of the Commission and not otherwise defined herein
have the meanings assigned to them therein.
SECTION 1.4. Rules of Construction. Unless the context
otherwise requires:
(a) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(b) words in the singular include the plural, and words in
the plural include the singular;
8
<PAGE> 15
(c) "HEREIN," "HEREOF" and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section
or other subdivision;
(d) all references to Sections or Articles refer to Sections
or Articles of this Indenture unless otherwise indicated; and
(e) use of masculine, feminine or neuter pronouns should not
be deemed a limitation, and the use of any such pronouns should be construed to
include, where appropriate, the other pronouns.
ARTICLE 2
THE SECURITIES
SECTION 2.1. Form and Dating. The Securities of each series shall
be substantially in such form or forms (not inconsistent with this Indenture) as
shall be established by or pursuant to one or more Board Resolutions or in one
or more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have imprinted or otherwise reproduced
thereon such legend or legends or endorsements, not inconsistent with the
provisions of this Indenture, as may be required to comply with any law, or with
any rules of any securities exchange or usage, all as may be determined by the
officers executing such Securities as evidenced by their execution of the
Securities. Any form of Security approved by or pursuant to a Board Resolution
must be acceptable as to form to the Trustee, such acceptance to be evidenced by
the Trustee's authentication of Securities in that form or a certificate signed
by a Responsible Officer of the Trustee and delivered to the Company. Unless
otherwise so established, Unregistered Securities shall have coupons attached.
SECTION 2.2. Execution and Authentication. Two Officers shall
execute the Securities (other than coupons) for the Company by facsimile or
manual signature in the name and on behalf of the Company. The seal of the
Company, if any, shall be reproduced on the Securities. If an Officer whose
signature is on a Security no longer holds that office at the time the Security
is authenticated, the Security shall nevertheless be valid.
9
<PAGE> 16
The Trustee, at the expense of the Company, may appoint an
authenticating agent acceptable to the Company (the "AUTHENTICATING AGENT") to
authenticate Securities (other than coupons). The Authenticating Agent may
authenticate Securities whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
Authenticating Agent.
A Security (other than coupons) shall not be valid until the
Trustee or Authenticating Agent 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 and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
having attached thereto appropriate coupons, if any, executed by the Company to
the Trustee for authentication together with a written order of the Company to
an authenticate and deliver such Securities and the applicable documents
referred to below in this Section, and the Trustee shall thereupon authenticate
and deliver such Securities to or upon the written order of the Company. In
authenticating any Securities of a series, the Trustee shall be entitled to
receive prior to the first authentication of any Securities of such series, and
(subject to Article 7) shall be fully protected in relying upon, unless and
until such documents have been superseded or revoked:
(a) any Board Resolution and/or executed supplemental
indenture referred to in Sections 2.01 and 2.03 by or pursuant to which the
forms and terms of the Securities of that series were established;
(b) an Officers' Certificate setting forth the form or forms
and terms of the Securities, stating that the form or forms and terms of the
Securities of such series have been, or will be when established in accordance
with such procedures as shall be referred to therein, established in compliance
with this Indenture; and
(c) an Opinion of Counsel substantially to the effect that the
form or forms and terms of the Securities of such series have been, or will be
when established in accordance with such procedures as shall be referred to
therein, established in compliance with this Indenture and that the supplemental
indenture, to the extent applicable, and Securities have been duly authorized
and, if executed and authenticated in accordance with the provisions of this
Indenture and delivered to and duly paid for by the purchasers thereof on the
date of such opinion, would be entitled to the benefits of this Indenture and
would be valid and binding obligations of the Company, in each case enforceable
against the Company in accordance with its terms, except as may be limited by
bankruptcy,
10
<PAGE> 17
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors generally and subject to the application of
general principles of equity (regardless of whether considered in a proceeding
in equity or at law), including without limitation (i) the possible
unavailability of specific performance, injunctive relief or any other equitable
remedy and (ii) concepts of materiality, reasonableness, good faith and fair
dealing.
The Trustee shall not be required to authenticate the Securities
of any series if the issue thereof will adversely affect the Trustee's own
rights, duties or immunities under the Securities or this Indenture.
If the Company shall establish pursuant to Section 2.03 that the
Securities of a series or a portion thereof are to be issued in the form of one
or more Registered Global Securities, then the Company shall execute and the
Trustee shall authenticate and deliver one or more Registered Global Securities
that (i) shall represent and shall be denominated in an amount equal to the
aggregate principal amount of all of the Securities of such series issued in
such form and not yet canceled, (ii) shall be registered in the name of the
Depositary for such Registered Global Security or Securities or the nominee of
such Depositary, (iii) shall be delivered by the Trustee to such Depositary or
its custodian or pursuant to such Depositary's instructions and (iv) shall bear
a legend substantially to the following effect: "Unless and until it is
exchanged in whole or in part for Securities in definitive registered form, this
Security may not be transferred except as a whole by the Depositary to the
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary."
SECTION 2.3. Amount Unlimited; Issuable in Series. The
aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series and each such
series shall rank equally and pari passu with all other unsecured and
unsubordinated debt of the Company. There shall be established in or pursuant to
a Board Resolution or one or more indentures supplemental hereto, prior to the
initial issuance of Securities of any series, subject to the last sentence of
this Section 2.03:
(a) the designation of the Securities of the series, which
shall distinguish the Securities of the series from the Securities of all other
series;
11
<PAGE> 18
(b) any limit upon the aggregate principal amount of the
Securities of the series that may be authenticated and delivered under this
Indenture and any limitation on the ability of the Company to increase such
aggregate principal amount after the initial issuance of the Securities of that
series (except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, or upon redemption of, other
Securities of the series pursuant hereto);
(c) the date or dates on which the Principal of the
Securities of the series is payable (which date or dates may be fixed or
extendible);
(d) the rate or rates (which may be fixed or variable) per
annum at which the Securities of the series shall bear interest, if any, the
date or dates from which such interest shall accrue, on which such interest
shall be payable and (in the case of Registered Securities) on which a record
shall be taken for the determination of Holders to whom interest is payable
and/or the method by which such rate or rates or date or dates shall be
determined;
(e) if other than as provided in Section 4.02, the place or
places where the Principal of and any interest on Securities of the series shall
be payable, any Registered Securities of the series may be surrendered for
exchange, notices, demands to or upon the Company in respect of the Securities
of the series and this Indenture may be served and notice to Holders may be
published;
(f) the right, if any, of the Company to redeem Securities of
the series, in whole or in part, at its option and the period or periods within
which, the price or prices at which and any terms and conditions upon which
Securities of the series may be so redeemed, pursuant to any sinking fund or
otherwise;
(g) the obligation, if any, of the Company to redeem, purchase
or repay Securities of the series pursuant to any mandatory redemption, sinking
fund or analogous provisions or at the option of a Holder thereof and the price
or prices at which and the period or periods within which and any of the terms
and conditions upon which Securities of the series shall be redeemed, purchased
or repaid, in whole or in part, pursuant to such obligation;
(h) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Securities of the series shall be
issuable;
(i) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof;
12
<PAGE> 19
(j) if other than the coin or currency in which the Securities
of the series are denominated, the coin or currency in which payment of the
Principal of or interest on the Securities of the series shall be payable or if
the amount of payments of Principal of and/or interest on the Securities of the
series may be determined with reference to an index based on a coin or currency
other than that in which the Securities of the series are denominated, the
manner in which such amounts shall be determined;
(k) if payment of the Principal of and interest on the
Securities of the series shall be payable in currency or currencies other than
the currency of the United States, the manner in which any such currency shall
be valued against other currencies in which any other Securities shall be
payable;
(l) whether the Securities of the series or any portion
thereof will be issuable as Registered Securities (and if so, whether such
Securities will be issuable as Registered Global Securities) or Unregistered
Securities (with or without coupons), or any combination of the foregoing, any
restrictions applicable to the offer, sale or delivery of Unregistered
Securities or the payment of interest thereon and, if other than as provided
herein, the terms upon which Unregistered Securities of any series may be
exchanged for Registered Securities of such series and vice versa;
(m) whether and under what circumstances the Company will pay
additional amounts on the Securities of the series held by Non-U.S. persons in
respect of any tax, assessment or governmental charge withheld or deducted and,
if so, whether the Company will have the option to redeem such Securities rather
than pay such additional amounts;
(n) if the Securities of the series are to be issuable in
definitive form (whether upon original issue or upon exchange of a temporary
Security of such series) only upon receipt of certain certificates or other
documents or satisfaction of other conditions, the form and terms of such
certificates, documents or conditions;
(o) any trustees, depositaries, authenticating or paying
agents, transfer agents or the registrar or any other agents with respect to the
Securities of the series;
(p) provisions, if any, for the defeasance of the Securities
of the series (including provisions permitting defeasance of less than all
Securities of the
13
<PAGE> 20
series), which provisions may be in addition to, in substitution for, or in
modification of (or any combination of the foregoing) the provisions of Article
8;
(q) if the Securities of the series are issuable in whole or
in part as one or more Registered Global Securities, the identity of the
Depositary for such Registered Global Security or Securities;
(r) any addition to or change in events of default or
covenants with respect to the Securities of the series; and
(s) any other terms of the Securities of the series (which
terms shall not be inconsistent with the provisions of this Indenture).
All Securities of any one series and coupons, if any,
appertaining thereto shall be substantially identical, except in the case of
Registered Securities as to date and denomination, except in the case of any
Periodic Offering and except as may otherwise be provided by or pursuant to the
Board Resolution referred to above or as set forth in any such indenture
supplemental hereto. All Securities of any one series need not be issued at the
same time and unless otherwise provided, a series may be reopened, without the
consent of any Holder, for issuances of additional Securities of such series and
such Securities may be issued from time to time, consistent with the terms of
this Indenture, if so provided by or pursuant to such Board Resolution or in any
such indenture supplemental hereto and any forms and terms of Securities to be
issued from time to time may be completed and established from time to time
prior to the issuance thereof by procedures described in such Board Resolution
or supplemental indenture.
SECTION 2.4. Denominaiton and Date of Securities; Payments of
Interest. The Securities of each series shall be issuable as Registered
Securities or Unregistered Securities in denominations established as
contemplated by Section 2.03 or, if not so established with respect to
Securities of any series, in denominations of $1,000 and any integral multiple
thereof. The Securities of each series shall be numbered, lettered or otherwise
distinguished in such manner or in accordance with such plan as the Officers of
the Company executing the same may determine, as evidenced by their execution
thereof.
Each Security shall be dated the date of its authentication. The
Securities of each series shall bear interest, if any, from the date, and such
interest shall be payable on the dates, established as contemplated by Section
2.03.
The Person in whose name any Registered Security of any series is
registered at the close of business on any record date applicable to a
particular
14
<PAGE> 21
series with respect to any interest payment date for such series shall be
entitled to receive the interest, if any, payable on such interest payment date
notwithstanding any transfer or exchange of such Registered Security subsequent
to the record date and prior to such interest payment date, except if and to the
extent the Company shall default in the payment of the interest due on such
interest payment date for such series, in which case the provisions of Section
2.13 shall apply. The term "RECORD DATE" as used with respect to any interest
payment date (except a date for payment of defaulted interest) for the
Securities of any series shall mean the date specified as such in the terms of
the Registered Securities of such series established as contemplated by Section
2.03, or, if no such date is so established, the fifteenth day next preceding
such interest payment date, whether or not such record date is a Business Day.
SECTION 2.5. Registrar and Paying Agent; Agents Generally. The
Company shall maintain an office or agency where Securities may be presented for
registration, registration of transfer or for exchange (the "REGISTRAR") and an
office or agency where Securities may be presented for payment (the "PAYING
AGENT"), which shall be in the Borough of Manhattan, The City of New York. The
Company shall cause the Registrar to keep a register of the Registered
Securities and of their registration, transfer and exchange (the "SECURITY
REGISTER"). The Company may have one or more additional Paying Agents or
transfer agents with respect to any series.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture and the Trust Indenture Act that relate to such
Agent. The Company shall give prompt written notice to the Trustee of the name
and address of any Agent and any change in the name or address of an Agent. If
the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act
as such. The Company may remove any Registrar or Paying Agent upon written
notice to such Agent and the Trustee; provided that no such removal shall become
effective until (i) the acceptance of an appointment by a successor Agent to
such Agent as evidenced by an appropriate agency agreement entered into by the
Company and such successor Agent and delivered to the Trustee or (ii) written
notification to the Trustee that the Trustee shall serve as such Agent until the
appointment of a successor Agent in accordance with clause (i) of this proviso.
The Company or any affiliate of the Company may act as Paying Agent or
Registrar; provided that neither the Company nor an affiliate of the Company
shall act as Paying Agent in connection with the defeasance of the Securities or
the discharge of this Indenture under Article 8.
15
<PAGE> 22
The Company initially appoints the Trustee as Registrar and
Paying Agent. If, at any time, the Trustee is not the Registrar, the Registrar
shall make available to the Trustee ten days prior to each interest payment date
and at such other times as the Trustee may reasonably request the names and
addresses of the Holders as they appear in the Security Register.
SECTION 2.6. Paying Agent to Hold Money in Trust. Not later than
10:00 a.m. New York City time on each due date of any Principal or interest on
any Securities, the Company shall deposit with the Paying Agent money in
immediately available funds sufficient to pay such Principal or interest. The
Company shall require each Paying Agent other than the Trustee to agree in
writing that such Paying Agent shall hold in trust for the benefit of the
Holders of such Securities or the Trustee all money held by the Paying Agent for
the payment of Principal of and interest on such Securities and shall promptly
notify the Trustee of any default by the Company in making any such payment. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee and account for any funds disbursed, and the Trustee may at any time
during the continuance of any payment default, upon written request to a Paying
Agent, require such Paying Agent to pay all money held by it to the Trustee and
to account for any funds disbursed. Upon doing so, the Paying Agent shall have
no further liability for the money so paid over to the Trustee. If the Company
or any affiliate of the Company acts as Paying Agent, it will, on or before each
due date of any Principal of or interest on any Securities, segregate and hold
in a separate trust fund for the benefit of the Holders thereof a sum of money
sufficient to pay such Principal or interest so becoming due until such sum of
money shall be paid to such Holders or otherwise disposed of as provided in this
Indenture, and will promptly notify the Trustee in writing of its action or
failure to act as required by this Section.
SECTION 2.7. Transfer and Exchange. Unregistered Securities
(except for any temporary global Unregistered Securities) and coupons (except
for coupons attached to any temporary global Unregistered Securities) shall be
transferable by delivery.
At the option of the Holder thereof, Registered Securities of any
series (other than a Registered Global Security, except as set forth below) may
be exchanged for a Registered Security or Registered Securities of such series
and tenor having authorized denominations and an equal aggregate principal
amount, upon surrender of such Registered Securities to be exchanged at the
agency of the Company that shall be maintained for such purpose in accordance
with Section 2.05 and upon payment, if the Company shall so require, of the
charges hereinafter provided. If the Securities of any series are issued in both
registered
16
<PAGE> 23
and unregistered form, except as otherwise established pursuant to Section 2.03,
at the option of the Holder thereof, Unregistered Securities of any series may
be exchanged for Registered Securities of such series and tenor having
authorized denominations and an equal aggregate principal amount, upon surrender
of such Unregistered Securities to be exchanged at the agency of the Company
that shall be maintained for such purpose in accordance with Section 4.02, with,
in the case of Unregistered Securities that have coupons attached, all unmatured
coupons and all matured coupons in default thereto appertaining, and upon
payment, if the Company shall so require, of the charges hereinafter provided.
At the option of the Holder thereof, if Unregistered Securities of any series,
maturity date, interest rate and original issue date are issued in more than one
authorized denomination, except as otherwise established pursuant to Section
2.03, such Unregistered Securities may be exchanged for Unregistered Securities
of such series and tenor having authorized denominations and an equal aggregate
principal amount, upon surrender of such Unregistered Securities to be exchanged
at the agency of the Company that shall be maintained for such purpose in
accordance with Section 4.02, with, in the case of Unregistered Securities that
have coupons attached, all unmatured coupons and all matured coupons in default
thereto appertaining, and upon payment, if the Company shall so require, of the
charges hereinafter provided. Registered Securities of any series may not be
exchanged for Unregistered Securities of such series. Whenever any Securities
are so surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the Securities which the Holder making the
exchange is entitled to receive.
All Registered Securities presented for registration of transfer,
exchange, redemption or payment shall be duly endorsed by, or be accompanied by
a written instrument or instruments of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder or his or her attorney duly
authorized in writing.
The Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
exchange or registration of transfer of Securities. No service charge shall be
made for any such transaction.
Notwithstanding any other provision of this Section 2.07, unless
and until it is exchanged in whole or in part for Securities in definitive
registered form, a Registered Global Security representing all or a portion of
the Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any
17
<PAGE> 24
such nominee to a successor Depositary for such series or a nominee of such
successor Depositary.
If at any time the Depositary for any Registered Global
Securities of any series notifies the Company that it is unwilling or unable to
continue as Depositary for such Registered Global Securities or if at any time
the Depositary for such Registered Global Securities shall no longer be eligible
under applicable law, the Company shall appoint a successor Depositary eligible
under applicable law with respect to such Registered Global Securities. If a
successor Depositary eligible under applicable law for such Registered Global
Securities is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such ineligibility, the Company will
execute, and the Trustee, upon receipt of the Company's order for the
authentication and delivery of definitive Registered Securities of such series
and tenor, will authenticate and deliver Registered Securities of such series
and tenor, in any authorized denominations, in an aggregate principal amount
equal to the principal amount of such Registered Global Securities, in exchange
for such Registered Global Securities.
The Company may at any time and in its sole discretion determine
that any Registered Global Securities of any series shall no longer be
maintained in global form. In such event the Company will execute, and the
Trustee, upon receipt of the Company's order for the authentication and delivery
of definitive Registered Securities of such series and tenor, will authenticate
and deliver, Registered Securities of such series and tenor in any authorized
denominations, in an aggregate principal amount equal to the principal amount of
such Registered Global Securities, in exchange for such Registered Global
Securities.
Any time the Registered Securities of any series are not in the
form of Registered Global Securities pursuant to the preceding two paragraphs,
the Company agrees to supply the Trustee with a reasonable supply of
certificated Registered Securities without the legend required by Section 2.02
and the Trustee agrees to hold such Registered Securities in safekeeping until
authenticated and delivered pursuant to the terms of this Indenture.
If established by the Company pursuant to Section 2.03 with
respect to any Registered Global Security, the Depositary for such Registered
Global Security may surrender such Registered Global Security in exchange in
whole or in part for Registered Securities of the same series and tenor in
definitive registered form on such terms as are acceptable to the Company and
such Depositary. Thereupon, the Company shall execute, and the Trustee shall
authenticate and deliver, without service charge:
18
<PAGE> 25
(i) to the Person specified by such Depositary
new Registered Securities of the same series and tenor, of any
authorized denominations as requested by such Person, in an
aggregate principal amount equal to and in exchange for such
Person's beneficial interest in the Registered Global Security;
and
(ii) to such Depositary a new Registered Global
Security in a denomination equal to the difference, if any,
between the principal amount of the surrendered Registered Global
Security and the aggregate principal amount of Registered
Securities authenticated and delivered pursuant to clause (i)
above.
Registered Securities issued in exchange for a Registered Global
Security pursuant to this Section 2.07 shall be registered in such names and in
such authorized denominations as the Depositary for such Registered Global
Security, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee or an agent of the Company or the Trustee.
The Trustee or such agent shall deliver such Securities to or as directed by the
Persons in whose names such Securities are so registered.
All Securities issued upon any registration of transfer or
exchange of Securities shall be valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Notwithstanding anything herein or in the forms or terms of any
Securities to the contrary, none of the Company, the Trustee or any agent of the
Company or the Trustee shall be required to exchange any Unregistered Security
for a Registered Security if such exchange would result in adverse Federal
income tax consequences to the Company (such as, for example, the inability of
the Company to deduct from its income, as computed for Federal income tax
purposes, the interest payable on the Unregistered Securities) under then
applicable United States Federal income tax laws. The Trustee and any such agent
shall be entitled to rely on an Officers' Certificate or an Opinion of Counsel
in determining such result.
The Registrar shall not be required (i) to issue, authenticate,
register the transfer of or exchange Securities of any series for a period of 15
days before a selection of such Securities to be redeemed or (ii) to register
the transfer of or exchange any Security selected for redemption in whole or in
part.
19
<PAGE> 26
SECTION 2.8. Replacement Securities. If a defaced or mutilated
Security of any series is surrendered to the Trustee or if a Holder claims that
its Security of any series has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Security of
such series and tenor and principal amount bearing a number not
contemporaneously outstanding. If required by the Trustee or the Company, an
indemnity bond must be furnished that is sufficient in the judgment of both the
Trustee and the Company to protect the Company, the Trustee and any Agent from
any loss that any of them may suffer if a Security is replaced. The Company may
charge such Holder for its expenses and the expenses of the Trustee (including
without limitation attorneys' fees and expenses) in replacing a Security. In
case any such mutilated, defaced, lost, destroyed or wrongfully taken Security
has become or is about to become due and payable, the Company in its discretion
may pay such Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the
Company and shall be entitled to the benefits of this Indenture.
To the extent permitted by law, the foregoing provisions of this
Section are exclusive with respect to the replacement or payment of mutilated,
destroyed, lost or wrongfully taken Securities.
SECTION 2.9. Outstanding Securities. Securities outstanding at
any time are all Securities that have been authenticated by the Trustee except
for those canceled by it, those delivered to it for cancellation and those
described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.08, it ceases to
be outstanding unless and until the Trustee and the Company receive proof
satisfactory to them that the replaced Security is held by a holder in due
course.
If the Paying Agent (other than the Company or an affiliate of
the Company) holds, or the Company holds in trust, on the maturity date or any
redemption date or date for repurchase of the Securities money sufficient to pay
Securities payable or to be redeemed or repurchased on such date, then on and
after such date such Securities shall cease to be outstanding and interest on
them shall cease to accrue.
A Security does not cease to be outstanding because the Company
or one of its affiliates holds such Security, provided, however, that, in
determining whether the Holders of the requisite principal amount of the
outstanding Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Securities owned by the Company or any
affiliate of
20
<PAGE> 27
the Company shall be disregarded and deemed not to be outstanding, except that,
in determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities as to which a Responsible Officer of the Trustee has received written
notice to be so owned shall be so disregarded. Any Securities so owned which are
pledged by the Company, or by any affiliate of the Company, as security for
loans or other obligations, otherwise than to another such affiliate of the
Company, shall be deemed to be outstanding, if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right to act as owner with respect to
such Securities and that the pledgee is not the Company or an affiliate of the
Company.
SECTION 2.10. Temporary Securities. Until definitive Securities
of any series are ready for delivery, the Company may prepare and the Trustee
shall authenticate temporary Securities of such series. Temporary Securities of
any series shall be substantially in the form of definitive Securities of such
series but may have insertions, substitutions, omissions and other variations
determined to be appropriate by the Officers executing the temporary Securities,
as evidenced by their execution of such temporary Securities. If temporary
Securities of any series are issued, the Company will cause definitive
Securities of such series to be prepared without unreasonable delay. After the
preparation of definitive Securities of any series, the temporary Securities of
such series shall be exchangeable for definitive Securities of such series and
tenor upon surrender of such temporary Securities at the office or agency of the
Company designated for such purpose pursuant to Section 4.02, 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 principal amount of
definitive Securities of such series and tenor and authorized denominations.
Until so exchanged, the temporary Securities of any series shall be entitled to
the same benefits under this Indenture as definitive Securities of such series.
SECTION 2.11. Cancellation. The Company at any time may deliver
to the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold.
The Registrar, any transfer agent and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for registration of transfer,
exchange or payment. The Trustee shall cancel and dispose of all Securities
surrendered for registration of transfer, exchange, payment or cancellation in
accordance with its customary procedures unless the Company otherwise directs
the Trustee in writing. The Company may
21
<PAGE> 28
not issue new Securities to replace Securities it has paid in full or delivered
to the Trustee for cancellation.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" and "CINS" numbers (if then generally in use), and
the Trustee shall use CUSIP numbers or CINS numbers, as the case may be, in
notices of redemption or exchange as a convenience to Holders and no
representation shall be made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of redemption or
exchange.
SECTION 2.13. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, it shall pay, or shall deposit with the
Paying Agent money in immediately available funds sufficient to pay, the
defaulted interest plus (to the extent lawful) any interest payable on the
defaulted interest (as may be specified in the terms thereof, established
pursuant to Section 2.03) to the Persons who are Holders on a subsequent special
record date, which shall mean the 15th day next preceding the date fixed by the
Company for the payment of defaulted interest, whether or not such day is a
Business Day. At least 15 days before such special record date, the Company
shall mail to each Holder and to the Trustee a notice that states the special
record date, the payment date and the amount of defaulted interest to be paid.
SECTION 2.14. Series May Include Tranches. A series of Securities
may include one or more tranches (each a "TRANCHE") of Securities, including
Securities issued in a Periodic Offering. The Securities of different tranches
may have one or more different terms, including authentication dates and public
offering prices, but all the Securities within each such tranche shall have
identical terms, including authentication date and public offering price.
Notwithstanding any other provision of this Indenture, with respect to Sections
2.02 (other than the fourth paragraph thereof) through 2.04, 2.07, 2.08, 2.10,
3.01 through 3.05, 4.02, 6.01 through 6.14, 8.01 through 8.05 and 9.02, if any
series of Securities includes more than one tranche, all provisions of such
sections applicable to any series of Securities shall be deemed equally
applicable to each tranche of any series of Securities in the same manner as
though originally designated a series unless otherwise provided with respect to
such series or tranche pursuant to Section 2.03. In particular, and without
limiting the scope of the next preceding sentence, any of the provisions of such
sections which provide for or permit action to be taken with respect to a series
of Securities shall also be deemed to provide for and permit such action to be
taken instead only with respect to Securities of one or more tranches within
that series (and such provisions shall be deemed satisfied thereby), even if no
comparable action is taken with respect to Securities in the remaining tranches
of that series.
22
<PAGE> 29
ARTICLE 3
REDEMPTION
SECTION 3.1. Applicability of Article. The provisions of this
Article shall be applicable to the Securities of any series which are redeemable
before their maturity or to any sinking fund for the retirement of Securities of
a series except as otherwise specified as contemplated by Section 2.03 for
Securities of such series.
SECTION 3.2. Notice of Redemption Partial Redemptions. Notice of
redemption to the Holders of Registered Securities of any series to be redeemed
as a whole or in part at the option of the Company shall be given by mailing
notice of such redemption by first class mail, postage prepaid, at least 30 days
and not more than 60 days prior to the date fixed for redemption to such Holders
of Registered Securities of such series at their last addresses as they shall
appear upon the Security Register. Notice of redemption to the Holders of
Unregistered Securities of any series to be redeemed as a whole or in part who
have filed their names and addresses with the Trustee pursuant to Section
313(c)(2) of the Trust Indenture Act, shall be given by mailing notice of such
redemption, by first class mail, postage prepaid, at least 30 days and not more
than 60 days prior to the date fixed for redemption, to such Holders at such
addresses as were so furnished to the Trustee (and, in the case of any such
notice given by the Company, the Trustee shall make such information available
to the Company for such purpose). Notice of redemption to all other Holders of
Unregistered Securities of any series to be redeemed as a whole or in part shall
be published in an Authorized Newspaper in The City of New York or with respect
to any Security the interest on which is based on the offered quotations in the
interbank Eurodollar market for dollar deposits in an Authorized Newspaper in
London, in each case, once in each of three successive calendar weeks, the first
publication to be not less than 30 days nor more than 60 days prior to the date
fixed for redemption. Any notice which is mailed or published in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not the Holder receives the notice. Failure to give notice by mail, or any
defect in the notice to the Holder of any Security of a series designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security of such series.
The notice of redemption to each such Holder shall specify the
principal amount of each Security of such series held by such Holder to be
redeemed, the
23
<PAGE> 30
CUSIP and CINS numbers of the Securities to be redeemed, the date fixed for
redemption, the redemption price, the place or places of payment, that payment
will be made upon presentation and surrender of such Securities and, in the case
of Securities with coupons attached thereto, of all coupons appertaining thereto
maturing after the date fixed for redemption, that such redemption is pursuant
to the mandatory or optional sinking fund, or both, if such be the case, that
interest accrued to the date fixed for redemption will be paid as specified in
such notice and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to accrue. In case any Security of a series is
to be redeemed in part only, the notice of redemption shall identify the
Securities to be redeemed and shall state the portion of the principal amount
thereof to be redeemed and shall state that on and after the date fixed for
redemption, upon surrender of such Security, a new Security or Securities of
such series and tenor in principal amount equal to the unredeemed portion
thereof will be issued.
The notice of redemption of Securities of any series to be
redeemed at the option of the Company shall be given by the Company or, at the
Company's request, by the Trustee in the name and at the expense of the Company.
On or before 10:00 a.m. New York City time on the redemption date
specified in the notice of redemption given as provided in this Section, the
Company will deposit with the Trustee or with one or more Paying Agents (or, if
the Company is acting as its own Paying Agent, set aside, segregate and hold in
trust as provided in Section 2.06) an amount of money sufficient to redeem on
the redemption date all the Securities of such series so called for redemption
at the appropriate redemption price, together with accrued interest to the date
fixed for redemption. If all of the outstanding Securities of a series are to be
redeemed, the Company will deliver to the Trustee at least 10 days prior to the
last date on which notice of redemption may be given to Holders pursuant to the
first paragraph of this Section 3.02 (or such shorter period as shall be
acceptable to the Trustee) an Officers' Certificate stating that all such
Securities are to be redeemed. If less than all the outstanding Securities of a
series are to be redeemed, the Company will deliver to the Trustee at least 15
days prior to the last date on which notice of redemption may be given to
Holders pursuant to the first paragraph of this Section 3.02 (or such shorter
period as shall be acceptable to the Trustee) an Officers' Certificate stating
the aggregate principal amount of such Securities to be redeemed. In case of a
redemption at the election of the Company prior to the expiration of any
restriction on such redemption, the Company shall deliver to the Trustee, prior
to the giving of any notice of redemption to Holders pursuant to this Section,
an Officers' Certificate stating that such redemption is not prohibited by such
restriction.
24
<PAGE> 31
If less than all the Securities of a series are to be redeemed,
the Trustee shall select, pro rata, by lot or in such manner as it shall deem
appropriate and fair, Securities of such series to be redeemed in whole or in
part. Securities may be redeemed in part in multiples equal to the minimum
authorized denomination for Securities of such series or any multiple thereof.
The Trustee shall, if requested in writing by the Company, promptly notify the
Company in writing of the Securities of such series selected for redemption and,
in the case of any Securities of such series selected for partial redemption,
the principal amount thereof to be redeemed. For all purposes of this Indenture,
unless the context otherwise requires, all provisions relating to the redemption
of Securities shall relate, in the case of any Security redeemed or to be
redeemed only in part, to the portion of the principal amount of such Security
which has been or is to be redeemed.
SECTION 3.3. Payment of Securities Called for Redemption. If
notice of redemption has been given as above provided, the Securities or
portions of Securities specified in such notice shall become due and payable on
the date and at the place stated in such notice at the applicable redemption
price, together with interest accrued to the date fixed for redemption, and on
and after such date (unless the Company shall default in the payment of such
Securities at the redemption price, together with interest accrued to such date)
interest on the Securities or portions of Securities so called for redemption
shall cease to accrue, and the unmatured coupons, if any, appertaining thereto
shall be void and, except as provided in Sections 7.11 and 8.04, such Securities
shall cease from and after the date fixed for redemption to be entitled to any
benefit under this Indenture, and the Holders thereof shall have no right in
respect of such Securities except the right to receive the redemption price
thereof and unpaid interest to the date fixed for redemption. On presentation
and surrender of such Securities at a place of payment specified in said notice,
together with all coupons, if any, appertaining thereto maturing after the date
fixed for redemption, said Securities or the specified portions thereof shall be
paid and redeemed by the Company at the applicable redemption price, together
with interest accrued thereon to the date fixed for redemption; provided that
payment of interest becoming due on or prior to the date fixed for redemption
shall be payable, in the case of Securities with coupons attached thereto, to
the Holders of the coupons for such interest upon surrender thereof, and in the
case of Registered Securities, to the Holders of such Registered Securities
registered as such on the relevant record date subject to the terms and
provisions of Sections 2.04 and 2.13 hereof.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the Principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate of
interest or Yield to
25
<PAGE> 32
Maturity (in the case of an Original Issue Discount Security) borne by such
Security.
If any Security with coupons attached thereto is surrendered for
redemption and is not accompanied by all appurtenant coupons maturing after the
date fixed for redemption, the surrender of such missing coupon or coupons may
be waived by the Company and the Trustee, if there be furnished to each of them
such security or indemnity as they may require to save each of them harmless.
Upon presentation of any Security of any series redeemed in part
only, the Company shall execute and the Trustee shall authenticate and deliver
to or on the order of the Holder thereof, at the expense of the Company, a new
Security or Securities of such series and tenor (with any unmatured coupons
attached), of authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented.
SECTION 3.4. Exclusion of Certain Securities from Eligibility for
Selection for Redemption. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and certificate
number in a written statement signed by an Officer of the Company and delivered
to the Trustee at least 40 days prior to the last date on which notice of
redemption may be given as being owned of record and beneficially by, and not
pledged or hypothecated by, either (a) the Company or (b) an entity specifically
identified in such written statement as directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company.
SECTION 3.5. Mandatory and Optional Sinking Funds. The minimum
amount of any sinking fund payment provided for by the terms of Securities of
any series 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 the
Securities of any series is herein referred to as an "OPTIONAL SINKING FUND
PAYMENT." The date on which a sinking fund payment is to be made is herein
referred to as the "SINKING FUND PAYMENT DATE."
In lieu of making all or any part of any mandatory sinking fund
payment with respect to any series of Securities in cash, the Company may at its
option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except through a mandatory sinking fund
payment) by the Company or receive credit for Securities of such series (not
26
<PAGE> 33
previously so credited) theretofore purchased or otherwise acquired (except as
aforesaid) by the Company and delivered to the Trustee for cancellation pursuant
to Section 2.11, (b) receive credit for optional sinking fund payments (not
previously so credited) made pursuant to this Section, or (c) receive credit for
Securities of such series (not previously so credited) redeemed by the Company
through any optional sinking fund payment. Securities so delivered or credited
shall be received or credited by the Trustee at the sinking fund redemption
price specified in such Securities.
On or before the sixtieth day next preceding each sinking fund
payment date for any series, or such shorter period as shall be acceptable to
the Trustee, the Company will deliver to the Trustee an Officers' Certificate
(a) specifying the portion of the mandatory sinking fund payment to be satisfied
by payment of cash and the portion to be satisfied by credit of specified
Securities of such series and the basis for such credit, (b) stating that none
of the specified Securities of such series has theretofore been so credited, (c)
stating that no defaults in the payment of interest or Events of Default with
respect to such series have occurred (which have not been waived or cured) and
are continuing and (d) stating whether or not the Company intends to exercise
its right to make an optional sinking fund payment with respect to such series
and, if so, specifying the amount of such optional sinking fund payment which
the Company intends to pay on or before the next succeeding sinking fund payment
date. Any Securities of such series to be credited and required to be delivered
to the Trustee in order for the Company to be entitled to credit therefor as
aforesaid which have not theretofore been delivered to the Trustee shall be
delivered for cancellation pursuant to Section 2.11 to the Trustee with such
Officers' Certificate (or reasonably promptly thereafter if acceptable to the
Trustee). Such Officers' Certificate shall be irrevocable and upon its receipt
by the Trustee the Company shall become unconditionally obligated to make all
the cash payments or delivery of Securities therein referred to, if any, on or
before the next succeeding sinking fund payment date. Failure of the Company, on
or before any such sixtieth day, to deliver such Officer's Certificate and
Securities specified in this paragraph, if any, shall not constitute a default
but shall constitute, on and as of such date, the irrevocable election of the
Company (i) that the mandatory sinking fund payment for such series due on the
next succeeding sinking fund payment date shall be paid entirely in cash without
the option to deliver or credit Securities of such series in respect thereof and
(ii) that the Company will make no optional sinking fund payment with respect to
such series as provided in this Section.
If the sinking fund payment or payments (mandatory or optional or
both) to be made in cash on the next succeeding sinking fund payment date plus
any unused balance of any preceding sinking fund payments made in cash shall
exceed $50,000 (or a lesser sum if the Company shall so request in writing with
respect to the Securities of any series), such cash shall be applied on the next
succeeding sinking fund payment date to the redemption of Securities of such
series at the sinking fund redemption price thereof together with accrued
interest thereon to the date fixed for redemption. If such amount shall be
$50,000 (or such
27
<PAGE> 34
lesser sum) or less and the Company makes no such request then it shall be
carried over until a sum in excess of $50,000 (or such lesser sum) is available.
The Trustee shall select, in the manner provided in Section 3.02, for redemption
on such sinking fund payment date a sufficient principal amount of Securities of
such series to absorb said cash, as nearly as may be, and shall (if requested in
writing by the Company) inform the Company of the serial numbers of the
Securities of such series (or portions thereof) so selected. Securities shall be
excluded from eligibility for redemption under this Section if they are
identified by registration and certificate number in an Officers' Certificate
delivered to the Trustee at least 60 days prior to the sinking fund payment date
as being owned of record and beneficially by, and not pledged or hypothecated by
either, (a) the Company or (b) an entity specifically identified in such
Officers' Certificate as directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company. The Company (or the
Trustee, if the Company shall so request the Trustee, in writing in the name and
at the expense of the Company), shall cause notice of redemption of the
Securities of such series to be given in substantially the manner provided in
Section 3.02 (and with the effect provided in Section 3.03) for the redemption
of Securities of such series in part at the option of the Company. The amount of
any sinking fund payments not so applied or allocated to the redemption of
Securities of such series shall be added to the next cash sinking fund payment
for such series and, together with such payment, shall be applied in accordance
with the provisions of this Section. Any and all sinking fund moneys held on the
stated maturity date of the Securities of any particular series (or earlier, if
such maturity is accelerated), which are not held for the payment or redemption
of particular Securities of such series shall be applied, together with other
moneys, if necessary, sufficient for the purpose, to the payment of the
Principal of, and interest on, the Securities of such series at maturity.
On or before 10:00 a.m. New York City time on each sinking fund
payment date, the Company shall pay to the Trustee in cash or shall otherwise
provide for the payment of all interest accrued to the date fixed for redemption
on Securities to be redeemed on the next following sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any
Securities of a series with sinking fund moneys or mail any notice of redemption
of Securities of such series by operation of the sinking fund during the
continuance of a Default in payment of interest on such Securities or of any
Event of Default except that, where the mailing of notice of redemption of any
Securities shall theretofore have been made, the Trustee shall redeem or cause
to be redeemed such Securities, provided that it shall have received from the
Company a sum sufficient for such redemption. Except as aforesaid, any moneys in
the sinking fund for such series at
28
<PAGE> 35
the time when any such Default or Event of Default shall occur, and any moneys
thereafter paid into the sinking fund, shall, during the continuance of such
Default or Event of Default, be deemed to have been collected under Article 6
and held for the payment of all such Securities. In case such Event of Default
shall have been waived as provided in Section 6.04 or the Default cured on or
before the sixtieth day preceding the sinking fund payment date in any year,
such moneys shall thereafter be applied on the next succeeding sinking fund
payment date in accordance with this Section to the redemption of such
Securities.
ARTICLE 4
COVENANTS
SECTION 4.1. Payment of Securities. The Company shall pay the
Principal of and interest on the Securities on the dates and in the manner
provided in the Securities and this Indenture. The interest on Securities with
coupons attached (together with any additional amounts payable pursuant to the
terms of such Securities) shall be payable only upon presentation and surrender
of the several coupons for such interest installments as are evidenced thereby
as they severally mature. The interest on any temporary Unregistered Securities
(together with any additional amounts payable pursuant to the terms of such
Securities) shall be paid, as to the installments of interest evidenced by
coupons attached thereto, if any, only upon presentation and surrender thereof,
and, as to the other installments of interest, if any, only upon presentation of
such Unregistered Securities for notation thereon of the payment of such
interest. The interest on Registered Securities (together with any additional
amounts payable pursuant to the terms of such Securities) shall be payable only
to the Holders thereof and at the option of the Company may be paid by mailing
checks for such interest payable to or upon the written order of such Holders at
their last addresses as they appear on the Security Register of the Company.
Notwithstanding any provisions of this Indenture and the
Securities of any series to the contrary, if the Company and a Holder of any
Registered Security so agree, payments of interest on, and any portion of the
Principal of, such Holder's Registered Security (other than interest payable at
maturity or on any redemption or repayment date or the final payment of
Principal on such Security) shall be made by the Paying Agent, upon receipt from
the Company of immediately available funds by 10:00 a.m., New York City time (or
such other time as may be agreed to between the Company and the Paying Agent),
directly to the Holder of such Security (by Federal funds wire transfer or
otherwise) if the Holder has
29
<PAGE> 36
delivered written instructions to the Trustee at least 15 days prior to such
payment date requesting that such payment will be so made and designating the
bank account to which such payments shall be so made and in the case of payments
of Principal surrenders the same to the Trustee in exchange for a Security or
Securities aggregating the same principal amount as the unredeemed principal
amount of the Securities surrendered. The Trustee shall be entitled to rely on
the last instruction delivered by the Holder pursuant to this Section 4.01
unless a new instruction is delivered 15 days prior to a payment date. The
Company will indemnify and hold each of the Trustee and any Paying Agent
harmless against any loss, liability or expense (including attorneys' fees)
resulting from any act or omission to act on the part of the Company or any such
Holder in connection with any such agreement or from making any payment in
accordance with any such agreement.
The Company shall pay interest on overdue Principal, and interest
on overdue installments of interest, to the extent lawful, at the rate per annum
specified in the Securities.
SECTION 4.2. Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Securities may be surrendered for registration of transfer or exchange or
for presentation for payment and where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The
Company hereby initially designates the Corporate Trust Office of the Trustee,
located in the Borough of Manhattan, The City of New York, as such office or
agency of the Company. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 10.02.
The Company will maintain one or more agencies in a city or
cities located outside the United States (including any city in which such an
agency is required to be maintained under the rules of any stock exchange on
which the Securities of any series are listed) where the Unregistered
Securities, if any, of each series and coupons, if any, appertaining thereto may
be presented for payment. No payment on any Unregistered Security or coupon will
be made upon presentation of such Unregistered Security or coupon at an agency
of the Company within the United States nor will any payment be made by transfer
to an account in, or by mail to an address in, the United States unless,
pursuant to applicable United States laws and regulations then in effect, such
payment can be
30
<PAGE> 37
made without adverse tax consequences to the Company. Notwithstanding the
foregoing, if full payment in United States Dollars ("DOLLARS") at each agency
maintained by the Company outside the United States for payment on such
Unregistered Securities or coupons appertaining thereto is illegal or
effectively precluded by exchange controls or other similar restrictions,
payments in Dollars of Unregistered Securities of any series and coupons
appertaining thereto which are payable in Dollars may be made at an agency of
the Company maintained in the Borough of Manhattan, The City of New York.
The Company may also from time to time designate one or more
other offices or agencies where the Securities of any series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an office or agency in
the Borough of Manhattan, The City of New York, for such purposes. The Company
will give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
SECTION 4.3. Negative Pledge. (ai The Company will not, and will
not permit any Restricted Subsidiary to, create or incur any mortgage or pledge,
as security for any indebtedness for borrowed money, on or of any shares of
stock or indebtedness owing by a Restricted Subsidiary or any Principal Property
of the Company or a Restricted Subsidiary, whether such shares of stock or
indebtedness of a Restricted Subsidiary or Principal Property are owned at the
date of this Indenture or hereafter acquired, unless the Company secures or
causes such Restricted Subsidiary to secure the outstanding Securities equally
and ratably with all indebtedness secured by such mortgage or pledge, so long as
such indebtedness shall be so secured; provided, however, that this covenant
shall not apply in the case of:
(i the creation of any mortgage, pledge or
other lien on any shares of stock or indebtedness of a Subsidiary
or any Principal Property hereafter acquired (including
acquisitions by way of merger or consolidation) by the Company or
a Restricted Subsidiary contemporaneously with such acquisition,
or within 360 days thereafter, to secure or provide for the
payment or financing of any part of the purchase price thereof,
or the assumption of any mortgage, pledge or other lien upon any
shares of stock or indebtedness of a Subsidiary or any Principal
Property hereafter acquired existing at the time of such
acquisition, or the acquisition of any shares of stock or
indebtedness of a Subsidiary or any Principal Property subject to
any mortgage, pledge or other lien without the assumption
thereof, provided that every such mortgage, pledge or lien
31
<PAGE> 38
referred to in this clause (i) shall attach only to the shares of
stock or indebtedness of a Subsidiary or any Principal Property
so acquired and improvements thereon and accessions thereto;
(ii any mortgage, pledge or other lien on any
shares of stock or indebtedness of a Subsidiary or any Principal
Property existing at the date of this Indenture;
(iii any mortgage, pledge or other lien on any
shares of stock or indebtedness of a Subsidiary or any Principal
Property in favor of the Company or any Restricted Subsidiary;
(iv any mortgage, pledge or other lien existing
on any Principal Property prior to the acquisition thereof by the
Company or any of its Subsidiaries or existing on any Principal
Property of any Person that becomes a Restricted Subsidiary after
the date hereof or on its shares of stock or indebtedness at or
prior to the time such Person becomes a Restricted Subsidiary;
provided that (x) such mortgage, pledge or other lien is not
created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary, (y) such
mortgage, pledge or other lien shall not apply to any other
Principal Property of the Company or any of its Subsidiaries and
(z) such mortgage, pledge or other lien shall secure only those
obligations which it secures on the date of such acquisition or
the date such Person becomes a Restricted Subsidiary and
improvements thereon and accessions thereto;
(v liens under workmen's compensation laws,
unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than
for the repayment of debt), or deposits to secure public or
statutory obligations of the Company or any Subsidiary, or
deposits of cash or obligations of the United States of America
to secure surety and appeal bonds to which the Company or any
Subsidiary is a party or in lieu of such bonds, or pledges or
deposits for similar purposes in the ordinary course of business,
or liens on standard industry terms imposed by charter parties or
under contracts of affreightment, or margin posted to secure
payment or performance under futures, forwards or swap
agreements, and other obligations of a like nature, in each case
in the ordinary course of business, or liens imposed by law, such
as laborers' or other employees, carriers', warehousemen's,
mechanics', materialmen's and vendors' liens and liens arising
out of judgments or awards against the Company or any Subsidiary
with respect to which the Company or such Subsidiary at the time
shall be prosecuting
32
<PAGE> 39
an appeal or proceedings for review and with
respect to which it shall have secured a stay of execution
pending such appeal or proceedings for review, or liens for
property taxes not yet subject to penalties for non-payment or
the amount or validity of which is being in good faith contested
by appropriate proceedings by the Company or any Subsidiary, as
the case may be, or minor survey exceptions, minor encumbrances,
easements or reservations of, or rights of others for, rights of
way, sewers, electric lines, telegraph and telephone lines and
other similar purposes, or zoning or other restrictions as to the
use of real properties, which liens, exceptions, encumbrances,
easements, reservations, rights and restrictions do not, in the
opinion of the Company, in the aggregate materially detract from
the value of said properties or materially impair their use in
the operation of the business of the Company and its
Subsidiaries;
(vi liens on any oil and/or gas properties or
other mineral interests of the Company or any of its
Subsidiaries, whether developed or undeveloped, arising (x) as
security for the Company or such Subsidiary's costs and expenses
incurred by it in connection with the exploration, development or
operation of such properties, in favor of a person who is
conducting the exploration, development or operation of such
properties, or (y) in connection with farmout, dry hole, bottom
hole, communitization, unitization, pooling and operating
agreements and/or other agreements of like general nature
incident to the acquisition, exploration, development and
operation of such properties or as required by regulatory
agencies having jurisdiction in the premises;
(vii overriding royalties, royalties, production
payments, net profits interests or like interests to be paid out
of production from oil and/or gas properties or other mineral
interests of the Company or any of its Subsidiaries, or to be
paid out of the proceeds from the sale of any such production;
(viii liens securing indebtedness in connection
with any industrial development bond financing, or pollution
control revenue bond financing, or similar financing transaction;
and
(ix any extension, renewal, or replacement (or
successive extensions, renewals or replacements) in whole or in
part of any mortgage, pledge or other lien referred to in the
foregoing clauses (i) to (viii) inclusive; provided, however,
that the principal amount of debt secured thereby shall not
exceed the principal amount of debt so secured at the time of
such extension, renewal or replacement, and that such extension,
33
<PAGE> 40
renewal or replacement shall be limited to all or a part of the
property which secured the mortgage so extended, renewed or
replaced (plus improvements on and accessions to such property).
(b Notwithstanding the foregoing provisions of this Section
4.03, the Company and any one or more Restricted Subsidiaries may issue, assume
or guarantee debt secured by mortgage, pledge or other lien which would
otherwise be subject to the foregoing restrictions in an aggregate amount which,
together with all other debt of the Company and its Restricted Subsidiaries
which (if originally issued, assumed or guaranteed at such time) would otherwise
be subject to the foregoing restrictions and Attributable Debt in respect of
sale and lease-back arrangements not covered by 4.04(a), does not at the time
exceed 15% of Consolidated Net Tangible Assets.
SECTION 4.4. Certain Sale and Lease-back Transactions
(a) The Company will not, and will not permit any Restricted
Subsidiary to, sell or transfer, directly or indirectly, except to the Company
or a Restricted Subsidiary, any Principal Property as an entirety, and as part
of the same transaction or series of transactions take back a lease of such
property, except a lease for a period of three years or less; provided that,
notwithstanding the foregoing, the Company or any Restricted Subsidiary may sell
any such Principal Property and lease it back for a longer period (i) if the
Company or such Restricted Subsidiary would be entitled, pursuant to the
provisions of Section 4.03(a), to create a mortgage on the property to be leased
securing indebtedness in an amount equal to the Attributable Debt with respect
to such sale and lease-back transaction without equally and ratably securing the
outstanding Securities or (ii) if (A) the Company promptly informs the Trustee
of such transaction, (B) the proceeds of such transaction are at least equal to
the fair value (as determined by Board Resolution of the Company) of such
property and (C) the Company causes an amount equal to the net proceeds of the
sale to be applied to the retirement, within 180 days after receipt of such
proceeds, of indebtedness incurred or assumed by the Company or a Restricted
Subsidiary (including the Securities); provided further that, in lieu of
applying all of or any part of such net proceeds to such retirement, the Company
may, within 75 days after such sale, cancel or deliver or cause to be delivered
to the applicable trustee for cancellation either debentures or notes evidencing
indebtedness of the Company (which may include the Securities) or of a
Restricted Subsidiary previously issued or authenticated and delivered by the
applicable trustee, and not theretofore tendered for sinking fund purposes or
called for a sinking fund or otherwise applied as a credit against an obligation
to redeem or retire such notes or debentures, and an Officers' Certificate
(which shall be delivered to the Trustee and which need not contain the
34
<PAGE> 41
statements prescribed by Section 10.04) stating that the Company elects to
deliver or cause to be delivered such debentures or notes in lieu of retiring
indebtedness as hereinabove provided. If the Company shall cancel or so deliver
debentures or notes to the applicable trustee and the Company shall duly deliver
such Officers' Certificate, the amount of cash which the Company shall be
required to apply to the retirement of indebtedness under this Section 4.04(a)
shall be reduced by an amount equal to the aggregate of the then applicable
optional redemption prices (not including any optional sinking fund redemption
prices) of such debentures or notes, or, if there are no such redemption prices,
the principal amount of such debentures or notes; provided, that in the case of
debentures or notes which provide for an amount less than the principal amount
thereof to be due and payable upon a declaration of the maturity thereof, such
amount of cash shall be reduced by the amount of principal of such debentures or
notes that would be due and payable as of the date of such application upon a
declaration of acceleration of the maturity thereof pursuant to the terms of the
indenture pursuant to which such debentures or notes were issued.
(a Notwithstanding the provisions of paragraph (a) of this
Section 4.04, the Company or any Restricted Subsidiary may enter into sale and
lease-back transactions in addition to those permitted by paragraph (a) of this
Section 4.04 without any obligation to retire any outstanding Securities or
other indebtedness, provided that at the time of entering into such sale and
lease-back transactions and after giving effect thereto, the Attributable Debt
in respect of such transactions, together with all other Attributable Debt in
respect of transactions subject to this Section 4.04 and not permitted by
paragraph (a) hereof and all other mortgages, pledges or other liens subject to
Section 4.03 and not permitted by paragraph (a) thereof, does not exceed in
aggregate 15% of Consolidated Net Tangible Assets.
SECTION 4.5. Certificate of Trustee. The Company will furnish to
the Trustee annually, on or before a date not more than four months after the
end of its fiscal year (which, on the date hereof, is a calendar year), a brief
certificate (which need not contain the statements required by Section 10.04)
from its principal executive, financial or accounting officer as to his or her
knowledge of the compliance of the Company with all conditions and covenants
under this Indenture, (such compliance to be determined without regard to any
period of grace or requirement of notice provided under this Indenture), which
certificate shall comply with the requirements of the Trust Indenture Act.
SECTION 4.6. Reports by the Company. The Company covenants to
file with the Trustee, within 15 days after the Company is required to file the
same with the Commission, copies of the annual reports and of the information,
35
<PAGE> 42
documents, and other reports which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.1. When Company May Merge, Etc. The Company shall not
consolidate with, merge with or into, or sell, convey, transfer, lease or
otherwise dispose of all or substantially all of its property and assets (as an
entirety or substantially as an entirety in one transaction or a series of
related transactions) to, any Person or permit any Person to merge with or into
the Company unless:
(a either (x) the Company shall be the continuing Person or
(y) the Person (if other than the Company) formed by such consolidation or into
which the Company is merged or that acquired or leased such property and assets
of the Company shall be a corporation organized and validly existing under the
laws of the United States of America or any jurisdiction thereof and shall
expressly assume, by a supplemental indenture, executed and delivered to the
Trustee, all of the obligations of the Company on all of the Securities and
under this Indenture and the Company shall have delivered to the Trustee an
Opinion of Counsel stating that such consolidation, merger or transfer and such
supplemental indenture complies with this provision and that all conditions
precedent provided for herein relating to such transaction have been complied
with and that such supplemental indenture constitutes the legal, valid and
binding obligation of the Company or such successor enforceable against such
entity in accordance with its terms, subject to customary exceptions; and
(b the Company shall have delivered to the Trustee an
Officers' Certificate to the effect that at the time and immediately after
giving effect to such transaction, no Default shall have occurred and be
continuing and an Opinion of Counsel as to the matters set forth in Section
5.01(a).
SECTION 5.2. Successor Substituted. Upon any consolidation or
merger, or any sale, conveyance, transfer, lease or other disposition of all or
substantially all of the property and assets of the Company in accordance with
Section 5.01 of this Indenture, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale,
conveyance, transfer, lease or other disposition 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
36
<PAGE> 43
as if such successor Person had been named as the Company herein and thereafter,
except in the case of a lease, the Company shall be relieved of all obligations
and covenants under this Indenture and the Securities.
ARTICLE 6
DEFAULT AND REMEDIES
SECTION 6.1. Events of Default. An "EVENT OF DEFAULT" shall
occur with respect to the Securities of any series if:
(a the Company defaults in the payment of the Principal of
any Security of such series when the same becomes due and payable at maturity,
upon acceleration or redemption, including as a sinking fund installment, or
otherwise;
(b the Company defaults in the payment of interest on any
Security of such series when the same becomes due and payable, and such default
continues for a period of 30 days;
(c the Company defaults in the performance of or breaches any
other covenant or agreement of the Company in this Indenture with respect to any
Security of such series or in the Securities of such series and such default or
breach continues for a period of 60 consecutive days after written notice to the
Company by the Trustee or to the Company and the Trustee by the Holders of 25%
or more in aggregate principal amount of the Securities of all series affected
thereby;
(d a default under any bond, debenture, note or other
evidence of indebtedness for money borrowed by the Company or under any
mortgage, indenture, guaranty or instrument under which there may be issued or
by which there may be secured or evidenced any indebtedness for money borrowed
by the Company, whether such indebtedness now exists or shall hereafter be
created, which default shall have resulted in such indebtedness becoming or
being declared due and payable prior to the date on which it would otherwise
have become due and payable, without such indebtedness having been discharged or
such acceleration having been rescinded or annulled within a period of 20 days
after there shall have been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the outstanding securities of all series
affected thereby a written notice specifying such default and requiring the
Company to cause such
37
<PAGE> 44
indebtedness to be discharged or such acceleration to be rescinded or annulled
and stating that such notice is a "NOTICE OF DEFAULT" hereunder; provided, that
no Event of Default under this subsection (d) shall be deemed to exist as a
result of the acceleration of any such indebtedness if the principal of and
interest on such indebtedness, when added to the principal of and interest on
all other such indebtedness which has been accelerated as aforesaid (excluding
any such indebtedness which has been discharged or as to which the acceleration
has been duly rescinded or annulled), shall not exceed $50,000,000;
(e a decree or order by a court having jurisdiction in the
premises adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under Federal bankruptcy law or any other
applicable Federal or State law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs is entered, and continues unstayed and in effect for a period of 60
consecutive days;
(f the Company (i) commences a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consents to the entry of an order for relief in an involuntary case
under any such law, (ii) consents to the appointment of or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Company or for all or substantially all of the property and
assets of the Company or (iii) effects any general assignment for the benefit of
creditors; or
(g any other Event of Default established pursuant to Section
2.03 with respect to the Securities of such series occurs.
SECTION 6.2. Acceleration. (a If an Event of Default described
in clauses (a) or (b) of Section 6.01 with respect to the Securities of any
series then outstanding occurs and is continuing, then, and in each and every
such case, except for any series of Securities the principal of which shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Securities of any such affected
series then outstanding hereunder (each such series treated as a separate class)
by notice in writing to the Company (and to the Trustee if given by
Securityholders), may declare the entire principal (or, if the Securities of any
such series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of such series established
pursuant to Section 2.03) of all Securities of such affected series, and the
interest accrued thereon, if any, to be
38
<PAGE> 45
due and payable immediately, and upon any such declaration the same shall become
immediately due and payable.
(b If an Event of Default described in clauses (c), (d) or
(g) of Section 6.01 with respect to the Securities of one or more but not all
series then outstanding, or with respect to the Securities of all series then
outstanding, occurs and is continuing, then, and in each and every such case,
except for any series of Securities the principal of which shall have already
become due and payable, either the Trustee or the Holders of not less than 25%
in aggregate principal amount (or, if the Securities of any such series are
Original Issue Discount Securities, the amount thereof accelerable under this
Section) of the Securities of all such affected series then outstanding
hereunder (treated as a single class) by notice in writing to the Company (and
to the Trustee if given by Securityholders), may declare the entire principal
(or, if the Securities of any such series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of such series established pursuant to Section 2.03) of all Securities of
all such affected series, and the interest accrued thereon, if any, to be due
and payable immediately, and upon any such declaration the same shall become
immediately due and payable.
(c If an Event of Default described in clause (e) or (f) of
Section 6.01 occurs and is continuing, then the principal amount (or, if any
Securities are Original Issue Discount Securities, such portion of the Principal
as may be specified in the terms thereof established pursuant to Section 2.03)
of all the Securities then outstanding and interest accrued thereon, if any,
shall be and become immediately due and payable, without any notice or other
action by any Holder or the Trustee, to the full extent permitted by applicable
law.
The foregoing provisions, however, are subject to the condition
that if, at any time after the principal (or, if the Securities are Original
Issue Discount Securities, such portion of the Principal as may be specified in
the terms thereof established pursuant to Section 2.03) of the Securities of any
series (or of all the Securities, as the case may be) shall have been so
declared due and payable, and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided, the
Company shall pay or shall deposit with the Trustee a sum sufficient to pay all
matured installments of interest upon all the Securities of each such series (or
of all the Securities, as the case may be) and the Principal of any and all
Securities of each such series (or of all the Securities, as the case may be)
which shall have become due otherwise than by acceleration (with interest upon
such Principal and, to the extent that payment of such interest is enforceable
under applicable law, on overdue installments of interest, at the same rate as
the rate of interest or Yield to Maturity
39
<PAGE> 46
(in the case of Original Issue Discount Securities) specified in the Securities
of each such series to the date of such payment or deposit) and such amount as
shall be sufficient to cover all amounts owing the Trustee under Section 7.07,
and if any and all Events of Default under the Indenture, other than the
non-payment of the Principal of Securities which shall have become due by
acceleration, shall have been cured, waived or otherwise remedied as provided
herein, then and in every such case the Holders of a majority in aggregate
principal amount of all the then outstanding Securities of all such series that
have been accelerated (voting as a single class), by written notice to the
Company and to the Trustee, may waive all defaults with respect to all such
series (or with respect to all the Securities, as the case may be) and rescind
and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon.
For all purposes under this Indenture, if a portion of the
Principal of any Original Issue Discount Securities shall have been accelerated
and declared due and payable pursuant to the provisions hereof, then, from and
after such declaration, unless such declaration has been rescinded and annulled,
the principal amount of such Original Issue Discount Securities shall be deemed,
for all purposes hereunder, to be such portion of the Principal thereof as shall
be due and payable as a result of such acceleration, and payment of such portion
of the Principal thereof as shall be due and payable as a result of such
acceleration, together with interest, if any, thereon and all other amounts
owing thereunder, shall constitute payment in full of such Original Issue
Discount Securities.
SECTION 6.3. Other Remedies. If a payment default or an Event of
Default with respect to the Securities of any series occurs and is continuing,
the Trustee may pursue, in its own name or as trustee of an express trust, any
available remedy by proceeding at law or in equity to collect the payment of
Principal of and interest on the Securities of such series or to enforce the
performance of any provision of the Securities of such series 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.
SECTION 6.4. Waiver of Past Defaults. Subject to Sections 6.02,
6.07 and 9.02, the Holders of at least a majority in principal amount (or, if
the Securities are Original Issue Discount Securities, such portion of the
principal as is then accelerable under Section 6.02) of the outstanding
Securities of all series affected (voting as a single class), by notice to the
Trustee, may waive an existing Default or Event of Default with respect to the
Securities of such series and its consequences, except a Default in the payment
of Principal of or interest on any
40
<PAGE> 47
Security as specified in clauses (a) or (b) of Section 6.01 or in respect of a
covenant or provision of this Indenture which cannot be modified or amended
without the consent of the Holder of each outstanding Security affected. Upon
any such waiver, such Default shall cease to exist, and any Event of Default
with respect to the Securities of such series arising therefrom shall be deemed
to have been cured, for every purpose of this Indenture; but no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereto.
SECTION 6.5. Control by Majority. Subject to Sections 7.01 and
7.02(e), the Holders of at least a majority in aggregate principal amount (or,
if any Securities are Original Issue Discount Securities, such portion of the
principal as is then accelerable under Section 6.02) of the outstanding
Securities of all series affected (voting as a single class) may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee with
respect to the Securities of such series by this Indenture; provided, that the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture, that may involve the Trustee in personal liability or that the
Trustee determines in good faith may be unduly prejudicial to the rights of
Holders not joining in the giving of such direction; and provided further, that
the Trustee may take any other action it deems proper that is not inconsistent
with any directions received from Holders of Securities pursuant to this Section
6.05.
SECTION 6.6. Limitation on Suits. No Holder of any Security of
any series may institute any proceeding, judicial or otherwise, with respect to
this Indenture or the Securities of such series, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder has previously given to the Trustee written
notice of a continuing Event of Default with respect to the Securities of such
series;
(b) the Holders of at least 25% in aggregate principal amount
of outstanding Securities of all such series affected shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee
indemnity reasonably satisfactory to the Trustee against any costs, liabilities
or expenses (including the costs and expenses of its counsel) to be incurred in
compliance with such request;
41
<PAGE> 48
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(e) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Securities of all such affected
series have not given the Trustee a direction that is inconsistent with such
written request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
SECTION 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
of a Security to receive payment of Principal of or interest, if any, on such
Holder's Security on or after the respective due dates expressed on such
Security, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.8. Collection Suit by Trustee. If an Event of Default
with respect to the Securities of any series in payment of Principal or interest
specified in clause (a) or (b) of Section 6.01 occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount (or such portion thereof as specified
in the terms established pursuant to Section 2.03 of Original Issue Discount
Securities) of Principal of, and accrued interest remaining unpaid on, together
with interest on overdue Principal of, and, to the extent that payment of such
interest is lawful, interest on overdue installments of interest on, the
Securities of such series, in each case at the rate or Yield to Maturity (in the
case of Original Issue Discount Securities) specified in such Securities, and
such further amount as shall be sufficient to cover all amounts owing the
Trustee under Section 7.07.
SECTION 6.9. 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 (including any claim for
amounts due the Trustee under Section 7.07) and the Holders allowed in any
judicial proceedings relative to the Company (or any other obligor on the
Securities), its creditors or its property and shall be entitled and empowered
to collect and receive any moneys, securities or other property payable or
deliverable upon conversion or exchange of the Securities or upon any such
claims and to distribute the same, and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the
42
<PAGE> 49
Holders, to pay to the Trustee any amount due to it under Section 7.07. Nothing
herein contained shall be deemed to empower the Trustee to authorize or consent
to, or accept or adopt on behalf of any Holder, any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights of
any Holder thereof, or to authorize the Trustee to vote in respect of the claim
of any Holder in any such proceeding.
SECTION 6.10. Application of Proceeds. Any moneys collected by
the Trustee pursuant to this Article in respect of the Securities of any series
shall be applied in the following order at the date or dates fixed by the
Trustee and, in case of the distribution of such moneys on account of Principal
or interest, upon presentation of the several Securities and coupons
appertaining to such Securities in respect of which moneys have been collected
and noting thereon the payment, or issuing Securities of such series and tenor
in reduced principal amounts in exchange for the presented Securities of such
series and tenor if only partially paid, or upon surrender thereof if fully
paid:
FIRST: To the
payment of all
amounts due the
Trustee under Section
7.07;
SECOND: In
case the Principal
of the Securities of such
series in respect of
which moneys have
been collected shall
not have become and
be then due and
payable, to the
payment of interest on
the Securities of such
series in default in the
order of the maturity
of the installments of
such interest, with
interest (to the extent
that such interest has
been collected by the
Trustee) upon the
43
<PAGE> 50
overdue installments
of interest at the same
rate as the rate of
interest or Yield to
Maturity (in the case
of Original Issue
Discount Securities)
specified in such
Securities, such
payments to be made
ratably to the Persons
entitled thereto,
without
discrimination or
preference;
THIRD: In
case the Principal of
the Securities of such
series in respect of
which moneys have
been collected shall
have become and
shall be then due and
payable, to the
payment of the whole
amount then owing
and unpaid upon all
the Securities of such
series for Principal
and interest, with
interest upon the
overdue Principal,
and (to the extent that
such interest has been
collected by the
Trustee) upon
overdue installments
of interest at the same
rate as the rate of
interest or Yield to
Maturity (in the case
44
<PAGE> 51
of Original Issue
Discount Securities)
specified in the
Securities of such
series; and in case
such moneys shall be
insufficient to pay in
full the whole amount
so due and unpaid
upon the Securities
of such series, then to
the payment of such
Principal and interest
or Yield to Maturity,
without preference or
priority of Principal
over interest or Yield to
Maturity, or of
interest or Yield to
Maturity over
Principal, or of any
installment of interest
over any other
installment of interest,
or of any Security of
such series over any
other Security of such
series, ratably to the
aggregate of such
Principal and accrued
and unpaid interest or
Yield to Maturity; and
FOURTH: To
the payment of the
remainder, if any, to
the Company or any
other Person lawfully
entitled thereto.
SECTION 6.11. Restoration of Rights and Remedies. If the Trustee
or any Holder has instituted any proceeding to enforce any right or remedy under
this
45
<PAGE> 52
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then, and in
every such case, subject to any determination in such proceeding, the Company,
the Trustee and the Holders shall be restored to their former positions
hereunder and thereafter all rights and remedies of the Company, Trustee and the
Holders shall continue as though no such proceeding had been instituted.
SECTION 6.12. Undertaking of 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, in either case in
respect to the Securities of any series, a court may require any party litigant
in such suit (other than the Trustee) to file an undertaking to pay the costs of
the suit, and the court may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant (other than the Trustee) in the suit
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section 6.12 does not apply to a suit by a Holder
pursuant to Section 6.07 or a suit by Holders of more than 10% in principal
amount of the outstanding Securities of such series.
SECTION 6.13. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or wrongfully taken Securities in Section 2.08, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.14. Delay Oromission Not Waiver. No delay or omission
of the Trustee or of any Holder to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article 6 or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
ARTICLE 7
TRUSTEE
46
<PAGE> 53
SECTION 7.1. General. The duties and responsibilities of the
Trustee shall be as provided by the Trust Indenture Act and as set forth herein.
Notwithstanding the foregoing, no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, unless it receives indemnity reasonably
satisfactory to it against any loss, liability or expense. Whether or not
therein expressly so provided, 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 Article 7.
SECTION 7.2. Certain Rights of Trustee. Subject to Trust
Indenture Act Sections 315(a) through (d):
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, Officers' Certificate,
Opinion of Counsel (or both), statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to have
been signed or presented by the proper Person or Persons. The Trustee need not
investigate any fact or matter stated in the document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit;
(b) before the Trustee acts or refrains from acting, it may
require an Officers' Certificate and/or an Opinion of Counsel, which shall
conform to Section 10.04. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such certificate or opinion.
Subject to Sections 7.01 and 7.02, whenever in the administration of the trusts
of this Indenture the Trustee shall deem it necessary or desirable that a matter
be proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee, and such certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof;
(c) the Trustee may act through its attorneys and agents not
regularly in its employ and shall not be responsible for the misconduct or
negligence of any agent or attorney appointed with due care;
(d) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers' Certificate
(unless other
47
<PAGE> 54
evidence in respect thereof be herein specifically prescribed); and any
resolution of the board of directors of the Company may be evidenced to the
Trustee by a Board Resolution;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be liable to the Holders for any
action it takes or omits to take in good faith that it believes to be authorized
or within its rights or powers or for any action it takes or omits to take in
accordance with the direction of the Holders in accordance with Section 6.05
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture;
(g) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(h) prior to the occurrence of an Event of Default hereunder
and after the curing or waiving of all Events of Default, the Trustee shall not
be bound to make any investigation into the facts or matters stated in any
resolution, certificate, Officers' Certificate, Opinion of Counsel, Board
Resolution, statement, instrument, opinion, report, notice, request, consent,
order, approval, appraisal, bond, debenture, note, coupon, security, or other
paper or document unless requested in writing so to do by the Holders of not
less than a majority in aggregate principal amount of the Securities of all
series affected then outstanding; provided that, if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it by
the terms of this Indenture, the Trustee may require reasonable indemnity
against such expenses or liabilities as a condition to proceeding; and
(i) The Trustee shall not be charged with knowledge of any
Default or Event of Default with respect to the Securities of any series unless
either (1) a Responsible Officer of the Trustee assigned to the Corporate Trust
Department of the Trustee (or any successor division or department of the
Trustee) shall have actual knowledge of such Default or Event of Default or (2)
written notice of such
48
<PAGE> 55
Default or Event of Default shall have been given to the Trustee by the Company
or any other obligor on the Securities of any series or by any Holder of the
Securities of any series.
SECTION 7.3. 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 the Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to Trust Indenture Act Sections 310(b)
and 311. For purposes of Trust Indenture Act Section 311(b)(4) and (6), the
following terms shall mean:
(a) "CASH TRANSACTION" means any transaction in which full
payment for goods or securities sold is made within seven days after delivery of
the goods or securities in currency or in checks or other orders drawn upon
banks or bankers and payable upon demand; and
(b) "SELF-LIQUIDATING PAPER" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or incurred
by the Company for the purpose of financing the purchase, processing,
manufacturing, shipment, storage or sale of goods, wares or merchandise and
which is secured by documents evidencing title to, possession of, or a lien
upon, the goods, wares or merchandise or the receivables or proceeds arising
from the sale of the goods, wares or merchandise previously constituting the
security, provided the security is received by the Trustee simultaneously with
the creation of the creditor relationship with the Company arising from the
making, drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation.
SECTION 7.4. Trustee's Disclaimer. The recitals contained herein
and in the Securities (except the Trustee's certificate of authentication) shall
be taken as statements of the Company and not of the Trustee and the Trustee
assumes no responsibility for the correctness of the same. Neither the Trustee
nor any of its agents (i) makes any representation as to the validity or
adequacy of this Indenture or the Securities and (ii) shall be accountable for
the Company's use or application of the proceeds from the Securities.
SECTION 7.5. Notice of Default. If any Default with respect to
the Securities of any series occurs and is continuing and if such Default is
known to the actual knowledge of a Responsible Officer with the Corporate Trust
Department of the Trustee, the Trustee shall give to each Holder of Securities
of such series notice of such Default within 90 days after obtaining knowledge
of such Default (i) if any Unregistered Securities of such series are then
outstanding,
49
<PAGE> 56
to the Holders thereof, by publication at least once in an Authorized Newspaper
in the Borough of Manhattan, The City of New York and at least once in an
Authorized Newspaper in London and (ii) to all Holders of Securities of such
series in the manner and to the extent provided in Section 313(c) of the Trust
Indenture Act, unless such Default shall have been cured or waived before the
mailing or publication of such notice; provided, however, that, (i) except in
the case of a Default in the payment of the Principal of or interest on any
Security, the Trustee shall be protected in withholding such notice if the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders and (ii) in the case of any Default of the character
specified in Section 6.01(c) with respect to Securities of such series, no such
notice to Holders shall be given until at least 30 days after the occurrence
thereof.
SECTION 7.6. Reports by Trustee to Holders. Within 60 days after
each May 15, beginning with May 15, 2000, the Trustee shall mail to each Holder
as and to the extent provided in Trust Indenture Act Section 313(c) a brief
report dated as of such May 15, if required by Trust Indenture Act Section
313(a).
SECTION 7.7. Compensation and Indemnity. The Company shall pay to
the Trustee such compensation as shall be agreed upon in writing from time to
time for its services. The compensation of the Trustee 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,
disbursements and advances incurred or made by the Trustee. Such expenses shall
include the reasonable compensation and expenses of the Trustee's agents,
counsel and other Persons not regularly in its employ.
The Company shall indemnify the Trustee for, and hold it harmless
against, any loss or liability or expense incurred by it without negligence or
bad faith on its part arising out of or in connection with the acceptance or
administration of this Indenture and the Securities or the issuance of the
Securities or of a series thereof or the trusts hereunder and the performance of
duties under this Indenture and the Securities, including the costs and expenses
of defending itself against or investigating any claim or liability and of
complying with any process served upon it or any of its officers in connection
with the exercise or performance of any of its powers or duties under this
Indenture and the Securities.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee, in its capacity as Trustee, except money or
property held in trust to pay Principal of, and interest on particular
Securities.
50
<PAGE> 57
The obligations of the Company under this Section to compensate
and indemnify the Trustee and each predecessor Trustee and to pay or reimburse
the Trustee and each predecessor Trustee for expenses, disbursements and
advances shall constitute additional indebtedness hereunder and shall survive
the resignation or removal of the Trustee, the satisfaction and discharge of
this Indenture or the rejection or termination of this Indenture under
bankruptcy law. Such additional indebtedness shall be a senior claim to that of
the Securities upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the benefit of the Holders of particular
Securities or coupons, and the Securities are hereby subordinated to such senior
claim. If the Trustee renders services and incurs expenses following an Event of
Default under Section 6.01(e) or Section 6.01(f) hereof, the parties hereto and
the Holders by their acceptance of the Securities hereby agree that such
expenses are intended to constitute expenses of administration under any
bankruptcy law.
SECTION 7.8. Replacement of Trustee. A resignation or removal of
the Trustee as Trustee with respect to the Securities of any series and
appointment of a successor Trustee as Trustee with respect to the Securities of
any series shall become effective only upon the successor Trustee's acceptance
of appointment as provided in this Section 7.08.
The Trustee may resign as Trustee with respect to the Securities
of any series at any time by so notifying the Company in writing. The Holders of
a majority in principal amount of the outstanding Securities of any series may
remove the Trustee as Trustee with respect to the Securities of such series by
so notifying the Trustee in writing and may appoint a successor Trustee with
respect thereto with the consent of the Company. The Company may remove the
Trustee as Trustee with respect to the Securities of any series if: (i) the
Trustee is no longer eligible under Section 7.10 of this Indenture; (ii) the
Trustee is adjudged a bankrupt or insolvent; (iii) a receiver or other public
officer takes charge of the Trustee or its property; or (iv) the Trustee becomes
incapable of acting.
If the Trustee resigns or is removed as Trustee with respect to
the Securities of any series, or if a vacancy exists in the office of Trustee
with respect to the Securities of any series for any reason, the Company shall
promptly appoint a successor Trustee with respect thereto. Within one year after
the successor Trustee takes office, the Holders of a majority in principal
amount of the outstanding Securities of such series may appoint a successor
Trustee in respect of such Securities to replace the successor Trustee appointed
by the Company. If the successor Trustee with respect to the Securities of any
series does not deliver its written acceptance required by the next succeeding
paragraph of this Section 7.08 within 30 days after the retiring Trustee resigns
or is removed, the retiring
51
<PAGE> 58
Trustee, the Company or the Holders of a majority in principal amount of the
outstanding Securities of such series may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect thereto.
A successor Trustee with respect to the Securities of any series
shall deliver a written acceptance of its appointment to the retiring Trustee
and to the Company. Immediately after the delivery of such written acceptance,
subject to the lien provided for in Section 7.07, (i) the retiring Trustee shall
transfer all property held by it as Trustee in respect of the Securities of such
series to the successor Trustee, (ii) the resignation or removal of the retiring
Trustee in respect of the Securities of such series shall become effective and
(iii) the successor Trustee shall have all the rights, powers and duties of the
Trustee in respect of the Securities of such series under this Indenture. A
successor Trustee shall mail notice of its succession to each Holder of
Securities of such series.
Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in the preceding paragraph.
The Company shall give notice of any resignation and any removal
of the Trustee with respect to the Securities of any series and each appointment
of a successor Trustee in respect of the Securities of such series to all
Holders of Securities of such series. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
Notwithstanding replacement of the Trustee with respect to the
Securities of any series pursuant to this Section 7.08, the Company's
obligations under Section 7.07 shall continue for the benefit of the retiring
Trustee.
SECTION 7.9. Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
SECTION 7.10. Eligibility. This Indenture shall always have a
Trustee who satisfies the requirements of Trust Indenture Act Section 310(a).
The Trustee shall have a combined capital and surplus of at least $25,000,000 as
set forth in its most recent published annual report of condition.
52
<PAGE> 59
SECTION 7.11. Money Held in Trust. The Trustee shall not be
liable for interest on any money received by it except as the Trustee may agree
in writing with the Company. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law and except for
money held in trust under Article 8 of this Indenture.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.1. Defeasance Within One Year of Payment. Except as
otherwise provided in this Section 8.01, the Company may terminate its
obligations under the Securities of any series and this Indenture with respect
to Securities of such series if:
(a) all Securities of such series previously authenticated and
delivered (other than destroyed, lost or wrongfully taken Securities of such
series that have been replaced or Securities of such series that are paid
pursuant to Section 4.01 or Securities of such series for whose payment money or
securities have theretofore been held in trust and thereafter repaid to the
Company, as provided in Section 8.05) have been delivered to the Trustee for
cancellation and the Company has paid all sums payable by it hereunder; or
(b) (i) the Securities of such series mature within one year
or all of them are to be called for redemption within one year under
arrangements satisfactory to the Trustee for giving the notice of redemption,
(ii) the Company irrevocably deposits in trust with the Trustee, as trust funds
solely for the benefit of the Holders of such Securities for that purpose, money
or U.S. Government Obligations or a combination thereof sufficient (unless such
funds consist solely of money, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee), without consideration of any reinvestment, to pay
Principal of and interest on the Securities of such series to maturity or
redemption, as the case may be, and to pay all other sums payable by it
hereunder, and (iii) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the satisfaction and discharge of this
Indenture with respect to the Securities of such series have been complied with.
53
<PAGE> 60
With respect to the foregoing clause (a), only the Company's
obligations under Section 7.07 in respect of the Securities of such series shall
survive. With respect to the foregoing clause (b), only the Company's
obligations in Sections 2.02 through 2.12, 4.02, 7.07, 7.08 and 8.05 in respect
of the Securities of such series shall survive until such Securities of such
series are no longer outstanding. Thereafter, only the Company's obligations in
Sections 7.07 and 8.05 in respect of the Securities of such series shall
survive. After any such irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Securities of such series and this Indenture with respect to the Securities of
such series except for those surviving obligations specified above.
SECTION 8.2. Defeasance. Except as provided below, the Company
will be deemed to have paid and will be discharged from any and all obligations
in respect of the Securities of any series and the provisions of this Indenture
will no longer be in effect with respect to the Securities of such series (and
the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same); provided that the following conditions shall have been
satisfied:
(a) the Company has irrevocably deposited in trust with the
Trustee as trust funds solely for the benefit of the Holders of the Securities
of such series, for payment of the Principal of and interest on the Securities
of such series, money or U.S. Government Obligations or a combination thereof
sufficient (unless such funds consist solely of money, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee) without consideration of
any reinvestment and after payment of all federal, state and local taxes or
other charges and assessments in respect thereof payable by the Trustee, to pay
and discharge the Principal of and accrued interest on the outstanding
Securities of such series to maturity or earlier redemption (irrevocably
provided for under arrangements satisfactory to the Trustee), as the case may
be;
(b) such deposit will not result in a breach or violation of,
or constitute a default under, this Indenture or any other material agreement or
instrument to which the Company is a party or by which it is bound;
(c) no Default with respect to the Securities of such series
shall have occurred and be continuing on the date of such deposit;
(d) the Company shall have delivered to the Trustee (i) either
(x) a ruling directed to the Trustee received from the Internal Revenue Service
to the effect that the Holders of the Securities of such series will not
recognize income,
54
<PAGE> 61
gain or loss for federal income tax purposes as a result of the Company's
exercise of its option under this Section 8.02 and will be subject to federal
income tax on the same amount and in the same manner and at the same times as
would have been the case if such deposit and defeasance had not occurred or (y)
an Opinion of Counsel to the same effect as the ruling described in clause (x)
above and (ii) an Opinion of Counsel to the effect that the Holders of the
Securities of such series have a valid security interest in the trust funds
subject to no prior liens under the UCC; and
(e) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the defeasance contemplated by this
Section 8.02 of the Securities of such series have been complied with.
The Company's obligations in Sections 2.02 through 2.12, 4.02,
7.07, 7.08 and 8.05 with respect to the Securities of such series shall survive
until such Securities are no longer outstanding. Thereafter, only the Company's
obligations in Sections 7.07 and 8.05 shall survive.
SECTION 8.3. Covenant Defeasance. The Company may omit to comply
with any term, provision or condition set forth in Sections 4.03 or 4.04 (or any
other specific covenant relating to such series provided for in a Board
Resolution or supplemental indenture pursuant to Section 2.03), and such
omission shall be deemed not to be an Event of Default under clauses (c) or (g)
of Section 6.01, and clause (d) of Section 6.01 will no longer be applicable
with respect to the outstanding Securities of a series, if:
(a) the Company has irrevocably deposited in trust with the
Trustee as trust funds solely for the benefit of the Holders of the Securities
of such series, for payment of the Principal of and interest, if any, on the
Securities of such series, money or U.S. Government Obligations or a combination
thereof in an amount sufficient (unless such funds consist solely of money, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee) without
consideration of any reinvestment and after payment of all federal, state and
local taxes or other charges and assessments in respect thereof payable by the
Trustee, to pay and discharge the Principal of and interest on the outstanding
Securities of such series to maturity or earlier redemption (irrevocably
provided for under arrangements satisfactory to the Trustee), as the case may
be;
55
<PAGE> 62
(b) such deposit will not result in a breach or violation of,
or constitute a default under, this Indenture or any other material agreement or
instrument to which the Company is a party or by which it is bound;
(c) no Default with respect to the Securities of such series
shall have occurred and be continuing on the date of such deposit;
(d) the Company has delivered to the Trustee an Opinion of
Counsel to the effect that (i) the Holders of the Securities of such series have
a valid security interest in the trust funds subject to no prior liens under the
UCC and (ii) such Holders will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and covenant defeasance and will
be subject to federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and defeasance had
not occurred; and
(e) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the covenant defeasance contemplated
by this Section 8.03 of the Securities of such series have been complied with.
SECTION 8.4. Application of Trust Money. Subject to Section 8.05,
the Trustee or Paying Agent shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Section 8.01, 8.02 or 8.03, as the
case may be, in respect of the Securities of any series and shall apply the
deposited money and the proceeds from deposited U.S. Government Obligations in
accordance with the Securities of such series and this Indenture to the payment
of Principal of and interest on the Securities of such series; but such money
need not be segregated from other funds except to the extent required by law.
SECTION 8.5. Repayment to Company. Subject to Sections
7.07, 8.01, 8.02 and 8.03, the Trustee and the Paying Agent shall promptly pay
to the Company upon request set forth in an Officers' Certificate any money held
by them at any time and not required to make payments hereunder and thereupon
shall be relieved from all liability with respect to such money. The Trustee and
the Paying Agent shall pay to the Company upon written request, subject to
applicable abandoned property laws, any money held by them and required to make
payments hereunder under this Indenture that remains unclaimed for two years;
provided that the Trustee or such Paying Agent before being required to make any
payment may cause to be published at the expense of the Company once in an
Authorized Newspaper in The City of New York or with respect to any Security the
interest on which is based on the offered quotations in the interbank Eurodollar
market for dollar deposits in an Authorized Newspaper in London or
56
<PAGE> 63
mail to each Holder entitled to such money at such Holder's address (as set
forth in the Security Register) notice that such money remains unclaimed and
that after a date specified therein (which shall be at least 30 days from the
date of such publication or mailing) any unclaimed balance of such money then
remaining will be repaid to the Company. After payment to the Company, Holders
entitled to such money must look to the Company for payment as general creditors
unless an applicable law designates another Person, and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
SECTION 8.6. Reinstatement. If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
Section 8.04 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities of the applicable series shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.01, 8.02 or
8.03, as the case may be, until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance
with Section 8.04; provided that, if the Company has made any payment of
Principal of or interest on the Securities of any series because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. Without Consent of Holders. The Company and the
Trustee may amend or supplement this Indenture or the Securities of any series
without notice to or the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency in this
Indenture; provided that such amendments or supplements shall not, as evidenced
by an Opinion of Counsel, materially and adversely affect the interests of the
Holders;
(b) to comply with Article 5;
(c) to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the Trust Indenture
Act;
57
<PAGE> 64
(d) to evidence and provide for the acceptance of appointment
hereunder with respect to the Securities of any or all series by a successor
Trustee;
(e) to establish the form or forms or terms of Securities of
any series or of the coupons appertaining to such Securities as permitted by
Section 2.03;
(f) to provide for uncertificated or Unregistered Securities
and to make all appropriate changes for such purpose;
(g) to issue additional Securities of a series previously
established, as provided in Section 2.03 hereof; and
(h) to make any change that does not, as evidenced by an
Opinion of Counsel, materially and adversely affect the rights of any Holder of
any series of Securities, including without limitation, to add the covenants or
other obligations of the Company, to add co-obligors or guarantors for the
benefit or the Holders or to secure the Securities.
SECTION 9.2. With Consent of Holders. Subject to Section 6.07,
without prior notice to any Holders, the Company and the Trustee may amend this
Indenture and the Securities of any series with the written consent of the
Holders of a majority in principal amount of the outstanding Securities of all
series affected by such supplemental indenture (all such series voting as one
class), and the Holders of a majority in principal amount of the outstanding
Securities of all series affected thereby (all such series voting as one class)
by written notice to the Trustee may waive future compliance by the Company with
any provision of this Indenture or the Securities of such series.
Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected thereby, an amendment or waiver, including a
waiver pursuant to Section 6.04, may not:
(a) extend the stated maturity of the Principal of, or any
sinking fund obligation or any installment of interest on, such Holder's
Security, or reduce the Principal amount thereof or the rate of interest thereon
(including any amount in respect of original issue discount), or any premium
payable with respect thereto, or reduce the amount of the Principal of an
Original Issue Discount Security that would be due and payable upon an
acceleration of the maturity thereof pursuant to Section 6.02 or the amount
thereof provable in bankruptcy, or change any place of payment where, or the
currency in which, any Security or any premium or the
58
<PAGE> 65
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the due date therefor;
(b) reduce the percentage in principal amount of outstanding
Securities of the relevant series the consent of whose Holders is required for
any such supplemental indenture, for any waiver of compliance with certain
provisions of this Indenture or certain Defaults and their consequences provided
for in this Indenture;
(c) waive a Default in the payment of Principal of or interest
on any Security of such Holder; or
(d) modify any of the provisions of this Section 9.02, except
to increase any such percentage or to provide that certain other provisions of
this Indenture cannot be modified or waived without the consent of the Holder of
each outstanding Security affected thereby.
A supplemental indenture which changes or eliminates any covenant
or other provision of this Indenture which has expressly been included solely
for the benefit of one or more particular series of Securities, or which
modifies the rights of Holders of Securities of such series with respect to such
covenant or provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series or of the coupons
appertaining to such Securities.
It shall not be necessary for the consent of any Holder under
this Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall give to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The Company will
mail supplemental indentures to Holders upon request. Any failure of the Company
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture or waiver.
SECTION 9.3. Revocation and Effect of Consent. Until an amendment
or waiver becomes effective, a consent to it by a Holder is a continuing consent
by the Holder and every subsequent Holder of a Security or portion of a Security
that evidences the same debt as the Security of the consenting Holder, even if
notation of the consent is not made on any Security. However, any such Holder or
subsequent Holder may revoke the consent as to its Security or portion of its
Security. Such revocation shall be effective only if the Trustee receives the
notice
59
<PAGE> 66
of revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver shall become effective with
respect to any Securities affected thereby on receipt by the Trustee of written
consents from the requisite Holders of outstanding Securities affected thereby.
The Company may, but shall not be obligated to, fix a record date
(which may be more than 60 days prior to the solicitation of consents) for the
purpose of determining the Holders of the Securities of any series affected
entitled to consent to any amendment, supplement or waiver. If a record date is
fixed, then, notwithstanding the immediately preceding paragraph, those Persons
who were such Holders at such record date (or their duly designated proxies) and
only those Persons shall be entitled to consent to such amendment, supplement or
waiver or to revoke any consent previously given, whether or not such Persons
continue to be such Holders after such record date. No such consent shall be
valid or effective for more than 180 days after such record date.
After an amendment, supplement or waiver becomes effective with
respect to the Securities of any series affected thereby, it shall bind every
Holder of such Securities unless it is of the type described in any of clauses
(a) through (d) of Section 9.02. In case of an amendment or waiver of the type
described in clauses (a) through (d) of Section 9.02, the amendment or waiver
shall bind each such Holder who has consented to it and every subsequent Holder
of a Security that evidences the same indebtedness as the Security of the
consenting Holder.
SECTION 9.4. Notation on or Exchange of Securities. If an
amendment, supplement or waiver changes the terms of any Security, the Trustee
may require the Holder thereof to deliver it to the Trustee. The Trustee may
place an appropriate notation on the Security about the changed terms and return
it to the Holder and the Trustee may place an appropriate notation on any
Security of such series thereafter authenticated. Alternatively, if the Company
or the Trustee so determines, the Company in exchange for the Security shall
issue and the Trustee shall authenticate a new Security of the same series and
tenor that reflects the changed terms.
SECTION 9.5. Trustee to Sign Amendments, Etc. The Trustee shall
be entitled to receive, and shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article 9 is authorized or permitted by this
Indenture, stating that all requisite consents have been obtained or that no
consents are required and stating that such supplemental indenture constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to customary exceptions. Subject
to the
60
<PAGE> 67
preceding sentence, the Trustee shall sign such amendment, supplement or waiver
if the same does not adversely affect the rights of the Trustee. The Trustee
may, but shall not be obligated to, execute any such amendment, supplement or
waiver that affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
SECTION 9.6. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article 9 shall conform to the
requirements of the Trust Indenture Act as then in effect.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1. Trust Indenture Act of 1939. This Indenture shall
incorporate and be governed by the provisions of the Trust Indenture Act that
are required to be part of and to govern indentures qualified under the Trust
Indenture Act.
SECTION 10.2. Notices. Any notice or communication shall be
sufficiently given if written and (a) if delivered in person when received or
(b) if, to the Holders, if mailed by first class mail 5 days after mailing, or
(c) as between the Company and the Trustee if sent by facsimile transmission,
when transmission is confirmed, in each case addressed as follows:
if to the Company:
<TABLE>
<S> <C>
Amerada Hess
Corporation
Corporate
Secretary
1185 Avenue
of the Americas
New York,
NY 10036
Attention:
If to the Trustee:
The Chase
Manhattan Bank
</TABLE>
61
<PAGE> 68
<TABLE>
<S> <C>
450 West 33rd
Street, 15th Floor
New York,
New York 10001
Attention:
Corporate Trust Administration
</TABLE>
The Company or the Trustee by written notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication shall be sufficiently given to
Holders of any Unregistered Securities by publication at least once in an
Authorized Newspaper in The City of New York, or with respect to any Security
the interest on which is based on the offered quotations in the interbank
Eurodollar market for dollar deposits at least once in an Authorized Newspaper
in London, and by mailing to the Holders thereof who have filed their names and
addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture
Act at such addresses as were so furnished to the Trustee and to Holders of
Registered Securities by mailing to such Holders at their addresses as they
shall appear on the Security Register. Notice mailed shall be sufficiently given
if so mailed within the time prescribed. Copies of any such communication or
notice to a Holder shall also be mailed to the Trustee and each Agent at the
same time.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
Except as otherwise provided in this Indenture, if a notice or communication is
mailed in the manner provided in this Section 10.02, it is duly given, whether
or not the addressee receives it.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case it shall be impracticable to give notice as herein
contemplated, then such notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every purpose hereunder.
SECTION 10.3. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
62
<PAGE> 69
(a) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 10.4. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall except as otherwise provided herein
include:
(a) a statement that each person signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion contained in
such certificate or opinion is based;
(c) a statement that, in the opinion of each 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
(d) a statement as to whether or not, in the opinion of each
such person, such condition or covenant has been complied with; provided,
however, that, with respect to matters of fact, an Opinion of Counsel may rely
on an Officers' Certificate or certificates of public officials.
SECTION 10.5. Evidence of Ownership. The Company, the Trustee and
any agent of the Company or the Trustee may deem and treat the Holder of any
Unregistered Security and the Holder of any coupon as the absolute owner of such
Unregistered Security or coupon (whether or not such Unregistered Security or
coupon shall be overdue) for the purpose of receiving payment thereof or on
account thereof and for all other purposes, and neither the Company, the
Trustee, nor any agent of the Company or the Trustee shall be affected by any
notice to the contrary. The fact of the holding by any Holder of an Unregistered
Security, and the identifying number of such Security and the date of his
holding the same, may be proved by the production of such Security or by a
certificate executed by any trust company, bank, banker or recognized securities
dealer wherever situated satisfactory to the Trustee, if such certificate shall
be deemed by the Trustee to be satisfactory. Each such certificate shall be
dated and shall state that on the date thereof a Security bearing a specified
identifying number was deposited with or
63
<PAGE> 70
exhibited to such trust company, bank, banker or recognized securities dealer by
the person named in such certificate. Any such certificate may be issued in
respect of one or more Unregistered Securities specified therein. The holding by
the Person named in any such certificate of any Unregistered Securities
specified therein shall be presumed to continue for a period of one year from
the date of such certificate unless at the time of any determination of such
holding (a) another certificate bearing a later date issued in respect of the
same Securities shall be produced or (b) the Security specified in such
certificate shall be produced by some other Person, or (c) the Security
specified in such certificate shall have ceased to be outstanding. Subject to
Article 7, the fact and date of the execution of any such instrument and the
amount and numbers of Securities held by the Person so executing such instrument
may also be proven in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in any other manner which the Trustee may
deem sufficient.
The Company, the Trustee and any agent of the Company or the
Trustee may deem and treat the person in whose name any Registered Security
shall be registered upon the Security Register for such series as the absolute
owner of such Registered Security (whether or not such Registered Security shall
be overdue and notwithstanding any notation of ownership or other writing
thereon) for the purpose of receiving payment of or on account of the Principal
of and, subject to the provisions of this Indenture, interest on such Registered
Security and for all other purposes; and neither the Company nor the Trustee nor
any agent of the Company or the Trustee shall be affected by any notice to the
contrary.
SECTION 10.6. Rules by Trustee, Paying Agent or Registrar. The
Trustee may make reasonable rules for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 10.7. Payment Date Other than a Business Day. If any date
for payment of Principal or interest on any Security shall not be a Business Day
at any place of payment, then payment of Principal of or interest on such
Security, as the case may be, need not be made on such date, but may be made on
the next succeeding Business Day at any place of payment with the same force and
effect as if made on such date and no interest shall accrue in respect of such
payment for the period from and after such date.
SECTION 10.8. Governing Law. The laws of the State of New York
shall govern this Indenture and the Securities.
SECTION 10.9. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture or loan or debt
64
<PAGE> 71
agreement of the Company or any Subsidiary of the Company. Any such indenture or
agreement may not be used to interpret this Indenture.
SECTION 10.10. 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 10.11. Duplicate Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement.
SECTION 10.12. Separability. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 10.13. Table of Contents, Headings, Etc. The Table of
Contents and headings of the Articles and Sections of this Indenture have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms and provisions
hereof.
SECTION 10.14. Incorporators, Stockholders, Officers and
Directors of Company Exempt from Individual Liability. No recourse under or upon
any obligation, covenant or agreement contained in this Indenture or any
indenture supplemental hereto, or in any Security or any coupons appertaining
thereto, or because of any indebtedness evidenced thereby, shall be had against
any incorporator, as such or against any past, present or future stockholder,
officer, director or employee, as such, of the Company or of any successor,
either directly or through the Company or any successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of the Securities and the
coupons appertaining thereto by the holders thereof and as part of the
consideration for the issue of the Securities and the coupons appertaining
thereto.
SECTION 10.15. Judgment Currency. The Company agrees, to the
fullest extent that it may effectively do so under applicable law, that (a) if
for the purpose of obtaining judgment in any court it is necessary to convert
the sum due in respect of the Principal of or interest on the Securities of any
series (the "REQUIRED CURRENCY") into a currency in which a judgment will be
rendered (the "JUDGMENT CURRENCY"), the rate of exchange used shall be the rate
at which in accordance with normal banking procedures the Trustee could purchase
in The City of New York the Required Currency with the Judgment Currency on the
day on which
65
<PAGE> 72
final unappealable judgment is entered, unless such day is not a Business Day,
then, to the extent permitted by applicable law, the rate of exchange used shall
be the rate at which in accordance with normal banking procedures the Trustee
could purchase in The City of New York the Required Currency with the Judgment
Currency on the Business Day preceding the day on which final unappealable
judgment is entered and (b) its obligations under this Indenture to make
payments in the Required Currency (i) shall not be discharged or satisfied by
any tender, or any recovery pursuant to any judgment (whether or not entered in
accordance with subsection (a)), in any currency other than the Required
Currency, except to the extent that such tender or recovery shall result in the
actual receipt, by the payee, of the full amount of the Required Currency
expressed to be payable in respect of such payments, (ii) shall be enforceable
as an alternative or additional cause of action for the purpose of recovering in
the Required Currency the amount, if any, by which such actual receipt shall
fall short of the full amount of the Required Currency so expressed to be
payable and (iii) shall not be affected by judgment being obtained for any other
sum due under this Indenture.
66
<PAGE> 73
EXHIBIT 4.1
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, all as of the date first written above.
AMERADA HESS CORPORATION
as the Company
By: /s/ John B. Hess
------------------------------------
Name: John B. Hess
Title: Chairman of the Board and
Chief Executive Officer
THE CHASE MANHATTAN BANK
as Trustee
By: /s/ L. O'Brien
------------------------------------
Name: L. O'Brien
Title: Vice President
67
<PAGE> 1
EXHIBIT 4.2
AMERADA HESS CORPORATION
AS ISSUER
AND
THE CHASE MANHATTAN BANK,
AS TRUSTEE
------------------------------------------------
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF OCTOBER 1, 1999
------------------------------------------------
DEBT SECURITIES
- --------------------------------------------------------------------------------
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE, dated as October 1, 1998 (hereafter
called the "FIRST SUPPLEMENTAL INDENTURE"), between Amerada Hess Corporation, a
corporation duly organized and existing under the laws of Delaware (hereinafter
called the "COMPANY") and The Chase Manhattan Bank, N.A., as Trustee under the
Original Indenture referred to below (hereinafter called the "TRUSTEE").
WITNESSETH:
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture dated as of October 1, 1999 (hereinafter called the
"ORIGINAL INDENTURE"), to provide for the issuance from time to time of its
unsecured debentures, notes or other evidences of indebtedness (herein called
the "SECURITIES"), up to such principal amount or amounts as may from time to
time be authorized in accordance with the terms of the Original Indenture and to
provide, among other things, for the authentication, delivery and administration
thereof, the Company has duly authorized the execution and delivery of the
Original Indenture;
WHEREAS, Section 9.01 of the Original Indenture provides, among
other things, that the Company and the Trustee may enter into indentures
supplemental to the Original Indenture for, among other things, the purpose of
establishing the form and terms of the Securities of any series as permitted in
Sections 2.01 and 3.01 of the Original indenture and of appointing an
Authenticating Agent with respect to the Securities of any series;
WHEREAS, the Company desires to create a series of the Securities in
an aggregate principal amount of $300,000,000 to be designated the "7 3/8% Notes
Due 2009" (the "2009 NOTES") and a series of the Securities in an aggregate
principal amount $700,000,000 to be designated "7 7/8% Notes Due 2029 (the "2029
NOTES") (the 2009 Notes and the 2029 Notes collectively, the "NOTES"), and all
action on the part of the Company necessary to authorize the issuance of the
Notes under the Original Indenture and this First Supplemental Indenture has
been duly taken; and
WHEREAS, all acts and things necessary to make the Notes, when
executed by the Company and authenticated and delivered by the Trustee as in the
Indenture provided, the valid and binding obligations of the Company and to
constitute these presents a valid and binding supplemental indenture and
agreement according to its terms, have been done and performed;
1
<PAGE> 3
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
That in consideration of the premises and of the acceptance and
purchase of the Notes by the holders thereof and of the acceptance of this trust
by the Trustee, the Company covenants and agrees with the Trustee, for the equal
benefit of holders of the Notes, as follows:
ARTICLE 1
DEFINITIONS
The use of the terms and expressions herein is in accordance with
the definitions, uses and constructions contained in the Original Indenture and
the form of Note attached hereto as Exhibit A.
Section 1.01 of the Original Indenture is amended and supplemented
as follows, in each case solely for purposes of the Notes:
"ADJUSTED TREASURY RATE" means, with respect to any redemption date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
"COMPARABLE TREASURY ISSUE" means the United States Treasury
security selected by a Quotation Agent as having a maturity comparable to the
remaining term of the Notes to be redeemed that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the Notes.
"COMPARABLE TREASURY PRICE" means, with respect to any redemption
date, (i) the average of the Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest such Reference Treasury
Dealer Quotations, or (ii) if the Trustee obtains fewer than three such
Reference Treasury Dealer Quotations, the average of all such Quotations.
"QUOTATION AGENT" means the Reference Treasury Dealer appointed by
Amerada Hess Corporation.
"REFERENCE TREASURY DEALERS" means each of J.P. Morgan Securities
Inc. and its respective successors and any other primary treasury dealer we
select. If
2
<PAGE> 4
any of the foregoing ceases to be a primary U.S. Government securities dealer in
New York City, we must substitute another primary treasury dealer.
"REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issues
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
ARTICLE 2
TERMS AND ISSUANCE OF 7 3/8 NOTES DUE 2009 AND 7 7/8 NOTES DUE 2029
SECTION 2.1. Issue of Notes. A series of Securities which shall be
designated the "7 3/8% Notes Due 2009" and a series of securities which shall be
designated the "7 7/8% Notes Due 2029" shall be executed, authenticated and
delivered in accordance with the provisions of, and shall in all respects be
subject to, the terms, conditions and covenants of the Original Indenture and
this First Supplemental Indenture (including the form of Note set forth in
Exhibit A hereto). The aggregate principal amount of the 2009 Notes which may be
authenticated and delivered under the First Supplemental Indenture shall not,
except as permitted by the provisions of the Original Indenture, exceed
$300,000,000. The aggregate principal amount of the 2029 Notes which may be
authenticated and delivered under the First Supplemental Indenture shall not,
except as permitted by the provisions of the Original Indenture, exceed
$700,000,000.
SECTION 2.2. Terms of Notes. The terms of the Notes shall be as set
forth in the Schedule I attached hereto.
SECTION 2.3. Negative Pledge. The covenant provided by Section 4.03
of the Original Indenture shall be applicable to the Notes.
SECTION 2.4. Certain Sale and Lease-Back Transactions. The covenant
provided by Section 4.4 of the Original Indenture shall be applicable to the
Notes.
SECTION 2.5. Place of Payment. The Place of Payment in respect of
the Notes will be in The City of New York, initially the corporate trust office
of The Chase Manhattan Bank, which, at the date hereof, is located at 450 West
33rd Street, New York, New York 10001.
3
<PAGE> 5
ARTICLE 3
AUTHENTICATING AGENT
SECTION 3.1. Authenticating Agent. The Chase Manhattan Bank, a
national banking association duly organized and existing under the laws of the
United States, is hereby appointed Authenticating Agent with respect to the
Notes.
ARTICLE 4
MISCELLANEOUS
SECTION 4.1. Confirmation of the Original Indenture. This First
Supplemental Indenture shall form a part of the Original Indenture for all
purposes and every holder of Securities heretofore or hereafter authenticated
and delivered under the Original Indenture shall be bound hereby; provided that
the supplemental definitions provided in Article 1 of this First Supplemental
Indenture shall apply only to the Notes. The Original Indenture as supplemented
by this First Supplemental Indenture is hereby in all respects ratified and
confirmed.
SECTION 4.2. Execution as Supplemental Indenture. This First
Supplemental Indenture is executed and shall be construed as an indenture
supplemental to the Original Indenture and, as provided in the Original
Indenture, this First Supplemental Indenture forms a part thereof.
SECTION 4.3. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof which is
required to be included in this First Supplemental Indenture by any of the
provisions of the Trust Indenture Act, such required provision shall control.
SECTION 4.4. Effect of Headings. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
SECTION 4.5. Successors and Assigns. All covenants and agreements
in this First Supplemental Indenture by the Company shall bind its successors
and assigns, whether so expressed or not.
SECTION 4.6. Separability Clause. In case any provision in this
First Supplemental Indenture or in the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
4
<PAGE> 6
SECTION 4.7. Benefits of First Supplemental Indenture. Nothing in
this First Supplemental Indenture or in the Notes, express or implied, shall
give to any person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this First Supplemental Indenture.
SECTION 4.8. Execution and Counterparts. This First Supplemental
Indenture may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
5
<PAGE> 7
EXHIBIT 4.2
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the date first written
above.
AMERADA HESS CORPORATION
as the Company
By: /s/ John B. Hess
------------------------------------
Name: John B. Hess
Title: Chairman of the Board and
Chief Executive Officer
THE CHASE MANHATTAN BANK
as Trustee
By: /s/ L. O'Brien
------------------------------------
Name: L. O'Brien
Title: Vice President
6
<PAGE> 8
SCHEDULE I
Title of Securities: 7 7/8% Notes due October 1, 2029
Aggregate principal
amount: $700,000,000
Price to Public: 98.754% of the principal amount of the Securities,
plus accrued interest, if any, from October 1,
1999 to the Closing Date.
Indenture: Indenture dated as of October 1, 1999 between the
Company and The Chase Manhattan Bank as Trustee.
Maturity: October 1, 2029
Interest Rate: 7 7/8%
Interest Payment Dates: April 1 and October 1
Optional Redemption The Securities may be redeemed at any time prior
Provisions: to maturity at the option of the Company, in whole
or in part, upon not less than 30 or more than 60
days prior written notice, at a redemption price
equal to the greater of (i) 100% of their
principal amount or (ii), as determined by a
Quotation Agent, the sum of the present values of
the remaining scheduled payments of principal and
interest thereon, discounted to the redemption
date, on a semi-annual basis, at the Adjusted
Treasury Rate (as all such terms are defined in
the First Supplemental Indenture) plus 25 basis
points, together with all accrued but unpaid
interest, if any, to the date of redemption;
provided, however, that interest installments due
on an interest payment date that is on or prior to
the date of redemption will be payable to holders
who are holders of record of such Securities as of
the close of business on the relevant record date
for such installment.
7
<PAGE> 9
Title of Securities: 7 3/8% Notes due October 1, 2009
Aggregate principal $300,000,000
amount:
Price to Public: 99.547% of the principal amount of the Securities,
plus accrued interest, if any, from October 1,
1999 to the Closing Date.
Indenture: Indenture dated as of October 1, 1999 between the
Company and The Chase Manhattan Bank as Trustee.
Maturity: October 1, 2009
Interest Rate: 7 3/8%
Interest Payment Dates: April 1 and October 1
Optional Redemption The Securities may be redeemed at any time prior
Provisions: to maturity at the option of the Company, in whole
or in part, upon not less than 30 or more than 60
days prior written notice, at a redemption price
equal to the greater of (i) 100% of their
principal amount or (ii), as determined by a
Quotation Agent, the sum of the present values of
the remaining scheduled payments of principal and
interest thereon, discounted to the redemption
date, on a semi-annual basis, at the Adjusted
Treasury Rate (as all such terms are defined in
the First Supplemental Indenture) plus 25 basis
points, together with all accrued but unpaid
interest, if any, to the date of redemption;
provided, however, that interest installments due
on an interest payment date that is on or prior to
the date of redemption will be payable to holders
who are holders of record of such Securities as of
the close of business on the relevant record date
for such installment.
8
<PAGE> 10
EXHIBIT A
[FORM OF FACE OF NOTE]
Unless and until this Security is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred except as a
whole by The Depository Trust Company, a New York corporation ("DTC" or the
"Depositary"), to a nominee of DTC or by a nominee of DTC to DTC or another
nominee of DTC or by DTC or any nominee to a successor Depositary or a nominee
of any successor Depositary. Unless this certificate is presented by an
authorized representative of DTC to the Issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
No.__________________ $_______________
AMERADA HESS CORPORATION
_____% Note Due
Amerada Hess Corporation, Delaware (the "ISSUER"), for value
received, hereby promises to pay to _____________ or registered assigns, at the
office or agency of the Issuer in New York, New York, the principal sum of
________________ Dollars on ______________, 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, semiannually on
__________________ and _______________ of each year, commencing
___________________, _______________, on said principal sum at said office or
agency, in like coin or currency, at the rate per annum specified in the title
of this Note, from the ______________ or the _________________, as the case may
be, next preceding the date of this Note to which interest has been paid, unless
the date hereof is a date to which interest has been paid, in which case from
the date of this Note, or unless no interest has been paid on these Notes, in
which case from ________________, _________________, until payment of said
principal sum has been made or duly provided for; provided, that payment of
interest may be made at
9
<PAGE> 11
the option of the Issuer by check mailed to the address of the person entitled
thereto as such address shall appear on the Security register. Notwithstanding
the foregoing, if the date hereof is after the ___________ day of ____________
or ______________, as the case may be, and before the following ____________ or
______________, this Note shall bear interest from such _________________ or
______________; provided, that if the Issuer shall default in the payment of
interest due on such _______________ or ______________, then this Note shall
bear interest from the next preceding _________________ or __________________,
to which interest has been paid or, if no interest has been paid on these Notes,
from _________________. The interest so payable on any ________________ or
_________________, will, subject to certain exceptions provided in the Indenture
referred to on the reverse hereof, be paid to the person in whose name this Note
is registered at the close of business on the ________________ or
_________________, as the case may be, next preceding such ___________________
or ________________.
Reference is made to the further provisions of this Note set forth
on the reverse hereof. Such further provisions shall for all purposes have the
same effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture referred to on the reverse hereof.
IN WITNESS WHEREOF, Amerada Hess Corporation has caused this
instrument to be signed by facsimile by its duly authorized officers and has
caused a facsimile of its corporate seal to be affixed hereunto or imprinted
hereon.
Dated:
AMERADA HESS CORPORATION
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title
10
<PAGE> 12
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities of the series designated herein
referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as
Trustee
By:
------------------------------
Authorized Officer
11
<PAGE> 13
[FORM OF REVERSE OF NOTE]
AMERADA HESS CORPORATION
% Note Due
This Note is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Issuer (hereinafter called the
"SECURITIES") of the series hereinafter specified, all issued or to be issued
under and pursuant to an indenture dated as of October 1, 1999 (as supplemented
by the First Supplemental Indenture dated as of October 1, 1999, the
"INDENTURE") duly executed and delivered by the Issuer to The Chase Manhattan
Bank, Trustee (herein called the "TRUSTEE") (as supplemented by the First
Supplemental Indenture dated as of October 1, 1999), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Issuer and the holders of the Securities. The Securities may
be issued in one or more series, which different series may be issued in various
aggregate principal amounts, may mature at different times, may bear interest
(if any) at different rates, may be subject to different redemption provisions
(if any), may be subject to different sinking, purchase or analogous funds (if
any) and may otherwise vary as in the Indenture provided. This Note is one of a
series designated as the ____% Notes Due _______ of the Issuer, limited in
aggregate principal amount to $ _________.
In case an Event of Default with respect to the ___% Notes Due
____________, as defined in the Indenture, shall have occurred and be
continuing, the principal hereof may be declared, and upon such declaration
shall become, due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
The Indenture contains provisions permitting the Issuer and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities at the time Outstanding (as defined
in the Indenture) of all series to be affected (voting as one class), evidenced
as in the Indenture provided, to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of any supplemental indenture or modifying in any manner the
rights of the Holders to amend the Indenture and the Securities of any series
with the written consent of the Holders of a majority in principal amount of the
outstanding Securities of all series affected by such supplemental indenture
(all such series voting as one class), and the Holders of a majority in
principal amount of the outstanding Securities of all series affected thereby
(all such series voting as one class) by written notice to the Trustee may waive
future compliance by the Company with any provision of this Indenture or the
Securities of such series; provided, however, that no such supplemental
indenture
12
<PAGE> 14
shall (i) extend the stated maturity of the Principal of, or any sinking fund
obligation or any installment of interest on, such Holder's Security, or reduce
the Principal amount thereof or the rate of interest thereon (including any
amount in respect of original issue discount), or any premium payable with
respect thereto, or reduce the amount of the Principal of an Original Issue
Discount Security that would be due and payable upon an acceleration of the
maturity thereof pursuant to Section 6.02 or the amount thereof provable in
bankruptcy, or change any place of payment where, or the currency in which, any
Security or any premium or the interest thereon is payable, or impair the right
to institute suit for the enforcement of any such payment on or after the due
date therefor; (ii) reduce the percentage in principal amount of outstanding
Securities of the relevant series the consent of whose Holders is required for
any such supplemental indenture, for any waiver of compliance with certain
provisions of this Indenture or certain Defaults and their consequences provided
for in this Indenture; (iii) waive a Default in the payment of Principal of or
interest on any Security of such Holder; or (iv) modify any of the provisions of
Section 9.02 of the Indenture, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each outstanding Security affected
thereby.
It is also provided in the Indenture that, subject to certain
conditions, the Holders of at least a majority in aggregate principal amount of
the outstanding Securities of all series affected (voting as a single class), by
notice to the Trustee, may waive an existing Default or Event of Default with
respect to the Securities of such series and its consequences, except a Default
in the payment of principal of or interest on any Security or in respect of a
covenant or provision of the Indenture which cannot be modified or amended
without the consent of the Holder of each outstanding Security affected. Upon
any such waiver, such Default shall cease to exist, and any Event of Default
with respect to the Securities of such series arising therefrom shall be deemed
to have been cured, for every purpose of the Indenture; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereto.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note in the manner, at the respective times, at the rate and in the coin
or currency herein prescribed.
The Notes are issuable in registered form without coupons in
denominations of $1,000 and any multiple of $1,000 and in book-entry form. The
Notes may be represented by one or more Global Securities (each, a "Global
Note") deposited with the Depositary and registered in the name of the nominee
of the Depositary, with certain limited exceptions. So long as DTC or any
successor Depositary or its nominee is the registered Holder of a Global Note,
DTC, such Depositary or such nominee, as the case may be, will be considered the
sole owner or Holder of the Notes
13
<PAGE> 15
represented by such Global Note for all purposes under the Indenture and the
Notes. Beneficial interest in the Notes will be evidenced only by, and transfer
thereof will be effected only through, records maintained by DTC and its
participants. Except as provided below, an owner of a beneficial interest in a
Global Note will not be entitled to have Notes represented by such Global Note
registered in such owner's name, will not receive or be entitled to receive
physical delivery of the Notes in certificated form and will not be considered
the owner or Holder thereof under the Indenture.
No Global Note may be transferred except as a whole by the
Depositary to a nominee of the Depositary. Global Notes are exchangeable for
certificated Notes only if (x) the Depositary notifies the Issuer that it is
unwilling or unable to continue as Depositary for such Global Notes or if at any
time the Depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, and the Issuer fails within 90 days
thereafter to appoint a successor, (y) the Issuer in its sole discretion
determines that such Global Notes shall be so exchangeable or (z) there shall
have occurred and be continuing an Event of Default or an event which with the
giving of notice or lapse of time or both would constitute an Event of Default
with respect to the Notes represented by such Global Notes. In such event, the
Issuer will issue Notes in certificated form in exchange for such Global Notes.
In any such instance, an owner of a beneficial interest in the Global Notes will
be entitled to physical delivery in certificated form of Notes equal in
principal amount to such beneficial interest and to have such Notes registered
in its name. Notes so issued in certificated form will be issued in
denominations of $1,000 or any integral multiple thereof, and will be issued in
registered form only, without coupons.
The Notes may be redeemed at the option of the Issuer as a whole, or
part, at anytime prior to maturity, upon mailing a notice of such redemption not
less than 30 nor more than 60 days prior to the date fixed for redemption to the
Holders of Notes at their last registered addresses, all as further provided in
the Indenture, at a redemption price equal to the greater of (i) 100% of their
principal amount or (ii) as determined by a Quotation Agent, the sum of the
present values of the remaining scheduled payments of principal and interest
thereon (not including any portion of such payments of interest accrued as of
the date of redemption) discounted to the redemption date, on a semi-annual
basis assuming a 360-day year consisting of twelve 30-day months at the Adjusted
Treasury Rate plus 25 basis points, together with all accrued but unpaid
interest, if any, to the date of redemption in either case.
No recourse under or upon any obligation, covenant or agreement of
the Issuer in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, stockholder, officer or director, as such, of
the Issuer or of any successor corporation, either directly or through the
Issuer or any successor corporation, under any rule of law, statute or
constitutional provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise, all such liability
14
<PAGE> 16
being expressly waived and released by the acceptance hereof and as part of the
consideration for the issue hereof.
Terms used herein which are defined in the Indenture shall have the
respective meanings assigned thereto in the Indenture.
15
<PAGE> 1
EXHIBIT 10.1
CHANGE IN CONTROL
TERMINATION BENEFITS AGREEMENT
THIS CHANGE IN CONTROL TERMINATION BENEFITS AGREEMENT (the
"Agreement"), dated as of the first day of September, 1999 is between Amerada
Hess Corporation, a Delaware corporation (the "Company"), and John B. Hess (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Company considers it essential to the best interests of
the Company and its stockholders that its management be encouraged to remain
with the Company and to continue to devote full attention to the Company's
business in the event of a transaction or series of transactions that could
result in a change in control of the Company through a tender offer or
otherwise;
WHEREAS, the Company recognizes that the possibility of a change in
control and the uncertainty which it may raise among management may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders;
WHEREAS, the Executive is a key Executive of the Company;
WHEREAS, the Company believes the Executive has made valuable
contributions to the productivity and profitability of the Company;
WHEREAS, should the Company receive a proposal for, or otherwise
consider any such transaction, in addition to the Executive's regular duties,
the Executive may be called upon to assist in the assessment of such proposals,
advise management and the Board of Directors of the Company (the "Board") as to
whether a proposed transaction would be in the best interests of the Company and
its stockholders, and to take such other actions as the Board might determine to
be appropriate; and
WHEREAS, the Board has determined that it is in the best interests
of the Company and its stockholders to assure that the Company will have the
continued services of the Executive, notwithstanding the possibility, threat or
occurrence of a change in control of the Company and believes that it is
imperative to diminish the potential distraction of the Executive by virtue of
the personal uncertainties and risks created by a pending or threatened change
in control, to assure the Executive's full attention and dedication to the
Company in the event of any threatened or pending change in control, and to
provide the Executive with appropriate severance arrangements following a change
in control.
<PAGE> 2
NOW, THEREFORE, to assure the Company that it will have the
continued undivided attention and services of the Executive and the availability
of the Executive's advice and counsel notwithstanding the possibility, threat or
occurrence of a change in control of the Company, and to induce the Executive to
remain in the employ of the Company, and for other good and valuable
consideration, the Company and the Executive agree as follows:
1. Change in Control.
For purposes of the Agreement, a Change in Control shall be deemed
to have taken place if any of the following shall occur:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934
(the "Exchange Act")), of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either the then (i)
outstanding shares of Common Stock of the Company (the "Outstanding Company
Common Stock") or (ii) combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Voting Securities") provided, however, that the
following acquisitions shall not constitute a Change in Control: (i) any
acquisition by the Company or any of its subsidiaries, (ii) any acquisition by
an employee benefit plan (or related trust) sponsored or maintained by the
Company or any of its subsidiaries, (iii) any acquisition by any company with
respect to which, following such acquisition, more than 60% of, respectively,
the then outstanding shares of common stock of such company and the combined
voting power of the then outstanding voting securities of such company entitled
to vote generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Voting Securities immediately prior to such
acquisition in substantially the same proportions as their ownership,
immediately prior to such acquisition, of the Outstanding Company Common Stock
and Outstanding Voting Securities, as the case may be, or (iv) any acquisition
by one or more Hess Entity (for this purpose a "Hess Entity" means (A) Mr. John
Hess or any of his children, parents or siblings, (B) any spouse of any person
described in Section (A) above, (C) any trust with respect to which any of the
persons described in (A) has substantial voting authority (D) any affiliate (as
such term is defined in Rule 12b-2 under the Exchange Act) of any person
described in (A) above, (E) the Hess Foundation Inc., or (F) any persons
comprising a group controlled (as such term is defined in such Rule 12b-2) by
one or more of the foregoing persons or entities described in this Section
1(a)(iv)); or
(b) Within any 24 month period, individuals who, immediately prior
to the beginning of such period, constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director during such period whose
election, or nomination for
2
<PAGE> 3
election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened solicitation to
which Rule 14a-11 of Regulation 14A promulgated under the Exchange Act applies
or other actual or threatened solicitation of proxies or consents; or
(c) Consummation of a reorganization, merger or consolidation, in
each case, with respect to which all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Voting Securities immediately prior to such
reorganization, merger or consolidation do not, following such reorganization,
merger or consolidation, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the company
resulting from such reorganization, merger or consolidation in substantially the
same proportions as their ownership, immediately prior to such reorganization,
merger or consolidation, of the Outstanding Company Common Stock and Outstanding
Voting Securities, as the case may be; or
(d) Consummation of (i) a complete liquidation or dissolution of the
Company or (ii) the sale or other disposition of all or substantially all of the
assets of the Company, other than to a company, with respect to which following
such sale or other disposition, more than 60% of, respectively, the then
outstanding shares of common stock of such company and the combined voting power
of the then outstanding voting securities of such company entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding Company Common Stock
and Outstanding Voting Securities, as the case may be. The term "the sale or
other disposition of all or substantially all of the assets of the Company"
shall mean a sale or other disposition in a transaction or series of related
transactions involving assets of the Company or of any direct or indirect
subsidiary of the Company (including the stock of any direct or indirect
subsidiary of the Company) in which the value of the assets or stock being sold
or otherwise disposed of (as measured by the purchase price being paid therefor
or by such other method as the Board determines is appropriate in a case where
there is no readily ascertainable purchase price) constitutes more than
two-thirds of the fair market value of the Company (as hereinafter defined). The
"fair market value of the Company" shall be the aggregate market value of the
then Outstanding Company Common Stock (on a fully diluted basis) plus the
aggregate market value of the Company's other outstanding equity securities. The
aggregate market value of the shares of Outstanding Company
3
<PAGE> 4
Common Stock shall be determined by multiplying the number of shares of such
Common Stock (on a fully diluted basis) outstanding on the date of the execution
and delivery of a definitive agreement with respect to the transaction or series
of related transactions (the "Transaction Date") by the average closing price of
the shares of Outstanding Company Common Stock for the ten trading days
immediately preceding the Transaction Date. The aggregate market value of any
other equity securities of the Company shall be determined in a manner similar
to that prescribed in the immediately preceding sentence for determining the
aggregate market value of the shares of Outstanding Company Common Stock or by
such other method as the Board shall determine is appropriate.
1. Circumstances Triggering Receipt of Termination Benefits.
(a) Subject to Section 2(c), the Company will provide the Executive
with the benefits set forth in Section 4 upon any termination of the Executive's
employment:
(i) by the Company at any time within the first 24
months after a Change in Control;
(ii) by the Executive for "Good Reason" (as defined in
Section 2(b) below) at any time within the first 24 months after a
Change in Control; or
(iii) by the Company or the Executive pursuant to
Section 2(d).
(a) In the event of a Change in Control, the Executive may terminate
employment with the Company and/or any subsidiary for "Good Reason" and receive
the payments and benefits set forth in Section 4 upon the occurrence of one or
more of the following events (regardless of whether any other reason, other than
Cause as provided below, for such termination exists or has occurred):
(i) Failure to elect or reelect or otherwise to
maintain the Executive in the office or the position, or at least a
substantially equivalent office or position, of or with the Company
(or any successor thereto), which the Executive held immediately
prior to a Change in Control, or the removal of the Executive as a
director of the Company (or any successor thereto), if the Executive
shall have been a director of the Company immediately prior to the
Change in Control;
(ii) (A) Any material adverse change in the nature or
scope of the Executive's authorities, powers, functions,
responsibilities or duties from those in effect immediately prior to
the Change in Control, (B) a reduction in the Executive's annual
base salary rate, (C) a reduction in the Executive's
4
<PAGE> 5
annual incentive compensation target or any material reduction in
the Executive's other bonus opportunities, or (D) the termination or
denial of the Executive's ability to participate in Employee
Benefits (as defined in Section 4(b)) or retirement benefits (as
described in Section 4(c)) or a material reduction in the scope or
value thereof, any of which is not remedied by the Company within 10
days after receipt by the Company of written notice from the
Executive of such change, reduction or termination, as the case may
be;
(iii) The liquidation, dissolution, merger,
consolidation or reorganization of the Company or transfer of all or
substantially all of its businesses and/or assets, unless the
successor or successors (by liquidation, merger, consolidation,
reorganization, transfer or otherwise) to which all or substantially
all of its businesses and/or assets have been transferred (directly
or by operation of law) assumed all duties and obligations of the
Company under this Agreement pursuant to Section 9(a);
(iv) The Company requires the Executive to change the
Executive's principal location of work to a location that is in
excess of 30 miles from the location thereof immediately prior to
the Change in Control, or requires the Executive to travel in the
course of discharging the Executive's responsibilities or duties at
least 20% more (in terms of aggregate days in any calendar year or
in any calendar quarter when annualized for purposes of comparison
to any prior year) than was required of the Executive in any of the
three full years immediately prior to the Change in Control without,
in either case, the Executive's prior written consent;
(v) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the Company or
any successor thereto, which breach is not remedied within 10 days
after written notice to the Company from the Executive describing
the nature of such breach.
(a) Notwithstanding Sections 2(a) and (b) above, no benefits shall
be payable by reason of this Agreement in the event of:
(i) Termination of the Executive's employment with the
Company and/or its subsidiaries by reason of the Executive's death
or Disability, provided that the Executive has not previously
given a valid "Notice of Termination" pursuant to Section 3. For
purposes hereof, "Disability" shall be defined as the inability of
the Executive due to illness, accident or other physical or mental
disability to perform the Executive's duties for any period of six
consecutive months or for any period of eight months out of any
12-month period, as determined by an independent physician
selected by the Executive (or the Executive's legal
representative) and reasonably acceptable to the Company, provided
that the Executive does not return to work on substantially a
full-time basis within 30 days after written notice from the
Company,
5
<PAGE> 6
pursuant to Section 3, of an intent to terminate the Executive's
employment due to Disability;
(ii) Termination of the Executive's employment with the
Company and/or its subsidiaries on account of the Executive's
retirement, pursuant to the Company's Employees' Pension Plan;
provided, however, that if the Executive has Good Reason to
terminate employment at the time of retirement, the Executive's
retirement shall be treated hereunder as a termination of the
Executive's employment for Good Reason and the Executive shall be
entitled to the benefits provided in Section 4 hereof;
(iii) Termination of the Executive's employment with the
Company and its subsidiaries for Cause. For the purposes hereof,
"Cause" shall be defined as (A) a felony conviction of the Executive
or the failure of the Executive to contest prosecution for a felony,
(B) the Executive's gross and willful misconduct in connection with
the performance of the Executive's duties with the Company and/or
its subsidiaries or (C) the willful and continued failure of the
Executive to substantially perform the Executive's duties with the
Company (or any successor thereto) after a written demand from the
Board for substantial performance which specifically identifies the
manner in which the Board believes that the Executive has not
performed the Executive's duties with the Company, any of which is
directly and materially harmful to the business or reputation of the
Company or any subsidiary or affiliate. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated
for "Cause" hereunder unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than three quarters of the Board
then in office at a meeting of the Board called and held for such
purpose, after reasonable notice to the Executive and an opportunity
for the Executive, together with counsel (if the Executive chooses
to have counsel present at such meeting), to be heard before the
Board, finding that, in the good faith opinion of the Board, the
Executive should be terminated for "Cause" as herein defined and
specifying the particulars thereof in detail. Nothing herein will
limit the right of the Executive or the Executive's beneficiaries to
contest the validity or propriety of any such determination.
This Section 2(c) shall not preclude the payment of any amounts
otherwise payable to the Executive under any of the Company's employee benefit
plans, pension plans, stock plans, programs and arrangements.
(d) A termination of the Executive's employment by the Company
without Cause or by the Executive for an event that would constitute Good Reason
following a Change in Control that occurs, in either event, prior to a Change in
Control, but occurs (i) not more than 180 days prior to the date on which a
Change in Control occurs and (ii) (x) at the request of a third party who has
indicated an intention or taken steps
6
<PAGE> 7
reasonably calculated to effect a Change in Control or (y) otherwise arose in
connection with, or in anticipation of, a Change in Control, shall be deemed to
be a termination or removal of the Executive without Cause within the first 24
months after a Change in Control for purposes of this Agreement and the date of
such Change in Control shall be deemed to be the date immediately preceding the
date the Executive's employment terminates.
1. Notice of Termination.
Any termination of the Executive's employment with the Company and
its subsidiaries as contemplated by Section 2 shall be communicated by written
"Notice of Termination" to the other party hereto. Any "Notice of Termination"
shall indicate the effective date of termination which shall not be less than 30
days or more than 60 days after the date the Notice of Termination is delivered
(the "Termination Date"), the specific provision in this Agreement relied upon,
and, except for a termination pursuant to Section 2(d), will set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
such termination including, if applicable, the failure by the Company, after
provision of written notice by the Executive, to effect a remedy pursuant to the
final clause of Section 2(b)(ii) or 2(b)(v).
2. Termination Benefits.
Subject to the conditions set forth in Section 2, the following
benefits shall be paid or provided to the Executive:
(a) Compensation.
The Company shall pay to the Executive three times the sum of (i)
"Base Pay", which shall be an amount equal to the greater of (A) the Executive's
rate of annual base salary (prior to any deferrals) at the Termination Date or
(B) the Executive's rate of annual base salary (prior to any deferrals)
immediately prior to the Change in Control, plus (ii) "Incentive Pay", which
shall be an amount equal to the greater of (X) the target annual bonus payable
to the Executive under the Company's incentive compensation plan or any other
annual bonus plan for the fiscal year of the Company in which the Change in
Control occurred or (Y) the highest annual bonus earned by the Executive under
the Company's incentive compensation plan or any other annual bonus plan
(whether paid currently or on a deferred basis) during the three fiscal years of
the Company immediately preceding the fiscal year of the Company in which the
Change in Control occurred. In addition, the Executive shall receive a pro rata
portion of the target bonus for the fiscal year in which the Executive's
termination of employment occurs.
(b) Welfare Benefits.
7
<PAGE> 8
For a period of 36 months following the Termination Date (the
"Continuation Period"), the Company shall arrange to provide the Executive with
benefits (the "Employee Benefits"), including travel accident, major medical,
dental care and other welfare benefit programs, substantially similar to those
in effect immediately prior to the Change in Control, or, if greater, to those
that the Executive was receiving or entitled to receive immediately prior to the
Termination Date (or, if greater, immediately prior to the reduction,
termination, or denial described in Section 2(b)(ii)(D)). If and to the extent
that any benefit described in this Section 4(b) is not or cannot be paid or
provided under any policy, plan, program or arrangement of the Company or any
subsidiary, as the case may be, then the Company will itself pay or provide for
the payment to the Executive, the Executive's dependents and beneficiaries, of
such Employee Benefits along with, in the case of any benefit which is subject
to tax because it is not or cannot be paid or provided under any such policy,
plan, program or arrangement of the Company or any subsidiary, an additional
amount such that after payment by the Executive, or the Executive's dependents
or beneficiaries, as the case may be, of all taxes so imposed, the recipient
retains an amount equal to such taxes. Employee Benefits otherwise receivable by
the Executive pursuant to this Section 4(b) will be reduced to the extent
comparable welfare benefits are actually received by the Executive from another
employer during the Continuation Period, and any such benefits actually received
by the Executive shall be reported by the Executive to the Company. In addition,
the Executive shall receive additional age and service credit for the
Continuation Period for purposes of the Executive's eligibility to receive any
retiree medical benefits.
(c) Retirement Benefits.
The Executive shall be deemed to be completely vested in the
Executive's currently accrued benefits under the Company's Employees' Pension
Plan and the Company's Pension Restoration Plan or other supplemental pension
plan ("SERP") in effect as of the date of the Change in Control (collectively,
the "Plans"), regardless of the Executive's actual vesting service credit
thereunder. In addition, the Executive shall be deemed to earn age and service
credit for benefit calculation purposes thereunder for the Continuation Period.
The additional retirement benefits to be paid pursuant to the Plans shall be
calculated as though the Executive's compensation rate for the years during the
Continuation Period equaled the sum of Base Pay plus Incentive Pay. Any benefits
payable pursuant to this Section 4(c) that are not payable out of the Plans for
any reason (including but not limited to any applicable benefit limitations
under the Employee Retirement Income Security Act of 1974, as amended, or any
restrictions relating to the qualification of the Company's Employees' Pension
Plan under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code")) shall be paid directly by the Company out of its general assets at the
time such benefits would be payable under the applicable Plan.
(d) Stock Based Compensation Plans.
8
<PAGE> 9
(i) Any issued and outstanding stock options shall vest
and become exercisable on the Termination Date (to the extent they
have not already become vested and exercisable) and any other
stock-based awards under any compensation plan or program maintained
by the Company (including, without limitation, awards of restricted
stock and book value appreciation units) and the Executive's rights
thereunder shall vest on the Termination Date (to the extent they
have not already vested) and any performance criteria under any such
compensation plan or program shall be deemed met at target as of the
Termination Date.
(ii) If and to the extent that any benefit or
entitlement (or portion thereof) described in paragraph (i) above is
not able to be implemented by the Company under the then applicable
terms of any plan, program or award agreement applicable to the
Executive, the Company shall pay to the Executive cash and/or other
property (including, without limitation, common stock of the Company
or any successor thereto) with a value, as determined by the Board,
equal to the value of any such option, award or other entitlement
(or portion thereof) that the Executive was not able to receive
under paragraph (i) above, and such payment shall be in full
satisfaction of the option, award or other entitlement (or portion
thereof) to which such payment relates.
(e) Deferred Compensation.
e
The Company shall pay to the Executive all other amounts accrued
or earned by the Executive through the Termination Date and amounts otherwise
owing under the then existing plans and policies of the Company, including but
not limited to, all amounts of compensation previously deferred by the Executive
(together with any accrued interest or other earnings thereon) and not yet paid
by the Company.
(f) Outplacement Services.
If so requested by the Executive, outplacement services shall be
provided to the Executive by a professional outplacement firm or provider
selected by the Executive that is reasonably acceptable to the Company at a cost
to the Company not in excess of $30,000.
(g) The Company shall pay to the Executive the amounts due pursuant
to Sections 4(a) and 4(d)(ii), in a lump sum on the first business day of the
month following the Termination Date. The Company shall pay to the Executive the
amounts due pursuant to Section 4(e) in accordance with the terms and conditions
of the existing plans and policies of the Company.
1. Certain Additional Payments by the Company.
9
<PAGE> 10
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined (as hereafter provided) that any payment
(other than the Gross-Up payments provided for in this Section 5) or benefit
provided by the Company or any of its subsidiaries to or for the benefit of the
Executive, whether paid or payable or provided pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement, policy,
plan, program or arrangement, including without limitation any stock option,
stock appreciation right or similar right, restricted stock, deferred stock or
the lapse or termination of any restriction on, deferral period for, or the
vesting or exercisability of any of the foregoing (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Code (or any successor
provision thereto) by reason of being considered "contingent on a change in
ownership or control" of the Company, within the meaning of Section 280G of the
Code (or any successor provision thereto) or to any similar tax imposed by state
or local law, or any interest or penalties with respect to any such tax (such
tax or taxes, together with any such interest and penalties, being hereafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment or payments (collectively, a "Gross-Up
Payment"). The Gross-Up Payment shall be in an amount such that, after payment
by the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax and any income tax imposed upon
the Gross-Up Payment, the Executive retains an amount of Gross-Up Payment equal
to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 5(f), all determinations
required to be made under this Section 5, including whether an Excise Tax is
payable by the Executive and the amount of such Excise Tax and whether a
Gross-Up Payment is required to be paid by the Company to the Executive and the
amount of such Gross-Up Payment, if any, shall be made by the Company's outside
auditors immediately prior to the Change in Control (the "Accounting Firm"). The
Executive shall direct the Accounting Firm to submit its determination and
detailed supporting calculations to both the Company and the Executive within 30
days after the Change in Control Date, the Termination Date, if applicable, and
any such other time or times as may be requested by the Company or the
Executive. If the Accounting Firm determines that any Excise Tax is payable by
the Executive, the Company shall pay the required Gross-Up Payment to the
Executive within five business days after receipt of such determination and
calculations with respect to any Payment to the Executive. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall, at the
same time as it makes such determination, furnish the Company and the Executive
an opinion that the Executive has substantial authority not to report any Excise
Tax on the Executive's federal, state or local income or other tax return. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state of local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that a Gross-Up Payment which will
not have been made by the Company should have been made (an "Underpayment'),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies
10
<PAGE> 11
pursuant to Section 5(f) and the Executive thereafter is required to make a
payment of any Excise Tax, the Executive shall direct the Accounting Firm to
determine the amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the Company and the
Executive as promptly as possible. Any such Underpayment shall be promptly paid
by the Company to, or for the benefit of, the Executive within five business
days after receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the Accounting
Firm access to and copies of any books, records and documents in the possession
of the Company or the Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by Section 5(b). Any determination by the Accounting Firm as to the
amount of the Gross-Up Payment shall be binding upon the Company and the
Executive.
(d) The federal, state and local income or other tax returns filed
by the Executive shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive shall make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of the Executive's federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment. If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall, within five business days, pay to the Company the amount of
such reduction.
(e) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by Section 5(b)
shall be borne by the Company. If such fees and expenses are initially paid by
the Executive, the Company shall reimburse the Executive the full amount of such
fees and expenses within five business days after receipt from the Executive of
a statement therefor and reasonable evidence of payment thereof.
(f) The Executive shall notify the Company in writing of any claim,
by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by the Company of a Gross-Up Payment or
any additional Gross-Up Payment. Such notification shall be given as promptly as
practicable but no later than l0 business days after the Executive actually
receives notice of such claim, and the Executive shall further apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by the
11
<PAGE> 12
Executive). The Executive shall not pay such claim prior to the earlier of (x)
the expiration of the 30-day period following the date on which the Executive
gives such notice to the Company and (y) the date that any payment with respect
to such claim is due. If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall:
(i) provide the Company with any written records or documents
in the Executive's possession relating to such claim reasonably
requested by the Company;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax including interest and
penalties with respect thereto, imposed as a result of such contest and payment
of costs and expenses. Without limiting the foregoing provisions of this Section
5(f), the Company shall control all proceedings taken in connection with the
contest of any claim contemplated by this Section 5(f) and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of such claim (provided,
however, that the Executive may participate therein at the Executive's own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and sue for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such advance; and
provided further, that any extension of the statute of limitations relating to
payment of taxes for the taxable year of the Executive with respect to which the
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of any such contested claim shall be
limited to
12
<PAGE> 13
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(g) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 5(f), the Executive receives any refund with
respect to such claim, the Executive shall (subject to the Company's complying
with the requirements of Section 5(f)) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 5(f), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial or refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of any such advance shall offset, to the extent
thereof, the amount of any Gross-Up Payment required to be paid by the Company
to the Executive pursuant to this Section 5.
6. No Mitigation Obligation; Obligations Absolute. The payment of
the severance compensation by the Company to the Executive in accordance with
the terms of this Agreement is hereby acknowledged by the Company to be
reasonable, and the Executive will not be required to mitigate the amount of any
payment or other benefit provided in this Agreement by seeking other employment
or otherwise, nor will any profits, income, earnings or other benefits from any
source whatsoever create any mitigation, offset, reduction or any other
obligation on the part of the Executive hereunder or otherwise, except as
expressly provided in the second to last sentence of Section 4(b) and Section 13
hereof. The obligations of the Company to make the payments and provide the
benefits provided herein to the Executive are absolute and unconditional and may
not be reduced under any circumstances, including without limitation any
set-off, counterclaim, recoupment, defense or other right which the Company may
have against the Executive or any third party at any time.
7. Legal Fees and Expenses.
It is the intent of the Company that the Executive not be required
to incur legal fees and the related expenses associated with the interpretation,
enforcement or defense of the Executive's rights under this Agreement by
litigation or otherwise because the cost and expense thereof would substantially
detract from the benefits intended to be extended to the hereunder.
Accordingly, if, following a Change in Control, it should appear to the
Executive that the Company has failed to comply with any of its obligations
under this Agreement or in the event that the Company or any other person takes
or threatens to take any action to declare this Agreement void or unenforceable,
or institutes any litigation or other action or proceeding designed to deny, or
to recover from, the Executive any or all of the benefits provided or intended
to be provided to the Executive hereunder, the Company irrevocably authorizes
the Executive from time to
13
<PAGE> 14
time to retain counsel of the Executive's choice, at the expense of the Company
as hereafter provided, to advise and represent the Executive in connection with
any such interpretation, enforcement or defense, including without limitation
the initiation or defense of any litigation or other legal action, whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to the Executive's entering into an attorney-client
relationship with such counsel, and in that connection the Company and the
Executive agree that a confidential relationship shall exist between the
Executive and such counsel. Without respect to whether the Executive prevails,
in whole or in part, in connection with any of the foregoing, the Company will
pay and be solely financially responsible for all reasonable attorneys' fees and
related expenses incurred by the Executive in good faith in connection with any
of the foregoing; provided, however, that the Company shall have no obligation
hereunder to pay any attorneys' fees or related expenses with respect to any
frivolous claims made by the Executive. Payments by the Company shall be made
within 10 business days after receipt of the Executive's written request for
payment accompanied by such evidence of fees and expenses as the Company may
reasonably require.
8. Continuing Obligations.
The Executive hereby agrees that all documents, records, techniques,
business secrets and other information which have come into the Executive's
possession from time to time during the Executive's employment with the Company
shall be deemed to be confidential and proprietary to the Company and, except
for personal documents and records of the Executive, shall be returned to the
Company. The Executive further agrees to retain in confidence any confidential
information known to him concerning the Company and its subsidiaries and their
respective businesses so long as such information is not otherwise publicly
disclosed, except that Executive may disclose any such information required to
be disclosed in the normal course of the Executive's employment with the Company
or pursuant to any court order or other legal process or as necessary to enforce
the Executive's rights under this Agreement.
9. Successors.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance reasonably satisfactory to the Executive to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place. Failure of such successor entity to enter into such agreement prior to
the effective date of any such succession (or, if later, within three business
days after first receiving a written request for such agreement) shall
constitute a breach of this Agreement and shall entitle the Executive to
terminate employment pursuant to Section 2(a)(ii) and to receive the payments
and benefits
14
<PAGE> 15
provided under Section 4. As used in this Agreement, "Company" shall mean the
Company as herein before defined and any successor to its business and/or assets
as aforesaid which executes and delivers the Agreement provided for in this
Section 9 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive dies
while any amounts are payable to him hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's designee or, if there is no such designee, to the
Executive's estate.
10. Notices.
For all purposes of this Agreement, all communications, including
without limitation notices, consents, requests or approvals, required or
permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or three business days after having been
sent by a nationally recognized overnight courier service such as FedEx, UPS, or
Purolator, addressed to the Company (to the attention of the Secretary of the
Company, with a copy to the General Counsel of the Company) at its principal
executive office and to the Executive at the Executive's principal residence, or
to such other address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
11. Governing Law.
THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
12. Miscellaneous.
No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in a
writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement (or in any employment or other written agreement relating to the
15
<PAGE> 16
Executive). Nothing expressed or implied in this Agreement will create any right
or duty on the part of the Company or the Executive to have the Executive remain
in the employment of the Company or any subsidiary prior to or following any
Change in Control. The Company may withhold from any amounts payable under this
Agreement all federal, state, city or other taxes as the Company is required to
withhold pursuant to any law or government regulation or ruling. In the event
that the Company refuses or otherwise fails to make a payment when due and it is
ultimately decided that the Executive is entitled to such payment, such payment
shall be increased to reflect an interest factor, compounded annually, equal to
the prime rate in effect as of the date the payment was first due plus two
points. For this purpose, the prime rate shall be based on the rate identified
by Chase Manhattan Bank as its prime rate.
Notwithstanding anything in this Agreement to the contrary, if any
right or entitlement of the Executive under this Agreement would cause a
transaction involving the Company to be ineligible for "pooling of interests"
accounting treatment and that transaction would, but for such right or
entitlement hereunder, be eligible for such accounting treatment (each as
determined by the Company's outside auditors), the Board may, unilaterally and
without notice, modify, adjust or terminate any such right or entitlement so
that the transaction will be eligible for "pooling of interests" accounting
treatment (as determined by the Company's outside auditors); provided, however,
that any such right or entitlement that is modified, adjusted or terminated
under this paragraph shall be fully reinstated (with retroactive payments, if
necessary) if the transaction which caused such modification, adjustment or
termination to be made is not consummated or if "pooling of interest" accounting
treatment is not applied to such transaction.
13. Reduction for Other Severance.
Any payments or other benefits provided to the Executive under this
Agreement shall be reduced by any payments or other benefits, under any
severance plan or employment agreement, which the Executive is eligible to
receive as a result of the termination of the Executive's employment.
14. Separability.
The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
15. Non-assignability.
This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder, except as provided in Section
9. Without limiting the foregoing, the Executive's right to receive payments
hereunder shall not be assignable or
16
<PAGE> 17
transferable, whether by pledge, creation of a security interest or otherwise,
other than a transfer by will or by the laws of descent or distribution, and in
the event of any attempted assignment or transfer by the Executive contrary to
this Section 15 the Company shall have no liability to pay any amount so
attempted to be assigned or transferred to any person other than the Executive
or, in the event of death, the Executive's designated beneficiary or, in the
absence of an effective beneficiary designation, the Executive's estate.
16. Effectiveness; Term.
This Agreement will be effective and binding as of the date first
above written immediately upon its execution and shall continue in effect
through the second anniversary of such date; provided, however, that the term of
this Agreement shall automatically be extended for an additional day for each
day that passes so that there shall at any time be two years remaining in the
term unless the Company provides written notice to the Executive that it does
not wish the term of this Agreement to continue to be so extended, in which case
the Agreement shall terminate on the second anniversary of such notice if there
has not been a Change in Control prior to such second anniversary. In the event
that a Change in Control has occurred during the term of this Agreement, then
this Agreement shall continue to be effective until the second anniversary of
such Change in Control. Notwithstanding any other provision of this Agreement,
if, prior to a Change in Control, the Executive ceases for any reason to be an
employee of the Company and any subsidiary (other than a termination of
employment pursuant to Section 2(d) hereof), thereupon without further action
the term of this Agreement shall be deemed to have expired and this Agreement
will immediately terminate and be of no further effect. For purposes of this
Section 16, the Executive shall not be deemed to have ceased to be an employee
of the Company and any subsidiary by reason of the transfer of the Executive's
employment between the Company and any subsidiary, or among any subsidiaries.
Notwithstanding any provision of this Agreement to the contrary, the parties'
respective rights and obligations under Sections 4 through 9 will survive any
termination or expiration of this Agreement or the termination of the
Executive's employment following a Change in Control for any reason whatsoever.
17
<PAGE> 18
EXHIBIT 10.1
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original
but all of which together will constitute one and the same
agreement.
18. Prior Agreement. This Agreement supersedes and terminates any
and all prior similar agreements by and among Company (and/or a
subsidiary) and the Executive.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above set forth.
AMERADA HESS CORPORATION
By: /s/ Nicholas F. Brady
------------------------------
Nicholas F. Brady
Chairman,
Compensation Committee
/s/ John B. Hess
- ------------------------------
Signature
18
<PAGE> 1
EXHIBIT 10.2
CHANGE IN CONTROL
TERMINATION BENEFITS AGREEMENT
THIS CHANGE IN CONTROL TERMINATION BENEFITS AGREEMENT (the
"Agreement"), dated as of the first day of September, 1999 is between Amerada
Hess Corporation, a Delaware corporation (the "Company"), and Francis R. Gugen
(the "Executive").
W I T N E S S E T H:
WHEREAS, the Company considers it essential to the best interests of
the Company and its stockholders that its management be encouraged to remain
with the Company and to continue to devote full attention to the Company's
business in the event of a transaction or series of transactions that could
result in a change in control of the Company through a tender offer or
otherwise;
WHEREAS, the Company recognizes that the possibility of a change in
control and the uncertainty which it may raise among management may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders;
WHEREAS, the Executive is a key Executive of the Company;
WHEREAS, the Company believes the Executive has made valuable
contributions to the productivity and profitability of the Company;
WHEREAS, should the Company receive a proposal for, or otherwise
consider any such transaction, in addition to the Executive's regular duties,
the Executive may be called upon to assist in the assessment of such proposals,
advise management and the Board of Directors of the Company (the "Board") as to
whether a proposed transaction would be in the best interests of the Company and
its stockholders, and to take such other actions as the Board might determine to
be appropriate; and
WHEREAS, the Board has determined that it is in the best interests of
the Company and its stockholders to assure that the Company will have the
continued services of the Executive, notwithstanding the possibility, threat or
occurrence of a change in control of the Company and believes that it is
imperative to diminish the potential distraction of the Executive by virtue of
the personal uncertainties and risks created by a pending or threatened change
in control, to assure the Executive's full attention and dedication to the
Company in the event of any threatened or pending change in control, and to
provide the Executive with appropriate severance arrangements following a change
in control.
<PAGE> 2
NOW, THEREFORE, to assure the Company that it will have the continued
undivided attention and services of the Executive and the availability of the
Executive's advice and counsel notwithstanding the possibility, threat or
occurrence of a change in control of the Company, and to induce the Executive to
remain in the employ of the Company, and for other good and valuable
consideration, the Company and the Executive agree as follows:
1. Change in Control.
For purposes of the Agreement, a Change in Control shall be deemed to
have taken place if any of the following shall occur:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934
(the "Exchange Act")), of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either the then (i)
outstanding shares of Common Stock of the Company (the "Outstanding Company
Common Stock") or (ii) combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Voting Securities") provided, however, that the
following acquisitions shall not constitute a Change in Control: (i) any
acquisition by the Company or any of its subsidiaries, (ii) any acquisition by
an employee benefit plan (or related trust) sponsored or maintained by the
Company or any of its subsidiaries, (iii) any acquisition by any company with
respect to which, following such acquisition, more than 60% of, respectively,
the then outstanding shares of common stock of such company and the combined
voting power of the then outstanding voting securities of such company entitled
to vote generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Voting Securities immediately prior to such
acquisition in substantially the same proportions as their ownership,
immediately prior to such acquisition, of the Outstanding Company Common Stock
and Outstanding Voting Securities, as the case may be, or (iv) any acquisition
by one or more Hess Entity (for this purpose a "Hess Entity" means (A) Mr. John
Hess or any of his children, parents or siblings, (B) any spouse of any person
described in Section (A) above, (C) any trust with respect to which any of the
persons described in (A) has substantial voting authority (D) any affiliate (as
such term is defined in Rule 12b-2 under the Exchange Act) of any person
described in (A) above, (E) the Hess Foundation Inc., or (F) any persons
comprising a group controlled (as such term is defined in such Rule 12b-2) by
one or more of the foregoing persons or entities described in this Section
1(a)(iv)); or
(b) Within any 24 month period, individuals who, immediately prior to
the beginning of such period, constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director during such period whose
election, or nomination for
2
<PAGE> 3
election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened solicitation to
which Rule 14a-11 of Regulation 14A promulgated under the Exchange Act applies
or other actual or threatened solicitation of proxies or consents; or
(c) Consummation of a reorganization, merger or consolidation, in each
case, with respect to which all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Voting Securities immediately prior to such
reorganization, merger or consolidation do not, following such reorganization,
merger or consolidation, beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the company
resulting from such reorganization, merger or consolidation in substantially the
same proportions as their ownership, immediately prior to such reorganization,
merger or consolidation, of the Outstanding Company Common Stock and Outstanding
Voting Securities, as the case may be; or
(d) Consummation of (i) a complete liquidation or dissolution of the
Company or (ii) the sale or other disposition of all or substantially all of the
assets of the Company, other than to a company, with respect to which following
such sale or other disposition, more than 60% of, respectively, the then
outstanding shares of common stock of such company and the combined voting power
of the then outstanding voting securities of such company entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding Company Common Stock
and Outstanding Voting Securities, as the case may be. The term "the sale or
other disposition of all or substantially all of the assets of the Company"
shall mean a sale or other disposition in a transaction or series of related
transactions involving assets of the Company or of any direct or indirect
subsidiary of the Company (including the stock of any direct or indirect
subsidiary of the Company) in which the value of the assets or stock being sold
or otherwise disposed of (as measured by the purchase price being paid therefor
or by such other method as the Board determines is appropriate in a case where
there is no readily ascertainable purchase price) constitutes more than
two-thirds of the fair market value of the Company (as hereinafter defined). The
"fair market value of the Company" shall be the aggregate market value of the
then Outstanding Company Common Stock (on a fully diluted basis) plus the
aggregate market value of the Company's other outstanding equity securities. The
aggregate market value of the shares of Outstanding Company
3
<PAGE> 4
Common Stock shall be determined by multiplying the number of shares of such
Common Stock (on a fully diluted basis) outstanding on the date of the execution
and delivery of a definitive agreement with respect to the transaction or series
of related transactions (the "Transaction Date") by the average closing price of
the shares of Outstanding Company Common Stock for the ten trading days
immediately preceding the Transaction Date. The aggregate market value of any
other equity securities of the Company shall be determined in a manner similar
to that prescribed in the immediately preceding sentence for determining the
aggregate market value of the shares of Outstanding Company Common Stock or by
such other method as the Board shall determine is appropriate.
1. Circumstances Triggering Receipt of Termination Benefits.
(a) Subject to Section 2(c), the Company will provide the Executive
with the benefits set forth in Section 4 upon any termination of the Executive's
employment:
(i) by the Company at any time within the first 24 months
after a Change in Control;
(ii) by the Executive for "Good Reason" (as defined in Section
2(b) below) at any time within the first 24 months after a Change in
Control; or
(iii) by the Company or the Executive pursuant to Section
2(d).
(a) In the event of a Change in Control, the Executive may terminate
employment with the Company and/or any subsidiary for "Good Reason" and receive
the payments and benefits set forth in Section 4 upon the occurrence of one or
more of the following events (regardless of whether any other reason, other than
Cause as provided below, for such termination exists or has occurred):
(i) Failure to elect or reelect or otherwise to maintain the
Executive in the office or the position, or at least a substantially
equivalent office or position, of or with the Company (or any successor
thereto), which the Executive held immediately prior to a Change in
Control, or the removal of the Executive as a director of the Company
(or any successor thereto), if the Executive shall have been a director
of the Company immediately prior to the Change in Control;
(ii) (A) Any material adverse change in the nature or scope of
the Executive's authorities, powers, functions, responsibilities or
duties from those in effect immediately prior to the Change in Control,
(B) a reduction in the Executive's annual base salary rate, (C) a
reduction in the Executive's
4
<PAGE> 5
annual incentive compensation target or any material reduction in the
Executive's other bonus opportunities, or (D) the termination or denial
of the Executive's ability to participate in Employee Benefits (as
defined in Section 4(b)) or retirement benefits (as described in
Section 4(c)) or a material reduction in the scope or value thereof,
any of which is not remedied by the Company within 10 days after
receipt by the Company of written notice from the Executive of such
change, reduction or termination, as the case may be;
(iii) The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or substantially all
of its businesses and/or assets, unless the successor or successors (by
liquidation, merger, consolidation, reorganization, transfer or
otherwise) to which all or substantially all of its businesses and/or
assets have been transferred (directly or by operation of law) assumed
all duties and obligations of the Company under this Agreement pursuant
to Section 9(a);
(iv) The Company requires the Executive to change the
Executive's principal location of work to a location that is in excess
of 30 miles from the location thereof immediately prior to the Change
in Control, or requires the Executive to travel in the course of
discharging the Executive's responsibilities or duties at least 20%
more (in terms of aggregate days in any calendar year or in any
calendar quarter when annualized for purposes of comparison to any
prior year) than was required of the Executive in any of the three full
years immediately prior to the Change in Control without, in either
case, the Executive's prior written consent;
(v) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the Company or any
successor thereto, which breach is not remedied within 10 days after
written notice to the Company from the Executive describing the nature
of such breach.
(a) Notwithstanding Sections 2(a) and (b) above, no benefits shall be
payable by reason of this Agreement in the event of:
(i) Termination of the Executive's employment with the Company
and/or its subsidiaries by reason of the Executive's death or
Disability, provided that the Executive has not previously given a
valid "Notice of Termination" pursuant to Section 3. For purposes
hereof, "Disability" shall be defined as the inability of the Executive
due to illness, accident or other physical or mental disability to
perform the Executive's duties for any period of six consecutive months
or for any period of eight months out of any 12-month period, as
determined by an independent physician selected by the Executive (or
the Executive's legal representative) and reasonably acceptable to the
Company, provided that the Executive does not return to work on
substantially a full-time basis within 30 days after written notice
from the
5
<PAGE> 6
Company, pursuant to Section 3, of an intent to terminate the
Executive's employment due to Disability;
(ii) Termination of the Executive's employment with the
Company and/or its subsidiaries on account of the Executive's
retirement, pursuant to the Company's Employees' Pension Plan;
provided, however, that if the Executive has Good Reason to terminate
employment at the time of retirement, the Executive's retirement shall
be treated hereunder as a termination of the Executive's employment for
Good Reason and the Executive shall be entitled to the benefits
provided in Section 4 hereof;
(iii) Termination of the Executive's employment with the
Company and its subsidiaries for Cause. For the purposes hereof,
"Cause" shall be defined as (A) a felony conviction of the Executive or
the failure of the Executive to contest prosecution for a felony, (B)
the Executive's gross and willful misconduct in connection with the
performance of the Executive's duties with the Company and/or its
subsidiaries or (C) the willful and continued failure of the Executive
to substantially perform the Executive's duties with the Company (or
any successor thereto) after a written demand from the Company's
internal Executive Committee, any successor or similar internal
management committee or, absent any such committee, its Chief Executive
Officer (such committee, or the Chief Executive Officer, being the
"Notifying Party") for substantial performance which specifically
identifies the manner in which the Notifying Party believes that the
Executive has not performed the Executive's duties with the Company,
any of which is directly and materially harmful to the business or
reputation of the Company or any subsidiary or affiliate.
Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for "Cause" hereunder unless and until the
Executive shall have been afforded, after reasonable notice, an
opportunity to appear, together with counsel (if the Executive chooses
to have counsel present), before the Notifying Party, if the Notifying
Party is a committee, or in the event that the Notifying Party is the
Chief Executive Officer, the three most highly compensated senior
executive officers of the Company, not including the Chief Executive
Officer (such Notifying Party or the three senior executive officers,
as the case may be, being the "Hearing Party"), and after such hearing
there shall have been delivered to the Executive a written
determination by the Hearing Party that, in the good faith opinion of
the Hearing Party the Executive shall have been terminated for "Cause"
as herein defined and specifying the particulars thereof in detail.
Nothing herein will limit the right of the Executive or the Executive's
beneficiaries to contest the validity or propriety of any such
determination.
This Section 2(c) shall not preclude the payment of any amounts
otherwise payable to the Executive under any of the Company's employee benefit
plans, pension plans, stock plans, programs and arrangements.
6
<PAGE> 7
(d) A termination of the Executive's employment by the Company without
Cause or by the Executive for an event that would constitute Good Reason
following a Change in Control that occurs, in either event, prior to a Change in
Control, but occurs (i) not more than 180 days prior to the date on which a
Change in Control occurs and (ii) (x) at the request of a third party who has
indicated an intention or taken steps reasonably calculated to effect a Change
in Control or (y) otherwise arose in connection with, or in anticipation of, a
Change in Control, shall be deemed to be a termination or removal of the
Executive without Cause within the first 24 months after a Change in Control for
purposes of this Agreement and the date of such Change in Control shall be
deemed to be the date immediately preceding the date the Executive's employment
terminates.
1. Notice of Termination.
Any termination of the Executive's employment with the Company and its
subsidiaries as contemplated by Section 2 shall be communicated by written
"Notice of Termination" to the other party hereto. Any "Notice of Termination"
shall indicate the effective date of termination which shall not be less than 30
days or more than 60 days after the date the Notice of Termination is delivered
(the "Termination Date"), the specific provision in this Agreement relied upon,
and, except for a termination pursuant to Section 2(d), will set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
such termination including, if applicable, the failure by the Company, after
provision of written notice by the Executive, to effect a remedy pursuant to the
final clause of Section 2(b)(ii) or 2(b)(v).
2. Termination Benefits.
Subject to the conditions set forth in Section 2, the following
benefits shall be paid or provided to the Executive:
(a) Compensation.
The Company shall pay to the Executive two times the sum of (i) "Base
Pay", which shall be an amount equal to the greater of (A) the Executive's rate
of annual base salary (prior to any deferrals) at the Termination Date or (B)
the Executive's rate of annual base salary (prior to any deferrals) immediately
prior to the Change in Control, plus (ii) "Incentive Pay", which shall be an
amount equal to the greater of (X) the target annual bonus payable to the
Executive under the Company's incentive compensation plan or any other annual
bonus plan for the fiscal year of the Company in which the Change in Control
occurred or (Y) the highest annual bonus earned by the Executive under the
Company's incentive compensation plan or any other annual bonus plan (whether
paid currently or on a deferred basis) during the three fiscal years of the
Company immediately preceding the fiscal year of the Company in which the Change
in Control occurred. In addition, the Executive shall receive a pro rata portion
of the
7
<PAGE> 8
target bonus for the fiscal year in which the Executive's termination of
employment occurs.
(b) Welfare Benefits.
For a period of 24 months following the Termination Date (the
"Continuation Period"), the Company shall arrange to provide the Executive with
benefits (the "Employee Benefits"), including travel accident, major medical,
dental care and other welfare benefit programs, substantially similar to those
in effect immediately prior to the Change in Control, or, if greater, to those
that the Executive was receiving or entitled to receive immediately prior to the
Termination Date (or, if greater, immediately prior to the reduction,
termination, or denial described in Section 2(b)(ii)(D)). If and to the extent
that any benefit described in this Section 4(b) is not or cannot be paid or
provided under any policy, plan, program or arrangement of the Company or any
subsidiary, as the case may be, then the Company will itself pay or provide for
the payment to the Executive, the Executive's dependents and beneficiaries, of
such Employee Benefits along with, in the case of any benefit which is subject
to tax because it is not or cannot be paid or provided under any such policy,
plan, program or arrangement of the Company or any subsidiary, an additional
amount such that after payment by the Executive, or the Executive's dependents
or beneficiaries, as the case may be, of all taxes so imposed, the recipient
retains an amount equal to such taxes. Employee Benefits otherwise receivable by
the Executive pursuant to this Section 4(b) will be reduced to the extent
comparable welfare benefits are actually received by the Executive from another
employer during the Continuation Period, and any such benefits actually received
by the Executive shall be reported by the Executive to the Company. In addition,
the Executive shall receive additional age and service credit for the
Continuation Period for purposes of the Executive's eligibility to receive any
retiree medical benefits.
(c) Retirement Benefits.
The Executive shall be deemed to be completely vested in the
Executive's currently accrued benefits under the Company's Employees' Pension
Plan and the Company's Pension Restoration Plan or other supplemental pension
plan ("SERP") in effect as of the date of the Change in Control (collectively,
the "Plans"), regardless of the Executive's actual vesting service credit
thereunder. In addition, the Executive shall be deemed to earn age and service
credit for benefit calculation purposes thereunder for the Continuation Period.
The additional retirement benefits to be paid pursuant to the Plans shall be
calculated as though the Executive's compensation rate for the years during the
Continuation Period equaled the sum of Base Pay plus Incentive Pay. Any benefits
payable pursuant to this Section 4(c) that are not payable out of the Plans for
any reason (including but not limited to any applicable benefit limitations
under the Employee Retirement Income Security Act of 1974, as amended, or any
restrictions relating to the qualification of the Company's Employees' Pension
Plan under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
8
<PAGE> 9
"Code")) shall be paid directly by the Company out of its general assets at the
time such benefits would be payable under the applicable Plan.
(d) Stock Based Compensation Plans.
(i) Any issued and outstanding stock options shall vest and
become exercisable on the Termination Date (to the extent they have not
already become vested and exercisable) and any other stock-based awards
under any compensation plan or program maintained by the Company
(including, without limitation, awards of restricted stock and book
value appreciation units) and the Executive's rights thereunder shall
vest on the Termination Date (to the extent they have not already
vested) and any performance criteria under any such compensation plan
or program shall be deemed met at target as of the Termination Date.
(ii) If and to the extent that any benefit or entitlement (or
portion thereof) described in paragraph (i) above is not able to be
implemented by the Company under the then applicable terms of any plan,
program or award agreement applicable to the Executive, the Company
shall pay to the Executive cash and/or other property (including,
without limitation, common stock of the Company or any successor
thereto) with a value, as determined by the Board, equal to the value
of any such option, award or other entitlement (or portion thereof)
that the Executive was not able to receive under paragraph (i) above,
and such payment shall be in full satisfaction of the option, award or
other entitlement (or portion thereof) to which such payment relates.
(e) Deferred Compensation.
The Company shall pay to the Executive all other amounts
accrued or earned by the Executive through the Termination Date and amounts
otherwise owing under the then existing plans and policies of the Company,
including but not limited to, all amounts of compensation previously deferred by
the Executive (together with any accrued interest or other earnings thereon) and
not yet paid by the Company.
(f) Outplacement Services.
If so requested by the Executive, outplacement services shall
be provided to the Executive by a professional outplacement firm or provider
selected by the Executive that is reasonably acceptable to the Company at a cost
to the Company not in excess of $30,000.
(g) The Company shall pay to the Executive the amounts due pursuant to
Sections 4(a) and 4(d)(ii), in a lump sum on the first business day of the month
following the Termination Date. The Company shall pay to the Executive the
amounts
9
<PAGE> 10
due pursuant to Section 4(e) in accordance with the terms and conditions of the
existing plans and policies of the Company.
1. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event that it shall be determined (as hereafter provided) that any payment
(other than the Gross-Up payments provided for in this Section 5) or benefit
provided by the Company or any of its subsidiaries to or for the benefit of the
Executive, whether paid or payable or provided pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement, policy,
plan, program or arrangement, including without limitation any stock option,
stock appreciation right or similar right, restricted stock, deferred stock or
the lapse or termination of any restriction on, deferral period for, or the
vesting or exercisability of any of the foregoing (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Code (or any successor
provision thereto) by reason of being considered "contingent on a change in
ownership or control" of the Company, within the meaning of Section 280G of the
Code (or any successor provision thereto) or to any similar tax imposed by state
or local law, or any interest or penalties with respect to any such tax (such
tax or taxes, together with any such interest and penalties, being hereafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment or payments (collectively, a "Gross-Up
Payment"). The Gross-Up Payment shall be in an amount such that, after payment
by the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax and any income tax imposed upon
the Gross-Up Payment, the Executive retains an amount of Gross-Up Payment equal
to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 5(f), all determinations
required to be made under this Section 5, including whether an Excise Tax is
payable by the Executive and the amount of such Excise Tax and whether a
Gross-Up Payment is required to be paid by the Company to the Executive and the
amount of such Gross-Up Payment, if any, shall be made by the Company's outside
auditors immediately prior to the Change in Control (the "Accounting Firm"). The
Executive shall direct the Accounting Firm to submit its determination and
detailed supporting calculations to both the Company and the Executive within 30
days after the Change in Control Date, the Termination Date, if applicable, and
any such other time or times as may be requested by the Company or the
Executive. If the Accounting Firm determines that any Excise Tax is payable by
the Executive, the Company shall pay the required Gross-Up Payment to the
Executive within five business days after receipt of such determination and
calculations with respect to any Payment to the Executive. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall, at the
same time as it makes such determination, furnish the Company and the Executive
an opinion that the Executive has substantial authority not to report any Excise
Tax on the Executive's federal, state or local income or other tax return. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision
10
<PAGE> 11
thereto) and the possibility of similar uncertainty regarding applicable state
of local tax law at the time of any determination by the Accounting Firm
hereunder, it is possible that a Gross-Up Payment which will not have been made
by the Company should have been made (an "Underpayment'), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts or fails to pursue its remedies pursuant to Section 5(f) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Executive shall direct the Accounting Firm to determine the amount of the
Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both the Company and the Executive as promptly as
possible. Any such Underpayment shall be promptly paid by the Company to, or for
the benefit of, the Executive within five business days after receipt of such
determination and calculations.
(c) The Company and the Executive shall each provide the Accounting
Firm access to and copies of any books, records and documents in the possession
of the Company or the Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by Section 5(b). Any determination by the Accounting Firm as to the
amount of the Gross-Up Payment shall be binding upon the Company and the
Executive.
(d) The federal, state and local income or other tax returns filed by
the Executive shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive shall make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of the Executive's federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment. If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall, within five business days, pay to the Company the amount of
such reduction.
(e) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by Section 5(b)
shall be borne by the Company. If such fees and expenses are initially paid by
the Executive, the Company shall reimburse the Executive the full amount of such
fees and expenses within five business days after receipt from the Executive of
a statement therefor and reasonable evidence of payment thereof.
(f) The Executive shall notify the Company in writing of any claim, by
the Internal Revenue Service or any other taxing authority that, if successful,
would require
11
<PAGE> 12
the payment by the Company of a Gross-Up Payment or any additional Gross-Up
Payment. Such notification shall be given as promptly as practicable but no
later than l0 business days after the Executive actually receives notice of such
claim, and the Executive shall further apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid (in each case, to
the extent known by the Executive). The Executive shall not pay such claim prior
to the earlier of (x) the expiration of the 30-day period following the date on
which the Executive gives such notice to the Company and (y) the date that any
payment with respect to such claim is due. If the Company notifies the Executive
in writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall:
(i) provide the Company with any written records or documents in the
Executive's possession relating to such claim reasonably requested by
the Company;
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order effectively to
contest such claim; and
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax including interest and
penalties with respect thereto, imposed as a result of such contest and payment
of costs and expenses. Without limiting the foregoing provisions of this Section
5(f), the Company shall control all proceedings taken in connection with the
contest of any claim contemplated by this Section 5(f) and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of such claim (provided,
however, that the Executive may participate therein at the Executive's own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and sue for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income
12
<PAGE> 13
or other tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which the contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
any such contested claim shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 5(f), the Executive receives any refund with respect
to such claim, the Executive shall (subject to the Company's complying with the
requirements of Section 5(f)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 5(f), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial or refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of any such advance shall offset, to the extent
thereof, the amount of any Gross-Up Payment required to be paid by the Company
to the Executive pursuant to this Section 5.
6. No Mitigation Obligation; Obligations Absolute. The payment of the
severance compensation by the Company to the Executive in accordance with the
terms of this Agreement is hereby acknowledged by the Company to be reasonable,
and the Executive will not be required to mitigate the amount of any payment or
other benefit provided in this Agreement by seeking other employment or
otherwise, nor will any profits, income, earnings or other benefits from any
source whatsoever create any mitigation, offset, reduction or any other
obligation on the part of the Executive hereunder or otherwise, except as
expressly provided in the second to last sentence of Section 4(b) and Section 13
hereof. The obligations of the Company to make the payments and provide the
benefits provided herein to the Executive are absolute and unconditional and may
not be reduced under any circumstances, including without limitation any
set-off, counterclaim, recoupment, defense or other right which the Company may
have against the Executive or any third party at any time.
7. Legal Fees and Expenses.
It is the intent of the Company that the Executive not be required to
incur legal fees and the related expenses associated with the interpretation,
enforcement or defense of the Executive's rights under this Agreement by
litigation or otherwise because the cost and expense thereof would substantially
detract from the benefits intended to be extended to the Executive hereunder.
Accordingly, if, following a Change in Control, it should appear to the
Executive that the Company has failed to comply with any of its
13
<PAGE> 14
obligations under this Agreement or in the event that the Company or any other
person takes or threatens to take any action to declare this Agreement void or
unenforceable, or institutes any litigation or other action or proceeding
designed to deny, or to recover from, the Executive any or all of the benefits
provided or intended to be provided to the Executive hereunder, the Company
irrevocably authorizes the Executive from time to time to retain counsel of the
Executive's choice, at the expense of the Company as hereafter provided, to
advise and represent the Executive in connection with any such interpretation,
enforcement or defense, including without limitation the initiation or defense
of any litigation or other legal action, whether by or against the Company or
any director, officer, stockholder or other person affiliated with the Company,
in any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to the Executive's entering into an attorney-client relationship with
such counsel, and in that connection the Company and the Executive agree that a
confidential relationship shall exist between the Executive and such counsel.
Without respect to whether the Executive prevails, in whole or in part, in
connection with any of the foregoing, the Company will pay and be solely
financially responsible for all reasonable attorneys' fees and related expenses
incurred by the Executive in good faith in connection with any of the foregoing;
provided, however, that the Company shall have no obligation hereunder to pay
any attorneys' fees or related expenses with respect to any frivolous claims
made by the Executive. Payments by the Company shall be made within 10 business
days after receipt of the Executive's written request for payment accompanied by
such evidence of fees and expenses as the Company may reasonably require.
8. Continuing Obligations.
The Executive hereby agrees that all documents, records, techniques,
business secrets and other information which have come into the Executive's
possession from time to time during the Executive's employment with the Company
shall be deemed to be confidential and proprietary to the Company and, except
for personal documents and records of the Executive, shall be returned to the
Company. The Executive further agrees to retain in confidence any confidential
information known to him concerning the Company and its subsidiaries and their
respective businesses so long as such information is not otherwise publicly
disclosed, except that Executive may disclose any such information required to
be disclosed in the normal course of the Executive's employment with the Company
or pursuant to any court order or other legal process or as necessary to enforce
the Executive's rights under this Agreement.
9. Successors.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance reasonably satisfactory to the Executive to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to
14
<PAGE> 15
perform it if no such succession had taken place. Failure of such successor
entity to enter into such agreement prior to the effective date of any such
succession (or, if later, within three business days after first receiving a
written request for such agreement) shall constitute a breach of this Agreement
and shall entitle the Executive to terminate employment pursuant to Section
2(a)(ii) and to receive the payments and benefits provided under Section 4. As
used in this Agreement, "Company" shall mean the Company as herein before
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the Agreement provided for in this Section 9 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive dies
while any amounts are payable to him hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's designee or, if there is no such designee, to the
Executive's estate.
10. Notices.
For all purposes of this Agreement, all communications, including
without limitation notices, consents, requests or approvals, required or
permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or three business days after having been
sent by a nationally recognized overnight courier service such as FedEx, UPS, or
Purolator, addressed to the Company (to the attention of the Secretary of the
Company, with a copy to the General Counsel of the Company) at its principal
executive office and to the Executive at the Executive's principal residence, or
to such other address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
11. Governing Law.
THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
12. Miscellaneous.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in a writing signed
by the Executive and the Company. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement
15
<PAGE> 16
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or any prior or subsequent time.
No agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement (or in any employment or other written
agreement relating to the Executive). Nothing expressed or implied in this
Agreement will create any right or duty on the part of the Company or the
Executive to have the Executive remain in the employment of the Company or any
subsidiary prior to or following any Change in Control. The Company may withhold
from any amounts payable under this Agreement all federal, state, city or other
taxes as the Company is required to withhold pursuant to any law or government
regulation or ruling. In the event that the Company refuses or otherwise fails
to make a payment when due and it is ultimately decided that the Executive is
entitled to such payment, such payment shall be increased to reflect an interest
factor, compounded annually, equal to the prime rate in effect as of the date
the payment was first due plus two points. For this purpose, the prime rate
shall be based on the rate identified by Chase Manhattan Bank as its prime rate.
Notwithstanding anything in this Agreement to the contrary, if any
right or entitlement of the Executive under this Agreement would cause a
transaction involving the Company to be ineligible for "pooling of interests"
accounting treatment and that transaction would, but for such right or
entitlement hereunder, be eligible for such accounting treatment (each as
determined by the Company's outside auditors), the Board may, unilaterally and
without notice, modify, adjust or terminate any such right or entitlement so
that the transaction will be eligible for "pooling of interests" accounting
treatment (as determined by the Company's outside auditors); provided, however,
that any such right or entitlement that is modified, adjusted or terminated
under this paragraph shall be fully reinstated (with retroactive payments, if
necessary) if the transaction which caused such modification, adjustment or
termination to be made is not consummated or if "pooling of interest" accounting
treatment is not applied to such transaction.
13. Reduction for Other Severance.
Any payments or other benefits provided to the Executive under this
Agreement shall be reduced by any payments or other benefits, under any
severance plan or employment agreement, which the Executive is eligible to
receive as a result of the termination of the Executive's employment.
14. Separability.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
16
<PAGE> 17
15. Non-assignability.
This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this Agreement or
any rights or obligations hereunder, except as provided in Section 9. Without
limiting the foregoing, the Executive's right to receive payments hereunder
shall not be assignable or transferable, whether by pledge, creation of a
security interest or otherwise, other than a transfer by will or by the laws of
descent or distribution, and in the event of any attempted assignment or
transfer by the Executive contrary to this Section 15 the Company shall have no
liability to pay any amount so attempted to be assigned or transferred to any
person other than the Executive or, in the event of death, the Executive's
designated beneficiary or, in the absence of an effective beneficiary
designation, the Executive's estate.
16. Effectiveness; Term.
This Agreement will be effective and binding as of the date first above
written immediately upon its execution and shall continue in effect through the
second anniversary of such date; provided, however, that the term of this
Agreement shall automatically be extended for an additional day for each day
that passes so that there shall at any time be two years remaining in the term
unless the Company provides written notice to the Executive that it does not
wish the term of this Agreement to continue to be so extended, in which case the
Agreement shall terminate on the second anniversary of such notice if there has
not been a Change in Control prior to such second anniversary. In the event that
a Change in Control has occurred during the term of this Agreement, then this
Agreement shall continue to be effective until the second anniversary of such
Change in Control. Notwithstanding any other provision of this Agreement, if,
prior to a Change in Control, the Executive ceases for any reason to be an
employee of the Company and any subsidiary (other than a termination of
employment pursuant to Section 2(d) hereof), thereupon without further action
the term of this Agreement shall be deemed to have expired and this Agreement
will immediately terminate and be of no further effect. For purposes of this
Section 16, the Executive shall not be deemed to have ceased to be an employee
of the Company and any subsidiary by reason of the transfer of the Executive's
employment between the Company and any subsidiary, or among any subsidiaries.
Notwithstanding any provision of this Agreement to the contrary, the parties'
respective rights and obligations under Sections 4 through 9 will survive any
termination or expiration of this Agreement or the termination of the
Executive's employment following a Change in Control for any reason whatsoever.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
17
<PAGE> 18
18. Prior Agreement. This Agreement supersedes and terminates any and
all prior similar agreements by and among Company (and/or a subsidiary) and the
Executive.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above set forth.
AMERADA HESS CORPORATION
By: /s/ John B. Hess
-------------------------
John B. Hess
Chairman of the Board and
Chief Executive Officer
/s/ Francis R. Gugen
--------------------
Signature
18
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 25,589
<SECURITIES> 0
<RECEIVABLES> 1,342,107
<ALLOWANCES> 0
<INVENTORY> 466,983
<CURRENT-ASSETS> 2,053,862
<PP&E> 11,239,319
<DEPRECIATION> 7,011,485
<TOTAL-ASSETS> 7,938,964
<CURRENT-LIABILITIES> 1,866,932
<BONDS> 2,335,848
0
0
<COMMON> 90,695
<OTHER-SE> 2,836,128
<TOTAL-LIABILITY-AND-EQUITY> 7,938,964
<SALES> 4,770,301
<TOTAL-REVENUES> 5,154,192
<CGS> 2,935,105
<TOTAL-COSTS> 2,935,105
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 115,984
<INCOME-PRETAX> 524,281
<INCOME-TAX> 217,760
<INCOME-CONTINUING> 306,521
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 306,521
<EPS-BASIC> 3.42
<EPS-DILUTED> 3.40
</TABLE>
